SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                       [X] ANNUAL REPORT UNDER SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

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

                          Commission File No. 000-23251

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

                             SFORZA ENTERPRISES INC.
                 (Name of small business issuer in its charter)


           FLORIDA                               65-0705377
  (State or other jurisdiction                  (I.R.S. Employer
of incorporation or organization)            Identification Number)

    222 CLEMATIS ST, SUITE 202, WEST PALM BEACH, FLORIDA 33401 (561) 366-0027

          (Address and telephone number of principal executive offices)
                              
                        --------------------------------

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

Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.01 par value

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past twelve months (or for such
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  [  ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

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The Registrant's revenues for its most recent fiscal year totaled
$ 3,774,366.

The aggregate market value of Common Stock held by non-affiliates based upon the
closing bid price on April 13, 1999, as reported by the Over the Counter
Electronic Bulletin Board(R), was approximately $ 438,000.

As of April 13, 1999 there were 1,710,000 shares of Sforza Enterprises Inc.
Common Stock, $.01 par value, outstanding.

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


ITEM 1.  DESCRIPTION OF BUSINESS.

OVERVIEW

         Sforza Enterprises Inc. (the "Company") owns and operates, through two
wholly-owned subsidiaries, two upscale, moderately priced restaurants located in
West Palm Beach, Florida (the "West Palm Beach Restaurants"). On December 30,
1997, the Company consummated its planned acquisition of 51% of the equity
interests in four entities, each of which owns or is developing one restaurant
using the Max's Grille Restaurant concept (the "Max's Grille Restaurants"). As
of December 31, 1998, the two West Palm Beach Restaurants and three of the Max's
Grille Restaurants are open. All of the Max's Grille Restaurants are managed by
Unique Restaurant Concepts, Inc. ("URC"), a company controlled by and affiliated
with the owners of the remaining 49% of the equity interests in the Max's Grille
Restaurants. The investments in the entities which own the Max's Grille
Restaurants are accounted for using the equity method.


HISTORY

         Castle Room, Inc. was incorporated in May 1995 by Company directors
Dale J. Brisson and Joseph C. Visconti to develop Sforza Ristorante, one of the
West Palm Beach restaurants. Clematis Bistro Corporation was incorporated in
April 1996 by Mr. Visconti to develop My Martini Grille, the other West Palm
Beach restaurant. Sushi Enterprises, Inc. was incorporated in July 1996 by
Messrs. Brisson and Visconti to develop a sushi restaurant. The Company was
incorporated in July 1996 as a holding company for the three corporations.
Messrs. Brisson and Visconti exchanged their founders' shares in Castle Room,
Inc. for founders' shares in the Company, and the Company capitalized Clematis
Bistro Corporation and Sushi Enterprises, Inc. with proceeds of private
securities offerings. Management determined to postpone the development of the
sushi restaurant until they decide that the competitive conditions are more
favorable.

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<PAGE>

THE WEST PALM BEACH RESTAURANTS

         Sforza Ristorante. The Company owns a full-service, mid-priced, casual
dining northern Italian restaurant named "Sforza Ristorante." Sforza Ristorante
offers an extensive menu featuring a wide variety of seafood, chicken and pasta
dishes, appetizers, salads and desserts. The restaurant offers full bar service.
Since its February 1996 opening, food and alcoholic beverages have accounted for
approximately 57% and 43% of restaurant sales, respectively. The restaurant
offers generous portions at moderate prices while providing friendly and
efficient service in a high-energy casual atmosphere intended to appeal to a
broad customer base, particularly young upscale adults. As a result, the Company
believes that the restaurant has generated a high level of repeat business and
customer loyalty. Sforza Ristorante offers dinner entrees between $8 and $18,
with an average dinner entree price of $14. The Company believes that by
emphasizing casual dining, high quality, large portions and moderate prices,
Sforza Ristorante will remain popular with consumers.

         Sforza Ristorante reflects an elegant yet casual European concept
featuring a plush red and gold decor. The eclectic design blends the ambiance of
renaissance Tuscany with the energy of a rejuvenated urban area, using period
fabric drapery treatments, which are enhanced by unique hand faux finished
walls. Contemporary styled sconces and pendants illuminate the dining and bar
areas with soft, inviting light, enhancing the casual upscale dining experience
and establishing a distinct identity for the restaurant. The Company believes
that the decor presents a unique identity for the restaurant.

         My Martini Grille. The Company owns a full-service upscale grill named
"My Martini Grille." My Martini Grille, which opened in February 1997, was
designed to serve a sophisticated clientele, including business diners. The My
Martini Grille concept embraces an elegant and timeless early twentieth century
motif, with an art nouveau theme. This sleek art nouveau restaurant and bar
recaptures the sophisticated allure of the martini culture. Cocktails are
complemented with deep mahogany walls and rich purple and golds. Stylish
stainless steel accents mix with unique Italian light fixtures to create a
relaxed ambiance. All of the elements enhance the dining experience and
establish a distinct identity for My Martini Grille.

My Martini Grille offers dinner entrees between $16 and $30, with an average
dinner entree price of $20.


THE MAX'S GRILLE RESTAURANTS

         On December 30, 1997, the Company acquired 51% of the limited
partnership interests in the entities that own the Max's Grille Restaurant
located at 17 South Atlantic Boulevard in Fort Lauderdale ("Beach Place") 300
Southwest First Avenue ("Las Olas Riverfront") in Fort Lauderdale, Florida, and
2210 Weston Road, in Weston, Florida ("Weston"), plus the entity that will own

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the next Max's Grille to be developed, the location of which is to be
determined. Each of the Max's Grille Restaurants will replicate the Max's Grille
Restaurant in Boca Raton, Florida. Beach Place opened in May 1997. Las Olas
Riverfront opened in June 1998, and Weston opened in October 1998. The Company
designated the majority of the directors of the corporations serving as general
partners of the Max's Grille Restaurants.

         The Las Olas Riverfront, a new 270,000 square foot shopping center on
the New River, the main water thoroughfare dissecting downtown Fort Lauderdale,
is anchored by a 24 screen stadium-seating movie theater and an 80,000 square
foot amusement center. The Max's Grille Restaurant located at the Las Olas
Riverfront is 6,500 square feet, seating 200 inside and 40 on an outside patio.

         In Weston, the Max's Grille Restaurant co-anchors the new 200,000
square foot Waterway Shoppes. It is 6,500 square feet, seating 200 inside and 40
on an outside lakefront patio.

         Each of the Max's Grille Restaurants is owned by a distinct Florida
limited partnership formed exclusively to own, develop and operate one
restaurant. The sole general partner of each limited partnership is a Florida
corporation owned by Company directors Daniel Catalfumo, Dennis Max (and his
wife, Patti Max) and Burt Rapoport. URC manages every restaurant in which
Messrs. Catalfumo, Max and Rapoport have an interest.

         The typical setting for a Max's Grille Restaurant is a high-profile
upscale community, where an average food and beverage check of $25 could foster
repeat visits by patrons. Young professional and prosperous active "golden
agers" the demographic group that according to the National Restaurant
Association spends more money dining out than any other age group - comprises
Max's Grille's regular clientele.

         Max's Grille in Boca Raton, Florida, which is not owned by the Company
but which served as the model for the Max's Grille Restaurants in which the
Company has an ownership interest, incorporates casual dining, moderate prices
and a cosmopolitan ambiance in a comfortable relaxed atmosphere. Opened in 1991,
the 225-seat restaurant has been serving a mix of new American and Continental
cuisine with a wide variety of wines and a full-service bar. The decor features
a free-standing mahogany bar, high ceilings with star chandeliers and floating
window treatments. The restaurant specializes in its fresh, simply-prepared
cuisine, with an emphasis on the cooking of Florida, California, New Orleans,
Europe and the Pacific. The future Max's Grille restaurants are expected to use
the same theme.

         The Max's Grille concept was first replicated in 1995 in Celebration,
Florida, The Walt Disney Co.'s planned community near Orlando, Florida. URC
successfully competed against restaurant companies from across the nation for
the right to open a restaurant in that community. The Max's Grille Restaurant in

                                       4
<PAGE>

Celebration is owned by The Celebration Company, an unaffiliated third party,
and managed by Unique Orlando Inc., a Florida corporation owned by Company
directors Messrs. Catalfumo, Max (and his wife) and Rapoport.


RESTAURANT  MANAGEMENT

         URC, the restaurant Management Company owned by Company directors
Messrs. Catalfumo, Max (and Mrs. Max) and Rapoport operate all of the Max's
Grille Restaurants, as well as their nine other existing restaurants. The West
Palm Beach restaurants were managed by URCI through October 31, 1998.

         On December 30, 1997, each of entities owning a Max's Grille Restaurant
entered into a management agreement with URC, pursuant to which URC will manage
the Max's Grille Restaurants. This agreement is terminable for any reason by any
party with ninety days prior written notice, or immediately by the Companies
under certain circumstances specified in the agreement.

