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                       SECURITIES AND EXCHANGE COMMISSION




                                   FORM 10-KSB





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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                   FORM 10-KSB

(Mark One)
[x]      Annual report under Section 13 or 15(d) of the Securities Exchange Act
         of 1934. For the fiscal year ended April 25, 1999.

[ ]      Transition report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934

         For the transition period from ________ to ________.

                             Commission File Number
                                     0-18369

                       BOSTON RESTAURANT ASSOCIATES, INC.
                       ----------------------------------
           (Name of Small Business Issuer as Specified in its Charter)


                       Delaware                              61-1162263
                       --------                              ----------
            (State or Other Jurisdiction of               (I.R.S. Employer
            Incorporation or Organization)               Identification No.)

                 999 Broadway, Suite 400                          01906
                  Saugus, Massachusetts                           -----
                  ---------------------                        (Zip Code)
         (Address of Principal Executive Offices)


                                  (781)231-7575
                                  -------------
                 (Issuer's Telephone Number Including Area Code)


Securities registered pursuant to Section 12(b) of the Securities Exchange Act
of 1934:

                                                          Name of Each Exchange
                Title of Each Class                       on Which Registered
                -------------------                       -------------------
      Common stock, $.01 par value per share             Boston Stock Exchange
     Redeemable Common Stock Purchase Warrants

Securities registered under Section 12(g) of the Securities Exchange Act of
1934:

                     Common Stock, $.01 par value per share
                     --------------------------------------
                                (Title of Class)

                             Redeemable Common Stock
                                Purchase Warrants
                                -----------------
                                (Title of Class)

         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
                                                                      ---   ---


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         Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendments to this Form 10-KSB. [X]

         The issuer's revenues for its most recent fiscal year were $12,173,934.

         The aggregate market value of registrant's Common Stock, $.01 par value
per share, held by non-affiliates of the registrant as of July 15, 1999 was
$6,398,632 based upon the average closing bid and asked prices of such stock on
that date as reported on the Nasdaq SmallCap Market on that date. As of July 15,
1999 there were 7,060,170 shares of the registrant's Common Stock, $.01 par
value per share outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the registrant's Proxy Statement involving the election of
directors, which is expected to be filed within 120 days after the end of the
registrant's fiscal year, are incorporated by reference in Part III of this
Report.

                                      -5-
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                                      INDEX

PART I

         ITEM 1.  DESCRIPTION OF BUSINESS

         ITEM 2.  DESCRIPTION OF PROPERTY

         ITEM 3.  LEGAL PROCEEDINGS

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

PART II

         ITEM 5.  MARKET FOR COMMON EQUITY AND
                  RELATED STOCKHOLDER MATTERS

         ITEM 6.  MANAGEMENT'S DISCUSSION AND
                  ANALYSIS OR PLAN OF OPERATION

         ITEM 7.  FINANCIAL STATEMENTS

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

PART III

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

         ITEM 10. EXECUTIVE COMPENSATION

         ITEM 11. SECURITY OWNERSHIP OF CERTAIN
                  BENEFICIAL OWNERS AND
                  MANAGEMENT

         ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
                  TRANSACTIONS

         ITEM 13. EXHIBITS AND REPORTS ON
                  FORM 8-K


                                      -6-
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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         Boston Restaurant Associates, Inc. (the "Company") operates a chain of
12 restaurants - eleven fast service, high volume pizzerias under the Pizzeria
Regina-Registered Trademark- name and one full service family-style
Italian/American restaurant under the Polcari's North End-TM- name. Of the
eleven Pizzeria Regina restaurants, nine are food court kiosks (self-service,
take-out style emphasizing pizza slices with common area seating), and two are
wait-service restaurants (full-service style emphasizing whole pizzas with
in-restaurant seating). A majority of the restaurants are located in the Boston,
Massachusetts metropolitan area.

         The Pizzeria Regina restaurants feature the Company's signature
product, its premium Neapolitan style, thin crust pizza, prepared in gas-fired
brick ovens. The original Pizzeria Regina, located in Boston's historic North
End, has served the Company's premium brick oven pizza since 1926. The Company
believes that the Pizzeria Regina pizza and the brand name are local symbols of
superior and distinctive pizza. (See "PIZZERIA REGINA RESTAURANTS.")

         The Polcari's North End restaurant is a full service Italian/American,
family-style restaurant that captures the community spirit of the 1940's and
1950's in Boston's Italian North End neighborhood. It highlights exposed
gas-fired brick ovens in open view of diners, memorabilia and photographs
depicting 1940 and 1950 scenes in Boston's North End and large tables to
encourage family style dining. (See "POLCARI'S NORTH END RESTAURANT.")

         The Company plans to expand its operations by opening additional
Company-operated Pizzeria Regina food court kiosks in high volume retail malls
as the opportunities present themselves and by franchising both its Pizzeria
Regina and Polcari's North End concepts. The Company has, through a joint
venture with Italian Ventures, LLC, formed Regina Ventures, LLC to facilitate
the expansion of the Polcari's North End concept. However, the expansion of
operations will depend upon market opportunities and the Company's overall
financial and management resources. The rate at which the Company actually is
able to open new Company-operated restaurants will be determined by many
factors, including the Company's success in obtaining adequate financing,
identifying satisfactory sites, negotiating satisfactory leases, securing
requisite governmental permits and approvals, and training management personnel.
The rate at which franchised restaurants are opened also will be determined by
many factors, including site availability and qualified franchisees. There can
be no assurance that the Company will have the resources to expand, that
expansion will not be more costly than anticipated, that current and future
sites will operate profitably, or that franchising efforts will be successful.

                                      -7-

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         The Company's principal offices are located at 999 Broadway, Saugus,
Massachusetts 01906 and its telephone number is (781) 231-7575. As used in this
Report, unless otherwise indicated, the term "Company" refers to Boston
Restaurant Associates, Inc. and its subsidiaries.

PIZZERIA REGINA RESTAURANTS

         The Company currently operates eleven Pizzeria Regina restaurants --
fast service, high volume pizzerias that feature premium brick oven pizza and
cater primarily to the lunchtime diner (with the exception of the original North
End location, which serves both the lunch and dinner markets). Of these eleven
restaurants, nine are food court kiosks and two are wait-service restaurants.

         The Pizzeria Regina restaurants feature the Company's premium
Neapolitan style, thin crust, brick oven pizza. This pizza features a
proprietary dough and pizza sauce which the Company believes combine to produce
a distinct flavor and superior pizza. These pizzas are offered with a wide
variety of fresh vegetable and cured meat toppings. The Company believes that
the quality of its pizza, a result of a proprietary ingredient mix and baking
process, enables it to appeal to both the lunch and dinner markets. The original
Pizzeria Regina, located in Boston's historic North End, has served the
Company's premium brick oven pizza since 1926.

         The Company's nine food court kiosks primarily serve pizza by the slice
with multiple topping choices and operate side-by-side with other fast food
vendors. Menu items are presented in a self-service, take-out style designed to
allow customers to order, pay for and consume their food in a very short period
of time. Customers who desire to sit down after purchasing their food may join
customers of other food court vendors in one or more designated common areas
within the mall. The focused menu, self-service, take-out style and common
seating provide food court customers with a fast, low cost dining alternative as
compared to more traditional full service restaurants.

         The Company intends to open additional Pizzeria Regina food court
kiosks, primarily in retail malls. Based on the Company's own experience and
articles from trade journals, the Company believes there is a trend at retail
malls to retrofit and upgrade food courts to emphasize fast food as a focal
point of malls. The Company further believes that lunchtime diners who visit
retail shopping malls seek high quality, quick service meals in a food court
setting, and that the premium quality of the Company's brick oven pizza should
position it to compete effectively in food court locations.

         During fiscal year 1999 the Company opened one food court kiosk
operation at the Auburn Mall, Auburn, Massachusetts. In addition, the Company
opened a food court kiosk at the Independence Mall, Kingston, Massachusetts in
June of 1999. The Company has preliminarily identified other potential site
locations that it believes will become available during the next 24 months.
Management estimates that the cost of opening a typical food court kiosk
currently is approximately $350,000 to $400,000. The Company

                                      -8-

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cannot provide any assurance, however, that actual costs will not significantly
exceed these estimates, that the Company will be able to obtain financing
necessary to construct additional food courts kiosks, that the Company will be
able to complete the construction of new kiosks on a timely basis and within
budget, if at all, or that the Company will be able to operate these kiosks
successfully.

         Two of the Company's Pizzeria Regina restaurants (a food court kiosk
and a wait-service restaurant) are located in the Quincy Market/Faneuil Hall
Marketplace in Boston, Massachusetts. The Company anticipates closing the
wait-service restaurant, the lease of which has already expired, on or before
December 31, 2000. At that time it will seek to enter into a lease for
alternative space for a full service restaurant in the Quincy Market/Faneuil
Hall Marketplace. The Company believes, based upon communications with the
landlord, that it will be able to successfully negotiate a new lease for a wait
service restaurant in that location, although there can be no assurance that it
will be able to do so.

POLCARI'S NORTH END RESTAURANT

         In March 1995, the Company opened its first Polcari's North End
restaurant in Saugus, Massachusetts, replacing a similar restaurant the Company
had operated from 1954-1989 in Boston's North End. The Polcari's North End
restaurant concept is designed to create an Italian/American, family-style,
casual dining ambiance that captures the community spirit of the 1940's and
1950's in Boston's Italian North End neighborhood. The restaurant highlights
exposed gas-fired brick ovens in open view of diners. In addition, memorabilia
and photographs depicting 1940 and 1950 scenes in Boston's North End are used to
create a neighborhood atmosphere rich with history. The restaurant also features
large tables of six or more seats to encourage family style dining and a
value-oriented menu that includes branded Pizzeria Regina pizza, large
Italian/American pasta dishes and fresh baked breads.

          The Company, through a joint venture affiliate, plans to open
additional Polcari's North End restaurants across the country. Such expansion
will be dependent upon market opportunities and the Company's overall financial
and management resources.

FRANCHISING

         In 1997, the Company formed Boston Restaurant Associates International,
Inc. ("BRAII"), a wholly owned subsidiary, for the purpose of offering Pizzeria
Regina franchise opportunities both domestically and internationally. BRAII has
filed a Uniform Franchise Offering Circular and is actively seeking franchisees
with operational experience.

         In January 1998, the Company entered into an international
development agreement with Regina International, Ltd. ("Regina
International") to pursue and develop franchise territories outside the
Americas, anticipated to be principally in Europe, the Far East and the
Pacific Rim. Terrance Smith, a director with experience in international
franchising, has a controlling interest in Regina International, the
international master franchisee under the development agreement. The
agreement provides for payment of certain development fees and royalties to
Regina International after certain events to the extent of positive cash
flow. The agreement sets forth a development and operation schedule pursuant
to which Regina International is obligated to meet milestones regarding
certain minimum numbers of operational restaurants. Regina International has
failed to meet the first such milestone, and the development agreement
provides that as a result the Company may choose to redefine Regina
International's exclusive franchise development territory to make such
territory nonexclusive and limited to the area in which it has already sold
franchises. (See "ITEM 7. FINANCIAL STATEMENTS - NOTE 8 TO CONSOLIDATED
FINANCIAL STATEMENTS".)


                                      -9-

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         In December 1998, BRAII entered into a twenty-year joint venture
development agreement with Italian Ventures, LLC, a Kentucky corporation
("Italian Ventures"), for the purpose of developing and introducing a new
type of full service bistro-type restaurant in the Continental United
States. The joint venture entity, Regina Ventures, LLC ("Regina Ventures"),
currently has one franchise territory and one Company restaurant site in
Medina, Ohio under agreement. The Company has a 51% interest in Regina
Ventures and Italian Ventures holds the remaining 49% interest. Richard
Reeves and Terrance Smith, both of whom are Company directors, each have a
30% ownership interest in Italian Ventures. Under certain circumstances,
Italian Ventures may put its 49% equity interest together with certain of its
and its affiliates assets to the Company, and under certain circumstances the
Company has a call on Italian Ventures' equity interest and the related
assets. In both cases, the purchase price is based upon the earnings and net
assets of Regina Ventures, and is payable in cash, Company stock or a
combination of both at the discretion of the Company. As a result of certain
issues which have arisen over the direction of the joint venture, the Company
is currently in negotiations with Italian Ventures over the possible
restructuring of the joint venture relationship. (See "ITEM 7. FINANCIAL
STATEMENTS - NOTE 8 TO CONSOLIDATED FINANCIAL STATEMENTS".)

SITE SELECTION

         The Company considers the specific location of a restaurant to be
critical to the restaurant's long term success. It devotes significant time and
resources to the investigation and evaluation of each prospective site,
including consideration of local market demographics, population density,
average household income levels and site characteristics such as visibility,
accessibility and traffic.

         The Company seeks sites for the Pizzeria Regina kiosk restaurants
within high-traffic food courts or retail shopping malls located in metropolitan
areas. It seeks sites for Pizzeria Regina wait-service restaurants in densely
populated areas. A favorable Polcari's North End restaurant site will be located
near high-volume, middle market traffic centers, such as retail and residential
areas with populations of at least 100,000 persons within a five mile radius.
For all types of restaurants, the Company also considers existing local
competition and, to the extent such information is available, the sales of other
comparably priced restaurants operating in the area.

RESTAURANT OPERATIONS

         The Company invests substantial time and effort in its training
programs, which focus on all aspects of restaurant operations, including
kitchen, bar and dining room operations, food quality and preparation, alcoholic
beverage service, liquor liability avoidance, customer service and employee
relations. The Company holds regular meetings of its managers to address new
products, continuing training and other aspects of business management. Managers
also attend periodic seminars, conducted by Company personnel and outside
experts on a broad range of topics.

