================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
---
 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
---  ACT OF 1934

FOR THE QUARTER ENDED APRIL 21, 2002            COMMISSION FILE NUMBER 333-90817

                                  SBARRO, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

         NEW YORK                                             11-2501939
(STATE OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER I.D. NO.)
INCORPORATION OR ORGANIZATION)

401 BROAD HOLLOW ROAD, MELVILLE, NEW YORK                       11747
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                    (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:        (631) 715-4100

     INDICATE  BY CHECK MARK  WHETHER THE  REGISTRANT  (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE  ACT OF
1934 DURING THE  PRECEDING  12 MONTHS,  AND (2) HAS BEEN  SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.

YES      X                 NO
   ---------------           ---------------

THE NUMBER OF SHARES OF COMMON STOCK OF THE REGISTRANT OUTSTANDING AS OF MAY 31,
2002 WAS 7,064,328.

================================================================================

<PAGE>

                                  SBARRO, INC.

                                 FORM 10-Q INDEX
                                 ---------------

PART I.     FINANCIAL INFORMATION                                          PAGES
            ---------------------                                          -----

Consolidated Financial Statements:

       Balance Sheets - April 21, 2002 (unaudited) and December 30, 2001.....3-4

       Statements of Operations (unaudited) - Sixteen Weeks
         ended April 21, 2002 and April 22, 2001...............................5

       Statements of Cash Flows (unaudited) - Sixteen Weeks ended
         April 21, 2002 and April 22, 2001...................................6-7

       Notes to Unaudited Consolidated Financial Statements -
         April 21, 2002.....................................................8-23

Management's Discussion and Analysis of Financial Condition and
         Results of Operations.............................................24-31

Qualitative and Quantitative Disclosures of Market Risk ......................31

PART II.    OTHER INFORMATION ................................................32


                                      Pg. 2

<PAGE>

PART 1 - FINANCIAL INFORMATION

                          SBARRO, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>

                                                                    (IN THOUSANDS EXCEPT SHARE DATA)
                                                                    --------------------------------
                                                                APRIL 21, 2002        DECEMBER 30, 2001
                                                                --------------        -----------------
                                                                 (UNAUDITED)
<S>                                                                <C>                     <C>
CURRENT ASSETS:

   CASH AND CASH EQUIVALENTS                                       $ 22,558                $ 36,952
   RESTRICTED CASH FOR UNTENDERED SHARES (NOTE 3)                        43                      45
   RECEIVABLES, NET OF ALLOWANCE FOR DOUBTFUL
      ACCOUNTS OF $175:
      FRANCHISEE                                                      1,806                   2,162
      OTHER                                                           3,000                   2,797
                                                                   --------                --------
                                                                      4,806                   4,959

   INVENTORIES                                                        3,048                   3,537
   LOANS RECEIVABLE FROM SHAREHOLDERS (NOTE 8)                        3,232                      --
   PREPAID EXPENSES                                                   3,389                   1,242
                                                                   --------                --------
      TOTAL CURRENT ASSETS                                           37,076                  46,735

PROPERTY AND EQUIPMENT, NET                                         126,681                 132,303

INTANGIBLE ASSETS:
  TRADEMARKS AND TRADENAMES, NET (NOTE 2)                           195,916                 195,916
  GOODWILL, NET (NOTE 2)                                              9,204                   9,204
  DEFERRED FINANCING COSTS, NET                                       7,377                   7,707

LOANS RECEIVABLE FROM SHAREHOLDERS (NOTE 8)                           2,800                   6,032

OTHER ASSETS                                                          6,894                   6,865
                                                                   --------                --------
                                                                   $385,948                $404,762
                                                                   ========                ========

</TABLE>

                                   (CONTINUED)


                                      PG. 3

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                        (IN THOUSANDS EXCEPT SHARE DATA)
                                                       -----------------------------------
                                                       APRIL 21, 2002    DECEMBER 30, 2001
                                                       --------------    -----------------
                                                        (UNAUDITED)
<S>                                                        <C>              <C>
CURRENT LIABILITIES:
   AMOUNTS DUE FOR UNTENDERED SHARES                       $     43         $     45
   ACCOUNTS PAYABLE                                           8,372            9,107
   ACCRUED EXPENSES                                          17,268           24,648
   ACCRUED INTEREST PAYABLE (NOTE 5)                          2,787            8,181
   CURRENT PORTION OF MORTGAGE PAYABLE                          145              140
                                                           --------         --------
      TOTAL CURRENT LIABILITIES                              28,615           42,121

DEFERRED RENT                                                 8,652            8,479

LONG-TERM DEBT, NET OF ORIGINAL ISSUE
     DISCOUNT (NOTE 5)                                      267,783          267,718

CONTINGENCIES (NOTE 9)

SHAREHOLDERS' EQUITY:
   PREFERRED STOCK, $1 PAR VALUE; AUTHORIZED
     1,000,000 SHARES; NONE ISSUED                               --               --
   COMMON STOCK, $.01 PAR VALUE; AUTHORIZED
     40,000,000 SHARES; ISSUED AND OUTSTANDING
     7,064,328 SHARES AT APRIL 21, 2002 AND
     DECEMBER 30, 2001                                           71               71
   ADDITIONAL PAID-IN CAPITAL                                    10               10
   RETAINED EARNINGS                                         80,817           86,363
                                                           --------         --------
                                                             80,898           86,444
                                                           --------         --------
                                                           $385,948         $404,762
                                                           ========         ========

</TABLE>

            SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


                                      PG. 4

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                              (IN THOUSANDS)
                                                    ----------------------------------
                                                        FOR THE SIXTEEN WEEKS ENDED:
                                                    ----------------------------------
                                                    APRIL 21, 2002     APRIL 22, 2001
                                                    --------------     ---------------
<S>                                                    <C>               <C>
REVENUES:
   RESTAURANT SALES                                    $ 100,769         $ 107,706
   FRANCHISE RELATED INCOME                                2,743             3,192
   REAL ESTATE AND OTHER                                   1,694             1,848
                                                       ---------         ---------
    TOTAL REVENUES                                       105,206           112,746
                                                       ---------         ---------
COSTS AND EXPENSES:
   RESTAURANT OPERATING EXPENSES:
    COST OF FOOD AND PAPER PRODUCTS                       20,008            21,928
    PAYROLL AND OTHER EMPLOYEE BENEFITS                   28,489            30,311
    OTHER OPERATING COSTS                                 35,717            36,120
   DEPRECIATION AND AMORTIZATION (NOTE 2)                  6,824             9,600
   GENERAL AND ADMINISTRATIVE                              7,155             9,584
   PROVISION FOR RESTAURANT CLOSINGS                         124                75
                                                       ---------         ---------
    TOTAL COSTS AND EXPENSES                              98,317           107,618
                                                       ---------         ---------
OPERATING INCOME BEFORE MINORITY INTEREST                  6,889             5,128
MINORITY INTEREST                                            (19)                8
                                                       ---------         ---------
    OPERATING INCOME                                       6,870             5,136
                                                       ---------         ---------
OTHER INCOME (EXPENSE):
   INTEREST EXPENSE (NOTE 5)                              (9,574)           (9,648)
   INTEREST INCOME                                           154               392
   EQUITY IN NET INCOME OF
      UNCONSOLIDATED AFFILIATES                              261                86
                                                       ---------         ---------
    NET OTHER EXPENSE                                     (9,159)           (9,170)
                                                       ---------         ---------
LOSS BEFORE INCOME TAXES                                  (2,289)           (4,034)
INCOME TAXES (NOTE 6)                                        132                75
                                                       ---------         ---------
NET LOSS                                               $  (2,421)        $  (4,109)
                                                       =========         =========

</TABLE>

            SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


                                      PG. 5

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                              (IN THOUSANDS)
                                                    ----------------------------------
                                                        FOR THE SIXTEEN WEEKS ENDED:
                                                    ----------------------------------
                                                    APRIL 21, 2002     APRIL 22, 2001
                                                    --------------     ---------------
<S>                                                    <C>               <C>
OPERATING ACTIVITIES:

NET LOSS                                               $ (2,421)         $ (4,109)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
   CASH USED IN OPERATING ACTIVITIES:
    DEPRECIATION AND AMORTIZATION                         7,271            10,049
    INCREASE IN DEFERRED RENT, NET                          262               (94)
    MINORITY INTEREST                                        19                (8)
    EQUITY IN NET INCOME OF
      UNCONSOLIDATED AFFILIATE                             (261)              (86)
    DIVIDENDS RECEIVED FROM
      UNCONSOLIDATED AFFILIATE                              311               244