         The staff of each Company restaurant (including the Max's Grille
Restaurants) consists of a general manager, a chef and between 20 and 70 other
employees. Restaurant managers are entitled to participate in an annual
discretionary bonus program based upon the financial and operational results of
their particular restaurant.

         The Company believes that achieving customer satisfaction by providing
knowledgeable, friendly, efficient service is critical to the restaurants'
long-term success. During the training program, restaurant managers are taught
to promote the Company's team-oriented atmosphere among restaurant employees,
with emphasis on preparing and serving food in accordance with strict standards
and providing friendly, courteous and attentive service. The Company believes
that the quality and training of its restaurant managers and staff results in
friendly, courteous, efficient service which contributes to a casual and
pleasurable dining experience for the customer.



COMMITMENT AND CUSTOMER SATISFACTION

         The Company's commitment to customer satisfaction is underscored by the
employee training program, which is required for all Company personnel. SEI has
refined its training program , producing manuals on policies and procedures and
an employee handbook. The Company's restaurant employees spend a full week
training, from orientation on cultures and standards to classroom lessons to
hands-on instruction. Tests are given each day to monitor retention. Food
tasting is included. The final step is a three-day mock service for family,
friends and vendors.

                                       5
<PAGE>

         Through the use of comment cards and table visits, Company management
receives valuable customer feedback and, through prompt responses, demonstrate a
continuing devotion to customer satisfaction.


QUALITY CONTROL

         The Company maintains a continuous inspection program for all its food
purchases. Each shipment of food is inspected upon receipt for quality and
conformance to the Company's specifications. In addition, fresh fish is
inspected by kitchen staff at the time of delivery. The restaurant's employees
are educated as to the correct handling and proper physical characteristics of
each product.

         The Company's general managers are all responsible for properly
training hourly employees and ensuring that the Company's restaurants are
operated in accordance with strict health and quality standards. The Company
believes that its inspection procedures and its employee training practices help
the Company to maintain a high standard of quality for the food and service it
provides.


PURCHASING

         Obtaining a reliable supply of quality food at competitive prices is
critical to the Company's success. By affiliating with URC, the Company is part
of a group that purchases over $14 million of food and other products and
services for 13 restaurants. Food and supplies are shipped directly to the
Company's restaurants. The Company does not maintain a central product warehouse
or commissary. The Company believes its diverse menu selection reduces the risk
and minimizes the effect of the shortage of any food products. To date, the
Company generally has not experienced any significant delays in receiving its
foods and beverage inventories, restaurant supplies or equipment.


ADVERTISING AND MARKETING

         Advertising and marketing expenditures were approximately 2% of sales
during 1997 and 1998. The Company sponsored charitable events, participated in
cooking competitions (regional and national), advertised in local magazines and
newspapers and gave away drinks and meals at tables.


MANAGEMENT INFORMATION

         The Company maintains financial and accounting controls for each
restaurant through a central management information system. Sales data is
collected daily, and managers are provided with daily sales and cash information
for their respective restaurants. A point-of-sale accounting and cash management
system enables the Company to access each restaurant's sales, inventory, costs

                                       6

<PAGE>

and other financial data on a real-time basis. The point-of-sale accounting and
cash management system enables both restaurant management and Company management
to react quickly to changing sales trends, better manage food, beverage and
labor costs, minimize theft and improve the quality and efficiency of accounting
and audit procedures. Software programs enable the Company to forecast and
schedule labor requirements.


COMPETITION

         Competition in the restaurant casual fine dining segment is intense.
The industry, particularly the full-service casual dining segment, is likely to
attract a significant number of new entrants. The Company also expects to face
competition from a broad range of other restaurants and food service
establishments, including national chain restaurants, which specialize in a
variety of cuisines. In addition, the full-service restaurant industry is
characterized by the frequent introduction of new food products accompanied by
substantial promotional campaigns. In recent years, numerous companies in the
full-service restaurant industry have introduced products intended to capitalize
on growing consumer preference for food products which are, or are perceived to
be, healthy, nutritious, low in calories and low in fat content. It can be
expected that the Company will be subject to increasing competition from
companies whose products or marketing strategies address these consumer
preferences.

         The Company competes with other restaurants on the basis of price,
atmosphere, decor and service.


GOVERNMENT REGULATION

         The Company is subject to extensive state and local government
regulation by various governmental agencies, including state and local
licensing, zoning, land use, construction and environmental regulations and
various regulations relating to the sale of food and alcoholic beverages,
sanitation, disposal of refuse and waste products, public health, safety and
fire standards. The Company's restaurants are subject to periodic inspections by
governmental agencies to ensure conformity with such regulations. The Company
believes it complies with all applicable government regulations.

         The Company is also subject to laws governing its relations with
employees, including wage and hour laws, and laws and regulations relating to
working and safety conditions and citizenship or immigration status.


SERVICEMARKS AND PROPRIETARY INFORMATION

         The Company has registered the servicemarks "Sforza" and "My Martini"
with the Secretary of State of Florida. The Company believes that its

                                       7
<PAGE>

servicemarks have significant value and are essential to its ability to create
demand for and awareness of its restaurants.


EMPLOYEES

         The Company (excluding the Max's Grille Restaurant employees) employs
approximately 145 people, of whom 10 are management or administrative personnel
and the rest are employed in non-management restaurant positions. Approximately
130 of these individuals are employed by the Company on a full-time basis. All
management and administrative personnel are salaried and non-management
personnel are on an hourly basis. The Company considers its employee relations
to be good. None of the Company employees is covered by a collective bargaining
agreement.



ITEM 2.  DESCRIPTION OF PROPERTY.

         The Company currently occupies approximately 800 square feet for its
offices located in West Palm Beach, Florida. The office is directly across the
street from the My Martini Grille and Sforza Ristorante restaurants. The Company
pays $1550 per month in rent. The lease expires October 31, 1999.

         Sforza Ristorante and My Martini Grille are each housed in adjacent
storefronts leased from Clematis Development Group, L.C., a real estate holding
company. Each restaurant lease provides that the tenant pay rent plus the cost
of insurance, taxes and a portion of the landlord's operating costs to maintain
common areas. The leases have initial terms of 10 years with renewal options.
The Company leases properties with 2,500 to 5,500 square feet total space and
seating capacity for 90 to 220 persons. All facilities are in good condition and
are adequate for the Company's use. The premises that had been contemplated for
the sushi restaurant remain vacant.


ITEM 3.  LEGAL PROCEEDINGS.

         The Company is not a party to, nor is any of its property the subject
of, any material threatened or pending legal proceedings.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.

   None.

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                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

   The Company's Common Stock and Warrants (the "Units") are traded on the OTC
Bulletin Board(R) service under the symbol "SFZAU." Units are traded together.

   The range of high and low bid information for the Units for the period
beginning November 13, 1997 (the date of the Company's initial public offering)
and for each quarterly period during the 1998 calander year as follows:


                      PERIOD              HIGH BID             LOW BID
              ---------------------       ---------          ----------

              11/13/97 - 12/31/97         $7.95                 $7.00

              1/1/98 - 3/31/98             6.50                  4.75
              4/1/98 - 6/30/98             6.32                  4.56
              7/1/98 - 9/30/98             6.00                  3.50
              10/1/98 - 12/31/98           4.75                   .75


 These quotations reflect interdealer prices, without retail markup, markdown,
or commission and may not represent actual transactions.

   As of April 13, 1999  there were approximately 55 stockholders of record.

   On April 13, 1998, the closing bid price for each Unit was $ .60



ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS.

         Certain statements contained herein are not based on historical facts,
but are forward-looking statements that are based upon assumptions about future
conditions that may not occur. Among many factors that could cause actual
results to differ materially are the following: the Company's ability to manage
expected rapid growth; competition in the restaurant industries; the Company's
ongoing relationship with its vendors; dependence upon key personnel;
governmental regulation of the restaurant industry; the Company's ability to
maintain, operate and upgrade its information systems and network; and the
Company's success in the offering of other enhanced service products.

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         Actual events, transactions and results may materially differ from the
anticipated events, transactions or results described in such statements. The
Company's ability to consummate such transactions and achieve such results is
subject to certain risks and uncertainties. Such risks and uncertainties
include, but are not limited to, the existence of demand for and acceptance of
the Company's products and services, regulatory approvals and developments,
economic conditions, the impact of competition and pricing results of financing
efforts and other factors affecting the Company's business that are beyond the
Company's control. The Company undertakes no obligation and does not intend to
update, revise or otherwise publicly release the result of any revisions to
these forward-looking statements that may be made to reflect future events or
circumstances.

         Sforza Enterprises Inc. and subsidiaries (the "Company") operate Sforza
Ristorante, a full-service northern Italian restaurant, which opened in February
1996, and My Martini Grille, a full-service up-scale grill which opened in
February 1997. Both restaurants are located in downtown West Palm Beach,
Florida.

