U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB
(Mark One)

_X_    Quarterly  report  pursuant  to  Section  13 or 15 (d) of the  Securities
       Exchange Act of 1934

For the quarterly period ended MARCH 29, 1998.
 
___    Transition  report  pursuant  to Section  13 or 15 (d) of the  Securities
       Exchange Act of 1934

For the transition period from _______________ to _______________.

Commission file number 0-23757

                              TAM RESTAURANTS, INC.
        (Exact Name of Small Business Issuer as Specified in its Charter)

                   Delaware                               13-3905598     
        (State or other Jurisdiction of                (I.R.S. Employer  
        Incorporation or Organization)                Identification No.)
                                                  

                   1163 FOREST AVENUE, STATEN ISLAND, NY 10310
                    (Address of Principal Executive Offices)

                                 (718) 720-5959
                 (Issuer's Telephone Number including area code)


              (Former Name, Former Address and Former Fiscal Year,
                          If Changed Since Last Report)

Check whether the issuer:  (1) filed all reports required to be filed by section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.
Yes _X_  No ___


As of May 15, 1998,  there were  3,500,000  shares of the issuer's  Common Stock
outstanding

           Transitional Small Business Disclosure Format (check one):
                           Yes ___          No _X_



<PAGE>



                     TAM RESTAURANTS, INC. AND SUBSIDIARIES
                          QUARTER ENDED MARCH 29, 1998
                                   FORM 10-QSB
                                      INDEX



Part I. FINANCIAL INFORMATION                                           Page(s)



Item 1. Financial Statements


        Condensed Consolidated Balance Sheets as of March 29, 1998
           (Unaudited)........................................................1

        Condensed Consolidated Statements of Operations
           For the Thirteen and Twenty-Six weeks ended March 29, 1998
           and March 30, 1997 (Unaudited).....................................2

        Condensed Consolidated Statements of Cash Flows
           For the Twenty-Six weeks ended March 29, 1998
           and March 30, 1997 (Unaudited).....................................3

        Notes to unaudited Condensed Consolidated Financial Statements .......4

Item 2. Management's Discussion and Analysis of Financial Condition
           And Results of Operations .........................................7

Part II.OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds............................11

Item 6. Exhibits and Reports on Form 8-K.....................................11



                                      -ii-


<PAGE>



                     TAM RESTAURANTS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (unaudited)

                                     ASSETS

                                                                  March 29, 1998
                                                                  --------------

Current Assets
     Cash                                                          $ 1,065,163
     Accounts receivable                                               275,799
     Inventory                                                         190,478
     Prepaid and other expenses                                        404,126
     Loan receivable-officer                                            59,475
                                                                   -----------

     Total current assets                                            1,995,041
                                                                   -----------

Property and equipment-net                                           5,309,726
Due from affiliates                                                    494,173
Other assets                                                           346,821
                                                                   -----------

TOTAL ASSETS                                                       $ 8,145,761
                                                                   ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
     Current portion of long-term debt                             $   416,620
     Current portion of capitalized lease obligations                   82,375
     Loans payable  - related parties                                   56,860
     Accounts payable                                                  662,043
     Contract deposits payable                                         568,618
     Accrued expenses                                                1,661,816
                                                                   -----------

Total current liabilities                                            3,448,332

Long-term liabilities
     Deferred rent expense                                             258,132
     Loans payable-related parties                                     924,050
     Long-term debt-net of current portion                             803,719
     Capitalized lease obligations-net of current portion              101,499
                                                                   -----------

     Total long-term liabilities                                     2,087,400
                                                                   -----------

TOTAL LIABILITIES                                                    5,535,732
                                                                   -----------

Commitments and contingencies

Stockholders' equity
     Preferred stock; $.0001 par value; 1,000,000
       shares authorized, 0  shares issued and
       outstanding                                                 $        --

     Common stock;  $.0001 par value;
       19,000,000 shares authorized;
       3,500,000 shares issued and outstanding:                            350
     Additional paid-in capital                                      7,234,283
     Accumulated deficit                                            (4,624,604)
                                                                   -----------