CHANGES IN OPERATING ASSETS AND LIABILITIES:
    DECREASE (INCREASE) IN RECEIVABLES                      154              (244)
    DECREASE IN INVENTORIES                                 490               465
    INCREASE IN PREPAID EXPENSES                         (2,147)           (2,247)
    DECREASE IN OTHER ASSETS                                 --               285
    DECREASE IN ACCOUNTS PAYABLE
      AND ACCRUED EXPENSES                               (7,786)           (7,369)
    DECREASE IN ACCRUED INTEREST PAYABLE                 (5,394)           (5,298)
                                                       --------          --------
NET CASH USED IN OPERATING ACTIVITIES                    (9,502)           (8,412)

</TABLE>

                                   (CONTINUED)


                                      PG. 6

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                              (IN THOUSANDS)
                                                    ----------------------------------
                                                        FOR THE SIXTEEN WEEKS ENDED:
                                                    ----------------------------------
                                                    APRIL 21, 2002     APRIL 22, 2001
                                                    --------------     ---------------
<S>                                                    <C>               <C>
INVESTING ACTIVITIES:

PURCHASES OF PROPERTY AND EQUIPMENT                    $ (1,721)         $ (5,526)
                                                       --------          --------
  NET CASH USED IN INVESTING ACTIVITIES                  (1,721)           (5,526)
                                                       --------          --------

FINANCING ACTIVITIES:

MORTGAGE PRINCIPAL REPAYMENTS                               (46)              (42)
PURCHASE OF MINORITY INTEREST                                --            (1,000)
LOANS TO SHAREHOLDERS                                        --            (3,932)
REPAYMENT OF SHAREHOLDER LOANS                               --               700
TAX DISTRIBUTIONS RELATED TO THE PRIOR FISCAL
   YEAR                                                  (3,125)           (7,564)
DIVIDENDS                                                    --            (5,000)
                                                       --------          --------
   NET CASH USED IN FINANCING ACTIVITIES                 (3,171)          (16,838)
                                                       --------          --------

DECREASE IN CASH AND CASH EQUIVALENTS                   (14,394)          (30,776)

CASH AND CASH EQUIVALENTS AT BEGINNING OF
   PERIOD                                                36,952            42,319
                                                       --------          --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $ 22,558          $ 11,543
                                                       ========          ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

CASH PAID DURING THE PERIOD FOR INCOME TAXES           $    340          $    523
                                                       ========          ========
CASH PAID DURING THE PERIOD FOR INTEREST               $ 14,497          $ 14,491
                                                       ========          ========

</TABLE>


            SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


                                      PG. 7

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION:

     The  accompanying  unaudited  consolidated  financial  statements have been
     prepared in accordance with the  instructions  for Form 10-Q and Regulation
     S-X related to interim period financial  statements and, therefore,  do not
     include  all  information  and  footnotes  required by  generally  accepted
     accounting  principles.  However,  in the  opinion of our  management,  all
     adjustments  (consisting  of normal  recurring  adjustments  and  accruals)
     considered necessary for a fair presentation of the consolidated  financial
     position  of  Sbarro  and  our  subsidiaries  at  April  21,  2002  and our
     consolidated  results of  operations  and cash flows for the  sixteen  week
     periods  ended April 21, 2002 and April 22,  2001 have been  included.  The
     results of operations for interim periods are not necessarily indicative of
     the results that may be expected for the entire year.  Reference  should be
     made to the  annual  financial  statements,  including  footnotes  thereto,
     included  in our  Annual  Report on Form  10-K for the  fiscal  year  ended
     December 30, 2001.

     Certain items in the financial  statements presented have been reclassified
     to conform to the fiscal 2002 presentation.

2.   RECENT ACCOUNTING PRONOUNCEMENTS:

     In July 2001, the Financial Accounting Standards Board issued Statements of
     Financial Accounting  Standards ("SFAS") No. 141, "Business  Combinations,"
     and No. 142, "Goodwill and Other Intangible  Assets." SFAS No. 141 requires
     all business combinations initiated after June 30, 2001 to be accounted for
     using the purchase method. SFAS No. 142 became effective with respect to us
     with  the  beginning  of  fiscal  2002.  SFAS  No.  142  requires  that the
     amortization  of goodwill  (which  resulted in a charge to earnings of $1.7
     million  for the first  sixteen  weeks of the 2001  fiscal  year)  cease on
     December 31, 2001. Under SFAS No. 142,  goodwill and intangible assets with
     indefinite  lives are no longer  amortized  but are  reviewed  annually for
     impairment (or more frequently if impairment  indicators arise).  Separable
     intangible  assets that are not deemed to have indefinite lives continue to
     be amortized  over their useful  lives.  We are currently in the process of
     completing our  preliminary  evaluations of goodwill and intangible  assets
     (trademarks and tradenames) with indefinite lives acquired prior to July 1,
     2001 ($205.2 million, net of accumulated  amortization of $19.3 million, at
     April  21,  2002).  We do not  believe  that the  evaluations  will  have a
     material impact on our financial position and results of operations.


                                      Pg. 8

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.   RECENT ACCOUNTING PRONOUNCEMENTS:

     The effect of the adoption of SFAS No. 142 on the reported net loss for the
     prior period is as follows:

<TABLE>
<CAPTION>

                                                                          Sixteen Weeks Ended
                                                                          -------------------
                                                                    April 21, 2002   April 22, 2001
                                                                    --------------   --------------
                                                                            (in thousands)
     <S>                                                               <C>              <C>
     Reported net loss                                                 $(2,421)         $(4,109)
     Add back: Amortization  of  goodwill  and  intangible  assets
     with indefinite lives                                                  --            1,671
                                                                       -------          -------

     Adjusted net loss                                                 $(2,421)         $(2,438)
                                                                       =======          =======

</TABLE>

     In August 2001, the Financial  Accounting  Standards  Board issued SFAS No.
     143,   "Accounting  for  Asset  Retirement   Obligations."  This  statement
     addresses   financial  and  reporting   obligations   associated  with  the
     retirement  of  tangible   long-lived   assets  and  the  associated  asset
     retirement  costs.  It applies  to legal  obligations  associated  with the
     retirement of long-lived assets that result from acquisition, construction,
     development  and/or the normal operation of long-lived  assets,  except for
     certain obligations of lessees.  SFAS No. 143 became effective with respect
     to us with the  beginning  of  fiscal  2002 and is not  expected  to have a
     material effect on our operations.

     In August 2001, the Financial  Accounting Standards Board issued Statements
     of Financial  Accounting  Standards  ("SFAS") No. 144,  "Accounting for the
     Impairment or Disposal of Long-lived  Assets."  This  statement  supersedes
     SFAS No. 121,  "Accounting for the Impairment of Long-lived  Assets and for
     Long-lived  Assets to be  Disposed  Of," and  Accounting  Principles  Board
     Opinion No. 30, "Reporting Results of  Operations-Reporting  the Effects of
     Disposal  of a  Segment  of  a  Business  and  Extraordinary,  Unusual  and
     Infrequently Occurring Events and Transactions." This Statement retains the
     fundamental  provisions of SFAS No. 121 for  recognition and measurement of
     impairment,  but amends the accounting and reporting standards for segments
     of a business to be disposed of. SFAS No. 144 became effective with respect
     to us with the  beginning of fiscal 2002.  The adoption of SFAS No. 144 has
     not had a material impact on our financial  position and operating results.
     We will continue to assess impairment of the assets of our restaurants on a
     restaurant-by-restaurant basis.

3.   UNTENDERED SHARES:

     During  the  second  quarter  of  fiscal  2001,  the  funds  remaining  for
     untendered  shares  that had been held by a third party  paying  agent were
     returned  to us. We will hold such  funds  until  the  related  shares  are
     tendered or escheated to the appropriate  jurisdiction.  At April 21, 2002,
     there was $43,000 being held by us for such untendered shares that is shown
     as  restricted   cash  and  amounts  due  for  untendered   shares  in  the
     consolidated balance sheet.


                                      Pg. 9

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4.   EFFECT OF EVENTS OF SEPTEMBER 11, 2001:

     As a result of the events of September 11, 2001, a  Sbarro-owned  location,
     as well as a  franchise  location,  that had  operated  in the World  Trade
     Center in New York City were destroyed.  Although the Sbarro-owned location
     generated  high sales  revenues  and  operating  income,  the effect on the
     results  for  the  first  quarter  of  fiscal  2002  was  not  material  to
     consolidated  results as a whole.  The franchise  location did not generate
     significant royalty revenues. In addition, a number of airports were closed
     due  to the  events  of  September  11  causing  airport  Sbarro-owned  and
     franchise  units to close for periods of time and those  airport  locations
     and a number of downtown locations have continued to experience a period of
     reduced sales through the first quarter of fiscal 2002.