         On December 30, 1997, the Company acquired 51% limited partnership
interests in each of four limited partnerships which operate or are planned to
operate Max's Grille Restaurants in separate South Florida locations for
$3,000,000. The first Max's Grille Restaurant began operations in May 1997, the
second opened in June 1998 and the third in October 1998. The remaining Max's
Grille location has not been determined. The investments are accounted for using
the equity method.

         This management's discussion and analysis of financial condition and
results of operations should be read in conjunction with the Company's
consolidated financial statements and footnotes thereto presented elsewhere
herein.


RESULTS OF OPERATIONS

         The following table sets forth selected historical consolidated
operating results for the Company as a percentage of net sales.



                                                      Year Ended December 31,
                                                   1998                  1997 
                                                   ----                  ---- 

Net sales                                         100.0%                100.0%
                                                  -----                 ----- 

Cost and expenses:
    Cost of sales                                  50.0                  56.2
    Operating expenses                             57.6                  53.5
    Interest expense                                 .3                    .8
                                                  -----                 -----

       Total cost and expenses                    107.9                 110.5
                                                  -----                 -----

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Operating loss                                     (7.9)                (10.5)

Other income, net                                    .3                    .5
Compensatory stock options
    granted                                           -                  (4.9)
Dividends to preferred
    shareholders                                      -                  (5.3)
Equity in loss of
    unconsolidated affiliates                     (11.9)                    -
                                                  -----                 -----

Loss before income taxes                          (19.5)                (20.2)
Income tax benefit                                    -                    .2
                                                  -----                 -----

Net loss                                          (19.5)%              (20.0)%
                                                  =====                 =====  


NET SALES

         The Company's net sales consist of the food and beverage sales realized
by the restaurants it operates. The first restaurant, Sforza Ristorante, opened
in February 1996 and the second restaurant, My Martini Grille, opened in
February 1997. The restaurants are in adjacent locations in downtown West Palm
Beach, Florida. Net sales decreased from $4,163,476 in 1997 to $3,774,366 in
1998, representing a decrease of 9.3%. The decrease in net sales from 1997 to
1998 was due to the insurgence of new restaurants opening in the downtown West
Palm Beach market place. Sforza Ristorante's net sales were $1,886,689 for the
year ended December 31, 1998 and $2,156,710 for the year ended December 31,
1997. My Martini Grille's net sales were $1,887,677 for 1998 and $2,006,766 for
1997. The decrease in Sforza Ristorante's net sales of 12.5% and My Martini
Grille of 5.9% from 1997 to 1998 was due to reduced customer counts. Management
believes that the decline was the result of increased competition from new
restaurants which opened in downtown West Palm Beach during 1997 and 1998.


COST OF SALES

         Cost of sales includes the cost of food and beverages sold and the
salaries and wages related to food preparation and service. Cost of sales
decreased from $2,338,755 in 1997 to $1,887,946, a 19.3% decrease.

         The cost of sales for Sforza Ristorante as a percentage of net sales
was 53.7% in 1997 and 53.3% in 1998. Cost of sales for My Martini Grille was
58.8% for 1997 and 46.8% in 1998. Management is continuing its evaluation of the
menu offerings and pricing structure in an attempt to maximize the sales and
profits from its restaurants. Total cost of sales, expressed as a percentage of
net sales, was 50.0% in 1998 and 56.2% in 1997.

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OPERATING EXPENSES

         Operating expenses include other salaries and wages, rent and other
occupancy expenses, advertising, repairs and maintenance, general supplies,
depreciation and amortization, start-up cost amortization, management fees and
administrative expenses. Operating expenses decreased from $2,227,163 in 1997 to
$2,174,814 in 1998. Such expenses totaled 53.5% and 57.6% of net sales in 1997
and 1998, respectively. Operating expenses, as percentage of net sales during
1999, are expected to decrease from the 1998 level principally due to the
elimination of certain non-recurring expenses and an expected increase in sales
in 1999.

         During 1998 and 1997, the Company incurred management fees of $93,982
and $63,309, respectively, pursuant to arrangements with URC which terminated on
October 31, 1998. Depreciation and amortization totaled $174,683 in 1998 and
$130,145 in 1997.


EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES

         On December 30, 1997, the Company 51% equity interests in each of four
limited partnerships which operate or are planned to operate Max's Grille
Restaurants. One of the restaurants was operating as of December 30, 1997 and
two additional restaurants were developed and opened during 1998. The Company's
investments are accounted for using the equity method. See Liquidity and Capital
Resources below for combined summarized financial information for the limited
partnerships.

         The Company's share of the combined loss of the limited partnerships
for 1998 was $450,415. This amount includes a $235,703 charge for restaurant
start-up costs and $27,081 amortization of the excess of the Company's initial
investment over the combined book value of the limited partnerships at the
acquisition date. During 1999, three restaurants will be open for the entire
year. In the event a fourth restaurant is not opened during 1999, the Company
will receive a return of its investment of approximately $600,000. Management
expects the limited partnerships to achieve profitability in 1999.


OTHER INCOME AND EXPENSES

         The Company recorded a charge to earnings of $206,250 in 1997 in
connection with the granting of options to purchase 75,000 shares of Common
Stock to URC. The charge to earnings was based upon the excess of the initial
public offering price of the Company's Common Stock over the exercise price of
the options. The transaction also resulted in an increase to the Company's
paid-in capital of $206,250.

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<PAGE>


         During 1997, the Company paid dividends to its Series A preferred
shareholders of $20,000 and recorded an additional dividend to Series A
preferred shareholders of $200,000 relating to the redemption of certain
preferred shares (see Liquidity and Capital Resources below). Such dividends are
recorded as deductions from earnings attributable to the common shareholders and
consequently enter into the determination of the net loss in 1997 for financial
reporting purposes.

         Other income for the years 1998 and 1997 principally consists of
interest earned.


INCOME TAX EXPENSE

         The Company reported net losses for federal income tax purposes for the
years ended December 31, 1997 and 1998 and, at December 31, 1998, has available
net operating loss carryforwards approximating $995,000 which may be used to
reduce future taxable income. The 1997 income tax benefit reflects the
refundable income taxes from 1996, net of the deferred tax asset recognized in
1996. The tax benefits from the operating loss carryforwards in1998 and 1997
were offset by valuation allowances and, accordingly, no net deferred tax
assests are recognized in the accompanying financial statements.


INTEREST EXPENSE, NET

         Interest incurred principally relates to capital leases for equipment.
Interest expense in 1997 is reflected net of interest capitalized on qualifying
expenditures of $7,450.


NET LOSS

         As a result of the above, the Company's net loss attributable to common
shareholders was $737,611 and $833,043 for the years ended December 31, 1998 and
1997, respectively.


LIQUIDITY AND CAPITAL RESOURCES

         The Company's operating restaurants are located in West Palm Beach,
Florida and are therefore subject to the relative seasonality of the tourist
industry in South Florida. Restaurant sales are expected to be brisk in the
tourist season which is generally from mid-fall to mid-spring and slow during
the off-season. The Company expects to use its cash reserves or working capital
generated during its busy season to fund its operations during the off-season.


                                       13
<PAGE>

         The Company's principal financing for the construction and opening of
its restaurants prior to 1997 was provided by its shareholders. During the year
ended December 31, 1997, the Company borrowed $250,000 pursuant to a fixed rate
promissory note payable to a principal of URC and subsequently converted
$125,000 of such note into 40,000 shares of Common Stock. In addition, $31,250
was raised through the issuance and sale of 25,000 shares of its Common Stock.
During May 1997, the Company issued and sold 160,000 shares of Series A
Preferred Stock (the "Series A shares") for $2.50 per share. Such funding was
obtained to complete construction and opening of the My Martini Grille
restaurant, and provide working capital to support operations, as needed, during
the off-season. The Company consummated the initial public offering of its
Common Stock in November 1997, raising net proceeds of $4,041,364. Such proceeds
were used to redeem 80,000 Series A shares for $400,000, repay the $125,000
balance due on the fixed rate promissory note, provide funding for the
acquisition of certain limited partnership interests and for working capital
(see below).

         The Company does not have an existing arrangement for a credit facility
with a financial institution for short-term financing. Management believes that
cash flow generated from operations, together with the above financing
transactions and the net proceeds from the initial public offering will be
sufficient to meet the Company's working capital requirements and anticipated
capital expenditures through 1999.

         On December 30, 1997, the Company acquired 51% limited partnership
interests in each of four limited partnerships for an aggregate of $3,000,000
pursuant to a partnership interest subscription agreement. Each of the limited
partnerships operates or is planned to operate Max's Grill Restaurants at a
separate location in South Florida. The business of the limited partnerships is
governed by identical limited partnership agreements (the Agreements) which vest
overall management and control of the partnerships in URC through management
agreements executed by each of the limited partnerships. The Agreements provide
for the return of approximately $600,000 of the Company's investment in the
event the fourth restaurant is not developed. The Agreements do not require the
partners to make loans to the partnerships or additional contributions to
capital.