TOTAL STOCKHOLDERS' EQUITY                                           2,610,029
                                                                   -----------
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY                                             $ 8,145,761
                                                                   ===========


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


                                       -1-


<PAGE>



                     TAM RESTAURANTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



<TABLE>
<CAPTION>
                                           Thirteen Weeks Ended         Twenty-Six Weeks Ended
                                        --------------------------    --------------------------


                                         March 30,      March 29,      March 30,       March 29,
                                           1997           1998           1997            1998
                                        -----------    -----------    -----------    -----------
<S>                                     <C>            <C>            <C>            <C>        
Sales                                   $ 1,736,828    $ 1,512,613    $ 3,995,920    $ 3,891,440

Cost of Sales                             1,315,241      1,432,002      2,841,638      2,957,998
                                        -----------    -----------    -----------    -----------

  Gross Profit                              421,587         80,611      1,154,282        933,442

Operating and Administrative Expenses       827,554      1,290,066      1,973,094      2,360,535
                                        -----------    -----------    -----------    -----------

Loss from Operations                       (405,967)    (1,209,455)      (818,812)    (1,427,093)
                                        -----------    -----------    -----------    -----------

Other Expense

  Interest Expense                          104,655        109,213        187,560        216,529

  Barter Expense                             51,149         97,366         51,149        198,840
                                        -----------    -----------    -----------    -----------

      Total Other Expense                   155,804        206,579        238,709        415,369
                                        -----------    -----------    -----------    -----------

  Loss Before Income Tax Benefit           (561,771)    (1,416,034)    (1,057,521)    (1,842,462)

Income Taxes                                     --             --             --             --
                                        -----------    -----------    -----------    -----------
   Net Loss                             $  (561,771)   $(1,416,034)   $(1,057,521)   $(1,842,462)
                                        ===========    ===========    ===========    ===========
Net loss per share:

  Basic and Diluted                     $      (.23)   $      (.47)   $      (.43)   $      (.67)
                                        ===========    ===========    ===========    ===========

Weighted average number of common
  shares outstanding basic and diluted    2,472,859      2,994,505      2,459,159      2,747,252
                                        ===========    ===========    ===========    ===========
</TABLE>
 

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

                                       -2-





<PAGE>



                     TAM RESTAURANTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                        Twenty-Six Weeks Ended
                                                       March 30,      March 29,
                                                         1997          1998
                                                     -----------    -----------

Cash Flows from Operating Activities
     Net (loss)                                      $(1,057,521)   $(1,842,462)
     Adjustments to reconcile net income
         (loss) to net cash provided by (used in)
         operating activities:
              Depreciation and amortization expense      166,160        188,586
              Deferred rent expense                       38,226         33,596
              Deferred income                             43,000        297,490
     (Increase) decrease in:
              Accounts receivable                       (121,020)        11,569
              Inventory                                    6,781         14,228
              Prepaid and other expenses                  (7,093)       (38,060)
              Other assets                               (74,743)      (227,602)
     Increase (decrease) in:
              Accounts payable                          (280,980)       139,219
              Accrued expenses
                and other liabilities                    497,935       (714,389)
                                                     -----------    -----------

Net Cash provided by Operating Activities               (789,255)    (2,137,825)
                                                     -----------    -----------
Cash Flows from Investing Activities
     Acquisition of property and equipment              (343,527)    (1,207,334)
                                                     -----------    -----------

Net Cash used in Investing Activities                   (343,527)    (1,207,334)
                                                     -----------    -----------

Cash Flows from Financing Activities
     Net repayments of
        officer's loans                                                  11,745
     Loans receivable                                     12,515        (24,761)
     Proceeds from long-term debt and warrants           713,000      1,000,000
     Principal payments on long-term
        and capitalized lease obligations                (55,850)      (352,307)
     Advances to/from affiliates and others              243,815       (278,889)
     Deferred stock offering costs                                      128,322
     Proceeds from capital stock issuance                200,000
     Proceeds from initial public offering                            3,644,587
                                                     -----------    -----------