     We are fully  insured for the cost of the assets  destroyed  at the Company
     location.  The  estimated  amount of the  expected  recovery is included in
     accounts receivable as of April 21, 2002. In addition, we expect to recover
     lost income from our business  interruption  insurance  coverage but, under
     applicable  accounting  principles,  we have not  reflected  any  estimated
     recoveries  in our  financial  statements.  In May 2002, we received a $1.5
     million advance against our claims.

5.   LONG-TERM DEBT:

     The cost of our "going  private"  merger in  September  1999 was  partially
     funded  by the  placement  of  $255.0  million  of 11.0%  Senior  Notes due
     September 15, 2009.

     We also entered into a Credit  Agreement that provides us with an unsecured
     senior revolving credit facility that enables us to borrow,  on a revolving
     basis from time to time during its  five-year  term,  up to $30.0  million,
     including  a $10.0  million  sublimit  for  standby  letters of credit.  No
     borrowings were outstanding under this credit facility, but $1.9 million of
     standby  letters  of credit  were  outstanding,  as of April 21,  2002.  We
     obtained a waiver of  compliance  for  fiscal  2001 from  certain  required
     ratios under the Credit Agreement and the ratios for fiscal 2002 and fiscal
     2003 were revised.

     Each  of  our  Restricted  Subsidiaries  (as  defined  in the  Senior  Note
     Indenture)  and our current  guaranteeing  subsidiaries  (as defined in the
     Credit  Agreement) have agreed to, and future  Restricted  Subsidiaries and
     guaranteeing subsidiaries are to, jointly,  severally,  unconditionally and
     irrevocably  guarantee our obligations  under the Senior Note Indenture and
     Credit Agreement, respectively, on a joint and several basis.

     In  March  2000,  one  of  our  Restricted  Subsidiaries  and  guaranteeing
     subsidiaries  obtained a $16.0 million, 8.4% loan due in 2010, secured by a
     mortgage on our  corporate  headquarters  building.  The loan is payable in
     monthly installments of principal and interest of $0.1 million.


                                     Pg. 10

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.   LONG-TERM DEBT (CONTINUED):

     We were in compliance  with the various  covenants in the Indenture for the
     Senior Notes, the Credit Agreement and the Mortgage as of April 21, 2002.

6.   INCOME TAXES:

     We have  elected to be taxed under the  provisions  of  Subchapter S of the
     Internal Revenue Code of 1986, and, where  applicable and permitted,  under
     similar state and local income tax provisions.  Accordingly,  we do not pay
     federal and, with certain limited exceptions,  state and local income taxes
     for  periods  for which we are  treated as an S  corporation.  Rather,  our
     shareholders  include their  pro-rata  share of our taxable income on their
     individual  income tax returns and thus are  required to pay taxes on their
     respective share of our taxable income, whether or not it is distributed to
     them.

     In connection with the going private transaction and the related financing,
     we entered  into a tax payment  agreement  with our  shareholders.  The tax
     payment  agreement  permits us to make  periodic tax  distributions  to our
     shareholders in amounts intended to approximate the income taxes, including
     estimated  taxes,  that would be payable by them if their only  income were
     their pro-rata share of our taxable income and that income was taxed at the
     highest applicable federal and New York state marginal income tax rates. We
     may only make the tax distributions with respect to periods in which we are
     treated as an S corporation for income tax purposes.

     During the sixteen weeks ended April 21, 2002,  we made tax  distributions,
     based on our tax basis income for fiscal 2001, of $3.1 million  compared to
     $7.6 million of tax distributions, based on our tax basis income for fiscal
     2000, during the sixteen weeks ended April 22, 2001.

7.   COMPREHENSIVE INCOME:

     The  Company's  operations  did not give  rise to any items  includible  in
     comprehensive  income  that were not  already  included  in net  income for
     either of the sixteen week periods ended April 21, 2002 or April 22, 2001.

8.   RELATED PARTY TRANSACTIONS:

     On April 5, 2001, we loaned $3.23  million to certain of our  shareholders,
     including:  Mario Sbarro, $1.08 million;  Joseph Sbarro, $1.24 million; and
     Anthony  Sbarro,  $0.87 million.  The related notes are payable on April 5,
     2003, and bear interest at the rate of 4.63% per annum, payable annually.

     On  December  28,  2001,  we  loaned  $2.8  million  to  our  shareholders,
     including:  Mario Sbarro,  $0.60  million;  Joseph  Sbarro,  $0.70 million;
     Anthony Sbarro, $0.49 million; and the Trust of


                                     Pg. 11

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8.   RELATED PARTY TRANSACTIONS:

     Carmela  Sbarro,  $0.99 million.  The related notes are payable on December
     28,  2004,  and  bear  interest  at the rate of 2.48%  per  annum,  payable
     annually.

9.   CONTINGENCIES:

     On December 20, 1999,  twelve current and former general managers of Sbarro
     restaurants  in  California  amended a  complaint  against  us filed in the
     Superior Court of California for Orange County.  The complaint alleges that
     the plaintiffs  were  improperly  classified as exempt  employees under the
     California  wage and hour law. The plaintiffs  are seeking actual  damages,
     punitive damages and costs of the lawsuit,  including reasonable attorney's
     fees, each in unspecified amounts. Plaintiffs filed a motion to certify the
     lawsuit as a class action, but the court denied the motion. We believe that
     we have  substantial  defenses to the claims and are  vigorously  defending
     this action.

     On September 6, 2000,  eight other current and former  general  managers of
     Sbarro  restaurants  in  California  filed a  complaint  against  us in the
     Superior Court of California for Orange County alleging that the plaintiffs
     were improperly  classified as exempt  employees under  California wage and
     hour law. The plaintiffs are seeking actual damages,  punitive  damages and
     costs  of the  lawsuit,  including  reasonable  attorney's  fees,  each  in
     unspecified amounts.  Plaintiffs are represented by the same counsel who is
     representing  the  plaintiffs  in  the  case  discussed  in  the  preceding
     paragraph.  We believe that we have substantial  defenses to the claims and
     are vigorously defending this action.

     On March 22, 2002,  five former general  managers of Sbarro  restaurants in
     California filed a complaint against us in the Superior Court of California
     for Los Angeles  County.  The complaint  alleges that the  plaintiffs  were
     illegally  required  to  perform  labor  services  without  proper  premium
     overtime compensation from at least May of 1999. The plaintiffs are seeking
     actual damages,  punitive  damages and attorney's  fees and costs,  each in
     unspecified  amounts.  In addition,  plaintiffs have requested class action
     status for all  managerial  employees who worked  overtime  and/or were not
     otherwise  paid  regular  wages due and owing from May 1999 to present.  We
     believe that we have substantial  defenses to the claims and are vigorously
     defending this action.

     From time to time, we are a party to certain  claims and legal  proceedings
     in the ordinary course of business,  none of which,  in our opinion,  would
     have a material  adverse  effect on our  financial  position  or results of
     operations.


                                     Pg. 12

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS:

     Certain  subsidiaries have guaranteed amounts  outstanding under the Senior
     Notes and Credit  Agreement.  Each of the guaranteeing  subsidiaries is our
     direct  or  indirect  wholly  owned  subsidiary  and  each  has  fully  and
     unconditionally  guaranteed the Senior Notes and the Credit  Agreement on a
     joint and several basis.

     The following condensed consolidating financial information presents:

     (1)  Condensed   consolidating   balance   sheets  as  of  April  21,  2002
          (unaudited)  and December 30, 2001 and  statements  of income and cash
          flows for the fiscal  quarters  ended April 21, 2002  (unaudited)  and
          April 22, 2001  (unaudited) of (a) Sbarro,  Inc., the parent,  (b) the
          guarantor  subsidiaries as a group, (c) the nonguarantor  subsidiaries
          as a group and (d) the Company on a consolidated basis, and

     (2)  Elimination entries necessary to consolidate Sbarro, Inc., the parent,
          with the guarantor and nonguarantor subsidiaries.

     The  principal  elimination  entries  eliminate  intercompany  balances and
     transactions.

     Investments  in  subsidiaries  are  accounted for by the parent on the cost
     method.


