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 27, 1997. (No Fee required)

[ ]      Transition report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934(No fee required)

         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                             (I.R.S. Employer
             Jurisdiction of                             Identification No.)
             Incorporation or
             Organization)

999 Broadway, Suite 400
Saugus, Massachusetts               (617)231-7575                       01906
--------------------                -------------                       -----
(Address of Principal               (Issuer's Telephone Number        (Zip Code)
Executive Offices)                  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
Redeemable Common Stock Purchase Warrants            Boston Stock Exchange

         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 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 _


                                       1
<PAGE>

     Check if disclosures 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. [ ]

     The issuer's revenues for its most recent fiscal year were $11,410,886.

     The aggregate market value of registrant's Common Stock, $.01 par value per
share, held by non-affiliates of the registrant as of July 25, 1997 was
$4,687,928 based upon the average closing bid and asked prices of such stock on
that date as reported on the NASDAQ Small-Cap Market on that date. As of July
25, 1997 there were 5,015,693 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.























                                       2
<PAGE>

PART I
------

ITEM 1.  BUSINESS
-----------------

General

     Boston Restaurant Associates, Inc. (the "Company") owns and operates a
chain of eight pizzerias under the name Pizzeria Regina(R) and two full service
restaurants in the Boston, Massachusetts metropolitan area. The Company's
primary full service restaurant is based upon the Polcari's North End(TM)
Italian/American, family style restaurant concept and is operated under the name
Polcari's North EndTM. The Company's other full service restaurant is operated
under the name Bel Canto(R).

     Founded in 1926, the original Pizzeria Regina restaurant has served its
signature Neapolitan style, thin crust pizza, prepared in gas-fired brick ovens,
for more than 65 years. The Company believes that the Pizzeria Regina pizza and
brand name are local symbols of superior and distinctive pizza. These
restaurants are fast service, high volume pizzerias that feature premium brick
oven pizza. Of the eight Pizzeria Regina restaurants, five are food court kiosks
(self-service, take-out style emphasizing pizza slices with common area
seating), one is a self-service restaurant (food court style with broader menu
selections including pasta and submarine sandwiches and in-restaurant seating),
and two are wait-service restaurants (full-service style emphasizing whole
pizzas with in-restaurant seating). See "Pizzeria Regina Restaurants."

     The Polcari's North End restaurant concept seeks 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 Company's Polcari's North End 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. See "Polcari's North End
Restaurant."

     The Company's Bel Canto full service restaurant is a moderately priced
casual dining Italian style restaurant.



                                       3
<PAGE>

     In April 1994, the stockholders of Pizzeria Regina, Inc. ("PRI") acquired a
60% interest in Capucino's, Inc. (the "Capucino's Acquisition"), which was then
operating four Capucino's restaurants (one of which has been converted into a
Polcari's North End restaurant, and three of which have been closed). The
Company's Bel Canto restaurant was acquired by the Company in 1991. See "Bel
Canto and Capucino's Restaurants" and "Capucino's Acquisition."

     The Company plans to expand its operations by opening additional Pizzeria
Regina food court kiosks in high volume retail malls as the opportunities
present themselves. The expansion of the Polcari's North End concept will be
dependent upon market opportunities and the Company's overall financial and
management resources. The specific rate at which the Company is able to open new
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. There can be no assurance that the Company will
have the resources to expand that expansion will not be more costly than
anticipated or that current and future sites will operate profitably.

     The Company's principal offices are located at 999 Broadway, Saugus,
Massachusetts 01906 and its telephone number is (617)231-7575. As used in this
Report, unless otherwise indicated, the term Company refers to Boston Restaurant
Associates, Inc. and its subsidiaries (including PRI). All references to
Capucino's Inc. in this Report refer to the Company prior to the Capucino's
Acquisition. All references to PRI in this Report refer to Pizzeria Regina, Inc.
which became a wholly-owned subsidiary of the Company in connection with the
Capucino's Acquisition but which was prior to that time, an independently
privately owned entity.

Pizzeria Regina Restaurants

     The Company's signature product, its premium Neapolitan style, thin crust,
brick oven pizza, features a proprietary dough and pizza sauce and whole-milk
mozzarella cheese, 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. By baking its pizza in gas-fired brick ovens,
at very high temperatures for short periods of time, the Company is able to
produce a light, evenly cooked crust while preserving the flavor and moisture of
the 




                                       4
<PAGE>

toppings. In addition, the speed of the baking process enables the Company
to provide fast service and cater to high volume. The Company believes that the
quality of its pizza resulting from its proprietary ingredients and baking
process should enable 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. Since the purchase of
this restaurant in 1946 by John B. Polcari, Sr., three generations of the
Polcari family have developed and refined the Pizzeria Regina product to produce
what the Company believes is a widely recognized local symbol of premium quality
pizza.