Net Cash provided by Financing Activities              1,113,480      4,128,697
                                                     -----------    -----------

Net Increase (Decrease) in Cash                          (19,302)       783,538
Cash, Beginning of period                                 66,616        281,625
                                                     -----------    -----------
Cash, End of period                                  $    47,314    $ 1,065,163
                                                     ===========    ===========


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

                                       -3-



<PAGE>



                     TAM RESTAURANTS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.     Basis of Presentation

       The accompanying  unaudited condensed  consolidated  financial statements
       have been  prepared in  accordance  with  generally  accepted  accounting
       principles for interim financial information and with the instructions to
       Form 10-QSB and Item 310(b) of Regulation S-B.  Accordingly,  they do not
       include  all of the  information  and  footnotes  required  by  generally
       accepted accounting principles for complete financial statements.  In the
       opinion  of  management,  all  adjustments  (consisting  of  only  normal
       recurring  accruals)  considered  necessary for a fair  presentation have
       been included.  It is suggested that the financial  statements be read in
       conjunction with the Company's  consolidated audited financial statements
       and footnotes thereto contained in the Company's  Registration  Statement
       on Form SB-2.  Operating  results for the  thirteen and  twenty-six  week
       periods  ended  March  29,  1998 are not  necessarily  indicative  of the
       results  that may be expected  for the full fiscal year ending  September
       27, 1998.

2.     Long-Term Debt

       In October 1997,  the Company  obtained  $1,000,000 in secured loans from
       two entities. The loans bear interest at 10% per annum, payable quarterly
       and matures  nineteen  months after the funding date (May 31, 1999).  The
       loans are  guaranteed by a principal  stockholder  of the Company and the
       guarantee  is secured by a pledge of 200,000  shares of common stock held
       by such stockholder.

       Additionally, as partial consideration for the loans, the Company granted
       to the entities warrants to purchase 200,000 shares of common stock at an
       exercise  price of $5.00 per share expiring in October 2002. The warrants
       became  exercisable  on May 11, 1998. The issuance of these warrants will
       give  rise to an  original  issue  discount  which  has  been  valued  at
       $482,000,  based on the  Black-Scholes  option pricing model, and will be
       amortized  beginning on the date the warrants are  exercisable and ending
       on the due date of the loans.

       During 1995 and 1996, the Company  borrowed an aggregate of $840,000 from
       Fleet Bank.  Such loans were  collateralized  by the Company's  principal
       executive offices,  which are owned by Frank Cretella,  the President and
       Chief  Executive  Officer of the  Company,  the  warehouse  leased by the
       Company and owned by Leisure Time  Services,  Inc.  ("Leisure  Time"),  a
       company  owned  by  Jeanne  Cretella,  Vice  President,  Director  and  a
       principal  stockholder  of the  Company,  and  Mr.  and  Mrs.  Cretella's
       personal  residence,  and guaranteed by Mr. and Mrs. Cretella and Leisure
       Time.  In June 1997,  Mr.  Cretella  agreed to settle the amounts owed to
       Fleet Bank of $720,405 for $640,000  plus  accrued  interest  through the
       date of payment. In August 1997, Mr. Cretella paid to Fleet Bank $140,000
       as part of the  settlement,  and the balance was paid in October 1997. As
       consideration for entering into the settlement, the Company has issued to
       Mr. Cretella a promissory note in the principal amount of $720,405, which
       bears interest at a rate of 10% per annum. Interest is payable in monthly
       installments of $6,003, with the outstanding principal balance payable in
       November  2002 upon  maturity  of the note.  The  condensed  consolidated
       financial statements reflect the effects of this refinancing.

                                       -4-


<PAGE>



                      TAM RESTAURANTS, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

3.     Capital Stock

       In January 1998,  the Company  effected a  1-for-1.8135268  reverse stock
       split.  All  shares  and per  share  data in the  condensed  consolidated
       financial statements have been adjusted to give retroactive effect to the
       reverse stock split.