                                     Pg. 13

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                           CONSOLIDATING BALANCE SHEET
                              AS OF APRIL 21, 2002
                        (IN THOUSANDS EXCEPT SHARE DATA)
                                   (UNAUDITED)

                                     ASSETS

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                            PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                            ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>              <C>            <C>
Current assets:
  Cash and cash equivalents               $  16,930     $   4,064         $   1,564                       $  22,558
  Restricted cash for untendered shares          43            --                --                              43
  Receivables less allowance for
    doubtful accounts of $175:
    Franchise                                 1,806            --                --                           1,806
    Other                                     2,239           626               135                           3,000
                                          ---------     ---------         ---------                       ---------
                                              4,045           626               135                           4,806

  Inventories                                 1,167         1,586               295                           3,048
  Loans receivable from shareholders          3,232            --                --                           3,232
  Prepaid expenses                            2,671           623                95                           3,389
                                          ---------     ---------         ---------                       ---------
    Total current assets                     28,088         6,899             2,089                          37,076

Intercompany receivables                     12,733       288,723                --        $(301,456)            --

Investment in subsidiaries                   65,469            --                --          (65,469)            --

Property and equipment, net                  44,626        70,373            11,682               --        126,681

Intercompany receivables - long term          3,608            --                --           (3,608)            --

Intangible assets:
  Trademarks and tradenames, net            195,916            --                --               --        195,916
  Goodwill, net                               9,204            --                --               --          9,204
  Deferred financing costs, net               7,200           297                --             (120)         7,377

Loans receivable from shareholders            2,800            --                --               --          2,800

Other assets                                  8,225         1,642              (616)          (2,357)         6,894
                                          ---------     ---------         ---------        ---------      ---------

                                          $ 377,869     $ 367,934         $  13,155        $(373,010)     $ 385,948
                                          =========     =========         =========        =========      =========

</TABLE>


                                     Pg. 14

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                           CONSOLIDATING BALANCE SHEET
                              AS OF APRIL 21, 2002
                        (IN THOUSANDS EXCEPT SHARE DATA)
                                   (UNAUDITED)

                       LIABILITIES AND SHAREHOLDERS EQUITY

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                            PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                            ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>              <C>            <C>
Current liabilities:
  Amounts due for untendered shares       $      43                                                       $      43
  Accounts payable                            7,461     $     161         $     750                           8,372
  Accrued expenses                           13,909           499             2,860                          17,268
  Accrued interest payable                    2,787            --                --                           2,787
  Current portion of mortgage payable            --           145                --                             145
                                          ---------     ---------         ---------                       ---------
    Total current liabilities                24,200           805             3,610                          28,615

Intercompany payables                       288,723            --            12,733        $(301,456)            --

Deferred rent                                 7,783            --               869               --          8,652

Long-term debt, net of
  original issue discount                   252,186        15,597                --               --        267,783

Intercompany payables - long term                --         3,608                --           (3,608)            --

Shareholders' equity (deficit):
  Preferred stock, $1 par value;
    authorized 1,000,000 shares; none
    issued                                       --            --                --               --             --
  Common stock, $.01 par value:
    authorized 40,000,000 shares;
    issued and outstanding 7,064,328
    shares                                       71            --                --               --             71
  Additional paid-in capital                     10        65,469             2,477          (67,946)            10
  Retained earnings (deficit)              (195,104)      282,455            (6,534)              --         80,817
                                          ---------     ---------         ---------        ---------      ---------

                                           (195,023)      347,924            (4,057)         (67,946)        80,898
                                          ---------     ---------         ---------        ---------      ---------

                                          $ 377,869     $ 367,934         $  13,155        $(373,010)     $ 385,948
                                          =========     =========         =========        =========      =========

</TABLE>


                                     Pg. 15

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.      GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                           CONSOLIDATING BALANCE SHEET
                             AS OF DECEMBER 30, 2001
                        (IN THOUSANDS EXCEPT SHARE DATA)
                                     ASSETS

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                            PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                            ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>              <C>            <C>
Current assets:
  Cash and cash equivalents               $  29,673     $   5,437         $   1,842                       $  36,952
  Restricted cash for untendered shares          45            --                --                              45
  Receivables less allowance for
    doubtful accounts of $175:
    Franchise                                 2,162            --                --                           2,162
    Other                                     2,069           613               115                           2,797
                                          ---------     ---------         ---------                       ---------
                                              4,231           613               115                           4,959

  Inventories                                 1,413         1,771               353                           3,537
  Prepaid expenses                            1,916          (530)             (144)                          1,242
                                          ---------     ---------         ---------                       ---------
    Total current assets                     37,278         7,291             2,166                          46,735

Intercompany receivables                     12,079       281,438                --        $(293,517)            --

Investment in subsidiaries                   65,469            --                --          (65,469)            --

Property and equipment, net                  46,554        73,659            12,090               --        132,303

Intercompany receivables - long term          3,900            --                --           (3,900)            --

Intangible assets:
  Trademarks and tradenames, net            195,916            --                --               --        195,916
  Goodwill, net                               9,204            --                --               --          9,204
  Deferred financing costs, net               7,398           309                --               --          7,707

Loans receivable from shareholders            6,032            --                --               --          6,032

Other assets                                  8,065         1,852              (576)          (2,476)         6,865
                                          ---------     ---------         ---------        ---------      ---------
                                          $ 391,895     $ 364,549         $  13,680        $(365,362)     $ 404,762
                                          =========     =========         =========        =========      =========

</TABLE>


                                     Pg. 16

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                           CONSOLIDATING BALANCE SHEET
                             AS OF DECEMBER 30, 2001
                        (IN THOUSANDS EXCEPT SHARE DATA)
                       LIABILITIES AND SHAREHOLDERS EQUITY

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                            PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                            ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>              <C>            <C>
Current liabilities:
  Amounts due for untendered shares       $      45                                                       $      45
  Accounts payable                            8,014     $     164         $     929                           9,107
  Accrued expenses                           19,392         1,824             3,432                          24,648
  Accrued interest payable                    8,181            --                --                           8,181
  Current portion of mortgage payable            --           140                --                             140
                                          ---------     ---------         ---------                       ---------
    Total current liabilities                35,632         2,128             4,361                          42,121

Intercompany payables                       281,438            --            12,078        $(293,516)            --

Deferred rent                                 7,512            --               967               --          8,479

Long-term debt, net of
  original issue discount                   252,070        15,648                --               --        267,718

Intercompany payables - long term                --         3,900                --           (3,900)            --

Shareholders' equity (deficit):
  Preferred stock, $1 par value;
    authorized 1,000,000 shares; none
    issued                                       --            --                --               --             --
  Common stock, $.01 par value:
    authorized 40,000,000 shares;
    issued and outstanding 7,064,328
    shares                                       71            --                --               --             71
  Additional paid-in capital                     10        65,469             2,477          (67,946)            10
  Retained earnings (deficit)              (184,838)      277,404            (6,203)              --         86,363
                                          ---------     ---------         ---------        ---------      ---------

                                           (184,757)      342,873            (3,726)         (67,946)        86,444
                                          ---------     ---------         ---------        ---------      ---------

                                          $ 391,895     $ 364,549         $  13,680        $(365,362)     $ 404,762
                                          =========     =========         =========        =========      =========

</TABLE>


                                     Pg. 17

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                      CONSOLIDATING STATEMENT OF OPERATIONS
                   FOR THE SIXTEEN WEEKS ENDED APRIL 21, 2002
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                            PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                            ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>              <C>            <C>

Revenues:
  Restaurant sales                        $  41,413     $  52,203         $   7,153                       $ 100,769
  Franchise related income                    2,743            --                --                           2,743
  Real estate and other                         809         1,161                --        $    (276)         1,694
  Intercompany charges                           --         4,050                --           (4,050)            --
                                          ---------     ---------         ---------        ---------      ---------
         Total revenues                      44,965        57,414             7,153           (4,326)       105,206
                                          ---------     ---------         ---------        ---------      ---------
Cost and expenses:
  Restaurant operating expenses:
       Cost of food and paper products        7,378        10,754             1,876               --         20,008
       Payroll and other employee
         benefits                            10,722        15,170             2,597               --         28,489
       Other operating costs                 14,781        18,417             2,519               --         35,717
  Depreciation and amortization               2,927         3,532               365               --          6,824
  General and administrative                  3,600         3,728               103             (276)         7,155
  Provision for restaurant closings             100            --                24               --            124
  Intercompany charges                        4,050            --                --           (4,050)            --
                                          ---------     ---------         ---------        ---------      ---------
       Total costs and expenses              43,558        51,601             7,484           (4,326)        98,317
                                          ---------     ---------         ---------        ---------      ---------