     The eight Pizzeria Regina restaurants currently operated by the Company are
located in the Boston metropolitan area. These restaurants are fast service,
high volume pizzerias that feature premium pizza and cater primarily to the
lunchtime diner with the exception of the original North End location, which
services both the lunch and dinner markets. Of these eight restaurants, five are
food court kiosks (self-service, take-out style emphasizing pizza slices with
common area seating), one is a self-service restaurant (food court style with
broader menu selections including pasta and submarine sandwiches and
in-restaurant seating), and two are wait-service restaurants (full-service style
emphasizing whole pizzas with in-restaurant seating).

     The Company intends to open additional Pizzeria Regina food court kiosks
primarily in retail malls within metropolitan areas in Massachusetts and other
states. The Company currently operates five food court kiosks located in the
Quincy Market/Fanueil Hall Marketplace on the Boston, Massachusetts waterfront,
and Longwood Medical Center, also in Boston; South Shore Plaza, Braintree,
Massachusetts; Solomon Pond Mall, Berlin/Marlborough Massachusetts; and the
Burlington Mall in Burlington, Massachusetts. The food court kiosks primarily
serve pizza slices 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
dining, low cost alternative relative to more traditional full service
restaurants.

     Based on the Company's experience and articles from trade




                                       5
<PAGE>

journals, the Company believes there is a trend at retail malls to retrofit
and upgrade food courts to emphasize fast food as one of the emerging focal
points 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 its brick oven pizza should position it
to compete effectively in food court locations.

          The Burlington Mall food court kiosk represented the first
of the Company's planned kiosk expansion, having been opened by the Company in
November 1994 upon the completion of the renovation of the food court in that
mall. The Company further expanded its food court kiosk operations with the
addition of kiosks in the Solomon Pond Mall in Marlborough, Massachusetts, and
the South Shore Plaza Mall in Braintree, Massachusetts. The food courts in the
Solomon Pond Mall and the South Shore Plaza Mall both opened in the beginning of
August, 1996. Management currently estimates that the cost of opening a typical
food court kiosk is approximately $350,000 to $400,000. There can be no
assurance 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.
The Company has preliminarily identified other potential site locations that it
believes will become available during the next 24 months.

         Two of the Company's Pizzeria Regina restaurants (a food court kiosk
and a wait-service restaurant), both of which are located in the Quincy
Market/Faneuil Hall Marketplace in Boston, Massachusetts, had leases that
expired on December 31, 1995. The Company entered into a new food court kiosk
lease on 1 January, 1996, which is the more successful of the two restaurants,
that runs through December 2000. The Company anticipates closing the
wait-service restaurant at the termination of the lease on or before December
31, 1997 at which time it will seek to enter into a lease for additional space
for a full service restaurant in the Quincy Market/Faneuil Hall Marketplace.
While there can be no assurance in this regard, the Company believes, based upon
communications with the landlord of this location, that it will be able to
successfully negotiate a new lease for a wait service location.



                                       6
<PAGE>

Polcari's North End Restaurant

     The Company's 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 Company's first Polcari's North End 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.

     In 1909, John B. Polcari, Sr., the patriarch of the Polcari family, opened
a neighborhood Italian groceria opposite the original North End Pizzeria Regina.
In 1946, he purchased this Pizzeria Regina. Mr. Polcari's son, John P. Polcari,
Jr., later operated Polcari's Restaurant, a well-known North End restaurant for
more than 30 years prior to its closure in 1989. Management believes that the
Polcari name evokes the Bostonian's image of immigrant, Italian/American food.

     In March 1995, the Company opened its first Polcari's North End restaurant
in Saugus, Massachusetts by converting its existing Capucino's restaurant at the
same location. In 1997 the lounge area was expanded. The Company may in the
future review opportunities to open additional Polcari's North End restaurants.
Such expansion will be dependent upon market opportunities and the Company's
overall financial and management resources.

Bel Canto and Capucino's Restaurants

     The Company operates one full service casual dining moderately priced
Italian style restaurant under the name Bel Canto. The Bel Canto Restaurant is
located in Lexington, Massachusetts. The Company introduced Pizzeria Regina
pizza in its Lexington Bel Canto restaurant in January 1995.

     In furtherance of shifting the Company's full service restaurant efforts
away from the Capucino's and Bel Canto(R) concepts the Company has, as detailed
below, converted, closed, or sold all of these restaurants other than its
remaining Lexington Bel Canto.

     The Company completed the conversion of its Brookline, Massachusetts
Capucino's restaurant into a full service Pizzeria Regina in February 1996 and
subsequently closed the restaurant in May 1997 at the termination of the
existing lease due to the 




                                       7
<PAGE>

inability to negotiate a new lease at a favorable rent. The Saugus, 
Massachusetts Capucino's restaurant was converted into a Polcari's North End
restaurant in March 1995. See "Pizzeria Regina Restaurants" and "Polcari's North
End Restaurants." The Company closed its Capucino's restaurant in Framingham,
Massachusetts in June 1995 with the intention of converting it into a Polcari's
North End restaurant. The conversion of this location was delayed while the
Company refined the Polcari's North End concept in the Saugus location. The
Company subsequently determined that it would be in its best interest to sell
the restaurant and completed the sale in April of 1997.