4.     Loss Per Share

       In March 1997, the Financial  Accounting Standards Board issued Statement
       of Financial  Accounting Standards No. 128 ("SFAS No. 128") "Earnings Per
       Share." SFAS No. 128 replaced the previously  reported  primary and fully
       diluted  earnings per share with basic and diluted earnings per share and
       was  effective  for all  financial  statements  after  December 15, 1997.
       Unlike primary earnings per share, basic earnings per share is arrived at
       by dividing net income  (loss) by the  weighted-average  number of common
       shares  outstanding  for the  period  while  diluted  earnings  per share
       includes the potential  dilution that could occur if options and warrants
       outstanding were included in the weighted-average number of common shares
       outstanding  for the period.  Earnings per share  amounts for all periods
       presented have been restated to conform to SFAS No. 128 requirements.

5.     Initial Public Offering

       In February  1998, the Company  completed an initial  public  offering of
       1,000,000  shares of common stock and 500,000  redeemable  warrants.  The
       offering resulted in net proceeds to the Company of $3,644,587.

       In  addition,  in February  1998,  the Company  entered  into  three-year
       employment  agreements  with  the  Chief  Executive  Officer  and a  Vice
       President,  which are  automatically  renewable and provide for an annual
       base compensation of $175,000 and $75,000, respectively, and such bonuses
       as the Board of Directors may from time to time determine.

       The Company has adopted a stock option plan (the "Option Plan")  pursuant
       to which  525,000  shares of common stock have been reserved for issuance
       upon the exercise of options designated as either (i) options intended to
       constitute  incentive stock options  ("ISOs") under the Internal  Revenue
       Code of 1986,  as  amended  or (ii)  non-qualified  options.  ISOs may be
       granted  under the Option Plan to officers and  employees of the Company.
       Non-qualified   options   may  be  granted   under  the  Option  Plan  to
       consultants,  directors (whether or not they are employees), employees or
       officers of the Company.

6.     Subsequent Events.

       The Company  opened its third New York  restaurant,  American Park at the
       Battery in Battery Park, in April 1998.


                                       -5-


<PAGE>



                      TAM RESTAURANTS, INC AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


7.     New Accounting Standards Not Yet Adopted

       In June 1997,  the Financial  Accounting  Standards  Board issued two new
       disclosure  standards.  Results of operations and financial position will
       be unaffected by implementation of these new standards.

       Statement of Financial  Accounting  Standards  No. 130,  ("SFAS No. 130")
       "Reporting Comprehensive Income", established standards for reporting and
       display of comprehensive income, its components and accumulated balances.
       Comprehensive  income is defined to include all changes in equity  except
       those resulting from  investments by owners and  distributions to owners.
       Among other  disclosures,  SFAS No. 130 requires  that all items that are
       required  to  be  recognized  under  current   accounting   standards  as
       components of comprehensive  income be reported in a financial  statement
       that is displayed with the same prominence as other financial statements.
       SFAS No. 131,  "Disclosures  about  Segments of an Enterprise and Related
       Information",  which  supercedes  SFAS No. 14,  "Financial  Reporting for
       Segments of a Business  Enterprise",  establishes  standards  for the way
       that public  enterprises  report  information about operating segments in
       annual   financial   statements   and  requires   reporting  of  selected
       information  about  operating  segments in interim  financial  statements
       issued to the  public.  It also  establishes  standards  for  disclosures
       regarding  products and services,  geographic  areas and major customers.
       SFAS No. 131 defines  operating  segments as  components of an enterprise
       about which separate financial information is available that is evaluated
       regularly  by  Management  in deciding how to allocate  resources  and in
       assessing performance.

       Both of these new standards are  effective for financial  statements  for
       fiscal years  beginning  after December 15, 1997 and require  comparative
       information  for  earlier  years to be  restated.  The  adoption of these
       statements will not have a material effect on the Company's  consolidated
       financial statements.