Operating income (loss) before minority
  interest                                    1,407         5,813              (331)              --          6,889
Minority interest                                --            --               (19)              --            (19)
                                          ---------     ---------         ---------        ---------      ---------
Operating income (loss)                       1,407         5,813              (350)              --          6,870
                                          ---------     ---------         ---------        ---------      ---------

Other (expense) income:
  Interest expense                           (9,121)         (453)               --               --         (9,574)
  Interest income                               154            --                --               --            154
  Equity in net income  of
    unconsolidated affiliates
                                                261            --                --               --            261
                                          ---------     ---------         ---------        ---------      ---------

Net other expense                            (8,706)         (453)               --               --         (9,159)
                                          ---------     ---------         ---------        ---------      ---------

Income (loss) before income taxes            (7,299)        5,360              (350)              --         (2,289)
Income taxes (benefit)                         (158)          309               (19)              --            132
                                          ---------     ---------         ---------        ---------      ---------

Net income (loss)                         $  (7,141)    $   5,051         $    (331)       $      --      $  (2,421)
                                          =========     =========         =========        =========      =========

</TABLE>


                                     Pg. 18

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                      CONSOLIDATING STATEMENT OF OPERATIONS
                   FOR THE SIXTEEN WEEKS ENDED APRIL 22, 2001
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                            PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                            ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>              <C>            <C>
Revenues:
  Restaurant sales                        $  44,862     $  54,587             8,257                       $ 107,706
  Franchise related income                    3,192            --                --                           3,192
  Real estate and other                         802         1,046                --                           1,848
  Intercompany charges                           --         3,806                --        $  (3,806)            --
                                          ---------     ---------         ---------        ---------      ---------
         Total revenues                      48,856        59,439             8,257           (3,806)       112,746
                                          ---------     ---------         ---------        ---------      ---------

Cost and expenses:
  Restaurant operating expenses:
       Cost of food and paper products        8,237        11,439             2,252               --         21,928
       Payroll and other employee
         benefits                            11,886        15,615             2,810               --         30,311
       Other operating costs                 15,047        18,140             2,933               --         36,120
  Depreciation and amortization               4,981         4,171               448               --          9,600
  General and administrative                  4,502         4,778               304               --          9,584
  Provision for restaurant closings              75            --                --               --             75
  Intercompany charges                        3,806            --                --           (3,806)            --
                                          ---------     ---------         ---------        ---------      ---------
       Total costs and expenses              48,534        54,143             8,747           (3,806)       107,618
                                          ---------     ---------         ---------        ---------      ---------

Operating income (loss) before minority
  interest                                      322         5,296              (490)              --          5,128
Minority interest                                --            --                 8               --              8
                                          ---------     ---------         ---------        ---------      ---------
Operating income (loss)                         322         5,296              (482)              --          5,136
                                          ---------     ---------         ---------        ---------      ---------

Other (expense) income:
  Interest expense                           (9,190)         (458)             (470)             470         (9,648)
  Interest income                               862            --                --             (470)           392
  Equity in net income  of
    unconsolidated affiliates                    86            --                --               --             86
                                          ---------     ---------         ---------        ---------      ---------

Net other expense                            (8,242)         (458)             (470)              --         (9,170)
                                          ---------     ---------         ---------        ---------      ---------

Income (loss) before income taxes            (7,920)        4,838              (952)              --         (4,034)
Income taxes (benefit)                          (49)          154               (30)              --             75
                                          ---------     ---------         ---------        ---------      ---------

Net income (loss)                         $  (7,871)    $   4,684         $    (922)       $      --      $  (4,109)
                                          =========     =========         =========        =========      =========

</TABLE>


                                     Pg. 19

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                      CONSOLIDATING STATEMENT OF CASH FLOWS
                   FOR THE SIXTEEN WEEKS ENDED APRIL 21, 2002
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
OPERATING ACTIVITIES:                       PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
--------------------                        ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>              <C>            <C>
Net (loss) income                         $ (7,141)     $  5,051          $   (331)                       $ (2,421)
Adjustments to reconcile net (loss)
  income to net cash (used in) provided
  by operating activities:
    Depreciation and amortization            3,362         3,544               365                           7,271
    Increase in deferred rent, net             272           (54)               44                             262
    Minority interest                           --            --                19                              19
    Equity in income of
     unconsolidated affiliates                (261)           --                --                            (261)
    Dividends received from
     unconcolidated affiliates                 311            --                --                             311
    Changes in operating assets
     and liabilities:
     Decrease (increase) in receivables        187           (13)              (20)                            154
     Decrease in inventories                   246           186                58                             490
     Increase in prepaid assets               (755)       (1,153)             (239)                         (2,147)
     (Increase) decrease in other assets      (183)          264                39         $   (120)            --
     (Decrease) increase in accounts
       payable and accrued expenses         (5,854)       (1,162)             (890)             120         (7,786)
     Decrease in accrued interest
       payable                              (5,394)           --                --               --         (5,394)
                                          --------      --------          --------         --------       --------
Net cash (used in) provided by
  operating activities                     (15,210)        6,663              (955)              --         (9,502)

Investing activities:
---------------------

Purchases of property and equipment         (1,347)         (416)               42               --         (1,721)
                                          --------      --------          --------         --------       --------
Net cash (used in) provided by
     investing activities                   (1,347)         (416)               42               --         (1,721)

</TABLE>


                                     Pg. 20

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                      CONSOLIDATING STATEMENT OF CASH FLOWS
                   FOR THE SIXTEEN WEEKS ENDED APRIL 21, 2002
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                            PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                            ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>                 <C>         <C>
Financing activities:
---------------------
Mortgage principal repayments                   --           (46)               --            --               (46)
Distributions to shareholders               (3,125)           --                --            --            (3,125)
Intercompany balances                        6,939        (7,574)              635            --                --
                                          --------      --------          --------       -------          --------
Net cash (used in) provided
  by financing activities                    3,814        (7,620)              635            --            (3,171)
                                          --------      --------          --------       -------          --------

Decrease in cash and
 cash equivalents                          (12,743)       (1,373)             (278)           --           (14,394)
Cash and cash equivalents at
 beginning of period                        29,673         5,437             1,842            --            36,952
                                          --------      --------          --------       -------          --------
Cash and cash equivalents at
 end of period                            $ 16,930      $  4,064          $  1,564            --          $ 22,558
                                          ========      ========          ========       =======          ========

Supplemental disclosure of cash flow
 information:
Cash paid during the period for
 income taxes                             $    233      $    107          $     --            --          $    340
                                          ========      ========          ========       =======          ========
Cash paid during the period for           $ 14,055      $    442          $     --            --          $ 14,497
                                          ========      ========          ========       =======          ========

</TABLE>


                                     Pg. 21

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                      CONSOLIDATING STATEMENT OF CASH FLOWS
                   FOR THE SIXTEEN WEEKS ENDED APRIL 22, 2001
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
OPERATING ACTIVITIES                        PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
--------------------                        ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>            <C>              <C>
Net (loss) income                         $ (7,871)     $  4,684          $   (922)                       $ (4,109)
Adjustments to reconcile net (loss)
  income to net cash (used in)
  provided  by operating activities:
  Depreciation and amortization              5,417         4,184               448                          10,049
  Increase in deferred rent, net                 6          (100)               --                             (94)
  Minority interest                             --            --                (8)                             (8)
  Equity in income of unconsolidated
   affiliates                                  (86)           --                --                             (86)
  Dividends received from
   unconsolidated affiliates                   244            --                --                             244
  Changes in operating assets and
   liabilities:
   (Increase) decrease in receivables         (504)          255                 5                            (244)
   Decrease in inventories                     199           235                31                             465
   (Increase) decrease in prepaid
   expenses                                 (1,577)         (672)                2                          (2,247)
   (Increase) decrease in other assets       1,594        (1,388)               79                             285
   (Decrease) increase in accounts
   payable and accrued expenses             (7,932)        1,169              (606)                         (7,369)
   Decrease in accrued interest payable     (5,298)           --                --                          (5,298)
                                          --------      --------          --------                        --------
Net cash (used in) provided by
 operating activities                      (15,808)        8,367              (971)                         (8,412)

Investing activities:
---------------------
Purchase of property and equipment          (1,954)       (2,627)             (945)                         (5,526)
                                          --------      --------          --------                        --------

Net cash used in investing activities       (1,954)       (2,627)             (945)                         (5,526)

</TABLE>


                                     Pg. 22

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10.  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS (CONTINUED):