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, which cover new products,
continuing training and other aspects of business management. Managers also
attend seminars, which are periodically 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 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
respects 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 a cash bonus program tied to achievement of specified objectives.

     The staff for a typical Pizzeria Regina restaurant consists of one general
manager, two managers and approximately 12 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



                                       8
<PAGE>

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,
sales mix and to prepare periodic financial management reports. This system is
also used for budget analysis, planning and determining 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 and Bel Canto restaurants. Cash
is controlled through deposits of sale proceeds in local operating accounts
following each restaurant shift with respect to the Pizzeria Regina and Bel
Canto locations and following each business day with respect to Polcari's North
End location, the balances of which are wire transferred daily to the Company's
principal operating account.

Purchasing and Commissary Operations

     The Company maintains a commissary from which food products such as pizza
dough, bread dough and a full line of desserts 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 and centralized monitoring of the dough preparation ensures
a consistent and premium product. All other food preparation is performed on
site at the restaurant level.

     The Company negotiates on a centralized basis 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 




                                       9
<PAGE>

Company believes that all essential food and beverage products are available 
from many qualified wholesale suppliers.

Site Selection

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

     Potential sites for the Pizzeria Regina restaurants are generally sought
within high-traffic food courts or retail shopping malls located in metropolitan
areas. Factors which will favor a Polcari's North End restaurant site are its
proximity to 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 both 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 opening in the area.

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.

     Sales volumes at the Company's full service restaurants are typically
higher in the fall and spring months. The Company attributes this to an influx
of the student population near the restaurants, which are located close to
colleges and moderate weather conditions during these seasons.

Employees

     As of July 25, 1997, the Company had approximately 250 employees of whom 10
were corporate and administrative personnel, 33 were field supervision or
restaurant managers or management trainees, and the remainder was 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.




                                       10
<PAGE>

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 high quality
brick oven pizza and other 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 due to
the increase in distribution channels for its premium Pizzeria Regina brick oven
pizza through the development of additional Pizzeria Regina food court kiosks.
In addition, management believes that the centralization of its restaurants
within the greater Boston and neighboring areas will enable the Polcari's North
End restaurant to benefit from the recognition of the Pizzeria Regina and
Polcari names. The Company plans to rely upon local advertising, high-volume
traffic flow at retail malls, and word of mouth exposure.

Capucino's Acquisition

     Pursuant to the Capucino's Acquisition, the Company, then known as
Capucino's, Inc., purchased all of the capital stock of PRI, then known as
Boston Restaurant Associates, Inc., from George R. Chapdelaine, John P. Polcari,
Jr., Anthony Polcari, Mary Polcari, BayBank as trustee of the Anthony A. Polcari
Irrevocable Trust, and Lucille Salhany Polcari, the former stockholders of PRI,
in exchange for 1,382,588 shares of Capucino's, Inc. Common Stock. Prior to the
Capucino's Acquisition, Capucino's, Inc. and PRI had no affiliation and PRI was
a privately held entity.

     Capucino's Inc. was incorporated in May 1989. In March 1990 Capucino's,
Inc. conducted a public offering of its securities and at all times since March
1990, the Company's Common Stock has traded on the NASDAQ Small-Cap Market.

     The Polcari family purchased the original Pizzeria Regina restaurant in
1946 and incorporated under the name Boston Restaurant Associates, Inc. in 1986.
In 1991, PRI acquired the assets of the Bel Canto restaurants through its wholly
owned subsidiary Bel Canto Restaurants, Inc.



                                       11
<PAGE>

     At the time of the Capucino's Acquisition, Capucino's, Inc. owned and
operated four full service, casual dining restaurants and PRI owned and operated
a chain of six pizzerias under the name Pizzeria Regina and two Bel Canto casual
dining restaurants, all in the Boston, Massachusetts metropolitan area.

     In connection with the Capucino's Acquisition, the management of PRI
assumed similar positions with the Company. As a result of the Capucino's
Acquisition, George R. Chapdelaine and John P. Polcari, Jr., as the Voting
Trustees of a Voting Trust that holds substantially all of the Common Stock
acquired by the former PRI stockholders, became the largest stockholders of the
Company. No stockholder of Capucino's, Inc. prior to the Capucino's Acquisition
continued to own 5% or more of the outstanding Common Stock after the
acquisition.

     Following the Capucino's Acquisition, Capucino's, Inc. assumed the name
Boston Restaurant Associates, Inc., effected a one-for-ten reverse stock split
and changed the NASDAQ Small-Cap market symbol for its Common Stock from CINO to
BRAI. In addition, PRI changed its name from Boston Restaurant Associates, Inc.
to Pizzeria Regina, Inc.

Competition

     The restaurant industry is highly competitive with respect to location,
menu selection and quality, prices, service and decor. The business is affected
by changes in tastes and eating habits of the public and by changes in local,
regional or national economic conditions, demographic trends and traffic
patterns, factors affecting consumers' disposable income and spending habits and
the types, number and location of competing restaurants.