                                       -6-


<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SAFE HARBOR  STATEMENT  UNDER THE PRIVATE  SECURITIES  LITIGATION  REFORM ACT OF
1995:  Certain  statements  contained  in this Item 2 and  elsewhere in the Form
10-QSB constitute "forward looking statements" within the meaning of the Private
Securities  Litigation  Reform  Act of 1995.  Such  forward  looking  statements
involve a number of known and unknown  risks,  uncertainties  and other  factors
which may cause the actual  results,  performance or achievements of the Company
to be materially different from any future results,  performance or achievements
expressed or implied by such forward looking  statements.  Such factors include,
but are not  limited  to,  the  Company's  recent  operating  losses,  increased
operating expenses and the Company's need to generate  additional revenues which
is dependent upon its ability to open additional restaurants and maintain market
acceptance,   the  Company's  significant  capital  requirements  and  need  for
additional  financing,  the Company's  limited  restaurant  base and  geographic
concentration, risks relating to its proposed expansion plans and the opening of
new  restaurants,  including the high failure rate that typically  characterizes
the  opening  of new  restaurants,  seasonality,  risks  relating  to  licensing
requirements,  outstanding  indebtedness,   competition,  litigation,  potential
liability relating to the sale of alcoholic beverages, government regulation and
other risks  detailed in the  Company's  Registration  Statement on Form SB-2 as
filed  with  the  Securities  and  Exchange  Commission.  The  words  "believe",
"expect",  "anticipate",  "intend" and "plan" and similar  expressions  identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements,  which speak only as of the date the statement
was made.

Overview

     The Company  operates Lundy Bros.  Restaurant  ("Lundy's"),  a high-volume,
casual,  upscale  seafood  restaurant  located in  Brooklyn,  New York,  and The
Boathouse  in Central Park ("The  Boathouse")  multi-use  facility  featuring an
upscale restaurant and catering pavilion, located on the lake in New York City's
Central Park.  Lundy's and The Boathouse are  high-profile  locations which host
many special events and receive extensive press coverage.  Subsequent to the end
of the reporting  quarter,  in April 1998, the Company has also opened  American
Park at the Battery, in Battery Park ("American Park"),  which has been designed
as a high volume premium-quality restaurant to be located at the water's edge in
Battery  Park,  a New York City  landmark  visited  by  approximately  4 million
visitors during 1996.

Results of Operations

     Sales for the  twenty-six  weeks ended March 29,  1998 were  $3,891,440  as
compared  with  $3,995,920  for the  twenty-six  weeks ended March 30,  1997,  a
decrease of $104,480 or 2.6%.  The Company's  sales for the thirteen weeks ended
March 29, 1998 were  $1,512,613  as compared  with  $1,736,828  for the thirteen
weeks ended March 30,  1997,  a decrease of $224,215 or 12.9%.  The  decrease in
sales for the  thirteen  week period was due  primarily  to a  reduction  in off
premise catering of $208,850 related to Lundy's operations.


                                       -7-

<PAGE>



     Cost of sales for the twenty-six weeks ended March 29, 1998 were $2,957,998
as compared to  $2,841,638  for the  twenty-six  weeks ended March 30, 1997,  an
increase of $116,360 or 4.1%.  Cost of sales for the thirteen  weeks ended March
29, 1998 amounted to $1,432,002 as compared to $1,315,241 for the thirteen weeks
ended March 30,  1997,  an increase of $116,761 or 8.9%.  This  increase was due
principally to an increase in restaurant  payroll costs which is attributable to
the lack of  management  focus on  operations  while it was in the  registration
process  related to the Company's  initial public offering which was consummated
in February 1998.

     Gross profit for the twenty-six  weeks ended March 29, 1998 was $933,442 or
24% of sales,  as compared to  $1,154,282  or 28.9% of sales for the  twenty-six
weeks ended March 30,  1997,  a decrease of $220,840 or 19.1%.  The gross profit
for the  thirteen  weeks ended  March 29, 1998 was $80,611 or 5.3% of sales,  as
compared to $421,587  or 24.3% of sales for the  thirteen  weeks ended March 30,
1997.