         New employees are trained by experienced employees who have
demonstrated their ability to implement the Company's commitment to provide high
quality food and

                                      -10-

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attentive service. The Company has developed manuals regarding its policies and
procedures for restaurant operations. Senior management regularly visits Company
restaurants and meets with the respective management teams to ensure compliance
with the Company's strategies and standards of quality in all aspects of
restaurant operations and personnel development.

         The Company seeks to attract and retain high caliber restaurant
managers by providing them with an appropriate balance of autonomy and
direction. Annual performance objectives and budgets for each restaurant are
jointly determined by restaurant managers and senior management. To provide
incentives, the Company has implemented a cash bonus program tied to achievement
of specified objectives.

         The staff for a typical Pizzeria Regina kiosk restaurant consists of
one general manager, two managers and approximately 12 to 15 hourly employees.
The staff of a typical sit-down Pizzeria Regina consists of a general manager,
two managers, and approximately 15 to 25 hourly employees. The staff for a
Polcari's North End restaurant consists of one general manager, two managers,
one kitchen manager and approximately 40 to 60 hourly employees. Most of the
Company's hourly employees are part-time personnel. The general manager of each
restaurant is primarily responsible for the day-to-day operations of the entire
restaurant and maintaining standards of quality and performance established by
the Company.

         The Company believes centralized financial and management controls are
fundamental to improving operating margins. These controls are maintained
through the use of an automated data processing system and prescribed reporting
procedures. Each restaurant has a point-of-sale system that captures restaurant
operating information. The restaurants forward daily sales reports, vendor
invoices, payroll information and other data to the Company's corporate
headquarters. Company management utilizes this data to centrally monitor costs
and sales mix and to prepare periodic financial management reports. This system
is also used for budget analysis, planning and determination of menu
composition. Restaurant managers perform daily inventories of key supplies. All
other supplies are inventoried weekly at the Pizzeria Regina restaurants and are
inventoried biweekly at the Polcari's North End restaurant. Cash is controlled
through deposits of sale proceeds in local operating accounts following each
restaurant shift with respect to the Pizzeria Regina locations and following
each business day with respect to the Polcari's North End location. The balances
in those accounts are wire transferred daily to the Company's principal
operating account.

                                      -11-

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PURCHASING AND COMMISSARY OPERATIONS

         The Company maintains a commissary where food products such as pizza
dough are produced for the Company's restaurants. These products require a high
degree of consistency that would be more difficult to maintain at the individual
restaurant locations. The Company believes that close, centralized monitoring of
the dough preparation ensures a more consistent premium product. All other food
preparation is performed on site at the restaurant level.

         The Company negotiates directly with wholesale suppliers of high volume
food ingredients such as cheese, tomato sauce, and flour to ensure consistent
quality and freshness of products across its restaurants and to obtain
competitive pricing. These ingredients are then purchased by the Company's
distributor at the negotiated price and redistributed to the Company's
restaurants. All other food ingredients and beverage products are purchased
directly by the general manager of each restaurant in accordance with corporate
guidelines. The Company believes that all essential food and beverage products
are available from many qualified wholesale suppliers.

ADVERTISING AND MARKETING

         The Company's target market for the Pizzeria Regina restaurants is very
broad, consisting of individuals and families who seek fast service and high
value-to-price meals during the lunch period. The target markets for the
Polcari's North End restaurant are adults and families who seek moderately
priced Italian dinner entrees in a comfortable environment. The Company believes
that its focus on premium quality, service and value is the most effective
approach to attracting customers.

         The Company anticipates that it will obtain greater name recognition
from increased distribution channels for its premium Pizzeria Regina brick oven
pizza and the development of additional Pizzeria Regina food court kiosks. The
Company plans to rely upon local advertising, high-volume traffic flow at retail
malls, and word of mouth exposure.

COMPETITION

         The restaurant business is highly competitive. Price, restaurant
location, food quality, service and attractiveness of facilities are important
aspects of competition, and the competitive environment is often affected by
factors beyond the Company's or a particular restaurant's control, including
changes in the public's tastes and eating and drinking habits, population and
traffic patterns and local economic conditions. The Company's restaurants
compete with a wide variety of restaurants ranging from national and regional
restaurant chains (some of which have substantially greater financial resources
than the Company) to locally-owned restaurants. There is also active competition
for liquor licenses in certain markets and for advantageous commercial real
estate sites suitable for restaurants. The Pizzeria Regina restaurants compete
with other

                                      -12-

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fast-service, high volume food providers on the basis of price, value, location,
and speed of service. The Polcari's North End restaurant competes with other
casual, full service restaurants primarily on the basis of menu selection,
quality, price, service, ambiance and location.

SEASONALITY

         The Company's restaurants are subject to seasonal fluctuations in sales
volume. Sales at the Pizzeria Regina restaurants are typically higher in June
through August and in November and December due to increased volume in shopping
malls during the holiday and tourist seasons and school vacations.

EMPLOYEES

         As of July 15, 1999, the Company had approximately 275 employees, of
whom 12 were corporate and administrative personnel, 37 were field supervision
or restaurant managers or management trainees, and the remainder were hourly
restaurant personnel. Many of the Company's hourly employees work part-time. The
Company believes that its relationship with its employees is good. None of the
Company's employees are covered by a collective bargaining agreement.

TRADEMARKS

         The Company regards its service marks as having significant value and
as being an important factor in the marketing of its products. Its most
significant marks are "Pizzeria Regina," "Regina," the Regina crown design logo,
and "Polcari's." These marks, which appear in its advertisements, menus and
elsewhere, are widely recognized. "Pizzeria Regina" and the crown design logo
are registered trademarks of the Company. The Company has applied to register
the "Polcari's" logo, "Polcari's North End" and the Regina service marks with
the United States Patent and Trademark Office.

GOVERNMENT REGULATION

         The Company is subject to a variety of federal, state and local laws
and regulations. Each of the Company's restaurants is subject to licensing and
regulation by a number of government authorities, including alcoholic beverage
control, health, safety, sanitation, building and fire agencies in the state or
municipality in which the restaurant is located. Difficulties in obtaining or
failure to obtain required licenses or approvals could delay or prevent the
development of a new restaurant in a particular area.

         The selection of new restaurant sites is affected by federal, state and
local laws and regulations regarding environmental matters, zoning and land use
and the sale of alcoholic beverages. Varied requirements (particularly at the
local level) may result in increases in the cost and time required for opening
new restaurants, as well as increases in

                                      -13-

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the cost of operating restaurants. Difficulties in obtaining necessary licenses
or permits could cause delays in or cancellations of new restaurant openings.

         A significant portion of the Company's revenues at the Polcari's North
End restaurant and the original Pizzeria Regina location in the North End is
attributable to the sale of alcoholic beverages. Alcoholic beverage control
regulations require each of the Company's restaurants that serve alcohol to
apply to both a state authority and municipal authorities for a license or
permit to sell alcoholic beverages on the premises. Typically, licenses must be
renewed annually and may be revoked or suspended for cause at any time.
Alcoholic beverage control regulations affect numerous aspects of restaurant
operations, including minimum age of patrons and employees, hours of operation,
advertising, wholesale purchasing, inventory control and handling, storage and
dispensing of alcoholic beverages. The failure of the Company to obtain or
retain liquor or food service licenses could have a material adverse affect on
the particular restaurant's operations and the business of the Company
generally.

         The Company is subject to "dram shop" statutes, which generally provide
a person injured by an intoxicated person the right to recover damages from an
establishment that wrongfully served alcoholic beverages to the intoxicated
person. The Company presently carries $1,000,000 of liquor liability coverage
for its restaurants, as well as excess liability coverage of $10,000,000 per
occurrence, with a $10,000 deductible. The Company has never been named as a
defendant in a lawsuit involving "dram shop" liability. There can be no
assurance that dram shop insurance will continue to be available to the Company
at commercially reasonable prices, if at all, or that such insurance, if
maintained, will be sufficient to cover any claims against the Company for dram
shop liability for which it may be held liable.

         The Company's restaurant operations are all subject to federal and
state laws governing such matters as the proposed government mandated health
insurance, over which the Company has no control. A significant number of the
Company's personnel are paid at rates related to the federal minimum wage, and
increases in the minimum wage could increase the Company's labor costs.

YEAR 2000 READINESS DISCLOSURE

         Many currently installed computer systems and software are coded to
accept only two digit entries in the date code fields. Beginning in the year
2000, these date code fields will need to accept four digit entries to
distinguish twenty-first century dates from twentieth century dates. As a
result, within the next year, computer systems and/or software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.

         The Company has been assessing the potential impact of Year 2000 on the
processing of date-sensitive information by the Company's automated information
and point-of-sale systems and computerized information systems. While there can
be no assurance that Year 2000 matters will be satisfactorily identified and
resolved, the

                                      -14-

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Company currently believes that most of its computer hardware and software
systems are already Year 2000 compliant and that Year 2000 issues will not have
a material adverse effect on the Company.

         The Company's Year 2000 initiative is being managed by an internal
staff member and is designed to ensure that there are no adverse effects on the
Company's ability to conduct business at the restaurant level and to process and
support restaurant activity at the corporate level.

         Under its current Year 2000 plan, the Company has brought a number of
its systems into Year 2000 compliance, subject to additional Year 2000 testing
and responsive actions.

         As part of its Year 2000 initiative, the Company is also evaluating
scenarios that may occur and developing contingency and business continuity
plans tailored for Year 2000-related occurrences. The Company believes that the
most reasonably likely, worst case scenario of failure by the Company would
result from third parties' failure to adequately resolve Year 2000 issues,
leading to a complete failure of its point-of-sale and ordering systems. This
failure would require the Company to resort to "non-computerized" means to
undertake such restaurant functions as placing customer orders, preparing
customer checks, accounting of restaurant receipts, recording and ordering
restaurant inventory and supplies, evaluating menu mix and analyzing other
operating statistics. While the Company believes that it is equipped to operate
in such a "non-computerized" mode, it could suffer lost revenues, increased
operating costs, loss of customers or other business interruptions of a material
nature. As of April 25, 1999, the estimated remaining cost for Year 2000
compliance is $50,000 to $60,000.

         The above information is based on the Company's current best estimates,
which were derived using numerous assumptions of future events, including the
availability and future costs of certain technological advancements. Given the
complexity of these issues and possible as yet unidentified risks, actual
results may vary materially from those anticipated and discussed above.

RISK FACTORS

         In addition to the risks discussed elsewhere in this Form 10-KSB,
investors should consider carefully the following risk factors in evaluating an
investment in the Company.

RISKS RELATED TO PLANNED EXPANSION

         The Company's ability to open additional Company restaurants and
grant franchises as planned will depend upon a number of factors, such as
identifying satisfactory sites, negotiating satisfactory leases, securing
requisite governmental permits and approvals, adequate supervision of
construction, recruiting training management personnel, and attraction of
qualified franchisees, some of which are beyond the control of the Company.
The

                                      -15-

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Company cannot assure that it will be able to open any of its planned new
restaurants within budget or on a timely basis, if at all, or that any of the
new restaurants will operate profitably. If the Company is unable to expand as
planned, it may reduce the Company's ability to increase profitability.

RISKS RELATED TO FRANCHISING

         The Company has limited experience in franchising domestic restaurants
and franchising operations present numerous risks. The Company faces vigorous
competition from other similar type restaurant chains in attracting and
retaining suitable franchisees. A Franchisee's failure to maintain the Company's
high standards could adversely affect customer attitude towards the Company's
restaurants. Granting exclusive territory agreements may also limit future
expansion opportunities for company owned stores. Franchise developers or
franchisees may leave the franchise system at the end of the term of development
or franchisee agreements or may attempt to terminate their agreements before the
end of the term, thereby reducing royalty revenues. Further, while franchising
permits the Company to increase the geographic coverage of its restaurant system
without substantial investment capital, it also means the Company may not have
direct operational control over the Company's franchise restaurants. The Company
is also subject to regulation by the Federal Trade Commission and must comply
with certain state laws that govern the offering, sale, and termination of
franchises and the refusal to renew franchises.

RISKS RELATED TO JOINT VENTURE

         By engaging in a joint venture for the development of Polcari's
franchises, the Company is subject to certain roll-up provisions and put call
provisions pursuant to the development agreement between Italian Ventures and
the Company. (See "ITEM 1. BUSINESS - FRANCHISING" and "ITEM 7. FINANCIAL
STATEMENTS - NOTE 8 TO CONSOLIDATED FINANCIAL STATEMENTS.")

POSSIBLE NEED OF ADDITIONAL FUNDING

         The Company believes that its anticipated cash flow from operations,
together with existing resources, will be sufficient to fund its working capital
needs and expansion plans for at least the next 12 months. However, there can be
no assurance that this will be the case. Changes in the Company's business or
its business plan could affect its capital requirements. Moreover, there can be
no assurance that the Company will have sufficient revenues after the end of
that 12-month period to continue to fund its expansion plans and other operating
requirements. In the event the Company requires additional financing, there can
be no assurance that the Company would be able to obtain financing on favorable
terms, if at all, and failure to do so could have a material adverse effect on
the Company's business. (See "ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION - LIQUIDITY AND CAPITAL RESOURCES.")

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RISKS OF RESTAURANT INDUSTRY

         The Company's future performance will be subject to a number of factors
that affect the restaurant industry generally, including (i) the highly
competitive nature of the restaurant industry, (ii) general and local economic
conditions, (iii) changes in tastes and eating and drinking habits, (iv) changes
in tax laws that affect the deductibility of business related meals, (v) changes
in food costs due to shortages, inflation or other causes, (vi) population and
traffic patterns, (vii) demographic trends, (viii) general employment and wage
and benefit levels in the restaurant industry, which may be affected by changes
in federal and local minimum wage requirements or by federally or locally
mandated health insurance, and (ix) the number of people willing to work at or
near the minimum wage. (See "ITEM 1. BUSINESS - COMPETITION.")