     The Pizzeria Regina restaurants compete with other fast-service, high
volume food providers on the basis of the price, value, relationship, 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. Many competitors of the
Company's restaurants are either locally owned or part of national or regional
restaurant chains, many of which are well established and have substantially
greater financial and other resources than the Company.

Trademarks

     The Company regards its service marks as having significant 




                                       12
<PAGE>

value and as being an important factor in the marketing of its products.
Its most significant marks include "Pizzeria Regina", "Regina", its crown design
logo, and "Polcari's". These marks, which appear in its advertisements, menus
and elsewhere, are widely recognized in the Boston restaurant market.


     "Pizzeria Regina" and the crown design logo are registered trademarks of
the Company. The Company has applied with the United States Patent and Trademark
Office to register the "Polcari's" logo, "Polcari's North End" and the Regina
service marks. Regina on Tap is a trademark of the Company.

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.

     A significant portion of the Company's revenues at the Polcari's North End,
Bel Canto, and the original Pizzeria Regina is attributable to the sale of
alcoholic beverages. Alcoholic beverage control regulations require each of the
Company's restaurants which serve alcohol to apply to 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 relate
to 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 liquor liability coverage for its
restaurants of $1,000,000, as well as excess liability coverage,





                                       13
<PAGE>

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.

     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. Significant numbers of the
Company's service, food preparation and other personnel are paid at rates
related to the federal minimum wage, and increases in the minimum wage could
increase the Company's labor costs.

     The development and construction of additional restaurants will be subject
to compliance with applicable zoning, land use and environmental laws and
regulations.


ITEM 2.  DESCRIPTION OF PROPERTY
-------  -----------------------

     All of the Company's existing restaurants are located in leased space in
the Boston, Massachusetts metropolitan area 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.

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


<TABLE>
<CAPTION>
Lease                               Approx.         Seating            Expiration
Location                            Sq. Ft.         Capacity           Date             Name/Type
--------                            -------         --------           ----------       ---------
<S>                                 <C>               <C>              <C>              <C>
North End, Boston (1)               4,300             67               NA               Pizzeria Regina
                                                                                        (wait-service)

Faneuil Hall Marketplace(2)           750             NA               12/31/00         Pizzeria Regina
Boston (Upstairs)                                                                       (food court)

Faneuil Hall Marketplace(3)         2,000             75               12/31/97         Pizzeria Regina
Boston (Downstairs)                                                                     (wait-service)

Longwood Medical Center (2)           650             NA               1/31/98          Pizzeria Regina
Boston                                                                                  (food court)

Burlington Mall                     3,000            100               4/30/99          Pizzeria Regina
Burlington                                                                              (self-service)

Burlington Mall(2)                  1,018             NA               11/30/05         Pizzeria Regina
Burlington                                                                              (food court)



                                       14
<PAGE>

South Shore Plaza (2)(5)              700             NA               2/28/06          Pizzeria Regina
Braintree                                                                               (food court)

Lexington                           3,850            160               11/14/98          Bel Canto

Solomon Pond Mall(2)(5)             1,085             NA               1/30/07           Pizzeria Regina
Marlborough                                                                             (food court)


Saugus(6)                           11,000           400               11/30/12         Polcari's
                                                                                        North End
</TABLE>

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

(1) Company-owned. This property is subject to a mortgage in favor of Haymarket
Co-Operative Bank. 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.

(2) Food court locations have no independent seating capacity. Seating is
centralized in the common areas of the food courts.

(3) The Company is currently in negotiations for a new wait service location
within the marketplace.

(5) The Solomon Pond Mall and South Shore Plaza Mall food courts opened in 
August 1996.

(6) Includes 30 seats located outdoors which are used weather permitting.

(7) The expiration date anticipates the Company exercise all of its extension
options that may be exercised by the Company in its discretion.


     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 14 August, 1998.


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.






                                       15
<PAGE>


PART II
-------

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

     The Company's Common Stock (NASDAQ symbol: "BRAI") is traded publicly and
is quoted on the NASDAQ Small-Cap Market. As of July 25, 1997, there were
approximately 170 holders of record of the Company's Common Stock. On July 25,
1997, the last bid and asked price of the Company's Common Stock as reported on
the NASDAQ Small-Cap Market were $1.25 and $1.25 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. 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              Low             High             Low
                                            Bid               Bid             Asked            Asked
                                            ---               ---             -----            -----
<S>                                         <C>              <C>               <C>              <C> 
Fiscal Year Ended April 28, 1996

         First Quarter . . . . .            1.63             1.25              1.75             1.38
         Second Quarter. . . . .            1.32              .50              1.38              .69
         Third Quarter . . . . .            1.13              .50              1.19              .69
         Fourth Quarter. . . . .            1.13              .70              1.19              .88

Fiscal Year Ended April 27, 1997

         First Quarter. . . . .             1.06               .56              1.08             1.00
         Second Quarter . . . .             1.00               .60              1.04              .62
         Third Quarter. . . . .             1.125             1.00              1.31             1.02
         Fourth Quarter . . . .             1.0825            1.04              1.22             1.08

</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.