     Operating and administrative  expenses for the twenty-six weeks ended March
29, 1998 were  $2,360,535 as compared to  $1,973,094  for the  twenty-six  weeks
ended March 30, 1997,  an increase of  $387,441.  Operating  and  administrative
expenses for the thirteen weeks ended March 29, 1998 were  $1,290,066,  compared
with  $827,554  for the  thirteen  weeks  ended March 30,  1997,  an increase of
$462,512.  These  increases  were due  principally  to an increase in management
payroll  related to the  Company's  expansion of its  corporate  infrastructure,
significantly  higher  marketing  costs  related to its  operations  during this
period and an increase in occupancy costs and other unit level expenses.

     Other expenses for the twenty-six  weeks ended March 29, 1998 were $415,369
as compared to  $238,709  for the  twenty-six  weeks  ended March 30,  1997,  an
increase of $176,660. Other expenses for the thirteen weeks ended March 29, 1998
amounted  to  $206,579 as  compared  to  $155,804,  an increase of $50,775.  The
increase is attributable to a slight increase in interest  expense as well as an
increase  in barter  expense of  $147,691  for the  twenty-six  week  period and
$46,217 for the thirteen week period.  This  increased  expense is the result of
bartering agreements entered into with member dining clubs whereby member dining
clubs  advance  cash to the Company in exchange  for food and  beverage  credits
which are passed  along as a discount  to  members  of the  dining  clubs.  Upon
entering into the agreement,  the Company records its obligation to provide food
and  beverages  at the  amount of the  advance it  receives.  When a member of a
dining club purchases  food or beverages,  the Company  records  revenue for the
amount of food and beverage purchased by the guest, and the barter discount as a
barter expense.

     The net loss for the  twenty-six  weeks ended March 29, 1998 was $1,842,462
or $.67 per share as compared to  $1,057,521 or $.43 per share or an increase of
$784,941.  The net  loss  for the  thirteen  weeks  ended  March  29,  1998  was
$1,416,034  or $.47 per share or an increase of $854,262 as compared to $561,771
or $.23 per share for the thirteen weeks ended March 30, 1997.

Liquidity and Capital Resources

     At March 29, 1998, Company had a working capital deficit of $1,453,291. The
Company's  financing  requirements  have  historically  exceeded cash flows from
operations   primarily  due  to,  among  other  things,  costs  associated  with
development,  opening  and  start-up  costs of the  Lundy's  and  American  Park
restaurants and building a corporate infrastructure sufficient

                                       -8-


<PAGE>



to support the Company's proposed expanded operations.  As a result, the Company
has been substantially dependent upon sales of its equity securities, loans from
financial  institutions and the Company's  officers,  directors and stockholders
and bartering  transactions with member dining clubs to finance a portion of its
working capital requirements.

     During the  twenty-six  weeks ended March 29, 1998,  net cash  increased by
$783,538. Net cash used in operating activities was $2,137,825, net cash used in
investing  activities was $1,207,334,  relating  primarily to the acquisition of
property and equipment for American  Park,  and net cash provided from financing
activities  was  $4,128,697,  consisting of long-term  borrowing of  $1,000,000,
offset by repayments of  indebtedness  to others of $779,212 and stock  offering
net cash proceeds of $3,772,909  (before  deduction of expenses of $128,322 paid
prior to September 28, 1997).

     During the  twenty-six  weeks ended March 30, 1997,  net cash  decreased by
$19,302.  Net cash used by operating  activities was $789,255,  net cash used in
investing activities was $343,527, consisting primarily of costs associated with
the  preliminary  development  of American  Park. Net cash provided by financing
activities was $1,113,480, primarily a result of additional borrowings.

