<PAGE>   1





                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 FORM 10-KSB/A
                      [X]  ANNUAL REPORT UNDER SECTION 13
                OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                    [  ]  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)

<TABLE>
<S>                                                                   <C>
  490 EAST PALMETTO PARK ROAD, SUITE 110, BOCA RATON, FLORIDA 33432   (561) 392-0611
</TABLE>
         (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.     [  ]

The Registrant's revenues for its most recent fiscal year totaled
$4,163,475.

The aggregate market value of Common Stock held by non-affiliates based
upon the closing bid price on March 11, 1998, as reported by the Over the
Counter Electronic Bulletin Board(R), was approximately $1,241,938.125.

As of March 11, 1998, there were 1,060,001 shares of Sforza Enterprises
Inc. Common Stock, $.01 par value, outstanding.

Transitional Small Business Disclosure Format:     Yes  [  ]    No  [X]
<PAGE>   2
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").  Currently, the two West Palm
Beach Restaurants are open and one of the Max's Grille Restaurants is
open.  All of the 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
and certain of the directors of the Company.  (See "Restaurant
Management.")  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 not to proceed with the
development of the sushi restaurant because it determined that the market
and competitive conditions were unfavorable.

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,

<PAGE>   3
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 ("Beach Place") and the Max's Grille Restaurants under
construction at 300 Southwest First Avenue ("Las Olas Riverfront") in Fort
Lauderdale, Florida and at 2210 Weston Road, in Weston, Florida ("Weston"),
plus the entity that will own 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 is expected to open in April 1998.
Weston is expected to open in the fall of 1998.  The Company has the right to
designate 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,
will be 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 will be 6,500 square feet, seating 200 inside and 40 on an
outside patio when it opens for business in April 1998.

   In Weston, the Max's Grille Restaurant will co-anchor the new 200,000 square
foot Waterway Shoppes.  It will also be 6,500 square feet, seating 200 inside
and 40 on an outside lakefront patio when it opens for business in the fall of
1998.

   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 am 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.





                                       2
<PAGE>   4
   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 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.

   URC also manages Maxaluna, Max's Cafe and Coffee Shop (two
locations), Prezzo's (three locations) and Astor Place restaurants, all
located in South Florida.

RESTAURANT MANAGEMENT

   URC, the restaurant management company owned by Company directors
Messrs. Catalfumo, Max (and Mrs. Max) and Rapoport, operates the West Palm
Beach Restaurants and is operating and will operate all of the Max's
Grille Restaurants, as well as nine other existing restaurants.  From
February through May 1997, URC provided management services pursuant to an
informal arrangement.  URC has since then managed the West Palm Beach
Restaurants pursuant to the terms of a Management and Consulting Agreement
dated June 1, 1997.  Under these arrangements, management fees totaled
$58,000 through October 31, 1997.  Thereafter URC receives a fee of one
percent of net sales plus 20 percent of the net operating profit, paid
monthly.  (Net operating profit equals net sales less direct operating and
other allocable expenses.)  Total fees for 1997 amounted to $63,309.
Additionally, URC received an option to acquire 75,000 shares of the
Company's Common Stock exercisable at $5.00 per share and expiring on
December 31, 1999 in partial consideration of its agreement to provide
management services at a reduced fee.  URC is responsible for determining
menu and bar items, designing menus, creating recipes, taste testing and
costing; interviewing, hiring and training personnel and developing
personnel policies and manuals; developing operating policies and manuals;
developing and implementing a marketing plan; and otherwise operating the
restaurants.  The agreement can be terminated by the Company in the event
of misappropriation of Company funds, disreputable conduct on the part of
either of Messrs. Rapoport or Max or breach.

   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 managed by URC.  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 URC's 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.





                                       3
<PAGE>   5
COMMITMENT AND CUSTOMER SATISFACTION

   The Company's commitment to customer satisfaction is underscored by URC's
employee training program, which is required for all Company personnel.  URC
has refined its training program over 10 years, 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.

   Through the use of comment cards and table visits, Company management and
URC receive 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
each of 1996 and 1997.  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 and through radio
promotions.

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
and other





                                       4
<PAGE>   6
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 industry 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 fast food 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 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-





                                       5
<PAGE>   7
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 2,200 square feet for its
offices located in Boca Raton, Florida, which space is shared with the
administrative offices for URC and the Max's Grille Restaurants.  The lease
expires January 31, 1999.  The Company does not pay a specified monthly rent,
although the fees paid by the Company pursuant to the Management and Consulting
Agreement with URC are intended to compensate URC for shared overhead expenses,
including the leased space.

   Sforza Ristorante and My Martini Grille are each housed in adjacent
storefronts leased from Clematis Development Group, L.C., a real estate holding
company partly owned by Joseph C. Visconti, a director of the 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, and the Company is actively seeking a
subtenant.


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.

   Messrs. Catalfumo, Max and Rapoport were defendants along with URC in a
civil lawsuit filed in the Florida State Court in Palm Beach County, Florida in
May 1996 by former partners in a defunct URC restaurant who alleged, among
other things, that the three men breached their fiduciary duties to the limited
partners.  This matter was settled, without admission of liability on the part
of any defendant, for a cash payment of $50,000, plus the assignment to the
plaintiffs of a promissory note with a remaining principal balance of
approximately $100,000.


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

   None.


                                       6
<PAGE>   8
                                    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, and are not separately transferable until November 13,
1997 or such earlier date as determined by Joseph Charles & Associates,
Inc., the Company's underwriter for its November 1997 public offering.

   The range of high and low bid information for the Units for the
period commencing November 13, 1997, the date that the Company's
securities were first offered to the public, through December 31, 1997, is
as follows:


<TABLE>
<CAPTION>
                              PERIOD                 HIGH BID          LOW BID
                      ----------------------    -----------------  --------------
                      <S>                          <C>                 <C>

                      November 13, 1997 -          $7.9375             $7
                         December 31, 1997
</TABLE>

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

   As of March 11, 1998, there were approximately 25 stockholders of
record.

   On March 11, 1998, the closing bid price for each Unit was $5.625.


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.

   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. was formed in July 1996 and issued
827,500 shares of its Common Stock in exchange for all of the outstanding
shares of common stock of Castle Room, Inc. (formed


                                      7
<PAGE>   9
May 17, 1995), Clematis Bistro Corporation (formed April 12, 1996), and Sushi
Enterprises, Inc. (formed July 3, 1996) in a transaction accounted for as a
pooling of interests.