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:




                                       16
<PAGE>

                                               Fiscal Year Ended
                                               ------------------
                                        April 27, 1997    April 28, 1996
                                        --------------    --------------

Income Statement Data:
Net Sales                                   100.0%            100.0%

Costs and expenses:
Cost of food and beverages                   22.2              24.1
Other operating expenses                     62.4              67.1
General and administrative                    8.9              18.4
Depreciation and amortization                 5.1               5.8
Loss from valuation of assets
 impaired, assets to be
 disposed of and restaurant
 closures                                       -              12.5
Total costs and expenses                     98.6             127.9

Operating Income/(Loss)                       1.4             (27.9)
Interest expense, Net                         1.3                .3
Other (income) expense, net                     -                .5
Net Income/(Loss)                              .1             (28.7)



Results of Operations

Overview

     The Company's results of operations for fiscal 1997 was significantly
affected by the Company's continuation of its strategy to focus its efforts on
the development of its Pizzeria Regina restaurant operations and the
corresponding effort to reduce its Capucino's and Bel Canto restaurant format.
The Company closed its Brookline, Massachusetts Capucino's restaurant in
November 1995 and reopened that location in February 1996 as a full service
Pizzeria Regina and subsequently closed this location in May of 1997 due to the
inability to negotiate a favorable lease extension. In June 1995 the Company
closed its Capucino's restaurant in Framingham, Massachusetts with the intention
of converting it into a Polcari's North End restaurant. The Company subsequently
determined that it would be in its best interest to sell the restaurant. This
sale was completed in April of 1997. In August 1996, the Company opened its new
food court kiosks in the Solomon Pond Mall and the South Shore Plaza Mall (which
replaced an existing in-line restaurant in this mall).




                                       17
<PAGE>

Results of Operations for the Years Ended April 27, 1997 and April 28, 1996

Revenues

     Net sales in fiscal 1997 were $11,411,000 compared to net sales of
$10,864,000 in fiscal 1996. The increase in net sales in fiscal 1997 as compared
to fiscal 1996 reflected, among other things, an increase in net sales at the
new Solomon Pond Mall and South Shore Plaza Pizzeria Regina (which replaced an
in-line restaurant at this mall) food court restaurants which were open in
August of 1996, increased aggregate sales from the other Pizzeria Regina
restaurants and increased sales at the new Polcari's North End Restaurant. The
increases were partially offset by a reduction in net sales at the remaining Bel
Canto restaurant and the closure of the self-service Pizzeria Regina at the
South Shore Plaza in August of 1996.

     Net sales at the Company's Pizzeria Regina restaurants increased to
$7,890,000 in fiscal 1997 from $6,543,000 in fiscal 1996, principally due to the
addition of sales from the new Pizzeria Regina food court kiosks and the
Brookline location opened in February 1996 which was subsequently closed in May
1997 at the completion of its lease (due to the inability to renegotiate a
market value lease). In addition there was aggregate increase in sales from the
previously existing ongoing Pizzeria Regina restaurants.

     Net sales at the Company's full service casual dining restaurants decreased
to $3,479,000 in fiscal 1997 from $4,287,000 in fiscal 1996. While sales at the
new Polcari's North End restaurant in fiscal 1997 increased by over $326,000
from the sales in fiscal 1996 period, this increase was offset by decreased
sales at the remaining Bel Canto restaurant, the closure of the Framingham
Capucino's in June 1995, the closure of the Wellesley restaurant in November
1995, and the conversion of the Brookline Capucino's to a Pizzeria Regina in
February 1996. The decrease at the Bel Canto restaurant was primarily
attributable to the increased competition in the Lexington area.

Costs and Expenses

Cost of Food and Beverages



                                       18
<PAGE>

     Cost of food and beverages as a percentage of net sales was 22.2% in fiscal
1997, compared to cost of food and beverages as a percentage of net sales in
fiscal 1996 of 24.1%.

     The cost of food and beverages as a percentage of net sales at the Pizzeria
Regina restaurants was 18.4% in fiscal 1997, compared to 19.3% in fiscal 1996.
The decrease in this cost as a percentage of net sales was primarily a result of
lower product costs and the addition of Pizzeria Regina food courts which
generally have lower food and beverage costs then wait service restaurants.

     The cost of food and beverages as a percentage of net sales at the
Company's full service casual dining restaurants decreased to 31.1% in fiscal
1997 from 32.1% in fiscal 1996. The decrease in the cost of food and beverages
as a percentage of net sales was principally due to a change in the menu
composition at the Company's full service restaurants.


Other Operating Expenses

     Payroll Expenses. Payroll expenses were $3,381,000 (29.6% of net sales) in
fiscal 1997, compared to payroll expenses of $3,667,000 (33.8% of net sales) in
fiscal 1996. The decrease in payroll expenses as a percentage of net sales
compared to fiscal year 1996 was primarily attributable to the closure of the
Wellesley Bel Canto and the Framingham Capucino in fiscal year 1996.