         The investments in the limited partnerships are accounted for under the
equity method of accounting. Summarized combined balance sheet information for
the limited partnerships as of December 31, 1998 follows:

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<PAGE>
<TABLE>
<CAPTION>
<S>                                                                       <C>        
        Assets:
          Current assets                                                  $ 1,256,483
          Property and equipment, net                                       1,972,259
          Other assets                                                         27,495
                                                                          -----------

        Total assets                                                      $ 3,256,237
                                                                          ===========

        Liabilities and equity:
          Current liabilities                                             $ 1,206,806
          Long-term debt                                                      150,302
          Partners' equity                                                  1,899,129
                                                                          -----------

        Total liabilities and equity                                      $ 3,256,237
                                                                          ===========
</TABLE>

   The limited partnerships' combined results of operations for 1997
attributable to the Company during its period of ownership in 1997 were not
material. Summarized combined results of operations for the year ended December
31, 1998 are presented as follows:

<TABLE>
<CAPTION>
<S>                                                                         <C>        
        Net sales                                                           $ 5,722,623
                                                                            ===========

        Net loss                                                            $  (830,066)
                                                                           ============
</TABLE>

                                       15
<PAGE>

IMPACT OF INFLATION

   The Company has not operated in a highly inflationary period and its
management does not believe that inflation has had a material effect on sales or
expenses. As operating expenses increase, the Company expects to recover
increased costs by increasing prices, to the extent permitted by competition.
Because the Company's business is somewhat dependent on tourism in Florida, any
significant decrease in tourism caused by inflation would likely have a material
adverse effect on revenue and profitability.

YEAR 2000 ISSUE

   The Company recognizes the need to ensure its operations will not be
adversely impacted by year 2000 software failures. Management has addressed the
issue and believes its operating systems to be year 2000 compliant.

ITEM 7.  FINANCIAL STATEMENTS.

   See Index to Consolidated Financial Statements on page F-1.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE.

   None.


                                       16

<PAGE>

PART III


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


              The Company's directors and officers are as follows:

<TABLE>
<CAPTION>
               NAME                          AGE                                   TITLE
---------------------------------           -------         -----------------------------------------------
<S>                                            <C>          <C>                                  
Gerald J. Visconti, Jr...........              34           President, Chief Executive Officer
                                                            Secretary and Director

Michael J. Fulgenzi..............              50           Vice President

Vincent Holland..................              68           Chief Financial Officer, Treasurer and Director

Dale J. Brisson..................              38           Director
</TABLE>

Gerald J. Visconti, Jr. has served as an officer and director of the Company
since its inception in July 1996. He structured the Company to consummate the
public offering in 1997. In addition he established the Company's accounting and
management information systems departments. Mr.Visconti was elected president on
November 1, 1998. Prior to joining the Company, he owned and operated an
international transportation company in Los Angeles, California for 11 years.
Mr. Visconti graduated from Morrisville Technical College, Morrisville, New York
in 1983 with a degree in automotive technology. He is a highly energetic and
capable entrepreneur who is exceptionally adept in restructuring business
organizations in order to accomplish optimum management proficiency and company
profitability.

Michael J Fulgenzi is an experienced restaurant executive who has an abundance
of knowledge in all facets of the restaurant industry. Not only was he an
accomplished chef, and independent restaurant owner, but he also operated his
own hospitality consulting company where he advised numerous restaurateurs
precisely how to improve their restaurant concepts, improve management
proficiency, and accomplish profitability.

Vincent Holland has over 37 years of restaurant experience. For the past 15
years he has been an active restaurant consultant with exposure to over 60
restaurants, hotels, country clubs, etc. Vince has perfected an industry
business and financing plan especially for restaurants. His business emphasis
includes establishing realistic revenue projections, operational cost budgets,
and formulating periodic business and financial reporting. 

                                       17
<PAGE>

Dale J. Brisson has served as a director of the Company since its inception in
July 1996, and as President from July 1996 - December 1997. He has served as
President and as a director of Castle Room, Inc. since May 1995, Clematis Bistro
Corporation since April 1996 and Sushi Enterprises, Inc. since July 1996. Born
and raised in Palm Beach County, Florida, Mr. Brisson has spent his entire
career in the restaurant business. In 1986, he opened the first Rosie's Key West
Grille in Lake Worth, Florida, which by 1994 had grown into a chain of four
restaurants in Palm Beach County with 110 employees.

   Each director of the Company is elected for a term of one year which expires
at the annual meeting of the Company's shareholders or at such other time as his
successor is duly elected and qualified.

   Directors have not been compensated for their services on the Board of
Directors. The Company will reimburse directors for reasonable travel expenses
incurred in connection with their activities on behalf of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

   Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership of equity
securities of the Company with the Securities and Exchange Commission ("SEC").
Officers, directors, and greater than ten percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
that they file.

   Based solely upon a review of Forms 3 and Forms 4 furnished to the Company
pursuant to Rule 16a-3 under the Exchange Act during its most recent fiscal year
and Forms 5 with respect to its most recent fiscal year, the Company believes
that all such forms required to be filed pursuant to Section 16(a) of the
Exchange Act were timely filed, as necessary, by the officers, directors, and
security holders required to file the same during the fiscal year ended December
31, 1997, except that Form 3 reports were filed late by each of the Company's
officers and directors.

                                       18
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS

    The Company does not have an audit committee, but as a whole selects and
engages the Company's independent certified public accountants and reviews the
scope of the annual audit, audit fees, and results of the audit.

    The Company does not have a compensation committee, but as a whole approves
the compensation for executive employees of the Company.

    The Company has no nominating committee or any committee serving a similar
function.



ITEM 10.  EXECUTIVE COMPENSATION.

    The following table sets forth the aggregate compensation paid for services
rendered to the Company during the last three fiscal years by the Company's
Chief Executive Officer ("CEO") and its four most highly compensated executive
officers other than the CEO who served as such at the end of the last fiscal
year.(1)(3)

                                       19
<PAGE>
<TABLE>
<CAPTION>
                            SUMMARY COMPENSATION TABLE

                               Annual Compensation
                 ----------------------------------------------
                                                                                    
                                                                               Other Annual      Securities Underlying  
Name and Principal                                                             Compensation ($)    Options Granted (#)
Position                  Year       Salary ($)            Bonus ($)
----------------------------------------------------------------------------------------------------------------------
<S>                <C>    <C>          <C>                  <C>                         <C>                        
Gerald J. Visconti (1)    1998         $68,153              $     0                     $ 0                      (4)
President, Director       1997         $51,000              $20,000                       -                       -   
and Chief Executive       1996               -                    -                       -                       -
Officer
- ------------------------------------------------------------------ -------------------------------------------------
Dale J. Brisson (2)       1998        $      0              $     0                 $12,260                     N/A
Director                  1997        $ 69,230                    -                       -                     N/A
                          1996               -                    -                       -                     N/A
----------------------------------------------------------------------------------------------------------------------
</TABLE>
 (1) Mr. Visconti became president and Chief Executive Office of the Company on
November 1, 1998.
(2) Mr. Brisson was an employee of the Company from July 1996 to December 30,
1997. The compensation set forth for 1998 was paid pursuant to a consulting
agreement. 
(3) No officer of the company earned $100,000 or more per year, during 1996 
through 1998.
(4) Does not include options to purchase 70,000 shares of Common Stock granted
to Mr. Visconti subsequent to December 31, 1998 at exercise prices ranging
from $2.50 to $4.44 per share.
                                       20
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    The following table reflects shares of Common Stock beneficially owned(1)
(or deemed to be beneficially owned pursuant to the rules of the Securities and
Exchange Commission) as of April 13, 1999 by (i) each person known to the
Company as having beneficial ownership of more than 5% of the Common Stock; (ii)
each director of the Company; (iii) each officer of the Company; and (iv) all
directors and officers of the Company as a group.

<TABLE>
<CAPTION>
 NAME AND ADDRESS OF BENEFICIAL OWNER           Shares Beneficially Owned(1)  Percent of Class
----------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                    <C>   
Dale J. Brisson(b)(d)                                    381,250                22.30%
2815 Hampton Court E
Delray Beach, Florida  33445
----------------------------------------------------------------------------------------------------------------------
Daniel S. Catalfumo(c)                                    95,000                 5.56%
4300 Catalfumo Way
Palm Beach Gardens, Florida  33410
----------------------------------------------------------------------------------------------------------------------
Gerald J. Visconti, Jr.(a)                                51,961                 3.04%
3500 North Flagler Drive
West Palm Beach, Florida  33401
----------------------------------------------------------------------------------------------------------------------
Milton Barbarosh (d)                                     377,750                22.09%
1900 Corporate Blvd., Suite 305-W 
Boca Raton, FL 33431           
----------------------------------------------------------------------------------------------------------------------
Vincent Holland (b)                                            0                    0
Suite 301
1701 Marina Isle Way
Jupiter, Florida  33477
----------------------------------------------------------------------------------------------------------------------
All directors and officers as a group                    905,961                52.99%
  (3 persons)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)      An officer and a director.
(b)      A director.
(c)      Includes 75,000 shares of Common Stock underlying an option granted to
         Unique Restaurant Concepts Inc. (URC). Mr. Catalfumo is a principle of 
         URC.
(d)      Includes 150,000 shares of Common Stock owned by Vask
         Enterprises, Inc., a Florida corporation of which Mr. Brisson and   
         Mr. Barbarosh are principals.
 -------------------------------------
(1) Unless otherwise indicated, each person has sole voting and investment
    rights with respect to the shares specified opposite his name.