   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.
One of the Max's Grille Restaurants began operating in May 1997 and another is
expected to open in April 1998.  The remaining two Max's Grille Restaurants are
expected to open subsequently during 1998.  The investments are accounted for
using the equity method.  This management's discussion and analysis of
financial conditions and results of operations should be read in conjunction
with the Company's consolidated financial statements and footnotes thereto
presented elsewhere herein.

RESULTS OF OPERATION

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

<TABLE>
<CAPTION>
                                         YEAR ENDED DECEMBER 31,
                                         1997              1996
<S>                                      <C>                <C>

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

Cost and expenses:
  Cost of sales                             56.2              55.7
  Operating expenses                        53.5              37.8
  Interest expense                            .8                -
                                           -----            ------

  Total cost and expenses                  110.5              93.5
                                           -----             -----

Operating income                           (10.5)              6.5
Other income, net                             .5                .1
Compensatory stock options granted          (4.9)                -
Dividends to preferred shareholders         (5.3)                -
                                           -----             -----

Income before income taxes                 (20.2)              6.6
Income tax expense (benefit)                 (.2)               .3
                                           -----             -----

Net income (loss)                          (20.0)%             6.3%
                                           =====             =====
</TABLE>

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



                                       8
<PAGE>   10
West Palm Beach, Florida.  Net sales increased from $2,333,530 in 1996 to
$4,163,476 in 1997, representing an increase of 78.4%.  There were no
comparable restaurant operations during 1995.  The increase in net sales
from 1996 to 1997 was due to the opening of My Martini Grille during
February 1997.  Sforza Ristorante's net sales were $2,156,710 for the year
ended December 31, 1997 and $2,333,530 for the year ended December 31,
1996.  My Martini Grille's net sales were $2,006,766 for 1997.  The
decrease in Sforza Ristorante's net sales of 8.2% from 1996 to 1997 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.

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 increased from $1,299,501 in 1996 to $2,338,755 in 1997, a 79.9%
increase. This increase is attributable to the opening of My Martini
Grille in 1997.  The cost of sales for Sforza Ristorante as a percentage
of net sales was 55.7% in 1996 and 53.7% in 1997.  Cost of sales for My
Martini Grille was 58.8% for 1997.  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 56.2% in 1997 and 55.7% in
1996.

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 increased
by $1,276,635 from $881,856 in 1996 to $2,227,163 in 1997, a 144.8%
increase.  Such expenses totaled 37.8% and 53.5% of net sales in 1996 and
1997, respectively.  This was due to the additional expenses attendant
with the increased level of sales, additional administrative personnel,
costs associated with the development of the Company's corporate
infrastructure, certain non-recurring compensation paid to certain
principals during the year ended December 31, 1997 aggregating $64,970,
start-up cost amortization approximating $129,000 for 1997 (versus
approximately $40,000 in 1996), and management fees.  Operating expenses,
as percentage of net sales during 1998, are expected to decrease
significantly from the 1997 level principally due to the reduction of
start-up cost, amortization and the elimination of the non-recurring
compensation.

   URC provides management services to the Company's restaurants
under a one year management agreement commencing June 1, 1997.  URC
managed the restaurants under an informal arrangement from February
through May 1997.  Total management fees under these arrangements amounted
to $63,309 in 1997, and were included in operating expenses.  In addition,
URC was granted options to purchase shares of Common Stock (see below).

   The Company incurs significant start-up costs in connection with
the opening of its restaurants.  Such costs are deferred and amortized
over a one-year period.  In December 1997, management abandoned its plan
to open a third restaurant in downtown West Palm Beach (the sushi
restaurant) and charged deferred start-up costs approximating $52,000 to
expenses in 1997 (included in the amortization amount discussed above).


                                       9
<PAGE>   11
OTHER EXPENSES

   The Company recorded a charge to earnings of $206,250 during the year ended
December 31, 1997 in connection with the granting of options to purchase 75,000
shares of Common Stock to URC.  The charge to earnings was computed 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 additional paid-in capital of $206,250.  There was no
similar charge taken by the Company in fiscal year 1996.

   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 net income or
loss for financial reporting purposes.

INCOME TAX EXPENSE

   During the period January 1, 1996 to July 29, 1996, the Company operated as
an S corporation for income tax purposes, whereby taxable income or loss was
apportioned among the shareholders rather than taxed to the Company.  The
provision for income taxes for the year ended December 31, 1996 reflects the
income taxes payable in connection with the consolidated taxable income
reported for periods after July 29, 1996.  The Company will report a net loss
for federal income tax purposes for the year ended December 31, 1997 of
approximately $380,000.  At December 31, 1997, the Company has an available net
operating loss carryforward of $312,000 to reduce future taxable income.  The
tax benefit for 1997 reflects the refundable income taxes from 1996, net of the
deferred tax asset recognized in 1996.  The tax benefit from the operating loss
carryforward was offset by a valuation allowance at December 31, 1997, and,
accordingly, no net deferred taxes are reflected in the accompanying
consolidated balance sheet.

INTEREST EXPENSE, NET

   Interest expense is reflected net of interest capitalized on qualifying
expenditures.  The Company capitalized interest incurred in connection with the
construction of its restaurants of $7,450 in 1997 and $23,005 in 1996.

OTHER INCOME

   Other income for the years ended December 31, 1997 and 1996 principally
consists of interest earned.

NET INCOME (LOSS)

   As a result of the above, the Company's net loss attributable to common
shareholders was $833,043 for the year ended December 31, 1997 versus prior
year net income of $145,905.

LIQUIDITY AND CAPITAL RESOURCES

   The Company's operating restaurants are located in West Palm Beach, Florida
and are therefore subject to the seasonality of the tourist industry in South
Florida.  Restaurant sales are


                                       10
<PAGE>   12
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.

   The Company's principal financing for the construction and
opening of its restaurants through December 31, 1996 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 1998.

   On December 30, 1997, the Company consummated the acquisition of
51% of the equity interests in each of four limited partnerships for an
aggregate payment 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 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, 1997 follows:

<TABLE>
        <S>                                                               <C>
        Assets:
          Current assets                                                  $ 2,073,530
          Property and equipment, net                                       1,393,840
          Other assets                                                         47,285
                                                                          -----------

        Total assets                                                      $ 3,514,655
                                                                          ===========

        Liabilities and equity:
          Current liabilities                                             $   585,170
          Long-term debt                                                      200,292
          Partners' equity                                                  2,729,193
                                                                          -----------

        Total liabilities and equity                                      $ 3,514,655
                                                                          ===========
</TABLE>

   The limited partnerships' combined results of operations for 1997
attributable to the Company during its period of ownership in 1997 were
not material.  The following summary unaudited pro forma financial
information assumes the acquisition had occurred on January 1, 1997:



                                      11
<PAGE>   13
<TABLE>
        <S>                                                                <C>
        Net sales                                                           $ 4,163,476
                                                                            ===========

        Net loss                                                           $(1,009,679)
                                                                           ===========

        Net loss per common share                                                $(.92)
                                                                                 =====
</TABLE>

These amounts include the Company's proportionate share of the results of
operations for the Max's Grille Restaurant which opened in May 1997, after
eliminating certain historical interest expense and adding investment interest
on assumed funds held for the three Max's Grille Restaurants which were in the
planning stages during 1997.