     During 1995 and 1996,  the Company  borrowed an aggregate of $840,000  from
Fleet Bank,  N.A.  Such loans were  collateralized  by the  Company's  principal
executive  offices,  which  are  owned by Frank  Cretella,  President  and Chief
Executive Officer of the Company,  the warehouse leased by the Company and owned
by Leisure Time  Services,  Inc.  ("Leisure  Time"),  a company  owned by Jeanne
Cretella,  and Mr. and Ms. Cretella's personal residence,  and guaranteed by Mr.
and Mrs.  Cretella and Leisure Time. In June 1997, Mr. Cretella agreed to pay to
Fleet  $640,000 as payment  for the amount  owed by the  Company  (approximately
$720,000 as of October 15,  1997).  In August 1997,  Mr.  Cretella paid to Fleet
$140,000  as part of the  settlement.  Mr.  Cretella  paid  the  balance  of the
principal  owed  to  Fleet  and  the  Company  paid  the  accrued   interest  of
approximately  $39,000  owed to Fleet in  October  1997.  As  consideration  for
repaying the loan, the Company issued to Mr.  Cretella a promissory  note in the
principal  amount of $720,405 which bears interest at the rate of 10% per annum.
Interest  is payable  in  monthly  installment  of $6,003  with the  outstanding
principal balance payable in November 2002 upon maturity of the note.

     In October 1997,  Kayne  Anderson  Non-Traditional  Investments,  L. P. and
ARBCO Associates,  L.P. affiliates of Kayne Anderson Investment Management, Inc.
(collectively, "Kayne Anderson"), loaned the Company an aggregate of $1,000,000.
The  loans  bear  interest  at the  rate of 10%  per  annum,  payable  quarterly
commencing December 31,1997,  and are due May 31, 1999. The loans are guaranteed
by Frank Cretella,  President, Chief Executive Officer, a director and principal
stockholder of the Company,  and the guarantee is secured by a pledge of 200,000
shares of  Common  Stock  owned by Frank  Cretella  and  Jeanne  Cretella,  Vice
President,  a director and  principal  stockholder  of the  Company.  As partial
consideration  for the loans, the Company issued to Kayne Anderson warrants (the
"KA Warrants") to purchase  200,000 shares of Common Stock.  The KA Warrants are
exercisable at a price of $5.00 per share  (subject to adjustment  under certain
circumstances) at any time from May 11, 1998 until October 31, 2002. The Company
will incur a non-cash interest charge of $482,000 representing the original

                                       -9-


<PAGE>



issue discount  relating to the  promissory  notes issued to Kayne Anderson over
the life of the promissory notes.

     In February  1998, the Company  completed its initial public  offering (the
"Offering") of common stock and redeemable  warrants  resulting in the Company's
receipt of net  proceeds of  $3,644,587.  The Company  anticipates  that the net
proceeds from the Offering,  together with anticipated cash flow from operations
and equipment,  vendor and landlord financing, will be sufficient to satisfy its
contemplated cash requirements until at least April 1999.  However, in the event
that the Company's plans change or its  assumptions  prove to be inaccurate (due
to unanticipated  expenses,  construction  delays or other  difficulties) or the
proceeds of the Offering  otherwise  prove to be insufficient to fund operations
and implement the Company's  proposed expansion  strategy,  the Company could be
required to seek  additional  financing  sooner than  anticipated.  Although the
Company  believes it has the ability to enter into bartering  transactions  with
member dining clubs, the Company has no current arrangements with respect to, or
potential sources of, additional financing from such clubs or elsewhere,  and it
is not anticipated that any officers, directors or stockholders will provide any
additional  loans to the Company.  Consequently,  there can be no assurance that
any  additional  financing  will be available  to the Company  when  needed,  on
commercially reasonable terms, or at all.