                      CONSOLIDATING STATEMENT OF CASH FLOWS
                   FOR THE SIXTEEN WEEKS ENDED APRIL 22, 2001
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                         GUARANTOR       NONGUARANTOR                    CONSOLIDATED
                                            PARENT      SUBSIDIARIES     SUBSIDIARIES    ELIMINATIONS       TOTAL
                                            ------      ------------     ------------    ------------       -----
<S>                                       <C>           <C>               <C>            <C>              <C>
Financing activities:
Mortgage principal repayments                           $    (42)                                         $    (42)
Purchase of minority interest             $ (1,000)           --                                            (1,000)
Loan to shareholders                        (3,932)           --                                            (3,932)
Repayment to shareholder loans                 700            --                                               700
Distributions to shareholders              (12,564)           --                                           (12,564)
Intercompany balances                        3,843        (5,772)         $  1,929                              --
                                          --------      --------          --------                        --------
Net cash (used in) provided
  by financing activities                  (12,953)       (5,814)            1,929                         (16,838)
                                          --------      --------          --------                        --------

(Decrease) increase in cash and
  cash equivalents                         (30,715)          (74)               13                         (30,776)
Cash and cash equivalents at
  beginning of period                       36,962         4,232             1,125                          42,319
                                          --------      --------          --------                        --------
Cash and cash equivalents at
  end of period                           $  6,247      $  4,158          $  1,138                        $ 11,543
                                          ========      ========          ========                        ========

Supplemental disclosure of cash flow
  information:
Cash paid during the period for
  income taxes                            $    123      $    393          $      7                        $    523
                                          ========      ========          ========                        ========

Cash paid during the period for
  interest                                $ 14,033      $    458          $     --                        $ 14,491
                                          ========      ========          ========                        ========

</TABLE>


                                     Pg. 23

<PAGE>

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

RESULTS OF OPERATIONS
---------------------

The following table provides information  concerning the number of Company-owned
and franchised restaurants in operation during each indicated period:

<TABLE>
<CAPTION>

                                             16 WEEKS     16 WEEKS             FISCAL YEAR
                                              ENDED        ENDED           -------------------
                                             04/21/02     04/22/01         2001           2000
                                             --------     --------         ----           ----
<S>                                           <C>            <C>            <C>            <C>
Company-owned restaurants:
 Opened during period                           2              1              9             13
 Acquired from (sold to)
  franchisees during period-net                --             --             --              1
 Closed during period                         (11)           (14)           (43)           (16)
                                             ----           ----           ----           ----
 Open at end of period (1)                    593            623            602            636

Franchised restaurants:
 Opened during period                           7              8             42             36
 Purchased from (sold to)
  Company during period-net                    --             --             --             (1)
 Closed or terminated during period            (8)            (2)           (20)           (18)
                                             ----           ----           ----           ----
 Open at end of period                        324            309            325            303

All restaurants:
 Opened during period                           9              9             51             49
 Closed or terminated during period           (19)           (16)           (63)           (34)
                                             ----           ----           ----           ----
 Open at end of period (1)                    917            932            927            939

Kiosks (all franchised) open at
  end of period                                 4              5              4              5

</TABLE>

----------
(1)  Excludes 34, 34, 37 and 33 new concept  units as of April 21,  2002,  April
     22, 2001, the end of fiscal 2001 and the end of fiscal 2000, respectively.


                                     Pg. 24

<PAGE>

Our  business  is subject to  seasonal  fluctuations,  the effect of weather and
economic  conditions and consumer  confidence in shopping safety.  Earnings have
been highest in our fourth fiscal  quarter due primarily to increased  volume in
shopping  malls during the holiday  shopping  season.  Historically,  the fourth
fiscal  quarter has  accounted  for  approximately  40% of annual  operating net
income before amortization of intangible assets. This percentage  fluctuates due
to the length of the holiday shopping period between Thanksgiving and New Year's
Day, the number of weeks in our fourth quarter, weather and economic conditions.

Our  consolidated  EBITDA for the  sixteen  weeks ended April 21, 2002 was $14.0
million and our EBITDA  margin was 13.3%,  compared to $14.8  million and 13.1%,
respectively,  for the sixteen  weeks ended April 22,  2001.  EBITDA  represents
earnings before interest  income,  interest  expense,  taxes,  depreciation  and
amortization.  EBITDA margin represents EBITDA divided by total revenues. EBITDA
should not be considered in isolation  from, or as a substitute for, net income,
cash  flow from  operations  or other  cash  flow  statement  data  prepared  in
accordance  with  generally  accepted  accounting  principles  ("GAAP")  or as a
measure of a company's  profitability or liquidity.  Rather, EBITDA is presented
because it is a widely accepted  supplemental  financial measure, and we believe
that it provides relevant and useful information.  Our calculation of EBITDA may
not be comparable to a similarly  titled  measure  reported by other  companies,
since all companies do not calculate  this non-GAAP  measure in the same manner.
Our EBITDA calculations are not intended to represent cash provided by (used in)
operating activities since they do not include interest and taxes and changes in
operating  assets and  liabilities,  nor are they  intended  to  represent a net
increase in cash since they do not include cash  provided by (used in) investing
and financing activities.

Restaurant sales from  Sbarro-owned  quick service units and consolidated  other
concept units decreased 6.4% to $100.8 million for the sixteen weeks ended April
21, 2002 from  $107.7  million in the sixteen  weeks ended April 22,  2001.  The
decrease in sales  reflects  $5.9 million of lower sales of Sbarro quick service
units and $1.0 million of lower sales of  consolidated  other concept units.  Of
the decline in Sbarro quick service unit restaurant  sales,  approximately  $4.1
million resulted from a 4.4% decrease in comparable unit sales to $89.6 million.
We believe this decline was attributable to a reduction in shopping mall traffic
related to the general  economic  downturn in the United  States and the further
impact of the events of September 11, 2001 offset,  in part, by price  increases
of 0.7% and 3.3% implemented in late March 2001 and mid-June 2001, respectively.
Comparable  restaurant  sales are made up of sales at  locations  that were open
during the entire  current and prior  fiscal  years.  Since the end of the first
quarter of fiscal 2001, we closed 34 more units than we opened  (including  nine
more units closed than opened during the first quarter of fiscal 2002),  causing
the remaining $1.8 million net reduction in Sbarro quick service unit sales. The
units closed since the beginning of fiscal 2001,  with the exception of our high
volume  owned  unit  destroyed  in the  collapse  of the World  Trade  Center on
September 11, 2001, were generally low volume units that did not have a material
impact on our results of  operations.  In addition,  during the first quarter of
fiscal 2002, we closed three consolidated other concept units, which resulted in
a net sales reduction of $1.0 million from sales at those locations in the first
quarter of fiscal 2001.

Excluding  approximately  $0.3  million  related to the  termination  of an area
development  agreement  for Egypt  during  the  first  quarter  of fiscal  2001,
franchise related income decreased


                                     Pg. 25

<PAGE>

4.5% to $2.7  million  for the  sixteen  weeks  ended  April 21,  2002 from $3.2
million in the  sixteen-week  period  ended April 22,  2001.  This  decrease was
caused by lower non-royalty generated revenues,  principally from a reduction of
income recognized from existing area development agreements in the first quarter
of fiscal 2002 than in the first  quarter of fiscal  2001,  and a  reduction  in
comparable unit sales at both domestic and  international  locations  offset, in
part, by continuing  royalties from a greater number of new unit openings during
the first quarter of 2002 than during the first quarter of 2001.

Real estate and other  revenues  decreased  8.3% in the first fiscal  quarter of
2002 from the same  period in fiscal  2001 due to  decreases  in certain  vendor
rebates.

Cost of food and paper products as a percentage of restaurant  sales improved to
19.9% for the sixteen  weeks ended April 21, 2002 from 20.3% for the  comparable
2001 fiscal period  primarily due to the benefit derived from closing  locations
in fiscal  2002 and 2001 that were not able to function  as  efficiently  as our
other quick service locations due to their low sales volume, partially offset by
slightly  higher  cheese  prices in fiscal  2002.  Cheese  prices to date in the
second  quarter  of  fiscal  2002  have  been  significantly  lower  than in the
comparable period in fiscal 2001.

Payroll  and  other  employee  benefits  decreased  by $1.8  million  but  these
expenses, as a percentage of restaurant sales,  increased to 28.3% of restaurant
sales in the sixteen weeks ended April 21, 2002 from 28.1% of  restaurant  sales
in the sixteen  weeks ended April 22, 2001.  This dollar  decrease was primarily
due to the  effect of steps  taken to reduce  payroll  costs  beginning  in late
fiscal 2001 and the benefit  derived from  closing the  locations in fiscal 2002
and 2001 which  were not able to  function  as  efficiently  as our other  quick
service locations due to their low sales volume. The percentage increase was due
to the reduced level of sales.