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.





                                       12
<PAGE>   14
                                    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>

      Dennis R. Max . . . . . . . . . .             53            President, Chief Executive Officer and Director

      Gerald J. Visconti, Jr. . . . . .             34            Vice President, Chief Financial Officer, Secretary
                                                                  and Director

      Daniel S. Catalfumo . . . . . . .             41            Director

      Dale J. Brisson . . . . . . . . .             37            Director

      Burton M. Rapaport  . . . . . . .             47            Director

      Joseph C. Visconti  . . . . . . .             33            Director
</TABLE>

    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.

    Gerald J. Visconti, Jr. has served as an officer and director of the
Company since its inception in July 1996.  He established the Company's
accounting and management information systems departments.  Prior to
joining the Company, he owned and operated a trucking company in Los
Angeles for 11 years.  Mr. Visconti graduated from Morrisville
Agricultural and Technical College, Morrisville, New York in 1983 with a
degree in automotive technology.  He is the older brother of Joseph
Visconti.  Mr. Visconti is currently Vice President of Corporate Finance
of Joseph Charles & Associates, Inc., which served as the Company's
underwriter for its November 1997 public offering.

    Daniel S. Catalfumo has spent his entire career in South Florida in
the construction industry.  He founded Catalfumo Construction &
Development Inc. in West Palm Beach in 1978 and has built over 12 million
square feet of office, medical, warehouse, country club, industrial,
retail and residential space.  He is a part owner of URC with Messrs. Max
(and Mrs. Max) and Rapoport.

    Dennis R. Max has served as a director of the Company since May 1997.
After a short stint in the banking and brokerage industries, he entered
the restaurant industry in 1972, where he has spent his entire career.  He
has been successful in national chains and as an entrepreneur.  He has
enjoyed tremendous success in South Florida, where his restaurants are
well-known.  Mr. Max owns URC with his wife, Patti Max, and Messrs.
Catalfumo and Rapoport, which he serves as President.


                                       13
<PAGE>   15
   Burton M. Rapaport has spent his entire career in the restaurant industry,
beginning as a bartender at the Victoria Station chain in Los Angeles in 1971,
where he met Mr. Max.  In 1978, Messrs. Rapoport and Max created the successful
Carlos & Pepe's in Ft.  Lauderdale, Florida, followed by Raffles in Miami,
which grew to 11 locations before being sold.  Mr. Rapoport served for 12 years
on the Advisory Board of Johnson & Wales University, the large culinary
institute based in Providence, Rhode Island.  Mr. Rapoport owns URC with
Messrs. Catalfumo and Max (and Patti Max), which he serves as Vice President.

   Joseph C. Visconti has served as director of the Company since its inception
in July 1996.  Mr. Visconti has served as Vice President, Secretary and 
Treasurer and as a director of Castle Room, Inc. since May 1995, Clematis
Bistro Corporation since April 1996 and Sushi Enterprises, Inc. since July
1996.  In 1991, Mr. Visconti founded Joseph Charles & Associates, Inc., the
firm which served as underwriter for the Company's November 1997 public
offering, and is that firm's Chairman, President and Chief Executive Officer. 
The firm employs over 300 people in its two Florida and its Beverly Hills,
Denver and Phoenix offices.  In 1993, Mr. Visconti founded Clematis
Development Group, L.C. ("CDG") to acquire and develop vacant buildings in
downtown West Palm Beach. CDG leases storefronts to the Company for the West
Palm Beach Restaurants.  In 1995, he teamed with Mr. Brisson to form Castle
Room, Inc. which opened Sforza Ristorante in February 1996.

   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.  Under the terms of the Funding
Agreement and Joinder, each dated July 1, 1997, among the Company, URC, Mr. Max
and others, Messrs. Brisson, G. Visconti and J. Visconti agreed to vote their
shares to elect three designees of Mr. Max as directors to the Company's
six-member Board of Directors.  Messrs. Max, Catalfumo and Rapaport are the
current Board designees of Mr. Max.  Each officer is appointed by the Board of
Directors and serves at the pleasure of the Board.

   Directors are not 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.



                                       14
<PAGE>   16
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.(a)(b)

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                  Annual Compensation
                                    ----------------------------------------------
                                                                      Other Annual     Securities Underlying
Name and Principal                                                  Compensation ($)    Options Granted (#)
Position                 Year       Salary ($)       Bonus ($)
-------------------------------------------------------------------------------------------------------------
<S>                      <C>          <C>             <C>                <C>                 <C>
Dennis R. Max            1997(c)        $0               $0                $0                75,000(d)
President, Director      1996            -               -                 -                     -
and Chief Executive      1995            -               -                 -                     -
Officer
-------------------------------------------------------------------------------------------------------------
Dale J. Brisson          1997         $40,178            $0                $0                   N/A
President, Director      1996         $69,230            -                 -                    N/A
and Chief Executive      1995            -               -                 -                    N/A
Officer
-------------------------------------------------------------------------------------------------------------
Gerald J. Visconti       1997         $51,000         $20,000              $0                   N/A
Vice President,          1996            -               -               $8,000                 N/A
Chief Financial          1995            -               -                 -                    N/A
Officer, Treasurer
and Secretary
</TABLE>

----------------
(a) The Company was not in existence in 1995.
(b) No officer of the Company earned $100,000 or more (during 1996 or 1997).
(c) Mr. Max began his service as President of the Company on December 30, 1997.
(d) Options are held of record by URC, the Company's management company, in
    which Mr. Max is an officer, director and principal shareholder.



                                       15
<PAGE>   17
OPTION GRANTS FOR FISCAL 1997 AND POTENTIAL REALIZABLE VALUES

    The following table sets forth as to each of the named executive officers
information with respect to option grants during the last fiscal year.