                                       21
<PAGE>
ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        Separation Agreement. Effective on November 1, 1998 (the "Separation
Date") the Company entered into an agreement (the "Separation Agreement") by and
among the Company and certain corporations, partnerships and individuals,
including Dennis Max, Burton Rapoport and Daniel Catalfumo, each of whom was at
the time a director of the Company. Pursuant to the terms of the Separation
Agreement, each of Messrs. Max, Rapoport and Catalfumo resigned as directors of
the Company on the Separation Date, and the Company terminated its Management
and Consulting Agreement for My Martini Grille and Sforza Ristorante with Unique
Restaurant Concepts, Inc. ("URC"), a corporation owned by the three resigning
directors. During fiscal 1998, URC was paid fees of $93,982 for management and
consulting services rendered by URC through the Separation Date. The Separation
Agreement also contained conditions providing that a previous Joinder Agreement
among certain of the parties was terminated whereby the remaining directors of
the Company would no longer be obligated to vote their capital stock of the
Company in favor of electing the resigning directors to the Company's board of
directors. Finally, the Separation Agreement provided that Mr. Max would be
available to provide advisory services to the Company. Mr. Max has provided
limited services but was paid no fees for such services from the
Separation Date through December 31, 1998.


         Premises Leases. The Company leases the spaces for its three
restaurants from Clematis Development Group, L.C., a Florida limited liability
company partially owned by Joseph Visconti, a former director. Castle Room
Inc.'s lease expires in December 2005 and calls for an annual rent of $51,500 in
the first year, gradually rising to $94,125 in 2005. Clematis Bistro
Corporation's lease expires in January 2006 and calls for annual rent of $96,250
in the first year, gradually rising to $145,750 in the final year. Sushi
Enterprises, Inc.'s lease expires in January 2006 and calls for annual rent of
$20,000 in the first year, gradually rising to $46,875 in the final year. Each
lease is "triple net," meaning that the tenant pays for insurance, taxes and
maintenance.


        Construction. Dan Catalfumo, a former director, owns the construction
company which built Max's Beach Place Grille, one of the Max's Grille
Restaurants in 1997, and built the Max's Grille Restaurants in the Las Olas
Riverfront development, Ft. Lauderdale, Florida and in Weston, Florida in 1998.

     Funding Agreement. The Company, URC, Dennis Max, a former director, and
related parties entered into a Funding Agreement on July 1, 1997 pursuant to
which the Company agreed to devote $3,000,000 of the proceeds of its November
1997 public offering to the construction and pre-opening expenses of four Max's
Grille Restaurants and to grant URC an option to acquire 75,000 shares of the
Company's Common Stock exercisable at $5.00 per share through December 31, 1999
in exchange for 51% equity interests in such Max's Grille Restaurants and URC's
agreement to manage such restaurants at a discounted rate.

                                       22
<PAGE>


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a) The following exhibits are filed as part of this Report.

2.1   Partnership Interest Subscription Agreement (incorporated by
      reference to Exhibit 2.1 on Form 8-K filed with the Securities and
      Exchange Commission on January 14, 1998, File No.
      000-33251).

3.1   Articles of Incorporation of the Company, as amended (incorporated
      by reference to Exhibit 3.1 to the Company's Registration Statement
      filed on Form SB-2, Amendment No. 3, filed with the Securities and
      Exchange Commission on October 17, 1997, File Number 333-32117).

3.2   Bylaws of the Company, as amended (incorporated by reference to
      Exhibit 3.2 to the Company's Registration Statement filed on Form
      SB-2, Amendment No. 3, filed with the Securities and Exchange
      Commission on October 17, 1997, File Number
      333-32117).

4.1   Specimen Common Stock Certificate (incorporated by reference to
      Exhibit 4.1 to the Company's Registration Statement filed on Form
      SB-2, Amendment No. 3, filed with the Securities and Exchange
      Commission on October 17, 1997, File Number
      333-32117).

4.2   Specimen Warrant (incorporated by reference to Exhibit 4.2 to the
      Company's Registration Statement filed on Form SB-2, Amendment No.
      3, filed with the Securities and Exchange Commission on October 17,
      1997, File Number 333-32117).

                                       23
<PAGE>

4.3   Promissory Note in the principal amount of $60,000 dated December 1, 1995
      by the Company payable to First Union National Bank of Florida
      (incorporated by reference to Exhibit 4.6 to the Company's Registration
      Statement filed on Form SB-2, Amendment No. 3, filed with the Securities
      and Exchange Commission on October 17, 1997, File Number 333-32117).

4.4   Form of Stock Option Agreement dated July 1, 1997 between the Company and
      Unique Restaurant Concepts Ltd. (incorporated by reference to Exhibit 4.7
      to the Company's Registration Statement filed on Form SB-2, Amendment No.
      3, filed with the Securities and Exchange Commission on October 17, 1997,
      File Number 333-32117).

10.1  Unique Brickell, Ltd. Amended and Restated Limited Partnership Agreement
      (incorporated by reference to Exhibit 10.1 on Form 8-K filed with the
      Securities and Exchange Commission on January 14, 1998, File No.
      000-33251).

10.2  Unique Weston, Ltd. Amended and Restated Limited Partnership Agreement
      (incorporated by reference to Exhibit 10.2 on Form 8-K filed with the
      Securities and Exchange Commission on January 14, 1998, File No.
      000-33251).

10.3  Unique TBA, Ltd. Amended and Restated Limited Partnership Agreement
      (incorporated by reference to Exhibit 10.3 on Form 8-K filed with the
      Securities and Exchange Commission on January 14, 1998, File No.
      000-33251).

10.4  Max's Beach Grille, Ltd. Amended and Restated Limited Partnership
      Agreement (incorporated by reference to Exhibit 10.4 on Form 8-K filed
      with the Securities and Exchange Commission on January 14, 1998, File No.
      000-33251).

10.5  License Agreement by and between Unique Restaurant Concepts, Inc. and
      Unique Brickell, Ltd. (incorporated by reference to Exhibit 10.5 on Form
      8-K filed with the Securities and Exchange Commission on January 14,
      1998, File No. 000-33251).

10.6  License Agreement by and between Unique Restaurant Concepts, Inc. and
      Unique Weston, Ltd. (incorporated by reference to Exhibit 10.6 on Form
      8-K filed with the Securities and Exchange Commission on January 14,
      1998, File No. 000-33251).

10.7  License Agreement by and between Unique Restaurant Concepts, Inc. and
      Unique TBA, Ltd. (incorporated by reference to Exhibit 10.7 on Form 8-K
      filed with the Securities and Exchange Commission on January 14, 1998,
      File No. 000-33251).

10.8  License Agreement by and between Unique Restaurant Concepts, Inc. and
      Max's Beach Grille, Ltd. (incorporated by reference to Exhibit 10.8 on
      Form 8-K filed with the Securities and Exchange Commission on January 14,
      1998, File No.  000-33251).

10.9  Management Agreement by and among Unique Restaurant Concepts, Inc., Max's
      Beach Grille, Ltd., Unique Brickell, Ltd., Unique Weston, Ltd. and Unique
      TBA, Ltd. (incorporated by reference to Exhibit 10.9 on Form 8-K filed
      with the Securities and Exchange Commission on January 14,
      1998, File No. 000-33251).

                                       24
<PAGE>

10.10  1997 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to
       the Company's Registration Statement filed on Form SB-2, Amendment No. 3,
       filed with the Securities and Exchange Commission on October 17, 1997,
       File Number 333-32117).

10.11  Certificate of registration of My Martini Grille as a service mark
       (incorporated by reference to Exhibit 10.2 to the Company's Registration
       Statement filed on Form SB-2, Amendment No. 3, filed with the Securities
       and Exchange Commission on October 17, 1997, File Number 333-32117).

10.12  Certificate of registration of Sforza Ristorante as a service mark
       (incorporated by reference to Exhibit 10.3 to the Company's Registration
       Statement filed on Form SB-2, Amendment No. 3, filed with the Securities
       and Exchange Commission on October 17, 1997, File Number 333-32117).

10.13* Standard Lease dated October 1998 by and between the Company and 230
       Clematis Street Limited Partnership, for the Company's executive offices.

10.14  Sforza Ristorante lease (incorporated by reference to Exhibit 10.5 to the
       Company's Registration Statement filed on Form SB-2, Amendment No. 3,
       filed with the Securities and Exchange Commission on October 17, 1997,
       File Number 333-32117).