Other  operating  expenses  increased by $0.4 million and to 35.4% of restaurant
sales in the sixteen  weeks ended April 21, 2002 from 33.5% in the sixteen weeks
ended April 22, 2001  primarily  due to  increases  in rent and other  occupancy
related  expenses  primarily due to the renewal of existing leases at the end of
their terms at higher rental rates, compounded, in the case of the percentage of
restaurant sales, by the reduced level of sales.

During the first  sixteen  weeks of both  fiscal  2002 and 2001,  we  recorded a
provision for  restaurant  closings of $0.1 million.  The provision in the first
quarter of fiscal 2002  relates to costs that  either  were not  included in the
provision for asset impairment  recorded in the fourth quarter of fiscal 2001 or
which were not absorbed by amounts  received from  landlords in connection  with
such closings. Due to the seasonal nature of the Sbarro quick service locations,
we generally  measure  asset  impairment of our store  locations  after our full
fiscal year results, unless impairment indications arise earlier.

Depreciation  and amortization  expense  decreased by $2.8 million for the first
quarter of fiscal 2002 from the same period in fiscal 2001.  The  reduction  was
due primarily to a $1.7 million reduction in amortization expense resulting from
SFAS No. 142, "Goodwill and Other Intangible Assets" becoming  applicable to the
Company as of the beginning of fiscal 2002, as well as a $0.8


                                     Pg. 26

<PAGE>

million  reduction in depreciation  and  amortization  related to locations that
closed since the end of the first quarter of fiscal 2001. Under SFAS No. 142, we
no longer amortize  goodwill and intangible  assets with indefinite  lives,  but
rather  review  those assets  annually for  impairment  (or more  frequently  if
impairment indicators arise).  Separate intangible assets that are not deemed to
have  indefinite  lives continue to be amortized over their useful lives. We are
currently in the process of completing our  preliminary  evaluations of goodwill
and intangible assets (trademarks and tradenames) with indefinite lives acquired
prior to July 1, 2001 ($205.2 million, net of accumulated  amortization at April
21, 2002). We do not believe that the evaluations will have a material impact on
our financial position and results of operations.

General  and  administrative  expenses  were  $7.2  million,  or 6.8%  of  total
revenues,  for the sixteen weeks ended April 21, 2002, compared to $9.6 million,
or 8.5% of total revenues,  for the sixteen weeks ended April 22, 2001.  General
and administrative  costs for the first quarter of fiscal 2002 reflect decreases
in field management costs and a reduction in corporate staff costs due to a cost
containment  program  which we  implemented  beginning in the fourth  quarter of
fiscal 2001.

Minority interest represents the share of the minority holders' interests in the
combined  operations  or loss in the first  fiscal  quarter of each  fiscal year
reported  of the joint  venture in which we have a majority  interest.  In early
fiscal 2002, we closed one of the two locations owned by this joint venture. The
closed unit had a nominal  operating  loss in the first  quarter of fiscal 2002.
The provision for the closing of this unit, which was not material,  was made in
the fourth quarter of fiscal 2001.

Interest  expense of $9.6 million for the first fiscal  quarter of both 2002 and
2001, relate to the 11%, $255.0 million Senior Notes issued to finance our going
private  transaction,  the 8.4%,  $16.0  million  mortgage loan on our corporate
headquarters in 2001 (the principal of which is being repaid at the rate of $0.1
million per quarter),  and fees for unused  borrowing  capacity under our Credit
Agreement. Of these amounts, $0.4 million in each of the first fiscal quarter of
2002 and 2001,  respectively,  represented non-cash charges for the accretion of
the original issue discount on our Senior Notes and the amortization of deferred
financing costs on the Senior Notes, Credit Agreement and the mortgage loan.

Interest  income was  approximately  $0.2 million and $0.4 million for the first
quarter  of the 2002 and 2001  fiscal  years,  respectively.  The  reduction  in
interest  income  reflected the reduced  availability of cash for investment and
lower interest rates in effect during the first fiscal quarter of 2002.

Equity in the net income of  unconsolidated  affiliates  represents our share of
earnings  and  losses  in  those  new  concepts  in  which we have a 50% or less
ownership  interest.  The increase of $0.2 million was  primarily as a result of
improved performance of our steakhouse joint venture. We have determined that we
will continue to develop and expand the steakhouse  joint venture  locations but
are evaluating  the  disposition of the other concepts in which we have a 50% or
less ownership interest.


                                     Pg. 27

<PAGE>

We have elected to be taxed under the provisions of Subchapter S of the Internal
Revenue Code and, where applicable and permitted,  under similar state and local
income tax provisions.  Under the provisions of Subchapter S,  substantially all
taxes on our income is paid by our shareholders  rather than us. Our tax expense
for both the first quarter of fiscal 2002 and fiscal 2001 of approximately  $0.1
million was for taxes owed to jurisdictions  that do not recognize S corporation
status or that tax entities based on factors other than income.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

We have  historically  not  required  significant  working  capital  to fund our
existing  operations and have financed our capital  expenditures and investments
in our joint ventures through cash generated from operations. At April 21, 2002,
we had  unrestricted  cash and cash  equivalents  of $22.5  million  and working
capital of $8.5 million  compared to unrestricted  cash and cash  equivalents of
$11.5 and a working capital deficit of $5.1 million at April 22, 2001.

Net cash used in operating  activities  was $9.5  million for the sixteen  weeks
ended April 21,  2002  compared to $8.4  million  used during the sixteen  weeks
ended April 22, 2001. The $1.1 million increase in cash used resulted  primarily
from a $0.8  million  reduction  in EBITDA and a $0.3  million  increase  in the
amount of cash used to pay  accounts  payable  and  accrued  expenses.  Accounts
payable and accrued expenses are traditionally highest at the end of each of the
Company's fiscal years which occurs at the end of the peak holiday season.

Net cash used in  investing  activities  has  historically  been  primarily  for
capital  expenditures,  including  investments  made by our  consolidated  other
concepts.  Net cash used in investing  activities declined from $5.5 million for
the sixteen  weeks ended  April 22, 2001 to $1.8  million for the sixteen  weeks
ended  April 21,  2002  primarily  due to a decline  in quick  service  new unit
openings  and  renovation   activity  and  a  reduction  in   expenditures   for
consolidated other concept locations.

Net cash used in financing  activities  was $3.2  million for the sixteen  weeks
ended  April  21,  2002  compared  to net  cash  used of  $16.8  million  in the
comparable 2001 period. The reduced amount of cash used in financing  activities
in the first quarter of fiscal 2002 compared to the first quarter of fiscal 2001
was  due to a $4.4  million  reduction  in tax  distributions  made  under a tax
payment  agreement,  the  absence in the first  quarter  of fiscal  2002 of $3.2
million of loans (net of $0.7  million of loan  repayments)  and $5.0 million of
dividends made to our  shareholders  in the first fiscal quarter of 2001 and the
absence of the $1.0 million  purchase price paid by us as part of the settlement
of  litigation  in the first  quarter of fiscal 2001 for the 20% interest in the
Umberto of New Hyde Park concept that we did not own. The tax payment  agreement
was entered into in light of our election that our shareholders, rather than us,
be taxed on our taxable income pursuant to Subchapter S of the Internal  Revenue
Code and,  where  applicable  and  permitted,  under similar state and local tax
provisions.   The  tax  payment  agreement  permits  us  to  make  periodic  tax
distributions  to our shareholders in amounts intended to approximate the income
taxes,  including  estimated taxes,  that would be payable by them if their only
income were their pro rata share of


                                     Pg. 28

<PAGE>

our taxable income and that income was taxed at the highest  applicable  Federal
and New York state marginal income tax rates.

We incur annual cash interest expense of  approximately  $29.7 million under our
Senior Notes and mortgage  loan and may incur  additional  interest  expense for
borrowings under our Credit  Agreement.  In addition to debt service,  we expect
that our other  liquidity  needs will  relate to capital  expenditures,  working
capital,  investments  in  other  ventures,  distributions  to  shareholders  as
permitted under the Indenture for the Senior Notes and the Credit  Agreement and
general  corporate  purposes.  We  believe  that  aggregate  restaurant  capital
expenditures and our investments in joint ventures during the next twelve months
will be significantly  lower than levels in fiscal 2001 due to reduced levels of
capital expenditures planned for our consolidated other concepts.

We expect our primary sources of liquidity to meet these needs will be cash flow
from  operations.  Also  at May  28,  2002,  we had  $28.1  million  of  undrawn
availability  under our Credit Agreement,  net of outstanding  letters of credit
and  guarantees of  reimbursement  obligations  aggregating  approximately  $1.9
million.