<TABLE>
<CAPTION>
      (a)                  (b)             (c)               (d)               (e)

                                       % of Total
                        Number of     Options/ SARs
                       Securities      Granted to      Exercise or Base
      Name             Underlying     Employees in       Price ($/Sh)    Expiration Date
                      Options/ SARs    Fiscal Year
                       Granted (#)
----------------------------------------------------------------------------------------
<S>                         <C>             <C>               <C>               <C>
Dennis R. Max           75,000(a)          10%              $5.00            12/31/99
----------------------------------------------------------------------------------------
Dale J. Brisson             0               0                 0                 0
----------------------------------------------------------------------------------------
Gerald J. Visconti, Jr.     0               0                 0                 0
----------------------------------------------------------------------------------------
</TABLE>


----------------
(a)  Options are held of record by URC, the Company's management company, in
     which Mr. Max is an officer, director and principal shareholder.

OPTION EXERCISES AND VALUES FOR FISCAL 1997

    The following table sets forth as to each of the named executive officers
information with respect to option exercises during Fiscal 1997 and the status
of their options on December 31, 1997.


<TABLE>
<CAPTION>


                                                                      Number of Unexercised   Value of Unexercised
                                                                        Options at Fiscal     In-the-Money Options
                                                                          Year End (#)         at Fiscal Year End
                        Shares Acquired on                              Exercisable (E)/      ($) Exercisable (E)/
Name                       Exercise (#)        Value Realized ($)       Unexercisable (U)       Unexercisable (U)
-------------------------------------------------------------------------------------------------------------------
<S>                             <C>                     <C>               <C>                      <C>
Dennis R. Max                   0                       0                 75,000(E)(a)             $125,000(E)
                                                                              0(U)                    0(U)
-------------------------------------------------------------------------------------------------------------------
Dale J. Brisson                 0                       0                     0(E)                    0(E)
                                                                              0(U)                    0(U)
-------------------------------------------------------------------------------------------------------------------
Gerald J. Visconti, Jr.         0                       0                     0(E)                    0(E)
                                                                              0(U)                    0(U)
-------------------------------------------------------------------------------------------------------------------
</TABLE>

------------------
(a) Options are held of record by URC, the Company's management company, in
    which Mr. Max is an officer, director and principal shareholder.



                                       16
<PAGE>   18
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 March 11, 1998 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      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(b)(c)                                         95,000                 5.56%
4300 Catalfumo Way
Palm Beach Gardens, Florida  33410
------------------------------------------------------------------------------------------------------
Dennis R. Max(a)(c)                                               75,000                 4.39%
490 East Palmetto Park Road, Suite 110
Boca Raton, Florida  33432
------------------------------------------------------------------------------------------------------
Burton M. Rapoport(b)(c)                                          75,000                 4.39%
490 East Palmetto Park Road, Suite 110
Boca Raton, Florida  33432
------------------------------------------------------------------------------------------------------
Gerald J. Visconti, Jr.(a)                                        51,961                 3.04%
3400 North Flagler Drive
West Palm Beach, Florida  33401
------------------------------------------------------------------------------------------------------
Joseph C. Visconti(b)(d)                                         377,750                22.09%
525 South Flagler Drive, Suite 400
West Palm Beach, Florida  33401
------------------------------------------------------------------------------------------------------
All directors and officers as a group                            905,961                52.99%
  (6 persons)(c)
------------------------------------------------------------------------------------------------------
</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).  Messrs.
         Catalfumo, Max and Rapoport are principals of URC.
(d)      Includes 150,000 shares of Common Stock owned by Vask
         Enterprises, Inc., a Florida corporation owned by Messrs. Brisson
         and J. Visconti.

-------------------------------------
(1) Unless otherwise indicated, each person has sole voting and investment
    rights with respect to the shares specified opposite his name.


                                       17
<PAGE>   19
ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Notes Payable; Shareholders.  During 1995 and 1996, Dale J. Brisson and
Joseph C. Visconti lent an aggregate of $175,000 to the Company or its
subsidiaries pursuant to notes collateralized by substantially all of the
Company's assets. In addition, such shareholders made uncollateralized loans to
the Company aggregating $63,445 for working capital purposes.  All such loans
have been repaid as of September 30, 1997.  See "Restaurant Management" and
"Construction" below in this section.

     Premises Leases.  The Company leases the spaces for its three restaurants
from Clematis Development Group, L.C., a Florida limited liability company
partly owned by Joseph C. Visconti.  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.  The
Company believes that each lease is on terms no less favorable than those
obtainable from an unrelated third party.

     Restaurant Management. URC, the restaurant management company owned by
Company directors Messrs. Catalfumo, Max (and Mrs. Max) and Rapoport, operates
the West Palm Beach Restaurants and is operating and will operate all of the
Max's Grille Restaurants, as well as nine other existing restaurants.  From
February through May 1997, URC provided management services pursuant to an
informal arrangement.  URC has since then managed the West Palm Beach
Restaurants pursuant to the terms of a Management and Consulting Agreement
dated June 1, 1997.  Under these arrangements, management fees totaled $58,000
through October 31, 1997.  Thereafter URC receives a fee of one percent of net
sales plus 20 percent of the net operating profit, paid monthly.  (Net
operating profit equals net sales less direct operating and other allocable
expenses.) Total fees for 1997 amounted to $63,309.  Additionally, URC received
an option to acquire 75,000 shares of the Company's Common Stock exercisable at
$5.00 per share and expiring on December 31, 1999 in partial consideration of
its agreement to provide management services at a reduced fee.  URC is
responsible for determining menu and bar items, designing menus, creating
recipes, taste testing and costing; interviewing, hiring and training personnel
and developing personnel policies and manuals; developing operating policies
and manuals; developing and implementing a marketing plan; and otherwise
operating the restaurants.  The agreement can be terminated by the Company in
the event of misappropriation of Company funds, disreputable conduct on the
part of either of Messrs. Rapoport or Max or breach.

     Construction.  Mr. Catalfumo's construction company built Max's Beach
Place Grille, one of the Max's Grille Restaurants, and is building the Max's
Grille Restaurants in the Las Olas Riverfront development, Ft. Lauderdale,
Florida and in Weston, Florida.  Mr.  Catalfumo acquired the Note from URC on
June 1, 1997 and immediately converted $125,000 of the unpaid principal into
20,000 shares of the Company's Common Stock.  The conversion price of $6.25 was
negotiated between the parties.

     Funding Agreement.  The Company, URC, Dennis Max 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


                                       18
<PAGE>   20
interests in such Max's Grille Restaurants and URC's agreement to manage
such restaurants at a discounted rate.