DEPENDENCE ON KEY EXECUTIVE OFFICERS

         The future success of the Company will depend in large part on the
continued services of its President, George R. Chapdelaine, as well as on the
Company's ability to attract and retain other qualified senior management
personnel. The Company also has and intends to maintain key man life insurance
in the amount of $2,000,000 on the life of Mr. Chapdelaine.

CONTROL BY MANAGEMENT

         The Company's executive officers, directors and their affiliates and
members of their immediate families control the vote of approximately 45.2% of
the outstanding shares of the Common Stock.

GEOGRAPHIC CONCENTRATION

         A total of nine of the Company's twelve existing restaurants are
located in Eastern Massachusetts. As a result, the Company's results of
operations may be materially affected by changes in the Massachusetts economy.
(See "ITEM 1. BUSINESS - GENERAL.")

VOLATILITY OF STOCK PRICE

         Compared to many other publicly traded companies, the Company is
relatively small and has a relatively small average trading volume. Quarterly
operating results of the Company or other restaurant companies, changes in
general conditions in the economy, the restaurant industry, or the financial
markets, or other developments affecting the Company, its competitors or the
financial markets, could cause the market price of the Common Stock to
fluctuate significantly. These broad market fluctuations may adversely affect
the market price of the Common Stock. In addition, the closing bid price of
the Common Stock was less than $1.00 on twenty occasions in the thirty-day
period ending July 15, 1999. Nasdaq SmallCap Market listing requirements
include a minimum bid price of $1.

                                      -17-

<PAGE>

On at least two occasions in the past two fiscal years, the Company has
found it necessary to take certain corrective actions in response to
notifications from Nasdaq of potential delisting of the Company's securities.
The Company cannot assure that it will be able to continue to meet these and
other Nasdaq requirements. If the Company fails to maintain its Nasdaq
listing, the Company's securities will likely be traded on the OTC Bulletin
Board. As a result, the market value of the Common Stock could decline and
stockholders may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of the Company's Common Stock. (See "ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.")

ITEM 2.  DESCRIPTION OF PROPERTY

         All of the Company's existing restaurants are located in leased space,
except for the North End Pizzeria Regina location, which is owned by the
Company. All of the Company's leases provide for a minimum annual rent, and most
call for additional rent based on sales volume at the particular location over a
specified minimum level. Generally, these leases are net leases, which require
the Company to pay the cost of insurance, taxes and a portion of the lessor's
operating costs. Certain mall locations also require the Company to participate
in upkeep of common areas and promotional activities.


                                      -18-

<PAGE>



         The following table sets forth certain information with respect to the
Company's restaurant properties:

<TABLE>
<CAPTION>
                                   APPROX. SQ.        LEASE
      LOCATION                         FT.        EXPIRATION DATE      TYPE (1)
      --------                     -----------    ---------------      --------
<S>                                <C>            <C>                 <C>
Auburn Mall                            924            1/ 31 /08       food court
Auburn, MA

North End                             4,300              N/A          wait service
Boston, MA (2)

Faneuil Hall Marketplace               750             12/31/00       food court
Boston, MA
(Upstairs)

Faneuil Hall Marketplace(3)           2,000            12/31/99       wait service
Boston, MA
(Downstairs)

Burlington Mall                       1,018            11/30/05       food court
Burlington, MA

Holyoke Mall                           749             1/31/09        food court-opening
Holyoke, MA                                                           early fall 1999

Independence Mall                      637             1/31/09        food court
Kingston, MA

South Shore Plaza                      700             8/31/06        food court
Braintree, MA

Solomon Pond Mall                     1,085            1/30/07        food court
Marlborough, MA

Oviedo Market Place                    714             4/01/08        food court
Oviedo, FL

Paramus Park                           696             7/31/09        food court
Paramus, NJ

Providence Place                       960            Fall 2009       food court-opening
Providence, RI                                                        early fall 1999

Regency Square                         605             11/03/04       food court
Richmond, VA

Saugus, MA                           11,000            11/30/12       Polcari's
                                                                      North End
</TABLE>

                                      -19-

<PAGE>



(1) Pizzeria Regina Food court locations have no independent seating capacity.
Seating is centralized in the common areas of the food courts. The North End and
downstairs Faneuil Hall Marketplace Pizzeria Regina wait-service locations each
seat approximately 75 customers, and the Saugus Polcari's North End location has
a seating capacity of 400.

(2) Company-owned. This property is subject to a mortgage in favor of
BankBoston. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION --
LIQUIDITY AND CAPITAL RESOURCES.") Includes approximately 1,000 square feet
located in two adjacent condominiums owned by the Company which have not been
built-out as of the date of this Report.

(3) The Company is currently in negotiations for a new wait service location
within the marketplace. (See ITEM 1. DESCRIPTION OF BUSINESS - PIZZERIA REGINA
RESTAURANTS.)

         The Company occupies approximately 3,200 square feet of executive
office space at 999 Broadway, Saugus, Massachusetts 01906. The Company also
leases approximately 5,000 square feet of warehouse space located in Somerville,
Massachusetts under a lease expiring on July 31, 2001 (including all extension
options that may be exercised by the Company in its discretion) and
approximately 2,741 square feet for its commissary located in Charlestown,
Massachusetts under a lease expiring on August 14, 2000.


ITEM 3.  LEGAL PROCEEDINGS

         The Company is involved in various legal matters in the ordinary course
of its business. Each of these matters is subject to various uncertainties and
some of these matters may be resolved unfavorably to the Company. Management
believes that any liability that may ultimately result from these matters will
not have a material adverse effect on the Company's financial position.


ITEM 4.           SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

         During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders of the Company.

                                      -20-

<PAGE>


PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock is traded publicly on the Nasdaq SmallCap
Market (Nasdaq symbol: "BRAI") and the Boston Stock Exchange (BSE symbol:
"BNR"). As of July 15, 1999, there were approximately 1,130 holders of record of
the Company's Common Stock. On July 15, 1999, the last bid and asked price of
the Company's Common Stock as reported on the Nasdaq Small-Cap Market were $.875
and $.9063 per share, respectively.

         The table below represents the quarterly high and low bid and asked
prices for the Company's Common Stock for the Company's last two fiscal years,
as reported on the Nasdaq SmallCap Market. The prices listed in this table
reflect quotations without adjustment for retail mark-up, markdown or
commission, and may not represent actual transactions.


<TABLE>
<CAPTION>
                                                    HIGH BID       LOW BID         HIGH ASKED      LOW ASKED
<S>                                                 <C>            <C>             <C>             <C>
Fiscal Year Ended April 25, 1999

     First Quarter........................            $2.19          $1.37           $2.19           $1.44
     Second Quarter.......................             1.50            .72            1.56            1.13
     Third Quarter........................             1.69            .63             .84             .72
     Fourth Quarter.......................             1.06            .94            1.13            1.00

Fiscal Year Ended April 26, 1998

     First Quarter........................            $1.31          $1.06           $1.43           $1.18
     Second Quarter.......................             2.18           1.18            2.31            1.28
     Third Quarter........................             1.62           1.25            1.87            1.37
     Fourth Quarter.......................             1.75           1.25            1.81            1.31
</TABLE>


         The Company has never paid cash dividends on its capital stock and does
not anticipate paying any cash dividends in the foreseeable future. Rather, the
Company intends to retain all of its future earnings to finance future growth.


                                      -21-
<PAGE>



ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following table sets forth for the fiscal periods indicated the
percentage of total revenues, unless otherwise indicated, represented by certain
items reflected in the Company's consolidated statements of operations:


<TABLE>
<CAPTION>
                                                             FISCAL YEAR ENDED
                                                  ----------------------------------------
                                                  APRIL 25, 1999            APRIL 26, 1998
                                                  --------------            --------------
<S>                                               <C>                       <C>
Income Statement Data:
Total Revenues                                         100%                      100.0%

Costs and expenses:
Cost of food, beverages and liquor                      20.9                      20.2
Other operating expenses                                58.4                      60.2
General and administrative                              13.7                      12.2
Depreciation and amortization                            4.5                       4.2
Pre-opening costs                                         .3                        .3


Total costs and expenses                                97.8                      97.1

Operating income                                         2.2                       2.9
Interest expense, net                                    2.0                       2.4
Other income, net                                                                 --
Minority interest                                        (.3)
Net income                                                .5                        .5
</TABLE>


RESULTS OF OPERATIONS

RESULTS OF OPERATIONS FOR THE YEARS ENDED APRIL 25, 1999 AND APRIL 26, 1998

RESTAURANT SALES

          Restaurant sales in fiscal 1999 were $12,154,000, compared to
$11,255,000 in fiscal 1998. The increase in restaurant sales in the fiscal 1999
period, as compared to the fiscal 1998 period, was attributable to the opening
of the new Auburn, Massachusetts Pizzeria Regina food court kiosk in May of 1998
and a full year of operations for three food court kiosks opened in fiscal 1998.
Comparable sales for the restaurants open throughout both fiscal 1999 and 1998
increased by approximately 7.1%.

         Net sales at the Company's Pizzeria Regina restaurants increased to
$9,136,000 in fiscal 1999 from $7,952,000 in fiscal 1998, principally due to the
addition of sales from the new Pizzeria Regina food court kiosks and an increase
in aggregate same store sales


                                      -22-
<PAGE>

for existing Pizzeria Regina restaurants.

     Net sales at the Company's full service casual dining restaurants decreased
to $3,005,000 in fiscal 1999 from $3,286,000 in fiscal 1998. The decrease was
primarily attributable to closure of the Lexington Bel Canto Restaurant in
December 1997, which was partially offset by increased sales at the Polcari's
North End Restaurant.

FRANCHISE FEES

     During fiscal 1999, the Company recognized $20,000 in franchise fees
related to the opening of a domestic Pizzeria Regina franchise controlled by a
Company director.

COSTS AND EXPENSES

COST OF FOOD, BEVERAGES AND LIQUOR

         Cost of food, beverages and liquor as a percentage of net sales for all
restaurants was 21% in fiscal 1999, compared to 20% in fiscal 1998.

         The cost of food, beverages, and liquor as a percentage of net sales at
the Pizzeria Regina restaurants was 18% in fiscal 1999, compared to 16% in
fiscal 1998. The cost of food, beverages, and liquor as a percentage of net
sales increased at the Pizzeria Regina Restaurants, principally due to higher
cheese costs and increased sales of gourmet pizzas, which have a higher selling
price and higher food costs than traditional pizza.

         The cost of food, beverages and liquor as a percentage of net sales at
the Company's full service casual dining restaurants increased to 31% in fiscal
1999 from 29% in fiscal 1998. The increase in cost of food, beverages and liquor
as a percentage of net sales was principally due to the closure of the Bel Canto
restaurant, which had lower food and beverage costs.

OTHER OPERATING EXPENSES

         PAYROLL EXPENSES. Payroll expenses were $3,457,000 (28% of total
revenues) in fiscal 1999, compared to of $3,380,000 (30% of total revenues) in
fiscal 1998.

         Payroll expenses at the Pizzeria Regina restaurants increased to
$2,402,000 (26% of net sales) in fiscal 1999 from $2,167,000 (27% of net sales)
in fiscal 1998. The increase in payroll expenses at the Pizzeria Regina
restaurants was primarily attributable to the opening of the new Auburn,
Massachusetts Pizzeria Regina food court kiosk in May 1998 and a full year of
operations for the three food court kiosks opened in fiscal 1998.

         Payroll expenses at the Company's full service casual dining
restaurants decreased to $872,000 (29% of net sales) in fiscal 1999 from
$1,056,000 (32% net sales) in fiscal 1998. The decrease in payroll expenses is
primarily attributable to the closure of the Lexington Bel Canto restaurant in
December of 1997. Payroll expenses at the


                                      -23-

<PAGE>

Company's Commissary were $183,000 for the fiscal 1999 period as compared to
$157,000 in fiscal 1998 period. The increase is primarily due to the
reclassification of the purchasing director's salary to the Commissary's payroll
expense.

         OTHER OPERATING EXPENSES, EXCLUSIVE OF PAYROLL. Other operating
expenses, exclusive of payroll were $3,658,000 (30% of total revenues) in fiscal
1999, compared to $3,401,000 (30% of total revenues) in fiscal 1998.

         Other operating expenses exclusive of payroll from the Pizzeria Regina
restaurants increased to $2,675,000 (29% of net sales) in fiscal 1999 from
$2,372,000 (30% of net sales) in fiscal 1998. The increase is primarily
attributable to the opening of the new Auburn, Massachusetts Pizzeria Regina
food court kiosk in May 1998 and a full year of operation for the three food
court kiosks opened in fiscal 1998.

         Other operating expenses, exclusive of payroll from the Company's full
service casual dining restaurants, decreased to $826,000 (27% of net sales) in
fiscal 1999 from $972,000 (30% of net sales) in fiscal 1998. This decrease was
primarily attributable to the closure of the Bel Canto restaurant in December of
1997. Other operating expenses also include commissary expenses, which were
$53,000 in fiscal 1999 and $57,000 in fiscal 1998, respectively. In addition the
Company realized other operating expenses of $104,000 in the current fiscal
year, which included franchising costs and joint venture costs.

GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative expenses were $1,664,000 (14% of total
revenues) in fiscal 1999, compared to $1,377,000 (12% of total revenues) in
fiscal 1998. The increase in general and administrative expenses in fiscal 1999
compared to fiscal 1998 was due principally to an increase in development costs,
legal costs, and real estate site selection consulting fees.