10.15  My Martini Grille lease (incorporated by reference to Exhibit 10.6 to the
       Company's Registration Statement filed on Form SB-2, Amendment No. 3,
       filed with the Securities and Exchange Commission on October 17, 1997,
       File Number 333-32117).

10.16  Planned sushi restaurant lease (incorporated by reference to Exhibit 10.7
       to the Company's Registration Statement filed on Form SB-2, Amendment No.
       3, filed with the Securities and Exchange Commission on October 17, 1997,
       File Number 333-32117).

10.17  Management and Consulting Agreement, as amended (incorporated by
       reference to Exhibit 10.8 to the Company's Registration Statement filed
       on Form SB-2, Amendment No. 3, filed with the Securities and Exchange
       Commission on October 17, 1997, File
       Number 333-32117).

10.18  Funding Agreement, as amended (incorporated by reference to Exhibit 10.9
       to the Company's Registration Statement filed on Form SB-2, Amendment No.
       3, filed with the Securities and Exchange Commission on October 17, 1997,
       File Number 333-32117).

10.19  Form of Lock-up Agreement (incorporated by reference to Exhibit 10.10 to
       the Company's Registration Statement filed on Form SB-2, Amendment No. 3,
       filed with the Securities and Exchange Commission on October 17, 1997,
       File Number 333-32117).

10.20* Release and Indemnification Agreement dated October 31, 1998 by and among
       the Company, Castle Room, Inc., Clematis Bistro Corporation, Sushi 
       Enterprises, Inc., Dennis Max, Burt Rapoport and Dan Catalfumo.

10.21* Agreement dated October 31, 1998 by and among the Company, Castle Room,
       Inc., Clematis Bistro Corporation, Sushi Enterprises, Inc., Max's Beach
       Grill, Ltd., Unique Brickell, Ltd., Unique Weston, Ltd., Unique TBA,
       Ltd., Unique Restuarant Concepts, Inc., Unique Restuarant Concepts, Ltd.,
       Dennis Max, Burt Rapoport, Dan Catalfumo, Joseph Visconti, Gerald J.
       Visconti, Jr. and Dale Brisson.

21.1*  Subsidiaries of the Registrant

27*    Financial Data Schedule


---------------------------------------
*     Filed herewith.

(b)   There were no reports on Form 8-K filed during the last quarter of the
      fiscal year ended December 31, 1998.


                                       25
<PAGE>
                                   SIGNATURES

         In accordance with Section 13 of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, hereunto duly
authorized.


                               SFORZA ENTERPRISES INC.
                               (Registrant)



Dated:  April 15, 1999         By:  /s/ Gerald J. Visconti
                                    ----------------------------
                                    Gerald J. Visconti
                                    President, Chief Executive Officer and 
                                    Director 


    In accordance with Section 13 of the Exchange Act, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature                                                  Title                      Date
---------                                                  -----                      ----
<S>                                           <C>                                    <C>
/s/ Michael J. Fulgenzi                       Vice President and Secretary            April 15, 1999
----------------------------------
Michael J. Fulgenzi

/s/ Dale J. Brisson                           Director                                April 15, 1999
----------------------------------
Dale J. Brisson

/s/ Vincent Holland                           Chief Financial Officer, Chief
----------------------------------            Accounting Officer and Director         April 15, 1999
Vincent Holland
</TABLE>

                                       26


<PAGE>

ITEM 7 FINANCIAL STATEMENTS


                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES



                                TABLE OF CONTENTS


                                                                  Page #
                                                                  ------

Table of contents                                                   F-1


Report of independent accountants                                   F-2


Consolidated financial statements:

    Consolidated balance sheet                                      F-3

    Consolidated statements of operations                           F-4

    Consolidated statements of shareholders' equity                 F-5

    Consolidated statements of cash flows                        F-6 - F-7


Notes to consolidated financial statements                       F-8 - F-16

                                      F-1

<PAGE>

                        Report of Independent Accountants


Board of Directors and Shareholders
Sforza Enterprises Inc.

We have audited the accompanying consolidated balance sheet of Sforza
Enterprises Inc. and subsidiaries as of December 31, 1998 and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the two 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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Sforza Enterprises
Inc. and subsidiaries as of December 31, 1998, and the consolidated results of
their operations and their cash flows for each of the two years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles.

/s Templeton & Company, P.A.


Royal Palm Beach, Florida
April 1, 1999

                                      F-2

<PAGE>

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                December 31, 1998


                                     ASSETS

Current assets:                                               
    Cash and cash equivalents                                   $  439,476
    Inventories                                                     69,146
    Other current assets                                           133,398
                                                                ----------

          Total current assets                                     642,020

Investments in unconsolidated affiliates                         2,549,585
Property and equipment, net                                        924,696
Other assets, net                                                   27,517
                                                                ----------
              Total assets                                      $4,143,818
                                                                ==========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                            $  283,322
    Accrued expenses                                               160,064
    Installment note payable                                         2,442
    Current portion of obligations
       under capital leases                                         21,150
                                                                ----------

          Total current liabilities                                466,978

Obligations under capital leases, net                               20,419
                                                                ----------

          Total liabilities                                        487,397
                                                                ----------

Shareholders' equity:
    Common stock, $.01 par value; 20,000,000
       shares authorized; 1,710,000 issued and
       outstanding                                                  17,100
    Additional paid-in capital                                   5,097,064
    Accumulated deficit                                         (1,457,743)
                                                                ----------

          Total shareholders' equity                             3,656,421
                                                                ----------

              Total liabilities and shareholders'
                 equity                                         $4,143,818
                                                                ==========

See accompanying notes.

                                      F-3

<PAGE>

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 For the Years Ended December 31, 1998 and 1997


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

Net sales                                          $3,774,366       $4,163,476
                                                   ----------       ----------

Cost and expenses:
    Cost of sales                                   1,887,946        2,338,755
    Operating expenses                              2,174,814        2,227,163
    Interest expense, net                              11,166           35,943
                                                   ----------       ----------

       Total cost and expenses                      4,073,926        4,601,861
                                                   ----------       ----------

Operating loss                                       (299,560)        (438,385)

Other income (expense):
    Other income                                       12,364           22,401
    Dividends to preferred shareholders                     -         (220,000)
    Compensatory earnings charge for
       stock options granted                                -         (206,250)
    Equity in losses of unconsolidated
       affiliates                                    (450,415)               -
                                                   ----------      -----------

Loss before provision for income taxes               (737,611)        (842,234)

Income tax benefit                                          -           (9,191)
                                                   ----------       ----------

          Net loss                                 $ (737,611)      $ (833,043)
                                                   ==========       ==========

Net loss per common share                          $     (.43)      $     (.76)
                                                   ==========       ==========

Weighted average common shares
    outstanding                                     1,710,000        1,096,267
                                                   ==========       ==========



See accompanying notes.

                                       F-4
<PAGE>


                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 For the Years Ended December 31, 1998 and 1997

<TABLE>
<CAPTION>


                                                         Common Stock             Additional      Retained
                                                   --------------------            Paid-in        Earnings
                                                   No. Shares    Amount            Capital        (Deficit)   
                                                   ----------    ------            -------        ---------   
<S>                                                  <C>       <C>                <C>             <C>            
Balance, January 1, 1997                             987,500   $   9,875          $  500,425      $   112,944
Issuance of 32,500
    shares of common stock                            32,500         325             155,925                -
Issuance of options to
    purchase 75,000
    shares of common stock                                 -           -             206,250                -
Issuance of 650,000
    shares of common
    stock in initial
    public offering                                  650,000       6,500           4,034,864                -
Conversion of 80,000
    shares of Series A
    preferred to 40,000
    shares of common
    stock                                             40,000         400             199,600                -
Net loss for the year
    ended December 31,
    1997                                                   -           -                   -         (833,043)
                                                   ---------   ---------          ----------        -----------

Balance, December 31,
    1997                                           1,710,000      17,100           5,097,064         (720,132)

Net loss for the year
    ended December 31,
    1998                                                  -           -                   -         (737,611)
                                                   ---------   ---------          ----------      -----------

Balance, December 31,
    1998                                           1,710,000   $  17,100          $5,097,064      $(1,457,743)
                                                   =========   =========          ==========      ===========

</TABLE>

                                     
See accompanying notes.

                                       F-5

<PAGE>

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Years Ended December 31, 1998 and 1997

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

Cash flows from operating activities:
    Net loss                                         $ (737,611)   $ (833,043)
    Adjustments to reconcile net loss
       to net cash used in operating
       activities:
          Equity in losses of unconsolidated
              affiliates                                450,415             -
          Compensatory earnings charge for
              stock options granted                           -       206,250
          Depreciation and amortization                 174,683       130,145
          Deferred income taxes                               -         6,068
          Changes in operating assets and
              liabilities:
              Inventories                                 1,016       (31,501)
              Other current assets                       29,449      (105,780)
              Accounts payable                           88,454       193,951
              Accrued expenses                          (12,896)       87,979
              Other current liabilities                       -       (77,146)
                                                     ----------    ----------

Net cash used in operating
    activities                                           (6,490)     (423,077)
                                                     ----------    ----------

Cash flows from investing activities:
    Purchases of property and equipment                (103,095)     (630,345)
    Investments in unconsolidated
       affiliates                                             -    (3,000,000)
    Decrease in other assets, net                         6,246       244,354
                                                     ----------    ----------

Net cash used in investing activities                   (96,849)   (3,385,991)
                                                     ----------    ----------


See accompanying notes.