     Acquisition of Limited Partnership Interests.  On December 30, 1997,
the Company entered into a Partnership Interest Subscription Agreement
pursuant to which it acquired 51% of the limited partnership interests of
Unique Brickell, Ltd., Unique Weston, Ltd., Unique TBA, Ltd. and Max's
Beach Grilled, Ltd. (the "Limited Partnerships").  Each Florida Limited
Partnership owns a Max's Grille Restaurant.  Additionally, the Company
entered into Amended and Restated Limited Partnership Agreements for each
of the foregoing Limited Partnerships.  Each of the Limited Partnerships
entered into a License Agreement with URC for the use of the name "Max's
Grille" and the Max's Grille Restaurant concept.

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).

     4.3    Fixed Rate Promissory Note in principal amount of $250,000
            dated January 31, 1997 payable to Unique Restaurant Concepts
            Ltd. (incorporated by reference to Exhibit 4.4 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    Fixed Rate Promissory Note in principal amount of $125,000
            dated June 1, 1997 payable to Daniel S. Catalfumo
            (incorporated by reference to Exhibit 4.5 to the Company's
            Registration Statement filed on Form SB-2, Amendment No. 3,
            filed with


                                  19
<PAGE>   21
      the Securities and Exchange Commission on October 17, 1997, File Number
      333-32117).

4.5   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).

4.6   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.


                                       20
<PAGE>   22
       (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).

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
       (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
       (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  Office lease (incorporated by reference to Exhibit 10.4 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).

10.14  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).


                                       21
<PAGE>   23
21*   Subsidiaries of the registrant.

27*   Financial Data Schedule

99.1  Press Release of the Company dated January 8, 1998 (incorporated by
      reference to Exhibit 99.1 on Form 8-K filed with the Securities and
      Exchange Commission on January 14, 1998, File No. 000-33251).

--------------------------------------
*     Filed herewith.
(b)   There were no reports on Form 8-K filed during the last quarter of the
      fiscal year ended December 31, 1997.  On January 14, 1998, the Company
      filed a Current Report on Form 8-K, as amended on March 13, 1998,
      reporting the conclusion of its acquisition of 51% of the equity
      interests in four Max's Grille Restaurants.





                                       22
<PAGE>   24
                                   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 30, 1998                     By:  /s/ Dennis R. Max
                                                ----------------------------
                                                Dennis R. Max
                                                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/ Gerald J. Visconti, Jr.                 Vice President, Chief Financial            April 30, 1998
--------------------------------              Officer, Secretary and Director
Gerald J. Visconti, Jr.

/s/ Dale J. Brisson                         Director                                   April 30, 1998
--------------------------------
Dale J. Brisson

/s/ Daniel S. Catalfumo                     Director                                   April 30, 1998
--------------------------------
Daniel S. Catalfumo

/s/ Burton M. Rapoport                      Director                                   April 30, 1998
--------------------------------
Burton M. Rapoport

/s/ Joseph C. Visconti                      Director                                   April 30, 1998
--------------------------------
Joseph C. Visconti
</TABLE>


                                       23
<PAGE>   25
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 Page #
                                                                                 ------
     <S>                                                                     <C>


     Report of independent accountants                                              F-2


     Consolidated financial statements:

       Consolidated balance sheets                                                  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-18
</TABLE>



                                      F-1
<PAGE>   26


                       REPORT OF INDEPENDENT ACCOUNTANTS



Board of Directors and Shareholders
Sforza Enterprises Inc.


We have audited the accompanying consolidated balance sheets of Sforza
Enterprises Inc. and subsidiaries as of December 31, 1997 and 1996 and the
related consolidated statements of operations, shareholders' equity and cash
flows for the years then ended.  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 financial position of Sforza Enterprises Inc. and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.



/s/ Templeton & Company, P.A.

Royal Palm Beach, Florida
March 20, 1998



                                      F-2
<PAGE>   27
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                               1997                  1996
                                                                        -----------------     ------------------
<S>                                                                            <C>                   <C>
                                         ASSETS
Current assets:
   Cash and cash equivalents                                                   $  591,269            $  202,639
   Accounts receivable                                                                  -                 2,238
   Inventories                                                                     70,162                38,661
   Deferred income taxes                                                                -                13,583
   Other current assets                                                           162,847                54,829
                                                                               ----------            ----------

          Total current assets                                                    824,278               311,950

Investments in unconsolidated affiliates                                        3,000,000                     -
Property and equipment, net                                                       996,284               495,370
Other assets, net                                                                  33,763               278,831
                                                                               ----------            ----------

             Total assets                                                      $4,854,325            $1,086,151
                                                                               ==========            ==========
<CAPTION>
                             LIABILITIES AND SHAREHOLDERS' EQUITY

<S>                                                                          <C>                   <C>
     Current liabilities:
        Accounts payable                                                       $  194,868            $      917
        Accrued expenses                                                          172,960                84,981
        Unearned revenue                                                                -                61,759
        Income taxes payable                                                            -                15,387
        Due to shareholders                                                             -                63,445
        Current portion of long-term debt                                          25,376               114,874
        Current portion of obligations
           under capital leases                                                    23,078                30,089
                                                                               ----------            ----------

               Total current liabilities                                          416,282               371,452

     Long-term debt, net                                                            2,442                30,014
     Obligations under capital leases, net                                         41,569                53,959
     Deferred income taxes                                                              -                 7,515
                                                                               ----------            ----------

               Total liabilities                                                  460,293               462,940
                                                                               ----------            ----------

     Shareholders' equity:
        Common stock, $.01 par value;
           20,000,000 shares authorized;
           issued and outstanding 1,710,000
           shares in 1997 and 987,500 shares
           in 1996                                                                 17,100                 9,875
        Additional paid-in capital                                              5,097,064               500,425
        Retained earnings (deficit)                                              (720,132)              112,911
                                                                                ----------           ----------
               Total shareholders' equity                                       4,394,032               623,211
                                                                               ----------            ----------
                  Total liabilities and
                     shareholders' equity                                      $4,854,325            $1,086,151
                                                                               ==========            ==========
</TABLE>



See accompanying notes.               F-3
<PAGE>   28
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                             1997          1996
                                                          ----------    ----------
<S>                                                       <C>           <C>
Net sales                                                 $4,163,476    $2,333,530
                                                          ----------    ----------

Cost and expenses:
  Cost of sales                                            2,338,755     1,299,501
  Operating expenses                                       2,227,163       881,856
  Interest expense, net                                       35,943             -
                                                          ----------    ----------

    Total cost and expenses                                4,601,861     2,181,357
                                                          ----------    ----------