DEPRECIATION AND AMORTIZATION EXPENSES

         Depreciation and amortization expense was $545,000 (4% of total
revenues) in fiscal 1999, as compared to $470,000 (4% of total revenues) in
fiscal 1998. The increase in depreciation and amortization expense in fiscal
1999 compared to fiscal 1998 was attributable to the opening of the new Auburn,
Massachusetts Pizzeria Regina food court kiosk in May 1998 and to a full year of
operation for the three Pizzeria Regina food court kiosks opened in fiscal 1998.

PRE-OPENING COSTS

         Pre-opening costs were $42,000 in fiscal 1999 compared to $34,000 in
fiscal 1998. Pre-opening costs for fiscal 1999 consisted primarily of costs
associated with the new food court kiosk at the Independence Mall, Kingston, MA,
which opened in June of


                                      -24-

<PAGE>

1999, and costs associated with Regina Ventures' Medina, Ohio Polcari's North
End restaurant, which is scheduled for opening in fiscal 2000.

INTEREST EXPENSE AND INTEREST INCOME

         Interest expense increased to $314,000 in fiscal 1999, compared to
$305,000 in fiscal 1998. This increase in interest expense is due to additional
equipment leases associated with the new Pizzeria Regina food court kiosks.

         Interest income increased to $72,000 in fiscal 1999 as compared to
interest income in fiscal 1998 of $25,000. The increase in interest income was
attributable to the proceeds from the March 1998 rights offering.

LIQUIDITY AND CAPITAL RESOURCES

         At April 25, 1999 the Company had net working capital of $1,044,000 and
cash equivalents of $1,863,000.

         During fiscal 1999, the Company had a net increase in cash and cash
equivalents of $75,000 reflecting net cash provided by operating activities
of $716,000, net cash used for investing activities of $486,000 and net cash
used for financing activities of $155,000. Net cash provided by operating
activities includes a decrease in accounts receivable of $15,000, an increase
in deferred rent of $21,000 and an increase in accrued expenses of $161,000,
partially offset by an increase in inventory of $3,000, an increase in
prepaid expenses of $2,000, a reduction in accounts payable of $77,000 and an
increase in other assets of $44,000. Net cash used for investing activities
reflects costs associated with the opening of the new Auburn, MA Pizzeria
Regina location and site expansion costs incurred to date. Net cash used for
financing activities of $155,000 consists of net repayments of long-term
debt, lease obligations and stockholder loans in the aggregate amount of
$220,000, offset by Italian Ventures' minority interest contribution to
Regina Ventures of $63,000 and proceeds from stock option exercises of $2,000.

         At April 25, 1999, the Company had current liabilities of $1,117,000,
including $237,000 of accounts payable, $651,000 of accrued expenses and current
maturities of long-term obligations in the amount of $229,000. At April 25,
1999, the Company had long-term obligations, less current maturities, in the
amount of $2,417,000, including $363,000 due under its new credit facility with
BankBoston, $117,000 of notes payable to a stockholder, $331,000 due under
capital lease obligations, $1,500,000 of convertible subordinated debentures,
and $107,000 of deferred rent. On November 23, 1998, the Company discharged its
credit facility with Haymarket Bank and entered into a new two million dollar
($2,000,000) line of credit facility with BankBoston. As of April 25, 1999, the
Company has accessed this line in the amount of $538,000.

         The Company believes that its existing resources, cash flow from
operations, borrowings under its credit facility and the net proceeds from the
March 1998 rights offering will be sufficient to allow it to meet its
obligations over the next twelve months.


                                      -25-

<PAGE>

The Company intends to fund its current obligations and operating expenses
through cash generated from operations. The net proceeds of the March 1998
rights offering will be used for repayment of indebtedness, to finance its
expansion plans and for other working capital requirements. There can be no
assurance that cash flows will improve in an amount sufficient to allow the
Company to fund its current obligations and operating expenses, or that the
Company will be able to obtain additional financing upon favorable terms, if at
all. Failure of the Company to do so could result in the Company's failure to be
able to meet its cash flow requirements.

YEAR 2000 READINESS DISCLOSURE

         Many currently installed computer systems and software are coded to
accept only two digit entries in the date code fields. Beginning in the year
2000, these date code fields will need to accept four digit entries to
distinguish twenty-first century dates from twentieth century dates. As a
result, within the next year, computer systems and/or software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.

         The Company has been assessing the potential impact of Year 2000 on the
processing of date-sensitive information by the Company's automated information
and point-of-sale systems and computerized information systems. While there can
be no assurance that Year 2000 matters will be satisfactorily identified and
resolved, the Company currently believes that most of its computer hardware and
software systems are already Year 2000 compliant and that Year 2000 issues will
not have a material adverse effect on the Company.

         The Company's Year 2000 initiative is being managed by an internal
staff member and is designed to ensure that there are no adverse effects on the
Company's ability to conduct business at the restaurant level and to process and
support restaurant activity at the corporate level.

         Under its current Year 2000 plan, the Company has brought a number of
its systems into Year 2000 compliance, subject to additional Year 2000 testing
and responsive actions.

         As part of its Year 2000 initiative, the Company is also evaluating
scenarios that may occur and developing contingency and business continuity
plans tailored for Year 2000-related occurrences. The Company believes that the
most reasonably likely, worst case scenario of failure by the Company would
result from third parties failure to adequately resolve Year 2000 issues,
leading to a complete failure of its point-of-sale and ordering systems. This
failure would require the Company to resort to "non-computerized" means to
undertake such restaurant functions as placing customer orders, preparing
customer checks, accounting of restaurant receipts, recording and ordering
restaurant inventory and supplies, evaluating menu mix and analyzing other
operating statistics. While the Company believes that it is equipped to operate
in such a "non-computerized" mode, it could suffer lost revenues, increased
operating costs, loss of


                                      -26-

<PAGE>

customers or other business interruptions of a material nature. As of April 25,
1999, the estimated remaining costs for Year 2000 compliance is $50,000 to
$60,000.

         The above information is based on the Company's current best estimates,
which were derived using numerous assumptions of future events, including the
availability and future costs of certain technological advancements. Given the
complexity of these issues and possible as yet unidentified risks, actual
results may vary materially from those anticipated and discussed above.

NEW ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 requires
companies to recognize all derivative contracts as either assets or liabilities
in the balance sheet and to measure them at their fair values. If certain
conditions are met, a derivative may be specifically designated as a hedge, the
objective of which is to match the timing of gain or loss recognition on the
hedging derivative with the recognition of (i) the changes in the fair value of
the hedged assets or liability, or (ii) the earnings effect of the hedged
forecasted transaction. For a derivative not designated as a hedging instrument,
the gain or loss is recognized in income in the period of change. SFAS No. 133,
as amended, is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000.

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

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

         Forward-looking statements in this report, including without limitation
statements relating to the adequacy of the Company's resources, and the timing
of the Company's expansion are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that such forward-looking statements involve risks and uncertainties, including
without limitations: potential quarterly fluctuations in the Company's operating
results; seasonality of sales; competition; risks associated with expansion; the
Company's reliance on key employees; risks generally associated with the
restaurant industry; risks associated with geographic concentration of the
Company's restaurants; risks associated with serving alcoholic beverages; and
other risks and uncertainties indicated from time to time in the Company's
filings with the Securities and Exchange Commission. (See "ITEM 1. BUSINESS -
RISK FACTORS")


                                      -27-

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                              PAGE
                                                              ----
<S>                                                           <C>

Boston Restaurant Associates, Inc. and Subsidiaries
Index to Financial Statements...........................      F-1
Report of Independent Certified Public Accountants.           F-2

Consolidated Financial Statements
     Balance Sheets.....................................      F-3 - F-4
     Statements of operations...........................      F-5
     Statements of stockholders' equity.................      F-6
     Statements of cash flows...........................      F-7
     Summary of accounting policies.....................      F-8 - F-12
     Notes to consolidated financial statements.........      F-13 - F-31

</TABLE>


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

         None.


                                      -28-

<PAGE>

PART III

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

         The information required by this Item 9 is hereby incorporated by
reference to the Company's definitive proxy statement to be filed by the Company
within 120 days after the close of its 1999 fiscal year.

ITEM 10. EXECUTIVE COMPENSATION

         The information required by this Item 10 is hereby incorporated by
reference to the Company's definitive proxy statement to be filed by the Company
within 120 days after the close of its 1999 fiscal year.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT

         The information required by this Item 11 is hereby incorporated by
reference to the Company's definitive proxy statement to be filed by the Company
within 120 days after the close if its 1999 fiscal year.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item 12 is hereby incorporated by
reference to the Company's definitive proxy statement to be filed by the Company
within 120 days after the close of its 1999 fiscal year.

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

<TABLE>
<CAPTION>

EXHIBIT                                                               REFERENCE
NUMBER                                                                NUMBER
------                                                                ------
<S>                                                                   <C>
3.01     Amended Certificate of Incorporation of the Registrant       Filed
                                                                      Herewith

3.02     Amended By-Laws of the Registrant                            A-3(b)*

4.01     Description of Stock (contained in the Amended               Filed
         Certificate of Incorporation of the Registrant, filed as     Herewith
         Exhibit 3.01).

</TABLE>

                                      -29-

<PAGE>

<TABLE>
<CAPTION>

EXHIBIT                                                               REFERENCE
NUMBER                                                                NUMBER
------                                                                ------
<S>                                                                   <C>

4.02     Form of Certificate evidencing shares of Common Stock        F-4(b)*

4.03     Stock Purchase Warrant issued to Corning Partners IV,        A-10(z)*
         L.P. on April 29, 1994

4.13     Guaranty  of Lease of  George R.  Chapdelaine  and John P.   0-4.01*
         Polcari,  Jr.  dated  March  17,  1998 in favor of  H.C.B.
         Corporation.

4.14     Guaranty of Lease of George R. Chapdelaine and John P.       0-4.02*
         Polcari, Jr. dated March 17, 1998 in favor of H.C.B.
         Corporation.

4.15     Guaranty of Lease of George R. Chapdelaine and John P.       0-4.03*
         Polcari Jr. dated March 17, 1998 in favor of H.C.B.
         Corporation

4.16     Form of Option granted to Mr.  Chapdelaine and Mr. Polcari   0-4.04*
         in consideration of their guaranties of Boston Restaurant
         Associates, Inc. obligations under the H.C.B. Corporation
         leases.

10.02    Lease dated August 19, 1992 between Polcari's Inc. and       A-10(k)*
         the Yen H. Tow Realty Trust regarding a location in
         Saugus, Massachusetts

10.03    Lease dated August 1, 1993 between Polcari Enterprises,      A-10(n)*
         Inc. and the E.J.H. Realty Trust regarding Registrant's
         warehouse located in Somerville, Massachusetts

10.04    Lease dated October 14, 1986 between Polcari Enterprises,    A-10(o)*
         Inc., and Costa Fruit & Produce Co., Inc. regarding the
         Registrant's commissary located in Charlestown,
         Massachusetts

10.05    Lease dated June 30, 1995 between Berlin Properties          G-10(p)*
         Limited Partnership and Ocean, Inc. regarding a Pizzeria
         Regina location in the Solomon Pond Mall, Berlin and
         Marlborough, Massachusetts

</TABLE>


                                      -30-

<PAGE>

<TABLE>
<CAPTION>

EXHIBIT                                                               REFERENCE
NUMBER                                                                NUMBER
------                                                                ------
<S>                                                                   <C>

10.06    Lease dated May 10, 1994 between Bellwether Properties of    G-10(q)*
         Massachusetts, L.P. and Ocean, Inc. regarding a Pizzeria
         Regina in the Burlington Mall, Burlington, Massachusetts

10.08    Form of 1994 Non-employee Director Stock Option Plan**       A-10(q)*

10.09    Form of 1994 Combination Stock Option Plan**                 A-10(r)*

10.10    Form of Indemnification Agreement with each of the           A-10(bb)*
         directors and certain officers of the Registrant**

10.11    Incentive Stock Option Plan**                                B-(10)h*

10.12    Non-employee Director Stock Option Plan**                    C-10(h)*

10.14    Lease dated July 24, 1996 between Faneuil Hall               I-10.08*
         Marketplace, Inc. and Fantail Restaurant, Inc. regarding a
         Pizzeria Regina location in the Faneuil Hall Marketplace
         Area, Boston, Massachusetts

10.15    Equipment Lease dated July 26, 1996 between HCB              I-10.11*
         Corporation and Ocean, Inc. regarding certain equipment
         at a Pizzeria Regina location in the Solomon Pond Mall,
         Berlin and Marlborough, Massachusetts

10.16    Lease dated June 30, 1995 between Berlin Properties          J-10.01*
         Limited Partnership and Ocean, Inc. regarding a Pizzeria
         Regina Location in Solomon Pond Mall, Berlin and
         Marlborough, Massachusetts

10.17    Lease dated July 7, 1997 between One Federal Street Joint    K-10.01*
         Venture and Pizzeria Regina of
         Virginia, Inc. regarding a Pizzeria Regina
         located in Regency Square Mall, Richmond , Virginia

</TABLE>


                                      -31-

<PAGE>

<TABLE>
<CAPTION>

EXHIBIT                                                               REFERENCE
NUMBER                                                                NUMBER
------                                                                ------
<S>                                                                   <C>

10.18    Lease dated December 10, 1997 between Rouse-Orlando, Inc.    L-10.01*
         and Pizzeria Regina of Florida, Inc. regarding a Pizzeria
         Regina location in the Oviedo Marketplace, Oviedo, Florida

10.19    International Development Agreement dated as of January      M-10.01*
         1, 1998 between Boston Restaurant Associates, Inc. and
         Regina International, Ltd.