                                       F-6
<PAGE>


                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                 For the Years Ended December 31, 1998 and 1997


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

Cash flows from financing activities:
    Proceeds from issuances of common
       stock, net                                  $        -        $4,072,614
    Proceeds from issuance of preferred
       stock                                                -           400,000
    Redemption of preferred stock                           -          (200,000)
    Repayment of notes payable,
       shareholders                                         -           (63,445)
    Proceeds from fixed rate promissory
       note                                                 -           250,000
    Repayment of fixed rate promissory
       note                                                 -          (125,000)
    Principal payments on long-term debt              (21,246)         (117,070)
    Principal payments on obligations
       under capital leases                           (27,208)          (19,401)
                                                   ----------        ----------

Net cash provided by (used in)
    financing activities                              (48,454)        4,197,698
                                                   ----------        ----------

Net increase (decrease) in cash and
    cash equivalents                                 (151,793)          388,630

Cash and cash equivalents, beginning
    of year                                           591,269           202,639
                                                   ----------        ----------

Cash and cash equivalents, end of
    year                                           $  439,476        $  591,269
                                                   ==========        ==========

See accompanying notes.

                                       F-7

<PAGE>



                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Organization and Description of Business

Sforza Enterprises Inc. (Sforza) and subsidiaries (the Company) operate Sforza
Ristorante, a full-service Northern Italian restaurant, which opened in February
1996, and My Martini Grille, a full-service up-scale grill which opened in
February 1997. Both restaurants are located in downtown West Palm Beach,
Florida. During November 1997, Sforza sold 650,000 units (consisting of 650,000
shares of its common stock and 650,000 warrants to purchase shares of common
stock) pursuant to a registration statement filed with the Securities and
Exchange Commission for net proceeds of $4,041,364 in an initial public offering
of its common stock.

On December 30, 1997, Sforza used $3,000,000 of the net proceeds from the
initial public offering to acquire 51% limited partnership interests in each of
four limited partnerships for the purpose of developing and operating Max's
Grille Restaurants (see Note 3) in separate South Florida locations. The
investments are accounted for using the equity method.


Note 2 - Summary of Significant Accounting Policies

A summary of the significant accounting policies used in preparing the
accompanying financial statements follows:

      Principles of Consolidation
      ---------------------------

      The consolidated financial statements include the accounts of Sforza
      Enterprises Inc. and its wholly-owned subsidiaries. All significant
      inter-company accounts and transactions are eliminated in consolidation.

      Cash Equivalents
      ----------------

      For purposes of the statement of cash flows, the Company considers all
      temporary cash investments with maturities of three months or less, when
      purchased, to be cash equivalents.

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

      Inventories consist of various food and beverage items which are stated at
      the lower of cost or market using the first-in, first-out method.

                                      F-8

<PAGE>

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Note 2 - Summary of Significant Accounting Policies, Continued

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

      Property and equipment is stated at cost. Depreciation is provided using
      the straight-line method over the estimated useful lives of the assets,
      which range from three to ten years. Leasehold improvements are amortized
      using the straight-line method over the estimated useful lives of the
      improvements or the term of the lease, whichever is shorter. Equipment
      leased under capital leases is amortized over the lives of the respective
      leases.

      Earnings (Net Loss) per Common Share
      ------------------------------------

      Earnings (net loss) per common share is computed in accordance with
      Financial Accounting Standards Board Statement 128 (FAS 128). Basic
      earnings (net loss) per common share excludes dilution and is computed by
      dividing income available to common shareholders by the weighted average
      number of common shares outstanding for the period. Dividends to preferred
      shareholders of $220,000 which were deducted in determining the net loss
      for 1997 increased the basic net loss per share by $.20 in 1997.

      Diluted earnings per share reflects the potential dilution that could
      occur if securities or other contracts to issue common stock were
      exercised or converted into common stock or resulted in the issuance of
      common stock that then shared in the Company's earnings. The effect of
      potentially dilutive securities outstanding during 1998 and 1997 is
      anti-dilutive, therefore, diluted earnings per share are not presented for
      such years. Securities that could potentially dilute basic earnings per
      share in future periods include outstanding options to purchase 75,000
      shares at $5.00 per share, options to purchase 65,000 shares at $11.63 per
      share, and warrants to purchase 650,000 shares at $9.50 per share.

      Management Estimates
      --------------------

      Preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and
      assumptions that affect certain reported amounts and disclosures.

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

      Financial instruments, which potentially subject the Company to
      concentration of credit risk, include temporary cash investments. The
      Company places its cash and temporary cash investments with high credit
      quality financial institutions. Such balances generally exceed the FDIC
      insurance limit.

                                      F-9

<PAGE>


                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Note 3 - Investments in Unconsolidated Affiliates

On December 30, 1997, the Company acquired 51% limited partnership interests in
each of four limited partnerships for an aggregate of $3,000,000 pursuant to a
Partnership Interest Subscription Agreement (the Subscription Agreement). Each
of the limited partnerships operates or is planned to operate a Max's Grille
Restaurant at a separate location in South Florida. The business of the limited
partnerships is governed by identical limited partnership agreements (the
agreements) which vest overall management and control of the limited
partnerships in Unique Restaurant Concepts, Inc. (URCI) through management
agreements with URCI executed by each of the limited partnerships. URCI also
managed the Company-owned restaurants under separate management agreements
through October 1998 (see Note 7).

Three Max's Grille Restaurants are operating as of December 31, 1998. One of the
restaurants began operating in April 1997; another in June 1998; and the third
opened in October 1998. The agreements provide for the return of approximately
$600,000 of the Company's investment in the event the fourth restaurant is not
developed. The agreements do not require the partners to make loans to the
partnerships or additional contributions to capital. The Company accounts for
the investments in the limited partnerships using the equity method.

Summarized combined balance sheet information for the limited partnerships as of
December 31, 1998 follows:

         Assets:                                 
             Current assets                                 $1,256,483
             Property and equipment, net                     1,972,259
             Other assets                                       27,495
                                                            ----------

                Total assets                                $3,256,237
                                                            ==========

         Liabilities and equity:
             Current liabilities                            $1,206,806
             Long-term debt, net                               150,302
                                                            ----------
                Total liabilities                            1,357,108

         Partners' equity                                    1,899,129
                                                            ----------
             Total liabilities and equity                   $3,256,237
                                                            ==========

The limited partnerships' combined results of operations for 1997 attributable
to the Company during its period of ownership in 1997 were not material.
Combined results of operations for the year ended December 31, 1998 are
presented as follows:

                                      F-10

<PAGE>

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Note 3 - Investments in Unconsolidated Affiliates, Continued

           Net sales                                               $ 5,722,623
           Cost and expenses (including
               pre-opening expenses of $462,163)                     6,587,491
                                                                   -----------

           Loss from operations                                       (864,868)
           Other income                                                 34,802
                                                                   -----------
           Net loss                                                $  (830,066)
                                                                   ===========

Equity in losses of unconsolidated affiliates for 1998 includes the Company's
51% interest in the limited partnerships' combined net loss plus $27,081,
representing amortization of the excess of the Company's initial investment over
the limited partnerships' combined book value at the acquisition date.


Note 4 - Property and Equipment

Property and equipment consists of the following at December 31, 1998:

       Leasehold improvements                                       $  540,272
       Equipment leased under capital leases                            90,873
       Furniture, fixtures, and equipment                              631,360
                                                                    ----------

                                                                     1,262,505
       Less accumulated depreciation and
          amortization                                                (337,809)
                                                                    ----------
                                                                    $  924,696
                                                                    ==========

The Company capitalizes interest on qualifying expenditures in accordance with
Statement of Financial Accounting Standards Number 34. Total interest incurred
and capitalized for the years ended December 31, 1998 and 1997 are presented as
follows:

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

    Interest incurred                         $   11,166            $   43,393
    Interest capitalized                               -                 7,450
                                              ----------            ----------

       Interest expense, net                  $   11,166            $   35,943
                                              ==========            ==========

Depreciation and amortization of property and equipment for the years ended
December 31, 1998 and 1997 amounted to $174,683 and $130,145, respectively.