Operating income                                            (438,385)      152,173

Other income (expense):
  Other income                                                22,401         3,051
  Dividends to preferred shareholders                       (220,000)            -
  Compensatory earnings charge for
    stock options granted                                   (206,250)            -
                                                          ----------    ----------

Income (loss) before provision for
  income taxes                                              (842,234)      155,224

Income tax expense (benefit)                                  (9,191)        9,319
                                                          ----------    ----------

  Net income (loss)                                       $ (833,043)   $  145,905
                                                          ==========    ==========

Basic earnings (net loss) per common share                $     (.76)   $      .16
                                                          ==========    ==========

Weighted average common shares
  outstanding                                              1,096,267       899,723
                                                          ==========    ==========
</TABLE>



See accompanying notes.               F-4
<PAGE>   29
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>

                                                Common Stock          Additional          Retained
                                         ---------------------------    Paid-in           Earnings
                                         No. Shares         Amount      Capital           (Deficit)
                                         -------------  ------------  ------------      ------------
<S>                                         <C>           <C>          <C>               <C>
Balance, January 1, 1996                            -     $       -    $   10,000        $  (12,799)
Issuance of 1,655,000
  shares of common stock
  in exchange for 500
  shares of Castle Room,
  Inc.                                      1,655,000        16,550       (10,000)           (6,550)
Issuance of 320,000
  shares of common
  stock                                       320,000         3,200       490,550                 -
Net income for the year
  ended December 31, 1996                           -             -             -           145,905
Distributions to share-
  holders of Castle Room,
  Inc.                                              -             -             -           (13,645)
Reverse stock split
  adjustment (Note 9)                        (987,500)       (9,875)        9,875                 -
                                            ---------     ---------    ----------         ---------

Balance, December 31, 1996                    987,500         9,875       500,425           112,911

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)
                                            =========     =========    ==========         =========
</TABLE>





See accompanying notes.               F-5
<PAGE>   30
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                      1997           1996
                                                                   ---------      ---------
<S>                                                             <C>            <C>
Cash flows from operating activities:
  Net income (loss)                                             $ (833,043)    $  145,905
  Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities:
      Compensatory earnings charge for
        stock options granted                                      206,250              -
      Depreciation and amortization                                130,145         33,946
      Deferred income taxes                                          6,068         (6,068)
      Changes in operating assets and
        liabilities:
        Accounts receivable                                          2,238         (2,238)
        Inventories                                                (31,501)       (38,661)
        Other current assets                                      (108,018)       (47,435)
        Accounts payable                                           193,951            917
        Accrued expenses                                            87,979         84,426
        Unearned revenue                                           (61,759)        11,759
        Income taxes payable                                       (15,387)        15,387
                                                                ----------     ----------

Net cash provided by (used in)
  operating activities                                            (423,077)       197,938
                                                                ----------     ----------

Cash flows from investing activities:
  Purchase of property and equipment                              (630,345)      (335,349)
  Investments in unconsolidated
    affiliates                                                  (3,000,000)             -
  (Increase) decrease in other
    assets, net                                                    244,354       (274,648)
                                                                ----------     ----------

Net cash used in investing activities                           (3,385,991)      (609,997)
                                                                ----------     ----------
</TABLE>


See accompanying notes.                 F-6
<PAGE>   31
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                  1997                  1996
                                                               ----------            ----------
<S>                                                          <C>                   <C>
 Cash flows from financing activities:
  Proceeds from issuance of common
    stock, net                                               $4,072,614            $  493,750
  Proceeds from issuance of preferred
    stock                                                       400,000                     -
  Redemption of preferred stock                                (200,000)                    -
  Proceeds from  notes payable,
    shareholders                                                      -               168,445
  Repayment of notes payable,
    shareholders                                                (63,445)              (75,897)
  Proceeds from fixed rate promissory
    note                                                        250,000                     -
  Repayment of fixed rate promissory
    note                                                       (125,000)                    -
  Proceeds from issuance of long-term
    debt                                                              -                 6,242
  Principal payments on long-term debt                         (117,070)              (20,457)
  Principal payments on obligations
    under capital leases                                        (19,401)               (6,825)
  Distributions to shareholders of
    Castle Room, Inc.                                                 -               (13,645)
                                                             ----------            ----------

Net cash provided by financing
  activities                                                  4,197,698               551,613
                                                             ----------            ----------

Net increase in cash and cash
  equivalents                                                   388,630               139,554

Cash and cash equivalents, beginning
  of year                                                       202,639                63,085
                                                             ----------            ----------

Cash and cash equivalents, end of
  year                                                       $  591,269            $  202,639
                                                             ==========            ==========
</TABLE>



See accompanying notes.                F-7
<PAGE>   32
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Sforza Enterprises Inc. (Sforza) was formed in July 1996 and issued 1,655,000
shares of its common stock (827,500 shares after the reverse split on November
3, 1997, see Note 9) in exchange for all of the outstanding shares of common
stock of Castle Room, Inc.  (formed May 17, 1995), Clematis Bistro Corporation
(formed April 12, 1996), and Sushi Enterprises, Inc. (formed July 3, 1996) in a
transaction accounted for as a pooling of interests.

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.

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, 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 which operate or are planned to operate as 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.



                                      F-8
<PAGE>   33
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     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.

     Restaurant Start-up Costs

     The Company defers certain restaurant start-up costs associated with the
     opening of new restaurants (included in other current assets) and
     amortizes such costs ratably over twelve months.

     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.

     Organization Costs

     Organization costs (included in other assets) are amortized by the
     straight-line method over five years.

     Unearned Revenue

     The Company was obligated to provide meals to individuals pursuant to an
     agreement with an entity which enrolled such individuals in a restaurant
     discount program.  Amounts received from the entity were recorded as
     unearned revenue and amortized ratably to income over the term of the
     agreement.

     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) for all
     periods.  All prior period data have been restated to conform with the
     provisions of 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.



                                      F-9
<PAGE>   34
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     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.  There were no
     potentially dilutive securities outstanding during 1996 and the effect of
     potentially dilutive securities outstanding during 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.