10.20    Equipment Lease dated March 17, 1998 between H.C.B.          N-10.01*
         Corporation and Pizzeria Regina of Virginia, Inc.
         regarding certain equipment located in the Regency Square
         Mall, Richmond  Virginia

10.21    Equipment Lease dated March 17, 1998 between H.C.B.          O-10.01*
         Corporation and Pizzeria Regina of Florida, Inc.
         regarding certain equipment located in the Oviedo
         Marketplace, Oviedo, Florida.

10.22    Equipment Lease dated March 17, 1998 between H.C.B.          O-10.02*
         Corporation and Ocean, Inc. regarding certain equipment
         at a Pizzeria Regina location in the Auburn Mall, Auburn,
         Massachusetts.

10.23    Equipment Lease dated March 17, 1998 between H.C.B.          O-10.03*
         Corporation and Ocean, Inc. regarding certain equipment
         at a Pizzeria Regina location in the Regency Square Mall,
         Richmond, VA.

10.24    Form of Franchise Agreement dated as of January 22, 1999     P-10.24*
         between Boston Restaurant Associates, Inc. and Shining
         Sea, LLC.

10.25    Joint Venture Agreement dated as of December 23, 1998        P-10.25*
         between Boston Restaurant Associates, Inc. and Italian
         Ventures, LLC

21       Subsidiaries of the Registrant                               A-21*

23       Consent of BDO Seidman, LLP                                  Filed
                                                                      Herewith

</TABLE>


                                      -32-

<PAGE>

<TABLE>
<CAPTION>

EXHIBIT                                                               REFERENCE
NUMBER                                                                NUMBER
------                                                                ------
<S>                                                                   <C>

27       Financial Schedule                                           Filed
                                                                      Herewith

*        In accordance with Rule 12b-32 under the Securities
         Exchange Act of 1934, as amended, reference is made to
         the documents previously filed with the Securities and
         Exchange Commission, which documents are hereby
         incorporated by reference.

**       Management Contract or Compensatory Plan or Arrangement

A        Incorporated by reference to the Company's Registration
         Statement on Form SB-2 (Registration No. 33-81068). The
         number set forth herein is the number of the Exhibit in
         said registration statement.

B        Incorporated by reference to the Company's registration
         statement on Form S-1 (File No. 33-31748). The number
         set forth herein is the number of the Exhibit in said
         registration statement.

C        Incorporated by reference to the Company's annual report
         on Form 10-K for the year ended April 30, 1991. The
         number set forth herein is the number of the Exhibit in
         said annual report.

D        Incorporated by reference to the Company's transition
         report on Form 10K for the seven months ended April 30,
         1990. The number set forth herein is the number of the
         Exhibit in said transition report.

E        Incorporated by reference to the Company's annual report
         on Form 10-K for the year ended April 30, 1993. The
         number set forth herein is the number of the Exhibit in
         said annual report.

F        Incorporated by reference to the Company's annual report
         on Form 10-K for the year ended April 30, 1994. The
         number set forth herein is the number of the Exhibit in
         said annual report.

G        Incorporated by reference to the Company's annual report
         on Form 10-K for the year ended April 30, 1995. The
         number set forth herein is the number of the Exhibit in
         said annual report.

H        Incorporated by reference to the Company's quarterly
         report on Form 10-QSB for the period ended January 28,
         1996. The number set forth herein is the number of the
         Exhibit in said quarterly report.

I        Incorporated by reference to the Company's annual report
         on Form 10-KSB for the year ended April 28, 1996. The
         number set forth herein is the number of the Exhibit in
         said annual report.

</TABLE>


                                      -33-

<PAGE>

<TABLE>
<CAPTION>

EXHIBIT                                                               REFERENCE
NUMBER                                                                NUMBER
------                                                                ------
<S>                                                                   <C>

J        Incorporated by reference to the Company's annual report on
         Form 10-KSB for the year ended April 27, 1997. The number set
         forth herein is the number of the Exhibit in said annual
         report.

K        Incorporated by reference to the Company's quarterly
         report on Form 10-QSB for the period ended July 26,
         1997. The number set forth herein is the number of the
         Exhibit in said quarterly report.

L        Incorporated by reference to the Company's quarterly
         report on Form 10-QSB for the period ended October 26,
         1997. The number set forth herein is the number of the
         Exhibit in said quarterly report.

M        Incorporated by reference to the Company's Form S-2
         Registration Statement dated February 26, 1998. The
         number set forth herein is the number of the Exhibit in
         said Registration Statement.

N        Incorporated by reference to the Company's quarterly
         report on Form 10-QSB for the period ended January 25,
         1998. The number set forth herein is the number of the
         Exhibit in said quarterly report.

O        Incorporated by reference to the Company's annual report
         on Form 10-KSB for the year ended April 26, 1998. The
         number set forth herein is the number of the Exhibit in
         said annual report.

P        Incorporated by reference to the Company's quarterly
         report on Form 10-QSB for period ending January 24,
         1999. The number set forth herein is the number of the
         Exhibit in said quarterly report.

</TABLE>

(a)   REPORTS ON FORM 8-K

1.    Boston Restaurant Associates, Inc. filed a report on Form 8-K dated 25
      January 1999 reporting third quarter sales results for Polcari's
      restaurant.

2.    Boston Restaurant Associates, Inc. filed a report on Form 8-K dated 27
      January 1999 reporting the Board of Directors' authorization to purchase
      500,000 shares of common stock over the next twenty-four months.


                                      -34-

<PAGE>

SIGNATURES

         In accordance with section 13 or 15 (d) of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                        BOSTON RESTAURANT ASSOCIATES, INC.

Date:    21 July, 1999                  By:  /S/GEORGE R. CHAPDELAINE
                                            ----------------------------------
                                              George R. Chapdelaine, President

         In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.


SIGNATURES                                                    DATE
----------                                                    ----

/S/GEORGE R. CHAPDELAINE                                    21 July, 1999
------------------------------------------
George R. Chapdelaine, Chief
Executive Officer, President and
Director (principal executive officer)

/S/ FRAN V. ROSS                                            21 July, 1999
------------------------------------------
Fran V. Ross, Chief Financial Officer
(principal financial and accounting officer)

/S/JOSEPH J. CARUSO                                         21 July, 1999
------------------------------------------
Joseph J. Caruso, Director

/S/ROGER LIPTON                                             21 July, 1999
------------------------------------------
Roger Lipton, Director

/S/KATHLEEN MASON                                           21 July, 1999
-----------------
Kathleen Mason, Director

/S/JOHN P. POLCARI, JR.                                     21 July, 1999
------------------------------------------
John P. Polcari, Jr., Director

/S/RICHARD J. REEVES                                        21 July, 1999
-------------------------------------------
Richard J. Reeves, Director

LUCILLE SALHANY                                             21 July, 1999
-------------------------------------------
Lucille Salhany, Director

/S/TERRANCE A. SMITH                                        21 July, 1999
-------------------------------------------
Terrance A. Smith, Director


                                      -35-




<PAGE>




                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                                                        CONTENTS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>

<S>                                                      <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS               F-2

CONSOLIDATED FINANCIAL STATEMENTS:

    Balance sheets                                           F-3 to F-4

    Statements of income                                         F-5

    Statements of stockholders' equity                           F-6

    Statements of cash flows                                     F-7

    Summary of accounting policies                           F-8 to F-12

    Notes to consolidated financial statements              F-13 to F-31

</TABLE>



                                      F-1
<PAGE>







REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders of
Boston Restaurant Associates, Inc.


We have audited the accompanying consolidated balance sheets of Boston
Restaurant Associates, Inc. and subsidiaries as of April 25, 1999 and April 26,
1998, and the related consolidated statements of income, stockholders' equity
and cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Boston Restaurant
Associates, Inc. and subsidiaries at April 25, 1999 and April 26, 1998, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.


                                                /s/ BDO Seidman, LLP
                                                 -------------------
                                                    BDO Seidman, LLP



Boston, Massachusetts
June 18, 1999




                                      F-2
<PAGE>



                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                                     CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                         APRIL 25,     April 26,
                                                           1999           1998
--------------------------------------------------------------------------------
<S>                                                      <C>          <C>
ASSETS (Note 4)

CURRENT:
   Cash and cash equivalents                             $1,863,299   $1,788,361
   Accounts receivable                                       32,121       46,958
   Inventories (Note 1)                                     214,657      212,071
   Prepaid expenses and other                                51,085       49,152
--------------------------------------------------------------------------------
     Total current assets                                 2,161,162    2,096,542
--------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT (Note 8):
   Building                                                 512,500      512,500
   Leasehold improvements                                 3,220,587    2,977,315
   Equipment, furniture and fixtures                      2,290,488    1,974,473
--------------------------------------------------------------------------------
                                                          6,023,575    5,464,288

   Less accumulated depreciation and amortization         2,567,084    2,119,015
--------------------------------------------------------------------------------
     Net property and equipment                           3,456,491    3,345,273
--------------------------------------------------------------------------------
OTHER ASSETS (Note 2)                                     1,270,041    1,323,160
--------------------------------------------------------------------------------
                                                         $6,887,694   $6,764,975
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>


         SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-3
<PAGE>
                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES

                                                     CONSOLIDATED BALANCE SHEETS
                                                                     (CONTINUED)
<TABLE>
<CAPTION>
                                                                                     APRIL 25,           April 26,
                                                                                       1999                1998
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                 <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                              $     236,770       $    314,124
   Accrued expenses (Note 3)                                                           651,089            490,525
   Current maturities (Notes 4, 5, and 8):
     Long-term debt                                                                    122,076            200,000
     Notes payable - stockholder                                                         4,740              4,495
     Obligations under capital leases                                                  102,200             74,206
-------------------------------------------------------------------------------------------------------------------

       Total current liabilities                                                     1,116,875          1,083,350

LONG-TERM OBLIGATIONS:
   Long-term debt, less current maturities (Note 4)                                    362,925            425,000
   Notes payable - stockholder, less current maturities (Note 5)                       116,569            121,336
   Obligations under capital leases, less current maturities (Note 8)                  331,403            361,548
   Deferred rent (Note 8)                                                              106,513             85,662
   Subordinated debentures (Note 6)                                                  1,500,000          1,500,000
-------------------------------------------------------------------------------------------------------------------

       Total liabilities                                                             3,534,285          3,576,896
-------------------------------------------------------------------------------------------------------------------

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                                            29,009                  -
-------------------------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES (Notes 8 and 9)

STOCKHOLDERS' EQUITY (Notes 6, 9, 10, and 12):
   Preferred stock, $.01 par value, 10,000,000 shares authorized
     in 1999; none issued                                                                    -                  -
   Common stock, $.01 par value, 25,000,000 shares authorized;
     shares issued 7,060,170 and 7,021,970                                              70,602             70,220
   Additional paid-in capital                                                       10,922,636         10,846,333
   Accumulated deficit                                                              (7,668,838)        (7,728,474)
-------------------------------------------------------------------------------------------------------------------

       Total stockholders' equity                                                    3,324,400          3,188,079
-------------------------------------------------------------------------------------------------------------------
                                                                                 $   6,887,694       $  6,764,975
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
</TABLE>

         SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-4
<PAGE>



                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES

                                               CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                            APRIL 25,      April 26,
YEARS ENDED                                                   1999            1998
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
<S>                                                       <C>             <C>
REVENUES:
   Restaurant sales                                       $ 12,153,934    $ 11,255,049
   Franchise fees (Note 8)                                      20,000            --
-----------------------------------------------------------------------------------------

     Total revenues                                         12,173,934      11,255,049
-----------------------------------------------------------------------------------------

COSTS AND EXPENSES:
   Cost of food, beverages and liquor                        2,546,026       2,267,331
   Other operating expenses                                  7,114,457       6,780,778
   General and administrative                                1,663,649       1,377,464
   Depreciation and amortization                               545,092         469,559
   Pre-opening costs                                            42,197          33,787
-----------------------------------------------------------------------------------------
     Total costs and expenses                               11,911,421      10,928,919
-----------------------------------------------------------------------------------------

OPERATING INCOME                                               262,513         326,130

INTEREST EXPENSE, net of interest income of $72,013 and
  $25,215 in 1999 and 1998, respectively                      (241,973)       (279,645)

OTHER INCOME, net                                                4,963           6,395
-----------------------------------------------------------------------------------------

   Income before minority interest                              25,503          52,880

MINORITY INTEREST IN NET LOSS OF SUBSIDIARY                     34,133            --
-----------------------------------------------------------------------------------------

NET INCOME                                                $     59,636    $     52,880
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
NET INCOME PER SHARE OF COMMON STOCK (Note 11):
   Basic                                                  $       0.01    $       0.01
   Diluted                                                $       0.01    $       0.01

</TABLE>


         SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.




                                      F-5
<PAGE>




                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                  Common Stock              Additional                          Total
YEARS ENDED APRIL 25, 1999 AND                   $.01 Par Value               Paid-In      Accumulated      Stockholders'
                                            --------------------------
APRIL 26, 1998                                  Shares        Amount          Capital        Deficit           Equity
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>           <C>            <C>               <C>
BALANCE, April 27, 1997                      5,015,693       $ 50,157      $ 9,043,199    $(7,781,354)      $1,312,002

   Proceeds from sale of common stock,
     net of expenses of $250,240 (Note 12)   2,006,277         20,063        1,735,974              -        1,756,037

   Issuance of options and warrants in
     exchange for services (Note 10)                 -              -           67,160              -           67,160

   Net income for the year                           -              -                -         52,880           52,880
--------------------------------------------------------------------------------------------------------------------------

BALANCE, April 26, 1998                      7,021,970         70,220       10,846,333     (7,728,474)       3,188,079

   Exercise of employee stock options            2,200             22            2,178              -            2,200

   Issuance of common stock in exchange
     for services (Note 10)                     36,000            360           17,816              -           18,176

   Issuance of options in exchange
     for services (Note 10)                          -              -           56,309              -           56,309

   Net income for the year                           -              -                -         59,636           59,636
--------------------------------------------------------------------------------------------------------------------------

BALANCE, April 25, 1999                      7,060,170       $ 70,602      $10,922,636    $(7,668,838)      $3,324,400
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

         SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.