Our contractual  obligations and other  commercial  commitments  with respect to
both our Sbarro  quick  service and the other  concepts  (both those in which we
have a  majority  or  minority  interest)  do not  differ  materially  from  the
information disclosed in the Form 10-K for the 2001 fiscal year. Our bank credit
agreement  has been  amended  to (a)  increase  the  required  maximum  ratio of
Consolidated  Senior  Debt  (as  defined)  at the  end of a  fiscal  quarter  to
Consolidated EBITDA (as defined) for the four fiscal quarters then ended that we
may have, and (b) decrease the required minimum ratio of Consolidated EBITDA (as
defined) for the four quarters  ended on the  measurement  date to  Consolidated
Interest  Expense (as defined) for the four  quarters  ended on the  measurement
date that we may have.

CRITICAL ACCOUNTING POLICIES
----------------------------

The SEC has recently  issued  Financial  Reporting  Release No. 60,  "Cautionary
Advice  Regarding  Disclosure  About Critical  Accounting  Policies" ("FRR 60"),
suggesting  companies  provide  additional  disclosure  and  commentary on those
accounting  policies  considered  most critical.  FRR 60 considers an accounting
policy to be critical if is important to our financial condition or results, and
requires  significant  judgment and  estimates on the part of  management in its
application.  We believe that the following  represent  our critical  accounting
policies as contemplated by FRR 60.

SFAS No.  5,  "Accounting  for  Contingencies,"  requires  management  judgments
regarding the  probability and estimated  amount of possible  future  contingent
liabilities,  especially,  in our case, legal matters. SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," requires judgments regarding future operating or


                                     Pg. 29

<PAGE>

disposition plans for marginally  performing  assets. The application of both of
these  policies  has  affected  the amount  and  timing of charges to  operating
results that have been  significant  in recent years.  In the past we have made,
and we intend in the future to make,  decisions regarding legal matters based on
the  status of the matter  and our best  estimate  of the  outcome  (we  expense
defense costs as incurred).  Our decisions  regarding our long-lived  assets are
based  on our  business  judgment  of when  underperforming  units  have  become
impaired.

We are required to periodically  assess, under SFAS No. 142, "Goodwill and Other
Intangible  Assets," the impairment of goodwill and indefinite  lived intangible
asset  acquired  prior  to July 1,  2001  ($205.1  million,  net of  accumulated
amortization,  at April 21, 2002). We are currently in the process of completing
our preliminary  evaluations of goodwill and intangible  assets  (trademarks and
tradenames)  with  indefinite  lives  acquired  prior  to July 1,  2001  ($205.2
million,  net of accumulated  amortization at April 21, 2002). We do not believe
that the evaluations  will have a material impact on our financial  position and
results of operations.  A charge for such  impairment  would affect our earnings
but, since it would be a non-cash charge, would not affect our cash flow.

FORWARD LOOKING STATEMENTS
--------------------------

This report  contains  certain  forward-looking  statements  about our financial
condition,   results  of  operations,   future  prospects  and  business.  These
statements  appear in a number of places in the  report and  include  statements
regarding our intent,  belief,  expectation,  strategies or  projections at that
time. These statements generally contain words such as "may," "should," "seeks,"
"believes,"  "expects," "intends," "plans," "estimates,"  "projects," "strategy"
and similar expressions or the negative of those words.

Forward-looking  statements  are subject to a number of known and unknown  risks
and  uncertainties  that could cause actual  results to differ  materially  from
those projected,  expressed or implied in the forward-looking statements.  These
risks and uncertainties,  many of which are not within our control,  include but
are not limited to:

o    general economic, weather and business conditions;
o    the  availability  of suitable  restaurant  sites in  appropriate  regional
     shopping malls and other locations on reasonable rental terms;
o    changes in consumer tastes;
o    changes in  population  and  traffic  patterns,  including  the effect that
     terrorist  or other  events may have on the  willingness  of  consumers  to
     frequent malls,  airports or downtown areas which are the predominant areas
     in which our restaurants are located;
o    our ability to continue to attract franchisees;
o    the success of the our present,  and any future,  joint  ventures and other
     expansion  opportunities;
o    the  availability  of food  (particularly  cheese and  tomatoes)  and paper
     products at current prices;
o    our ability to pass along cost increases to our customers;
o    no material increase occurring in the Federal minimum wage;


                                     Pg. 30

<PAGE>

o    the continuity of services of members of our senior management team;
o    our  ability  to attract  and retain  competent  restaurant  and  executive
     managerial personnel;
o    competition;
o    the level of, and our ability to comply with, government regulations;
o    our ability to generate  sufficient cash flow to make interest payments and
     principal under our senior notes and credit agreement;
o    our ability to comply with covenants contained in the Indenture under which
     the  Senior  Notes are  issued and in our bank  credit  agreement,  and the
     effects which the  restrictions  imposed by those covenants may have on our
     ability to operate our business; and
o    our ability to repurchase Senior Notes to the extent required and make
     repayments under our Credit Agreement to the extent required in the event
     we make certain asset sales or experience a change of control.

You are cautioned not to place undue reliance on these  statements,  which speak
only as of the date of the report.  We do not  undertake any  responsibility  to
release publicly any revisions to these forward-looking  statements to take into
account  events or  circumstances  that  occur  after  the date of this  report.
Additionally,  we do not  undertake  any  responsibility  to  update  you on the
occurrence of any unanticipated  events which may cause actual results to differ
from those expressed or implied by the forward-looking  statements  contained in
this report.

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES OF MARKET RISK

We have historically invested our cash on hand in short term, fixed rate, highly
rated and  highly  liquid  instruments  which are  reinvested  when they  mature
throughout  the year.  The  Indenture  under  which our Senior  Notes are issued
limits us to similar  investments.  Although  our existing  investments  are not
considered  at risk with  respect to changes in  interest  rates or markets  for
these  instruments,  our  rate of  return  on  short-term  investments  could be
affected at the time of reinvestment as a result of intervening events.

Future  borrowings  under our credit  facility (none are currently  outstanding)
will be at rates that float with the market and,  therefore,  will be subject to
fluctuations  in interest  rates.  Our $255.0 Senior Notes bear a fixed interest
rate of 11.0%.  We do not expect to enter into any interest  rate swaps or other
instruments to hedge interest rates.

We have not purchased  future,  forward,  option or other  instruments  to hedge
against fluctuations in the prices of the commodities we purchase.  As a result,
our future  commodities  purchases  are subject to changes in the prices of such
commodities.

All of our transactions  with foreign  franchisees have been denominated in, and
all  payments  have been made in,  United  States  dollars,  reducing  the risks
attendant in changes in the values of foreign  currencies.  As a result, we have
not purchased future  contracts,  options or other  instruments to hedge against
changes in values of foreign currencies.


                                     Pg. 31

<PAGE>

                           PART II. OTHER INFORMATION
                           --------------------------

Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits

         No.               Description
         ---               -----------

         4.02 (a)          Letter agreement dated March 18, 2002 with respect to
                           the Credit  Agreement  dated as of September 23, 1999
                           between the Company and  Citibank,  N.A. as successor
                           to European American Bank, as agent.

(b)  Reports on Form 8-K.

No  Current  Reports  on Form 8-K were  filed by the  Company  during the period
covered  by this  Report.  A Report on Form 8-K was filed by the  Company  dated
(date of earliest event  reported) May 22, 2002 reporting  under Item 4, Changes
in  Registrants  Certifying  Accountant,  and Item 7,  Financial  Statements and
Exhibits. No financial statements were filed with that Report.


                                     Pg. 32

<PAGE>

                                    SIGNATURE
                                    ---------

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

                                  SBARRO, INC.
                                  ----------------------------------------
                                  Registrant


Date: May 31, 2002          By:   /s/ MARIO SBARRO
     --------------               ----------------------------------------
                                  Mario Sbarro
                                  Chairman of the Board and President (Principal
                                  Executive Officer)


Date: May 31, 2002          By:   /s/ STEVEN B. GRAHAM
     --------------               ----------------------------------------
                                  Steven B. Graham
                                  Vice President and Controller (Principal
                                  Accounting Officer)


                                     Pg. 33

<PAGE>

                                  EXHIBIT INDEX
                                  -------------

Exhibit
Number            Description
------            -----------

4.02 (a)          Letter  agreement  dated  March 18,  2002 with  respect to the
                  Credit  Agreement  dated as of September  23, 1999 between the
                  Company and Citibank,  N.A. as successor to European  American
                  Bank, as agent.


                                     Pg. 34