     Payroll expenses at the Pizzeria Regina restaurants increased to $2,242,000
(28.4% of net sales) in fiscal 1997 from $1,948,000 (29.8% of net sales) in
fiscal 1996 primarily due to the opening of the new Pizzeria Regina food court
restaurants in the Solomon Pond Mall and South Shore Plaza Mall in August 1996
and the opening of the new Brookline location.

     Payroll expenses at the Company's full service casual dining restaurants
decreased to $1,139,000 (32.7% of net sales) in fiscal 1997 from $1,719,000
(40.1% of net sales) in fiscal 1996. The decrease in payroll expenses in amount
and as a percentage of net sales was primarily attributable to closure of the
Wellesley Bel Canto and Framingham Capucino's.

     Other Operating Expenses, Exclusive of Payroll. Other operating expenses,
exclusive of payroll, were $3,738,000 (32.8% of net sales) in fiscal 1997 as
compared to other operating expenses in fiscal 1996 of $3,620,000 (33.3% of net
sales). Other operating expenses from the Pizzeria Regina restaurants exclusive
of payroll increased to $2,415,000 in fiscal 1997 from 





                                       19
<PAGE>

$1,938,000 in fiscal 1996. This increase in other operating expenses was
attributable to the addition of expenses associated with the nine months of
operations at the food court in Solomon Pond Mall and South Shore Plaza Mall and
the opening of the new Brookline location (which was subsequently closed in May
1997 at the end of the lease term). Other operating expenses from the Company's
full service casual dining restaurants exclusive of payroll decreased to
$1,130,000 in fiscal 1997 from $1,497,000 in fiscal 1996 primarily as a result
of restaurant closures. The decrease was partially offset by an increase of
operating expenses at the Polcari's North End restaurant and the addition of two
new Pizzera Regina food court locations. Other operating expenses also include
commissary expenses which were $191,000 in fiscal 1997 and $185,000 in fiscal
1996, respectively.

General and Administrative Expenses

     General and administrative expenses were $1,021,000 (8.9% of net sales) in
fiscal 1997, as compared to general and administrative expenses of $1,997,000
(18.4% of net sales) in fiscal 1996. The decrease in general and administrative
expenses in fiscal 1997 compared to fiscal 1996 was due, principally, to
personnel downsizing and relocation of the corporate office.

Loss for Store closures and the Write Down of Certain Assets

     In fiscal 1996, the Company decided to close its Framingham, Massachusetts
Capucino's restaurant and had lease expense associated with this property
through April 1997.

Interest Expense and Interest Income

     Interest expense increased to $157,000 in fiscal 1997 as compared to
interest expense in fiscal 1996 of $34,000. The increase in interest expense was
associated with borrowings under the Company's new credit facility and the
issuance of convertible subordinated debentures.

     Interest income was $5,000 in both fiscal 1997 and 1996 periods.

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 these matters will not have a
material adverse effect on the Company's financial position.



                                       20
<PAGE>


Liquidity and Capital Resources

     The Company has financed its operations primarily through cash generated
from operations and debt instruments. At April 27, 1997 the Company had a
negative net working capital of approximately $213,000 and cash and cash
equivalents of approximately $726,000. In December 1995, the Company obtained a
long-term credit facility with Haymarket Co-Operative Bank. The terms of the
credit facility provide that the Company may initially draw upon a $500,000
credit line ("Phase One"), and that, at the Bank's discretion, an additional
$500,000 would be made available to the Company based upon the Company's results
of operations in fiscal 1996("Phase Two"). During fiscal 1997 the company
amended the 12% note and borrowed an additional $380,750. The interest rate on
Phase One of this credit facility is 2% above the bank's prime rate. The
interest rate on Phase Two of the credit facility is a fixed rate of 12% per
annum. The Company is obligated to make monthly principal payments of $8,333 on
Phase One of the loan, commencing May 1996, with all outstanding amounts due and
payable on or before April 1, 2001. The Company is obligated to make monthly
principal payments of $8,333 on Phase Two of the loan, commencing August 1996.
The credit facility is secured by all of the assets of the Company and its
subsidiaries, including the Company's Pizzeria Regina restaurant located in the
North End of Boston, Massachusetts. The credit facility also contains certain
covenants. The President and the Treasurer of the Company and each of the
Company's subsidiaries have guaranteed the Company's obligations to the bank. A
member of the Board of Directors of the Company also serves as a member of the
bank's board of directors. As of April 27, 1997, the Company had an outstanding
balance of $825,000 under this credit facility.

     During fiscal 1997 the Company had a net increase in cash of $566,000
reflecting net cash used for operating activities of $364,000, net cash used for
investing activities of $232,000 and net cash provided from financing activities
of $1,162,000. The Company's cash used in operating activities was adversely
affected by the closure of its full service casual dining Italian restaurant in
Framingham. The Company incurred approximately $344,000 in connection with the
build-out of its two new food court kiosks and the Saugus lounge area. The
Company funded these expenditures primarily through borrowings under its credit
facility and its issuance of subordinated debentures. The company has identified
other locations for food court kiosks which cost approximately $400,000 to
construct and open. During fiscal 1997, the Company issued $1,118,750 of
convertible subordinated debentures. Subordinated debentures outstanding at




                                       21
<PAGE>

April 27, 1997 consist of convertible debentures bearing interest at 8% through
31 December, 1997; 10% through 31 December, 1998; 12% through 31 December 1999;
14% through 2011 (this is straight-lined at 13.2% annually) payable
semi-annually and convertible into the Company's common stock at a conversion
rate of $1.25 per share. The Company can redeem the convertible debentures under
certain conditions, as defined. The debentures are due December 2011. The
Company is authorized to issue an additional $381,250 of subordinated
debentures.