                                      F-6

<PAGE>

                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                       (NOTE 10)

<TABLE>
<CAPTION>

                                                                                     APRIL 25,                April 26,
YEARS ENDED                                                                            1999                     1998
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                        $  59,636              $   52,880
   Adjustments to reconcile net income to net cash provided by operating activities:
     Depreciation and amortization                                                     545,092                 469,559
     Options granted in exchange for services                                           56,309                  37,704
     Common stock issued in exchange for services                                       18,176                       -
     Minority interest in net loss of subsidiary                                       (34,133)                      -
     Changes in operating assets and liabilities:
       Accounts receivable                                                              14,837                  22,771
       Inventories                                                                      (2,586)                 (2,776)
       Prepaid expenses and other                                                       (1,933)                (21,620)
       Other assets                                                                    (43,901)               (113,787)
       Accounts payable                                                                (77,354)                (68,170)
       Accrued expenses                                                                160,564                (137,752)
       Deferred rent                                                                    20,851                  18,638
-----------------------------------------------------------------------------------------------------------------------

         Net cash provided by operating activities                                     715,558                 257,447
-----------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures                                                               (485,960)               (796,716)
   Purchase of lease acquisition rights                                                      -                (290,700)
   Proceeds from sales of fixed assets                                                       -                  22,908
-----------------------------------------------------------------------------------------------------------------------

         Net cash used for investing activities                                       (485,960)             (1,064,508)
-----------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of long-term debt                                            538,472                       -
   Repayments of long-term debt                                                       (678,471)               (200,000)
   Repayments of capital lease obligations                                             (75,481)                (36,711)
   Repayments of stockholder loans                                                      (4,522)                 (4,240)
   Minority interest investment in subsidiary                                           63,142                       -
   Proceeds from exercise of stock options                                               2,200                       -
   Net proceeds from sale of common stock                                                    -               1,756,037
   Proceeds from issuance of subordinated debentures                                         -                 381,250
   Debt issuance costs                                                                       -                 (26,968)
-----------------------------------------------------------------------------------------------------------------------

         Net cash provided by (used for) financing activities                         (154,660)              1,869,368
-----------------------------------------------------------------------------------------------------------------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                               74,938               1,062,307

CASH AND CASH EQUIVALENTS, beginning of year                                         1,788,361                 726,054
-----------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS, end of year                                              $1,863,299              $1,788,361
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------

</TABLE>

         SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.


                                      F-7

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                                  SUMMARY OF ACCOUNTING POLICIES

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

NATURE OF BUSINESS           The Company is engaged in the restaurant business.
AND BASIS OF                 As of April 25, 1999, the Company operated ten
PRESENTATION                 pizza restaurants and one casual Italian dining
                             restaurant. As of April 26, 1998, the Company
                             operated nine pizza restaurants and one casual
                             Italian dining restaurant.

                             The consolidated financial statements include the
                             accounts of the Company and its majority-owned
                             subsidiaries. All significant intercompany balances
                             and transactions have been eliminated.


FISCAL YEAR                  The Company's fiscal year ends on the last Sunday
                             in April. Fiscal years 1999 and 1998 both included
                             52 weeks.


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


RECLASSIFICATIONS            Certain reclassifications have been made to the
                             1998 financial statements to conform to the 1999
                             presentation.


CASH EQUIVALENTS             For purposes of the statements of cash flows, the
                             Company considers all highly liquid debt
                             instruments purchased with maturities of three
                             months or less to be cash equivalents. Cash
                             equivalents were approximately $1,415,000 and
                             $1,646,000 at April 25, 1999 and April 26, 1998,
                             respectively.


FINANCIAL INSTRUMENTS        The estimated fair values of the Company's
                             financial instruments, which consist of cash and
                             cash equivalents, accounts receivable, accounts
                             payable, accrued expenses and certain long-term
                             obligations, approximate their carrying values
                             based on their maturity dates and prevailing market
                             interest rates.


                                      F-8

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                                  SUMMARY OF ACCOUNTING POLICIES

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

INVENTORIES                  Inventories are valued at the lower of cost
                             (first-in, first-out) or market.


PROPERTY AND                 Property and equipment are stated at cost.
EQUIPMENT                    Depreciation is computed using accelerated and
                             straight-line methods over the estimated useful
                             lives of the assets. Leasehold improvements are
                             amortized over the estimated useful lives of the
                             improvements or the length of the related lease,
                             including anticipated renewal periods, whichever is
                             shorter.

OTHER ASSETS

GOODWILL                     Goodwill resulting from the excess of cost over the
                             fair value of net assets acquired is being
                             amortized on a straight-line basis over 20 years.

DEFERRED FINANCING           Costs incurred in connection with obtaining
COSTS                        financing are amortized over the terms of the
                             related debt.

LEASE ACQUISITION            Costs incurred in connection with the purchase of a
RIGHTS                       lease are being amortized over the term of the
                             lease.


REVENUE RECOGNITION

RESTAURANT SALES             Substantially all restaurant sales represent retail
                             sales to the general public through Company-owned
                             restaurants. Such amounts are recognized as revenue
                             at the point of sale.

FRANCHISE FEES               Franchise fees resulting from the sale of
                             individual franchise locations are recognized as
                             revenue upon the commencement of franchise
                             operations. Revenues from the sale of area
                             development rights are recognized proportionately
                             as the franchised restaurants subject to the area
                             development agreements commence operations.
                             Franchise royalties, which are based on a
                             percentage of franchised restaurants' sales, are
                             recognized as earned.



                                      F-9
<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                                  SUMMARY OF ACCOUNTING POLICIES

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

ADVERTISING COSTS            Advertising costs are expensed when incurred.
                             Advertising expense amounted to approximately
                             $203,000 in 1999 and $118,000 in 1998.


PRE-OPENING COSTS            All nonrecurring costs, such as recruiting,
                             training and other initial direct administrative
                             expenses associated with the opening of new
                             restaurant locations are expensed as incurred.


TAXES ON INCOME              The Company accounts for income taxes under the
                             asset and liability method pursuant to Statement of
                             Financial Accounting Standards No. 109 ("SFAS No.
                             109"), "Accounting for Income Taxes." Under SFAS
                             No. 109, deferred income taxes are recognized for
                             the future tax consequences attributable to
                             differences between the financial statement
                             carrying amounts of existing assets and liabilities
                             and their respective tax basis. Deferred tax assets
                             and liabilities are measured using enacted tax
                             rates expected to apply to taxable income in the
                             years in which those temporary differences are
                             expected to be recovered or settled. The effect of
                             any tax rate change on deferred taxes is recognized
                             in income in the period that includes the enactment
                             date of the tax rate change.

STOCK OPTIONS                The Company follows the provisions of Statement of
                             Accounting Standards No. 123, "Accounting for
                             Stock-Based Compensation." The Company has elected
                             to continue to account for stock options at their
                             intrinsic value with disclosure of the effects of
                             fair value accounting on earnings and earnings per
                             share of common stock on a pro forma basis.



                                      F-10

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                                  SUMMARY OF ACCOUNTING POLICIES

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

NET INCOME PER SHARE         The Company follows Statement of Financial
OF COMMON STOCK              Accounting Standards No. 128 ("SFAS No. 128"),
                             "Earnings per Share." Under SFAS No. 128, basic
                             earnings per share excludes the effect of any
                             dilutive options, warrants or convertible
                             securities and is computed by dividing the net
                             income (loss) available to common shareholders by
                             the weighted average number of common shares
                             outstanding for the period. Diluted earnings per
                             share is computed by dividing the net income (loss)
                             available to common shareholders by the sum of the
                             weighted average number of common shares and common
                             share equivalents computed using the average market
                             price for the period under the treasury stock
                             method.


LONG-LIVED ASSETS            The Company evaluates its long-lived assets under
                             the provisions of Statement of Financial Accounting
                             Standards No. 121 ("SFAS No. 121"), "Accounting for
                             the Impairment of Long-Lived Assets and for
                             Long-Lived Assets to be Disposed of". SFAS No. 121
                             establishes accounting standards for the impairment
                             of long-lived assets and certain identifiable
                             intangibles to be held and used and for long-lived
                             assets and certain identifiable intangibles to be
                             disposed of.

                             The Company reviews the carrying values of its
                             long-lived and identifiable intangible assets for
                             possible impairment whenever events or changes in
                             circumstances indicate that the carrying amounts of
                             the assets may not be recoverable.


                                      F-11

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                                  SUMMARY OF ACCOUNTING POLICIES

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

NEW ACCOUNTING               In June 1998, the Financial Accounting Standards
STANDARD                     Board issued SFAS No. 133, "Accounting for
                             Derivative Instruments and Hedging Activities"
                             ("SFAS No. 133"). SFAS No. 133 requires companies
                             to recognize all derivative contracts as either
                             assets or liabilities in the balance sheet and to
                             measure them at their fair values. If certain
                             conditions are met, a derivative may be
                             specifically designated as a hedge, the objective
                             of which is to match the timing of gain or loss
                             recognition on the hedging derivative with the
                             recognition of (i) the changes in the fair value of
                             the hedged assets or liability or (ii) the earnings
                             effect of the hedged forecasted transaction. For a
                             derivative not designated as a hedging instrument,
                             the gain or loss is recognized in income in the
                             period of change. SFAS No. 133, as amended, is
                             effective for all fiscal quarters of fiscal years
                             beginning after June 15, 2000.

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


                                      F-12

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1.     INVENTORIES                    Inventories consist of the following:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                                                                                1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                        <C>                 <C>
                                      Food, beverages and liquor                           $   105,643         $   102,943
                                      Paper goods and supplies                                 109,014             109,128
                                      --------------------------------------------------------------------------------------

                                      Total                                                $   214,657         $   212,071
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>

2. OTHER ASSETS                       Other assets consist of the following:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                                                                                1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                      <C>                 <C>
                                      Goodwill                                           $     765,133       $     765,133
                                      Lease acquisition rights                                 290,700             290,700
                                      Deferred financing costs                                 288,775             268,524
                                      Deposits and other                                       243,848             213,646
                                      --------------------------------------------------------------------------------------

                                                                                             1,588,456           1,538,003

                                      Less accumulated amortization                            318,415             214,843
                                      --------------------------------------------------------------------------------------

                                      Other assets, net                                  $   1,270,041       $   1,323,160
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>


                                      F-13

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

3. ACCRUED EXPENSES                   Accrued expenses consist of the following:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                                                                                1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                        <C>                 <C>
                                      Compensation                                         $   222,464         $   160,315
                                      Interest                                                 168,207             127,412
                                      Taxes other than income taxes                             44,944              71,073
                                      Professional fees                                         87,176              64,000
                                      Gift certificates                                         51,207              36,465
                                      Accrued rent                                              24,114              22,209
                                      Other                                                     52,977               9,051
                                      --------------------------------------------------------------------------------------

                                      Total                                                $   651,089         $   490,525
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>

4.     REVOLVING CREDIT
       FACILITY AND
       LONG-TERM DEBT

                             In November 1998, the Company obtained a $2,000,000
                             revolving credit facility with a bank which expires
                             on October 1, 1999. At the Company's option,
                             borrowings used to repay existing bank debt or to
                             finance construction of new restaurant locations
                             may be in the form of a term loan, payable over a
                             four year period with variable interest rate
                             options. Borrowings used to fund short-term working
                             capital needs bear interest at the bank's base
                             lending rate plus 1%. Such borrowings plus accrued
                             interest are due in full within 30 days of
                             issuance. The Revolving Credit Facility Agreement
                             requires compliance with various covenants
                             including leverage ratio, debt service ratio,
                             certain earnings ratios, and maximum capital
                             expenditures. Outstanding borrowings against this
                             credit facility amounted to $485,001 at April 25,
                             1999 and consisted of term notes payable. All
                             borrowings under the revolving credit facility are
                             collateralized by substantially all of the
                             Company's assets.