Seasonality and Fluctuations in Quarterly Operating Result

     The Company's business is seasonal.  The restaurant and bicycle and rowboat
rentals  at the  Boathouse  have  historically  been  open  only  March  through
November,  with dinner served in the restaurant May 1 through  October 1. All of
the  seating  at the  Boathouse  and a portion of the  seating  at  Lundy's  was
outdoors.  In addition,  since Lundy's is a waterside location, it attracts more
guests during the warmer weather months. As a result,  the Company's  restaurant
sales generally increase from May through September,  and decrease from November
through March. The Company anticipates that the opening of American Park and the
winterizing of the Boathouse (which will provide indoor seating) will reduce the
seasonal fluctuations in its operating results.

     The Company  also  expects  that future  quarterly  operating  results will
fluctuate as a result of the timing of and  expenses  related to the openings of
new  restaurants  (as the Company  will incur  significant  expenses  during the
months  preceding  the  opening  of a  restaurant),  as well  as due to  various
factors,  including the seasonal nature of its business,  weather  conditions in
New York City,  the health of New York City's economy in general and its tourism
industry in  particular.  Accordingly,  the  Company's  sales and  earnings  may
fluctuate  significantly  from quarter to quarter and operating  results for any
quarter will not  necessarily  be indicative of the results that may be achieved
for a full year.

Inflation

     The effect of inflation on the Company has not been  significant  in any of
the periods being reported on.

                                      -10-


<PAGE>



                           PART II - OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds.

(d)    On February 13, 1998 the Company  consummated its initial public offering
       (the "Offering")  contemplated by its Registration Statement on Form SB-2
       (file no.  333-39937) which was declared  effective by the Securities and
       Exchange  Commission on February 10, 1998. A total of 1,150,000 shares of
       Common  Stock  (including  150,000  shares  subject to an  over-allotment
       option granted to Paragon  Capital  Corporation,  the  underwriter of the
       offering)  were  registered  for sale by the  Company  to the  public and
       1,000,000   shares  were  sold  to  the  public  for  gross  proceeds  of
       $5,000,000.  In addition,  Redeemable  Warrants  ("Warrants") to purchase
       575,000  shares of Common Stock  (including  75,000  Redeemable  Warrants
       subject to the  over-allotment  option) were  registered  for sale to the
       public of which  500,000  Warrants  were sold in the  Offering  for gross
       proceeds of $50,000. In addition, 575,000 shares of Common Stock issuable
       upon  exercise  of  the  Warrants  were  registered.   The  warrants  are
       exercisable  between  March 10, 1999 and  February 9, 2003.  In addition,
       310,000   warrants  were   registered  and  issued  to  certain   selling
       stockholders ("Selling Securityholders'  Warrants") in exchange for other
       warrants  previously  owned  by them  and  converted  at the  time of the
       offering.  The underlying shares of Common Stock were also registered and
       both the Selling  Securityholders'  Warrants  and  underlying  shares are
       subject to a lock-up that expires in May 1999.

       The net  proceeds of the  Offering was  approximately  $3,644,587.  As of
       March  29,  1998,  the  Company  used  approximately  $2,560,000  of such
       proceeds for payment of accrued  expenses and liabilities  (approximately
       $1,000,000),   construction  and  pre-opening   costs  of  American  Park
       (approximately  $1,322,000)  and working  capital  and general  corporate
       purposes (approximately $238,000).

Item 6. Exhibits and Reports on Form 8-K

       (a)    Exhibits

              Exhibit 27 - Financial Data Schedule

       (b)    Reports on Form 8-K

              No  reports  on Form 8-K  were  filed by the  Company  during  the
              thirteen week period March 29, 1998.


                                      -11-


<PAGE>


                     TAM RESTAURANTS, INC. AND SUBSIDIARIES

                                   SIGNATURES



In accordance with the  requirements of the Exchange Act, the Registrant  caused
this  report to be  signed  on its  behalf  by the  undersigned,  hereunto  duly
authorized on the 18th day of May 1998.



                                        TAM RESTAURANTS, INC.
                                            (Registrant)

                                        /s/ Frank Cretella
                                        ----------------------------------------
                                        Frank Cretella
                                        President and Chief Executive Officer


                                      -12-