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 Max's Grille
Restaurants at a separate location in South Florida.  The business of the
limited partnerships is governed by identical limited partnership agreements
which vest overall management and control of the limited partnerships to Unique
Restaurant Concepts, Inc. (URCI) through management agreements with URCI
executed by each of the limited partnerships.  URCI also manages the
Company-owned restaurants under separate management agreements (see Note 7).
In May 1997, one of the Max's Grille Restaurants began operating.  Another
Max's Grille Restaurant is expected to open in April 1998; and the remaining
two Max's Grille Restaurants are expected to open subsequently during 1998.
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, 1997 follows:


                                      F-10
<PAGE>   35
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


     NOTE 3 - INVESTMENTS IN UNCONSOLIDATED AFFILIATES, CONTINUED

<TABLE>
       <S>                                     <C>
       Assets:
         Current assets                        $1,687,160
         Due from affiliates                      386,370
         Property and equipment, net            1,393,840
         Other assets                              47,285
                                               ----------

           Total assets                        $3,514,655
                                               ==========

       Liabilities and equity:
         Current liabilities                   $  560,695
         Due to affiliate                          24,475
         Long-term debt                           200,292
         Partners' equity                       2,729,193
                                               ----------

           Total liabilities and
             equity                            $3,514,655
                                               ==========
</TABLE>

The limited partnerships' combined results of operations for 1997 attributable
to the Company during its period of ownership in 1997 were not material.  The
following summarized unaudited pro forma financial information assumes the
acquisition had occurred on January 1, 1997:

<TABLE>
       <S>                                    <C>
       Net sales                              $ 4,163,476
                                              ===========

       Net loss                               $(1,009,679)
                                              ===========

       Net loss per common share              $      (.92)
                                              ===========
</TABLE>

These amounts include the Company's proportionate share of the results of
operations for the Max's Grille Restaurant which opened in May 1997, after
eliminating certain historical interest expense and adding investment interest
on assumed funds held for the three Max's Grille Restaurants which were in the
planning stages during 1997.


NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1997 and
1996:



                                      F-11
<PAGE>   36

                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


NOTE 4 - PROPERTY AND EQUIPMENT, CONTINUED

<TABLE>
<CAPTION>
                                                                    1997         1996
                                                                -----------    ----------
<S>                                                             <C>              <C>

Operating properties:
  Leasehold improvements                                        $  379,942       $  134,456
  Equipment leased under capital
    equipment lease                                                 90,873           90,873
  Furniture, fixtures, and equipment                               582,805          239,063
                                                                ----------       ----------

                                                                 1,053,620          464,392
Less accumulated depreciation and
  amortization                                                    (163,126)         (33,695)
                                                                ----------       ----------

                                                                   890,494          430,697
Properties undergoing renovation:
  Leasehold improvements in progress                               105,790           64,673
                                                                ----------       ----------

                                                                $  996,284       $  495,370
                                                                ==========       ==========
</TABLE>

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, 1997 and 1996 are presented as
follows:

<TABLE>
<CAPTION>
                                                                   1997             1996
                                                                ----------       ----------
<S>                                                             <C>              <C>
Interest incurred                                               $   43,393       $   23,005
Interest capitalized                                                 7,450           23,005
                                                                ----------       ----------

   Interest expense, net                                        $   35,943       $        -
                                                                ==========       ==========
</TABLE>

Depreciation and amortization of property and equipment for the years ended
December 31, 1997 and 1996 amounted to $129,431 and $33,695, respectively.
Included in other assets at December 31, 1996 is $231,801 in deposits on
pending restaurant property and equipment purchases.


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 sheets at December 31, 1997 and 1996
include the following regarding equipment leased under capital leases:





                                      F-12
<PAGE>   37
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


NOTE 5 - DESCRIPTION OF LEASING ARRANGEMENTS, CONTINUED

<TABLE>
<S>                                                                <C>              <C>
Equipment leased under capital leases                              $   90,873       $   90,873
Accumulated amortization                                              (24,852)          (4,991)
                                                                   ----------       ----------

                                                                   $   66,021       $   85,882
                                                                   ==========       ==========
</TABLE>

Minimum annual rentals for leases in effect at December 31, 1997 follow:

<TABLE>
<CAPTION>
                                      Equipment
   Year Ending                      Under Capital        Operating
  December 31,                          Leases            Leases
  ------------                       ------------      ------------
<S>                                <C>               <C>
      1998                         $   32,859        $  191,250
      1999                             26,694           203,750
      2000                             22,508           216,250
      2001                                  -           228,750
      2002                                  -           241,250
   Thereafter                               -           999,750
                                   ----------        ----------

Total minimum rentals                  82,061        $2,081,000
                                                     ==========
Less interest portion                 (17,414)
                                   ----------

Present value of net
 minimum rentals                   $   64,647
                                   ==========
</TABLE>

Total rent expense under operating leases for the year ended December 31,
1997 and 1996 amounted to $286,329 and $80,410, respectively.


NOTE 6 - LONG-TERM DEBT

Long-term debt includes the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
                                                                         1997                1996
                                                                      ---------           ---------
<S>                                                                    <C>                  <C>
Note payable, requires monthly payments of principal
and interest at prime plus 2%, 10.5% at December 31,
1997, and is due in 1998.  The note is uncollateralized
and personally guaranteed by certain shareholders.                     $ 22,029             $ 41,986

Notes payable, requires monthly payments of principal and
interest (10.98% at December 31, 1997), and due in 1999.
The notes are collateralized by certain equipment                         5,789                3,799

Notes payable, shareholders, represents loans from certain
shareholders for working capital purposes.  Interest incurred
on such notes amounted to $4,039 for 1997 and $13,758 for
1996.                                                                         -               99,103
                                                                       --------             --------

                                                                       $ 27,818             $144,888
                                                                       ========             ========
</TABLE>



                                      F-13
<PAGE>   38
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


NOTE 6 - LONG-TERM DEBT, CONTINUED

Principal payments due on long-term debt in years subsequent to December 31,
1997 are $25,376 in 1998 and $2,442 in 1999.


NOTE 7 - RELATED PARTY TRANSACTIONS

Management Agreement

On June 1, 1997, the Company consummated a one-year agreement with URCI for the
management of its Company-owned restaurants (see Note 1).  One of URCI's
stockholders is a shareholder in Sforza and another shareholder is a member of
Sforza's Board of Directors.  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.  Under the terms of
the option agreement, no options or shares issued pursuant to the option
agreement may be sold or transferred prior to March 31, 1999.  URCI also has
agreed to manage each of the Max's Grille Restaurants owned by the limited
partnerships (see Note 3).

URCI provided management services to the Company-owned restaurants pursuant to
an informal agreement from February through May 1997.  Under these
arrangements, URCI's management fees totaled $58,000 through October 31, 1997.
Thereafter, URCI receives a fee equal to one percent of net sales plus twenty
percent of the net operating profit of the restaurants as defined in the
agreement.  Total management fees incurred in 1997 amounted to $63,309.