                                      F-14

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

4.     REVOLVING CREDIT
       FACILITY AND
       LONG-TERM DEBT
       (Continued)

       LONG-TERM DEBT                 Long-term debt consists of the following:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                                                                                1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                            <C>                <C>
                                      Notes payable to a bank bearing interest at 7.84%,
                                       representing borrowings against the Company's
                                       revolving credit facility, payable in aggregate
                                       monthly installments of $12,984 through November 2002.   $485,001           $      -

                                      Note payable to a bank, interest at prime plus 2%,
                                       repaid in full during fiscal 1999.                              -           $300,000

                                      Note payable to a bank, interest at 12.0%, repaid
                                       in full during fiscal 1999.                                     -           $325,000
                                      -------------------------------------------------------------------------------------

                                      Total                                                     485,001             625,000

                                      Less current maturities                                   122,076             200,000
                                      -------------------------------------------------------------------------------------

                                      Long-term debt                                           $362,925            $425,000
                                      -------------------------------------------------------------------------------------
                                      -------------------------------------------------------------------------------------

</TABLE>


                                      F-15

<PAGE>

                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

4.     REVOLVING CREDIT
       FACILITY AND
       LONG-TERM DEBT
       (Continued)

       LONG-TERM DEBT                 Maturities of long-term debt are as
       (Continued)                    follows:

<TABLE>
<CAPTION>

                                      FISCAL YEAR ENDING                                                          Amount
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                                            <C>
                                      2000                                                                     $122,076
                                      2001                                                                      131,998
                                      2002                                                                      142,727
                                      2003                                                                       88,200
                                      --------------------------------------------------------------------------------------

                                      Total                                                                    $485,001
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>


5.     NOTES PAYABLE -                Notes payable - stockholder consists of
       STOCKHOLDER                    two notes, with interest at 7.18% and 8%,
                                      payable in aggregate monthly installments
                                      of principal and interest of $810,
                                      maturing January, 2017. Maturities of
                                      notes payable - stockholder are as
                                      follows:

<TABLE>
<CAPTION>

                                      FISCAL YEAR ENDING                                                          Amount
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                                            <C>
                                      2000                                                                     $  4,740
                                      2001                                                                        4,996
                                      2002                                                                        5,274
                                      2003                                                                        5,567
                                      2004                                                                        5,820
                                      Thereafter                                                                 94,912
                                      --------------------------------------------------------------------------------------

                                      Total                                                                    $121,309
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>


                                      F-16

<PAGE>

                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

6.     SUBORDINATED                   Subordinated debentures outstanding at
       DEBENTURES                     April 25, 1999 and April 26, 1998 consist
                                      of convertible debentures bearing interest
                                      at variable rates of 8% through December
                                      31, 1997, 10% through December 31, 1998,
                                      12% through December 31, 1999 and 14%
                                      through December 31, 2011, payable
                                      semi-annually and convertible into the
                                      Company's common stock at a conversion
                                      rate of $1.25 per share. The Company has
                                      recorded interest costs related to these
                                      debentures at a straight-lined rate of
                                      13.2%. The convertible debentures are
                                      convertible at the option of the holder,
                                      at any time, and automatically convert
                                      into shares of common stock at the
                                      conversion rate if the average bid price
                                      of the Company's common stock for any
                                      sixty consecutive trading days is equal to
                                      or greater than $3.00. The debentures are
                                      due on December 31, 2011.


7.     TAXES ON INCOME                At April 25, 1999, the Company has the
                                      following net operating loss
                                      carryforwards, subject to review by the
                                      Internal Revenue Service, available to
                                      offset future federal taxable income:

<TABLE>
<CAPTION>

                                                                                                               Expiration
                                                                                               Amount             Dates
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                          <C>                 <C>
                                      Net operating losses purchased in a 1994
                                       acquisition, whose use is limited.                    $2,908,000          2004-2009

                                      Net operating losses incurred before and
                                       after acquisition and available for
                                       immediate offset against taxable
                                       income.                                               $4,422,000          2000-2013

</TABLE>


                                      F-17

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

7.     TAXES ON INCOME                Deferred tax assets are comprised of the
       (Continued)                    following:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                                                                                1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                     <C>                 <C>
                                      Deferred tax assets:
                                         Net operating loss carryforwards               $ 2,932,000      $ 3,212,000
                                         Depreciation                                       374,000          452,000
                                         Valuation allowance                             (3,306,000)      (3,664,000)
                                      --------------------------------------------------------------------------------------

                                           Net deferred tax assets                      $         -      $         -
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>

                                      The Company has provided a valuation
                                      allowance equal to 100% of its total
                                      deferred tax assets in recognition of the
                                      uncertainty regarding the ultimate amount
                                      of the deferred tax assets that will be
                                      realized.

                                      A reconciliation of the statutory federal
                                      income tax rate and the effective tax rate
                                      as a percentage of income before taxes on
                                      income is as follows:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                      YEARS ENDED                                               1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                            <C>                 <C>
                                      Statutory rate                                           34.0%               34.0%

                                      Utilization of net operating loss carryforward
                                      generating no current or deferred tax effect.            (34.0)                 -

                                      Operating income offset by current tax loss
                                      generating no current or deferred tax effect.                -              (34.0)
                                      --------------------------------------------------------------------------------------

                                      Effective tax rate                                           -  %               -  %
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
</TABLE>


                                      F-18

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

8.     COMMITMENTS AND
       CONTINGENCIES

       LEASES                         The Company is obligated under
                                      noncancellable operating leases for its
                                      leased restaurant locations, office,
                                      commissary and warehouse space. Lease
                                      terms range from five to twenty years and,
                                      in certain instances, include options to
                                      extend the original terms. Generally, the
                                      Company is required to pay its
                                      proportionate share of real estate taxes,
                                      insurance, common area and other operating
                                      costs in addition to annual base rent.
                                      Substantially all restaurant leases
                                      provide for contingent rent based on sales
                                      in excess of specified amounts. The
                                      Company also leases equipment under
                                      capital leases.

                                      The following is an analysis of equipment
                                      held under capital leases, included in
                                      property and equipment in the accompanying
                                      consolidated balance sheets:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                      YEARS ENDED                                               1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                        <C>              <C>
                                      Equipment                                            $566,095         $492,765

                                      Less: accumulated amortization                         94,021           65,868
                                      --------------------------------------------------------------------------------------

                                      Net leased property under capital leases             $472,074         $426,897
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>


                                      F-19

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

8.     COMMITMENTS AND
       CONTINGENCIES
       (Continued)

       LEASES                         Aggregate minimum rental requirements
                                      under capital leases and operating leases
                                      as of April 25, 1999, are approximately
                                      as follows:

<TABLE>
<CAPTION>

                                                                                           Capital              Operating
                                      FISCAL YEAR ENDING                                   Leases                Leases
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                      <C>                <C>
                                      2000                                               $149,782           $ 2,041,000
                                      2001                                                149,782             1,987,000
                                      2002                                                128,102             1,961,000
                                      2003                                                107,241             1,881,000
                                      2004                                                      -             1,795,000
                                      Thereafter                                                -             6,997,000
                                      --------------------------------------------------------------------------------------
                                      Total minimum lease payments                        534,907           $16,662,000
                                                                                                            -----------
                                                                                                            -----------
                                      Amount representing interest                        101,304
                                      --------------------------------------------------------------

                                      Present value of net minimum
                                        lease payments                                    433,603

                                      Less current maturities                             102,200
                                      --------------------------------------------------------------

                                      Long-term maturities                               $331,403
                                      --------------------------------------------------------------
                                      --------------------------------------------------------------

</TABLE>

                                      Deferred rent liabilities of $106,513 and
                                      $85,662 as of April 25, 1999 and April 26,
                                      1998, respectively, were recorded in order
                                      to recognize lease escalation provisions
                                      on a straight-line basis for certain
                                      operating leases.

                                      Rent expense under all operating leases
                                      amounted to approximately $1,668,000 and
                                      $1,499,000 during fiscal 1999 and 1998,
                                      respectively, which included contingent
                                      rent of approximately $34,000 and $17,000,
                                      respectively.


                                      F-20

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

8.     COMMITMENTS AND
       CONTINGENCIES
       (Continued)

       LEASE GUARANTEES               In connection with the sale of a
                                      restaurant to a non-affiliated
                                      third-party, the Company is a guarantor of
                                      certain lease payments required under a
                                      lease assumed by the buyer which expires
                                      in fiscal 2001. At April 25, 1999, the
                                      Company is contingently liable for
                                      approximately $335,000 under the guaranty.
                                      The Company's management believes that the
                                      buyer of the location will be able to
                                      perform under the terms of the lease and
                                      that no payments will be required and no
                                      losses will be incurred by the Company
                                      under the guaranty.

       LITIGATION                     The Company is involved in various legal
                                      matters in the ordinary course of its
                                      business. Each of these matters is subject
                                      to various uncertainties, and some of
                                      these matters may be resolved unfavorably
                                      to the Company. Management believes that
                                      any liability that may ultimately result
                                      from the resolution of these matters will
                                      not have a material adverse effect on the
                                      financial position of the Company.

       CONSTRUCTION OF NEW            At April 25, 1999, the Company had
       RESTAURANT FACILITIES          commitments amounting to approximately
                                      $849,000 to fund the construction of three
                                      Pizzeria Regina restaurants, which are
                                      expected to open in fiscal 2000.

       FRANCHISING                    In December 1997, the Company formed
                                      Boston Restaurant Associates
                                      International, Inc. ("BRAII"), a wholly
                                      owned subsidiary, for the purpose of
                                      offering Pizzeria Regina franchise
                                      opportunities both domestically and
                                      internationally. During fiscal 1999, the
                                      Company recognized $20,000 in franchise
                                      fee revenues related to the opening of a
                                      domestic Pizzeria Regina franchise
                                      controlled by a Company director.


                                      F-21

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


8.     COMMITMENTS AND
       CONTINGENCIES
       (Continued)

       INTERNATIONAL                  In January 1998, the Company entered into
       DEVELOPMENT                    an International Development Agreement
       AGREEMENT                      ("Development Agreement") with
                                      Regina International, Ltd ("Regina
                                      International"), a  corporation
                                      controlled by a Company director, to
                                      pursue and develop franchise territories
                                      outside the Americas, anticipated to be
                                      principally in Europe, the Far East and
                                      the Pacific Rim.

                                      The Development Agreement, which is for an
                                      initial term of five and a half years,
                                      requires the Company to pay a monthly
                                      development fee of $7,000 beginning the
                                      month after the first territory fee has
                                      been received and continuing for sixty
                                      months, provided the Development Agreement
                                      has not been earlier terminated. The
                                      Development Agreement provides that either
                                      party may re-negotiate the agreement
                                      pursuant to a written notice prior to the
                                      end of the initial term. If the parties
                                      are unable to re-negotiate this agreement
                                      on mutually satisfactory terms, the
                                      Company and Regina International have the
                                      right to cause the Company to pay Regina
                                      International a one-time buy-out fee equal
                                      to the aggregate gross revenues of BRAII
                                      for the 5 years immediately preceding the
                                      buy-out or such shorter period, if 5 years
                                      have not elapsed less certain
                                      international expenses, as defined.

                                      The Company is also required to pay Regina
                                      International during the term of the
                                      agreement a royalty equal to 40% of the
                                      gross revenues of BRAII less international
                                      expenses. The royalty payment is subject
                                      to reduction, if certain levels of
                                      international expenses in relation to
                                      revenues are not achieved by BRAII. As of
                                      April 25, 1999, no development fees or
                                      royalties have been earned.


                                      F-22

<PAGE>

                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

8.     COMMITMENTS AND
       CONTINGENCIES
       (Continued)

       JOINT VENTURE AND              In December 1998, the Company formed a
       DEVELOPMENT                    joint venture with Italian Ventures, LLC
       AGREEMENT                      ("Italian Ventures"), a Kentucky
                                      corporation controlled by two Company
                                      directors and entered into a Development
                                      Agreement (the "Agreement") for the
                                      purpose of developing domestic casual
                                      Italian dining restaurants. The Company
                                      has a 51% equity interest in the joint
                                      venture entity, Regina Ventures, LLC
                                      ("Regina Ventures").

                                      The Agreement, which has an initial term
                                      of 20 years, provides for a "Put Option",
                                      which may be exercised by Italian Ventures
                                      and a "Call Option", which may be
                                      exercised by the Company. After the first
                                      60 months of the Agreement, Italian
                                      Ventures may exercise its Put Option and
                                      cause the Company to purchase its 49%
                                      equity interest in Regina Ventures plus
                                      the assets (excluding cash, cash
                                      equivalents and accounts receivable) of
                                      Italian Ventures and its affiliates used
                                      in any Regina Ventures restaurants
                                      developed under the Agreement (the
                                      "Italian Ventures Equity Interest"). After
                                      the first 36 months of the Agreement, the
                                      Company may exercise its Call Option and
                                      thereby elect to purchase the Italian
                                      Ventures Equity Interest. Under certain
                                      limited circumstances, as defined in the
                                      Agreement, the Put and Call Options may
                                      be exercised prior to the respective
                                      initial 36 and 60 months of the Agreement.
                                      If neither the Put nor the Call Option is
                                      exercised and, at the end of the initial
                                      term, the Company and Italian Ventures do
                                      not agree to extend the Agreement, the
                                      Company shall purchase the Italian
                                      Ventures Equity Interest. In all
                                      scenarios, the purchase price for the
                                      Italian Ventures Equity Interest shall be
                                      based on the earnings and net assets of
                                      Regina Ventures, as defined in the
                                      Agreement, and payable in cash, Company
                                      common stock, or a combination of both, at
                                      the discretion of the Company.

                                      During fiscal 1999, one franchise
                                      territory and one Company restaurant site
                                      were established under the Agreement. No
                                      franchise revenues were recognized during
                                      fiscal 1999, as both locations are
                                      expected to commence operations during
                                      fiscal 2000.


                                      F-23

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


9.     STOCKHOLDERS'
       EQUITY

       PREFERRED STOCK                In September 1998, the Company's
                                      shareholders authorized the Company to
                                      issue up to 10,000,000 shares of
                                      preferred stock, $.01 par value per
                                      share. The preferred stock may be issued
                                      in one or more series. The terms of the
                                      issuances will be determined by the Board
                                      of Directors on the dates of the issuances
                                      and may include provisions for voting
                                      rights, preferences, conversion and
                                      redemption rights and other limitations or
                                      restrictions.

       STOCK OPTIONS                  In July 1994, the Company's stockholders
       AND WARRANTS                   approved the 1994 Combination Stock
                                      Option Plan (the "1994 Combination
                                      Plan") and the 1994 Non-Employee
                                      Director Stock Option Plan (the "1994
                                      Director Plan").

                                      The 1994 Combination Plan provides for the
                                      granting of incentive stock options
                                      intended to qualify under the requirements
                                      of the Internal Revenue Code and options
                                      not qualified as incentive stock options.
                                      Incentive stock options may only be
                                      granted to employees of the Company.
                                      Non-employees contributing to the success
                                      of the Company are eligible to receive
                                      non-qualified stock options. The 1994
                                      Combination Plan is to be administered by
                                      a Committee designated by the Board of
                                      Directors. Options under the 1994
                                      Combination Plan may not be granted after
                                      July 2004 and the exercise price shall be
                                      at least equal to the fair market value of
                                      the common stock at the grant date.