                                      F-11

<PAGE>


                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Note 5 - Description of Leasing Arrangements

The Company operates primarily in facilities leased from an entity partially
owned by certain of the Company's shareholders under three separate leases. The
leases have specified monthly payments over their ten-year terms and require the
Company to pay its proportionate share of common area maintenance costs and real
estate taxes. Certain of the Company's shareholders have personally guaranteed
an amount aggregating $125,000 in lieu of cash security deposits. The Company
leases certain equipment from unrelated parties under capital leases. The
consolidated balance sheet at December 31, 1998 includes the following regarding
equipment leased under capital leases:

    Equipment leased under capital leases           $   90,873
    Accumulated amortization                           (46,694)
                                                    ----------
                                                    $   44,179
                                                    ==========

Minimum annual rentals for leases in effect at December 31, 1998 follow:

                                                Equipment
            Year Ending                      Under Capital           Operating
            December 31,                         Leases                Leases   
            ------------                         ------                ------   

                  1999                        $   26,694            $  203,750
                  2000                            22,508               216,250
                  2001                                 -               228,750
                  2002                                 -               241,250
                  2003                                 -               254,250
            Thereafter                                 -               745,500
                                              ----------            ----------

           Total minimum rentals                  49,202            $1,889,750
                                                                    ==========
           Less interest portion                  (7,633)
                                              ----------
           Present value of net
               minimum rentals                $   41,569
                                              ==========

Total rent expense under operating leases for the year ended December 31, 1998
and 1997 amounted to $249,231 and $286,329, respectively.


Note 6 - Installment Note Payable

The installment note payable at December 31, 1998 represents the balance due on
an equipment loan which matures in 1999.

                                      F-12

<PAGE>

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Note 7 - Related Party Transactions

Management Agreement

Restaurant management services were provided under various arrangements by URCI
(see Note 1) through October 31, 1998. One of URCI's shareholders is a
shareholder in Sforza and another shareholder was a member of Sforza's Board of
Directors. Total management fees incurred under these arrangements in 1998 and
1997 amounted to $93,982 and $63,309, respectively.

In addition, on July 1, 1997, the Company granted to URCI options to purchase
75,000 shares of its common stock at an exercise price of $5.00 per share which
will be exercisable through December 31, 1999. Such grant resulted in a charge
to earnings of $206,250. URCI also manages each of the Max's Grille Restaurants
owned by the limited partnerships (see Note 3).

Underwriter Compensation

Joseph Charles & Associates, Inc. (JCA) was the lead underwriter in connection
with the Company's initial public offering of common stock (see Note 1). Two of
JCA's shareholders are also shareholders in Sforza. The underwriters' discounts
and commissions and non-accountable expense allowance totaled $654,875 for this
transaction. In addition, JCA received a $60,000 fee for consulting services to
be rendered through November 1999.


Note 8 - Income Taxes

The income tax expense (benefit) for the years ended December 31, 1998 and 1997
consists as follows:

                                                   1998         
                             --------------------------------------------------
                                 Current              Deferred          Total  
                                 -------              --------          -----  

       Federal                  $       -             $       -        $     -
       State                            -                     -              -
                                ---------             ---------        --------

                                $       -             $       -        $     -
                                =========             =========        ========

                                                   1997 
                             --------------------------------------------------
                                 Current              Deferred          Total  
                                 -------              --------          -----  

       Federal                  $ (11,663)            $   5,881        $ 5,782)
       State                       (3,596)                  187         (3,409)
                                ---------              ---------       ---------

                                $ (15,259)            $   6,068        $(9,191)
                                =========              =========       ========

At December 31, 1998, the Company has net operating loss carryforwards
approximating $994,434 for federal income tax purposes, expiring through 2113,
which may be carried forward to offset future taxable income. General tax credit
carryforwards

                                      F-13

<PAGE>


                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Note 8 - Income Taxes, Continued

which total approximately $16,837 and expire through 2113 are also available at
December 31, 1998.

Reconciliations of the effective income tax rate with the U.S. statutory income
tax rate for the years ended December 31, 1998 and 1997 are presented as
follows:
                                                       1998              1997  
                                                      -------          -------

      U.S. statutory rate                             (34.0)%          (34.0)%
      Preferred stock dividends                           -              8.9
      Stock options granted                               -              8.3
      Valuation allowance on net deferred
         tax assets                                    34.0             13.7
      Other, net                                          -              2.0
                                                      ------            -----

      Effective income tax rate                           -%            (1.1)%
                                                      ======            ======

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes and tax carryforwards.
Deferred tax liabilities are recognized for temporary differences that will
result in future taxable amounts. Deferred tax assets are recognized for
temporary differences that will result in deductible amounts in future years and
for carryforwards. Realization of the future tax benefits related to the
deferred tax assets is dependent on many factors, including the Company's
ability to generate taxable income within the net operating loss period. Due to
the Company's limited operating history, management has provided a valuation
allowance for financial reporting purposes at December 31, 1998 to offset its
net deferred tax asset at that date.

The following is a summary of the significant components of the Company's
deferred tax assets and deferred tax liabilities as of December 31, 1998:

    Gross deferred tax assets:
       Accrued expenses not deducted                           $ 43,630
       Operating loss carryforward                              373,907
       Tax credit carryforwards                                  16,837
       Investment in unconsolidated affiliates                   21,682
                                                               --------

                                                                456,056
    Gross deferred tax liabilities:
       Property and equipment differences                       (39,831)

          Net deferred tax asset                                416,225
    Less: valuation allowance                                  (416,225)

              Net deferred tax asset recognized                $      -
                                                               ========

                                      F-14

<PAGE>

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Note 9 - Shareholders' Equity

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

During May 1997, the Company amended its articles of incorporation to authorize
the issuance of up to 400,000 shares of preferred stock and issued 160,000
shares of Series A convertible preferred stock (the Series A shares) for
$400,000. The Series A shares had a liquidation preference of $2.50 per share
and carried a cumulative dividend of ten percent (10%) per annum. Upon the
completion of the initial public offering of the Company's common stock (see
Note 1), 80,000 of the Series A shares converted into 40,000 common shares while
the other 80,000 Series A shares were redeemed for $400,000. The redemption of
the 80,000 Series A shares resulted in a $200,000 preferred stock dividend which
was recorded as a deduction from earnings attributable to common shareholders.
The conversion of the remaining 80,000 shares resulted in a $200,000 increase in
shareholders' equity. Dividends of $20,000 were also paid for the period the
Series A shares were outstanding. The Company has no authorized or outstanding
preferred stock as of December 31, 1998.

Fixed Rate Promissory Note Conversion
-------------------------------------

During 1997, the Company borrowed $250,000 pursuant to a fixed rate promissory
note payable to a principal of URCI. On June 1, 1997, the terms of the loan were
modified to convert $125,000 of the principal balance into 20,000 shares of
common stock with the remaining $125,000 payable on demand. The remaining
balance was repaid with proceeds from the Company's initial public offering
together with $21,319 interest accrued at 15% per annum.

Common Stock Issuance
---------------------

During February 1997, the Company issued 12,500 shares of its common stock for
total proceeds of $31,250 ($2.50 per share).

Stock Option Plans
------------------

On June 1, 1997, the Company adopted the equity incentive plan (the Plan) which
provides for the granting of options to key employees and consultants to
purchase up to 142,500 shares of the Company's common stock. No options were
granted pursuant to the Plan through December 31, 1998.

During February 1999, the Company granted options to purchase 12,000 shares at
$1.00 per share which become exercisable on December 31, 1999 pursuant to the
Plan. The Company also granted options to purchase 40,000 shares under the 
Plan at $4.44 per share; 20,000 of which became exercisable in October 1999
and 20,000 of which become exercisable in October 2000.

                                      F-15


<PAGE>

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


Note 9 - Shareholders' Equity, Continued

Stock Option Plans, continued
-----------------------------

In addition, during February 1999, the Company granted options to purchase
30,000 shares at $2.50 per share pursuant to a separate, non-qualified plan; of
which 15,000 become exercisable in October 1999, and 15,000 become exercisable
in October 2000.

Common Stock Options and Warrants
---------------------------------

As of December 31, 1998, warrants to purchase 650,000 shares of the Company's
common stock are outstanding in connection with the initial public offering (see
Note 1). The warrants are exercisable at $9.50 per share at any time through
November 2002 and are subject to redemption by the Company at $.01 per warrant
if the quoted market price per share of the common stock reaches a certain level
for a specified period.

In connection with the initial public offering (see Notes 1 and 7), the Company
sold to JCA an option to purchase 65,000 units at $11.63 for nominal
consideration which is exercisable through 2002.


Note 10 - Supplemental Statement of Cash Flows Information

Supplemental statement of cash flows information for the years ended December
31, 1998 and 1997 follows:

                                                     1998              1997    
                                                  ---------         ----------
    Non-cash financing activities:
       Series A preferred shares redeemed
          on conversion to common stock           $       -         $ (200,000)
       Common stock issued on conversion
          of Series A preferred shares                    -            200,000
       Fixed rate promissory note
          converted to common stock                       -           (125,000)
       Common stock issued on conversion
          of fixed rate promissory note                   -            125,000
                                                  ---------         ----------

    Total non-cash financing activities           $       -         $       -
                                                  =========         ==========

    Cash payments for:
       Interest                                   $  11,166         $   43,801
                                                  =========         ==========

       Income taxes                               $       -         $   15,387
                                                  =========         ==========


                                      F-16