     At April 27, 1997 the Company had long-term debt obligations, less current
maturities, in the amount of $2,075,000, including the $625,000 of borrowings
under the Company's credit facility. At that date the Company's short-term debt
consisted of current maturities of long-term debt in the aggregate amount of
$235,000.

     The Company believes that its existing resources, borrowings under its
credit facility, proceeds from the issuance of convertible subordinated
debentures and cash flow from operations will be sufficient to allow it to meet
its obligations over the next twelve months. The Company is also seeking
additional financing in order to fund its expansion plans and other cash flow
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 such 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.


"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 expansion
plans, 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 limitation:
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.




                                       22
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS
-------  --------------------

BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

                                                                      Page
                                                                      ----

         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
                  Statements of operations......................       F-5
                  Statements of stockholders' equity............       F-6
                  Statements of cash flows......................       F-7
                  Summary of accounting policies................       F-8
                  Notes to consolidated financial statements....       F-11


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

     There were no disagreements on accounting principles or practices or
financial statement disclosure between the Company and its accountants during
the fiscal year ended April 27, 1997.


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 1997 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 1997 fiscal year.


                                       23
<PAGE>

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 1997 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 1997 fiscal year.

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

(a)       Exhibits

Exhibit                                                                Reference
Number

2                 Stock for Stock Purchase Agreement, as                 A-2*
                  amended, among Capucino's, Inc., a Delaware
                  corporation, and John P. Polcari, Jr. and
                  George R. Chapdelaine, in their capacity as
                  Voting Trustees under that certain Amended
                  And Restated Voting Trust Agreement dated
                  April 28, 1994

3(a)              Amended Certificate of Incorporation of the           A-3(a)*
                  Registrant

 (b)              Amended Bylaws of the Registrant                      A-3(b)*

4(a)              Description of Common Stock (contained in             A-4(a)*
                  the Amended Certificate of Incorporation
                  of the Registrant, filed as Exhibit 3(a))

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

 (c)              Amended and Restated Voting Trust Agreement           A-9*
                  dated April 28, 1994, as amended

10(a)             Lease dated July 15, 1987 between PRI and             A-10(a)*
                  the Longwood Galleria Associates Limited
                  Partnership regarding a Pizzeria Regina
                  Location in the Longwood Galleria Mall,
                  Boston, Massachusetts



                                       24
<PAGE>

 (b)              Lease dated June 15, 1987 (together with an           A-10(b)*
                  amendment dated January 23, 1991) between
                  Ocean, Inc. and the BRA Nominee Trust
                  Regarding a Pizzeria Regina location in the
                  North End of Boston, Massachusetts

 (c)              Lease dated September 9, 1987 between Ocean,         A-10(c)*
                  Inc. and Bellwether Properties of
                  Massachusetts Limited Partnership regarding
                  A Pizzeria Regina location in the Burlington
                  Mall, Burlington, Massachusetts

 (d)              Lease dated January 19, 1976 (together with          A-10(d)*
                  amendments thereto dated April 1, 1980 and
                  November 6, 1987 as well as an amendment
                  And renewal notice dated December 7, 1990)
                  Between Fantail Restaurant, Inc. and Faneuil
                  Hall Market Place, Inc. regarding a Pizzeria
                  Regina location in the Faneuil Hall
                  Marketplace, Boston, Massachusetts (upstairs)

 (e)              Lease dated December 30, 1986 (together with        A-10(e)*
                  an amendment thereto dated November 6, 1987
                  and a renewal notice dated December 7, 1990)
                  between Fantail Restaurant, Inc. and Faneuil
                  Hall Market Place, Inc. regarding a Pizzeria
                  Regina location in the Faneuil Hall
                  Marketplace, Boston, Massachusetts (downstairs)

 (f)              Lease dated June 9, 1980 (together with              A-10(f)*
                  an assignment thereof dated March 11, 1991)
                  between Ocean, Inc. and Braintree Property
                  Associates Limited Partnership regarding
                  A Pizzeria Regina location in the South
                  Shore Plaza, Braintree, Massachusetts

 (g)              Lease dated March 6, 1984 (together with             A-10(g)*
                  an amendment thereto dated September 13,
                  1991) between Bel Canto Restaurants, Inc.
                  and the Wellesley Realty Trust regarding a
                  Bel Canto location in Wellesley, Massachusetts