                                      F-24

<PAGE>

                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

9.     STOCKHOLDERS'
       EQUITY
       (Continued)

       STOCK OPTIONS                  Incentive stock options may be granted to
       AND WARRANTS                   holders of more than 10% of the Company's
       (Continued)                    common stock at an exercise price of at
                                      least 110% of the fair market value of the
                                      Company's common stock at the grant date.
                                      The terms of the options granted are to
                                      be determined by the Committee, but
                                      in no event shall the term of any
                                      incentive stock option extend beyond
                                      three months after the time a
                                      participant ceases to be an employee of
                                      the Company. No options may be exercised
                                      more than five years after the date of
                                      the grant for 10% stockholders, or ten
                                      years after the date of grant for all
                                      other participants. A total of 500,000
                                      shares of common stock have been reserved
                                      for issuance under the 1994 Combination
                                      Plan.

                                      The 1994 Director Plan, as amended,
                                      provides for the granting to each eligible
                                      non-employee director of the Company
                                      options to purchase shares of the
                                      Company's common stock. Options granted
                                      under the 1994 Director Plan become
                                      exercisable over a ten year period at an
                                      exercise price equal to the fair market
                                      value of the Company's common stock at the
                                      grant date and expire ten years from the
                                      grant date. A total of 500,000 shares have
                                      been reserved for issuance under the 1994
                                      Director Plan.

                                      During fiscal 1998, the Company issued
                                      options to the Company's President and
                                      Treasurer to purchase an aggregate of
                                      108,346 shares of the Company's common
                                      stock in connection with their guarantees
                                      of certain equipment leases. The options
                                      are exercisable at $1.27 per share and
                                      expire March 17, 2003.


                                      F-25

<PAGE>

                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

9.     STOCKHOLDERS'
       EQUITY
       (Continued)

       STOCK OPTIONS                  Changes in options outstanding under the
       AND WARRANTS                   1994 Plans, options issued in connection
       (Continued)                    with the guarantees of certain leases and
                                      debt by the Company's President and
                                      Treasurer, and options issued under
                                      prior plans which have expired are
                                      summarized as follows:

<TABLE>
<CAPTION>

                                                                                                                Weighted-
                                                                                                                 Average
                                                                                                                Exercise
                                                                                          Shares                  Price
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                     <C>                     <C>
                                      BALANCE, April 27, 1997                              753,600                 $ 1.01
                                         Granted                                           237,846                   1.34
                                         Cancelled or expired                               (3,500)                  4.38
                                      --------------------------------------------------------------------------------------

                                      BALANCE, April 26, 1998                              987,946                   1.08
                                         Granted                                           145,000                   1.13
                                         Exercised                                          (2,200)                  1.00
                                      --------------------------------------------------------------------------------------

                                      BALANCE, April 25, 1999                            1,130,746                 $ 1.08
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>


                                      As of April 25, 1999, options for 902,846
                                      shares were exercisable at prices ranging
                                      from $0.88 to $2.38. As of April 26, 1998,
                                      options for 660,800 shares were
                                      exercisable at prices ranging from $0.88
                                      to $2.38.


                                      F-26

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


9.     STOCKHOLDERS'
       EQUITY
       (Continued)

       STOCK OPTIONS                  The following table summarizes stock
       AND WARRANTS                   options outstanding at April 25, 1999:
       (Continued)

<TABLE>
<CAPTION>

                                                                                 OPTIONS OUTSTANDING
                                                                      ------------------------------------------------------
                                                                                              Weighted-
                                                                          Number               Average          Weighted-
                                                   Range of           Outstanding at          Remaining          Average
                                                   Exercise              April 25,           Contractual        Exercise
                                                    Prices                 1999             Life (years)          Price
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                            <C>                        <C>                 <C>                  <C>
                                                    $ 2.38                    5,000            6.3                 $ 2.38
                                                      1.88                   42,000            6.9                   1.88
                                                 1.24 -   1.56              183,346            4.9                   1.32
                                                 0.88 -   1.17              900,400            4.1                    .98
                                      --------------------------------------------------------------------------------------

                                               $ 0.88-   $2.38            1,130,746            4.3                 $ 1.08
                                      --------------------------------------------------------------------------------------

</TABLE>

<TABLE>
<CAPTION>

                                                                                       OPTIONS EXERCISABLE
                                                                              ----------------------------------------------
                                                                                                                Weighted-
                                                   Range of                         Number                       Average
                                                   Exercise                     Exercisable at                  Exercise
                                                    Prices                      April 25, 1999                    Price
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                           <C>                                 <C>                              <C>
                                                    $ 2.38                              3,000                      $ 2.38
                                                      1.88                             35,200                        1.88
                                                 1.24 -   1.56                        153,346                        1.29
                                                 0.88 -   1.17                        711,300                         .97
                                      --------------------------------------------------------------------------------------

                                               $ 0.88 -  $2.38                        902,846                      $ 1.06
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>


                                      F-27

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


9.     STOCKHOLDERS'
       EQUITY
       (Continued)

       STOCK OPTIONS                  At April 25, 1999, warrants and units
       AND WARRANTS                   outstanding, all of which are exercisable,
       (Continued)                    consist of the following:

                                      (a) Warrants for the purchase of 210,000
                                          shares of common stock at an exercise
                                          price of $2.00 per share, expiring
                                          April 29, 1999.

                                      (b) Warrants to purchase 1,708,000 shares
                                          of common stock at a purchase price of
                                          $3.20 per share, expiring September 7,
                                          1999, issued in connection with the
                                          Company's September 7, 1994 public
                                          offering.

                                      (c) Warrants to purchase 75,000 units
                                          (375,000 shares of common stock) at a
                                          purchase price of $3.20 per share,
                                          expiring September 7, 1999, issued in
                                          connection with the Company's
                                          September 7, 1994 public offering.

                                      (d) Warrants to purchase 25,000 shares of
                                          common stock at a purchase price of
                                          $2.80 per share, expiring December 28,
                                          2000 and warrants to purchase 25,000
                                          shares of common stock at a purchase
                                          price of $2.80 per share, expiring
                                          April 19, 2001, granted to a bank in
                                          connection with the issuance of
                                          certain notes payable.

                                      (e) Warrants to purchase 350,000 and
                                          150,000 shares of common stock at an
                                          exercise price of $3.00 per share,
                                          expiring December 31, 2006 and January
                                          25, 2008, respectively, granted in
                                          consideration for brokerage services
                                          related to the issuance of convertible
                                          subordinated debentures.

                                      The convertible subordinated debentures
                                      with an outstanding balance of $1,500,000
                                      as of April 25, 1999 are convertible into
                                      common shares at $1.25 per share.
                                      Accordingly, 1,200,000 shares have been
                                      reserved for conversion of the
                                      subordinated debentures.


                                      F-28

<PAGE>

                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

9.     STOCKHOLDERS'
       EQUITY
       (Continued)

       STOCK OPTIONS                  At April 25, 1999, 5,623,846 shares of
       AND WARRANTS                   common stock were reserved with respect to
       (Continued)                    outstanding options, warrants and
                                      convertible debentures.

                                      No units, warrants or options expired
                                      during fiscal 1999. During fiscal 1998,
                                      options to purchase 3,500 shares of
                                      common stock at $4.38 per share expired.

                                      The Company accounts for its stock-based
                                      compensation plans using the intrinsic
                                      value method. Accordingly, no compensation
                                      cost has been recognized for its stock
                                      option plans. Had compensation cost for
                                      the Company's two stock option plans and
                                      options issued in connection with the
                                      guarantee of certain debt been determined
                                      based on the fair value at the grant dates
                                      for awards under those plans consistent
                                      with the method of FASB Statement 123,
                                      "Accounting for Stock-Based Compensation,"
                                      the Company's net income (loss) and
                                      earnings (loss) per share would have been
                                      adjusted to the pro forma amounts
                                      indicated below:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                      YEARS ENDED                                               1999               1998
                                      --------------------------------------------------------------------------------------
<S>                                                                <C>                      <C>                 <C>
                                      Net income (loss)            As reported              $   59,636          $   52,880
                                                                   Pro forma                $  (12,644)         $  (20,182)

                                      Basic income (loss)          As reported                    0.01                0.01
                                        per share                  Pro forma                     (0.00)              (0.00)

                                      Diluted income (loss)        As reported                    0.01                0.01
                                        per share                  Pro forma                     (0.00)              (0.00)

</TABLE>


                                      F-29

<PAGE>


                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

9.     STOCKHOLDERS'
       EQUITY
       (Continued)

       STOCK OPTIONS                  In determining the pro forma amounts
       AND WARRANTS                   above, the Company estimated the fair
       (Continued)                    value of each option granted using the
                                      Black-Scholes option pricing model with
                                      the following weighted-average
                                      assumptions used for grants in 1999 and
                                      1998, respectively: dividend yield of 0%
                                      for both years, expected volatility of 49%
                                      and 46% for 1999 and 1998, respectively,
                                      risk free rates ranging from 4.6% to 5.3%
                                      for 1999, and 5.1% to 6.6% for 1998, and
                                      expected lives ranging from 5 to 10 years
                                      for both 1999 and 1998. The weighted
                                      average per share fair value of options
                                      granted in fiscal 1999 and 1998 was $0.60
                                      and $0.58, respectively.


10.    SUPPLEMENTAL                   Cash paid for interest and income taxes
       CASH FLOW                      are as follows:
       INFORMATION

<TABLE>
<CAPTION>

                                                                                             APRIL 25,          April 26,
                                      YEARS ENDED                                               1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                        <C>                 <C>
                                      Interest                                             $266,638         $212,763
                                      Income taxes                                         $      -         $      -

</TABLE>


                                      Noncash investing and financing activities
                                      are as follows:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                      YEARS ENDED                                               1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                        <C>                 <C>
                                      Common stock and options issued in
                                        exchange for services                              $ 74,485            $ 37,704

                                      Common stock warrants issued in
                                        exchange for debt placement services               $      -            $ 29,456

                                      Capital leases entered into during the year          $ 73,330            $302,765

</TABLE>


                                      F-30

<PAGE>

                                              BOSTON RESTAURANT ASSOCIATES, INC.
                                                                AND SUBSIDIARIES


                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

11.    NET INCOME                     The following is a reconciliation of the
       PER SHARE OF                   denominator (number of shares) used in the
       COMMON                         computation of earnings per share. The
       STOCK                          numerator (net income) is the same for the
                                      basic and diluted computations.

<TABLE>
<CAPTION>

                                                                                             APRIL 25,            April 26,
                                      YEARS ENDED                                             1999                   1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                          <C>                 <C>
                                      Basic shares                                           7,038,314           5,175,096

                                      Effect of dilutive securities:
                                         Options                                               145,815             278,059
                                      --------------------------------------------------------------------------------------

                                      Diluted shares                                         7,184,129           5,453,155
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------

</TABLE>

                                      The following table summarizes securities
                                      that were outstanding as of April 25, 1999
                                      and April 26, 1998, but not included in
                                      the calculations of net income per share
                                      because such securities are antidilutive:

<TABLE>
<CAPTION>

                                                                                              APRIL 25,          April 26,
                                      YEARS ENDED                                               1999               1998
                                      --------------------------------------------------------------------------------------
                                      --------------------------------------------------------------------------------------
<S>                                                                                            <C>                  <C>
                                      Options                                                  230,346              57,000
                                      Warrants                                               2,843,000           2,843,000
                                      Convertible debentures                                 1,200,000           1,200,000

</TABLE>

12.    RIGHTS OFFERING                During fiscal 1998, the Company completed
                                      a rights offering registration under the
                                      Securities Act of 1933. Pursuant to the
                                      offering, 2,006,277 shares of common stock
                                      were issued and sold by the Company at a
                                      price of $1.00 per share. The Company
                                      received net proceeds after expenses of
                                      approximately $1,756,000.



                                      F-31

<PAGE>


Dear Shareholders:

Boston Restaurant Associates continued to make significant progress toward
financial security and corporate growth in fiscal 1999.

Early in the third quarter of this fiscal year, we entered into a new two
million-dollar line of credit facility with BankBoston. This added to our cash
reserves from an earlier rights offering and has strengthened our ability to
build new restaurants.

We opened one new Pizzeria Regina at the Auburn Mall, Auburn, Massachusetts in
May 1998 and signed new leases to build three more Pizzeria Reginas this summer
and fall. Independence Mall, Kingston, Massachusetts is now opened, Ingleside
Mall, Holyoke, Massachusetts opens in September and Providence Mall, Providence,
Rhode Island will open in October 1999.

Our first franchise Pizzeria Regina opened in Louisville, Kentucky in the Spring
of 1999 and a second will open in Las Vegas this winter.

On another front, we are moving expeditiously to grow the Polcari's North-End
restaurant concept. Our Saugus, Massachusetts facility posted another
double-digit sales gain in fiscal 1999. Presently, we have scheduled a new
Polcari's opening this fall with others scheduled to open in the third
quarter. In addition, we have signed one franchise agreement to build a
Polcari's North-End restaurant this winter.

The pace at Boston Restaurant Associates is quickening. We have a solid
financial, operational and conceptual base, and are moving rapidly to achieve
the growth expected by our stockholders.

I believe that fiscal 2000 will see Pizzeria Regina and Polcari's North-End
restaurants come into their own. I appreciate the continued support of our
stockholders and employees and look forward to a promising fiscal 2000.


                                             Sincerely,



                                             --------------------------------
                                             George R. Chapdelaine
                                             President and Chief
                                             Executive Officer