Due to Shareholders

Due to shareholders represents outstanding borrowings from certain shareholders
for working capital purposes.  Such borrowings are uncollateralized,
non-interest bearing, and due on demand.

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.



                                      F-14
<PAGE>   39
               SFORZA ENTERPRISES INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 8 - INCOME TAXES

The shareholders of Castle Room, Inc. elected for it to be treated as an S
Corporation for federal income tax purposes, whereby taxable income or loss is
apportioned among shareholders rather than taxed directly to the corporation
from its inception in 1995.  Effective July 29, 1996, in connection with the
exchange of shares among the shareholders of Castle Room, Inc., Clematis Bistro
Corporation, Sushi Enterprises, Inc., and Sforza Enterprises Inc. (see Note 1),
Castle Room, Inc. became a wholly-owned subsidiary of Sforza Enterprises Inc.
and no longer qualified for treatment as an S Corporation for federal income
tax purposes for periods subsequent to July 29, 1996.  Commencing July 24,
1996, the Company files consolidated federal income tax returns.

The income tax expense (benefit) for the years ended December 31, 1997 and 1996
consists as follows:

<TABLE>
<CAPTION>
                                                   1997
                            -------------------------------------------------
                              Current             Deferred            Total
                            -----------          ----------        ----------
         <S>              <C>                  <C>               <C>
         Federal          $ (11,663)           $   5,881         $  (5,782)
         State               (3,596)                 187            (3,409)
                          ---------            ---------         ---------
                          $ (15,259)           $   6,068         $  (9,191)
                          =========            =========         =========
</TABLE>

<TABLE>
<CAPTION>
                                                   1996
                            -------------------------------------------------
                              Current             Deferred            Total
                            -----------          ----------         ---------
         <S>             <C>                   <C>               <C>

         Federal         $   11,791            $  (5,881)        $   5,910
         State                3,596                 (187)            3,409
                         ----------            ---------         ---------
                         $   15,387            $  (6,068)        $   9,319
                         ==========            =========         =========
</TABLE>

At December 31, 1997, the Company has a net operating loss carryforward
approximating $312,000 for federal income tax purposes, expiring in 2112,
which may be carried forward to offset future taxable income.  General tax
credit carryforwards which total $10,813 and expire in the years 2111 and
2112 are also available at December 31, 1997.

Reconciliations of the effective income tax rate with the U.S. statutory
income tax rate for the years ended December 31, 1997 and 1996 are
presented as follows:
<TABLE>
<CAPTION>
                                                    1997              1996
                                                   -----------------------
         <S>                                     <C>             <C>

         U.S. statutory rate                     (34.0)%          34.0%
         Preferred stock dividends                 8.9                -
         Stock options granted                     8.3                -
         Valuation allowance                      13.7                -
         S Corporation income                        -           (20.2)
         Surtax bracket difference                   -            (7.5)
         State income tax, net of federal
           benefit                                   -              .8
         Other, net                                2.0            (1.1)
                                                  ----           -----
         Effective income tax rate                (1.1)%           6.0%
                                                  ====           =====
</TABLE>





                                      F-15
<PAGE>   40
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED


NOTE 8 - INCOME TAXES, CONTINUED

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, 1997 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, 1997 and
1996:
<TABLE>
<CAPTION>
                                                                           1997               1996
                                                                        ----------         ----------
<S>                                                                    <C>                 <C>
Gross deferred tax assets:
  Accrued expenses not deducted                                        $ 28,990            $ 8,004
  Operating loss carryforward                                           117,522                  -
  Tax credit carryforwards                                               10,813              4,789
  Tax inventory difference                                                1,578                790
  Depreciation difference                                                     -              1,135
                                                                       --------            -------

                                                                        158,903             14,718
                                                                       --------            -------

Gross deferred tax liabilities:
  Capitalized interest                                                  (11,451)            (8,650)
  Depreciation difference                                               (11,654)                 -
                                                                       --------            -------

                                                                        (23,105)            (8,650)
                                                                       --------            -------

Valuation allowance                                                    (135,798)                 -
                                                                       --------            -------

    Net deferred tax assets                                            $      -            $ 6,068
                                                                       ========            =======
</TABLE>

Balance sheet classifications of deferred taxes are as follows:

<TABLE>
<CAPTION>
                                                                         1997               1996
                                                                       --------           --------
<S>                                                                    <C>                 <C>
    Deferred tax asset - current                                       $      -            $13,583
    Deferred tax liability - noncurrent                                       -             (7,515)
                                                                       --------            -------
                                       
      Net deferred tax asset                                           $      -            $ 6,068
                                                                       ========            =======
</TABLE>





                                      F-16
<PAGE>   41
                    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, 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
Series A shares as of December 31, 1997.

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).

Reverse Stock Split

On November 3, 1997, the Board of Directors authorized a two-for-one reverse
stock split.  The change in the capital structure was given retroactive effect
in the consolidated balance sheet at December 31, 1996 and all per share data
have been restated to reflect the reverse split. In connection with the reverse
split, common stock was debited and additional paid in capital was credited,
effective December 31, 1996, for the aggregate par value attributable to the
share reduction.



                                      F-17
<PAGE>   42
                    SFORZA ENTERPRISES INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

NOTE 9 - SHAREHOLDERS' EQUITY, CONTINUED

Stock Option Plan

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.

Common Stock Options and Warrants

As of December 31, 1997, the Company has outstanding warrants to purchase
650,000 shares of common stock in connection with its initial public offering
(see Note 1) at $9.50 per share at any time through November 2002.  The
warrants 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
granted options to purchase up to 97,500 additional units for a sixty-day
period.  Such options expired unexercised in January 1998.  In addition, the
Company sold to JCA an option to purchase 65,000 units at $11.63 for nominal
consideration which are exercisable through 2002.

NOTE 10 - SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

Supplemental statement of cash flows information for the years ended December
31, 1997 and 1996 follows:

<TABLE>
<CAPTION>
                                                                          1997               1996
                                                                        ---------          ---------
<S>                                                                   <C>                 <C>
Non-cash investing activities:
  Equipment recorded under capital
    leases                                                            $       -           $ 90,873
                                                                      =========           ========

Non-cash financing activities:
  Capital lease obligations assumed                                   $       -           $ 90,873
  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                                   $       -           $ 90,873
                                                                      =========           ========

Cash payments for:
  Interest                                                            $  43,801           $ 22,697
                                                                      =========           ========

  Income taxes                                                        $  15,387           $      -
                                                                      =========           ========
</TABLE>


                                      F-18