 (h)              Lease dated January 12, 1988 (together with          A-10(h)*
                  amendments thereto dated August 31, 1988 and
                  September 13, 1991 and an assignment thereof
                  Dated September 13, 1991) between Bel Canto
                  Restaurants, Inc. and the 1709 Mass Avenue
                  Nominee Trust regarding a Bel Canto location
                  In Lexington, Massachusetts



                                       25
<PAGE>

 (i)              Lease dated October 23, 1990 (together with          A-10(I)*
                  an amendment thereto dated June 19, 1992)
                  between Capucino's Boston IV, Inc. and
                  Circuit City Stores, Inc. regarding a
                  Capucino's location in Framingham,
                  Massachusetts

 (j)              Lease dated February 8, 1972 (together with          A-10(j)*
                  an amendment thereto dated July 10, 1973 and
                  an assignment thereof dated May 31, 1977)
                  and March 11, 1982 (together with an
                  amendment thereto dated March 11, 1982)
                  between Capucino's, Inc. and Ben-Har
                  Properties Realty Trust regarding a
                  Capucino's location in Brookline,
                  Massachusetts

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

 (l)              Lease dated August 2, 1990 between                   A-10(l)*
                  Capucino's Cambridge, Inc. and LEST
                  Corporation regarding a Capucino's
                  Location in Cambridge, Massachusetts

 (m)              Lease dated October 20, 1986 (together               A-10(m)*
                  with an amendment thereto dated
                  September 10, 1991) between PRI and
                  Portland Causeway Realty Trust regarding 
                  the Registrant's principal executive Offices
                  in Boston, Massachusetts

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

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

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



                                       26
<PAGE>

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

 (r)              Employment Agreement between the Registrant        A-10(p)***
                  and George R. Chapdelaine

 (s)              Form of 1994 Nonemployee Director Stock            A-10(q)***
                  Option Plan

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

  (u)             Agent Borrowing Agreement by and among PRI         A-10(s)*
                  and other subsidiaries of the Registrant
                  and BayBank dated February 8, 1991, as
                  amended on April 29, 1994

(v)               $1,038,666 Commercial Note between PRI and         A-10(t)*
                  BayBank dated February 8, 1991 as amended
                  On April 29, 1994

(w)               $275,000 Commercial Note between PRI and           A-10(u)*
                  Baybank dated February 9, 1991, as amended
                  On April 29, 1994

(x)               Master Note in favor of BayBank issued by          A-10(v)*
                  PRI on April 29, 1994

(y)               Form of Guaranty of the Registrant in favor        A-10(w)*
                  of BayBank

(z)               Form of Guaranty of George R. Chapdelaine          A-10(x)*
                  in favor of BayBank

(aa)              Form of Guaranty of John P. Polcari in favor       A-10(y)*
                  of BayBank

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

(cc)              $500,000 Subordinated debenture of the             A-10(aa)*
                  Registrant issued to Corning Partners
                  IV, L.P. on April 29, 1994

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

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

(ff)              Non-Employee Director's Stock Option               C-10(h)***
                  Plan



                                       27
<PAGE>

(gg)              Form of Stock Option Agreement between             D-10(h)
                  the Registrant and each of James I. Maruna,
                  W. Rex Seley and Richard J. Reeves

(hh)              Severance Agreement between the Registrant         E-10(p)***
                  and James I. Maruna

(ii)              Amendment to Employment Agreement between          A-(hh)***
                  the Registrant and George R. Chapdelaine

(jj)              $500,000 Note, dated December 28, 1995,            H-10.01*
                  issued by Boston Restaurant Associates, Inc.
                  in favor of Haymarket Co-Operative Bank

(kk)              Condominium Mortgage-Security Agreement,           H-10.02*
                  dated December 28, 1995, issued by George
                  R. Chapdelaine, Trustee of BRA Nominee
                  Trust, in favor of Haymarket Co-Operative
                  Bank

(ll)              Loan and Security Agreement, dated                 H-10.03*
                  December 28, 1995, between Boston
                  Restaurant Associates, Inc. and Haymarket
                  Co-Operative Bank

(mm)              Guaranty of Ocean, Inc., Polcari Enterprises,      H-10.04*
                  Inc., Pizzeria Regina, Inc., Capucino Boston
                  IV, Inc., Fantail Restaurant, Inc.,
                  Capucino's, Inc., Bel Canto Restaurant, Inc.,
                  And Capucino's of Saugus, Inc., dated
                  December 28, 1995, in favor of Haymarket
                  Co-Operative Bank

(nn)              Guaranty of George R. Chapdelaine,                 H-l0.05*
                  individually and as trustee of the BRA
                  Nominee Trust, dated December 28, 1995,
                  In favor of Haymarket Co-Operative Bank

(oo)               Guaranty of John P. Polcari, Jr., dated           H-10.06*
                  December 28, 1995, in favor of Haymarket
                  Co-Operative Bank

(pp)              Form of Option granted to Mr. Chapdelaine          H-10.07*
                  and Mr. Polcari in consideration of
                  their guaranties of BRA's obligations
                  of Boston Restaurant Associates, Inc.
                  under its credit facility

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




                                       28
<PAGE>

(rr)              $350,000 Note, dated April 19, 1996,               I-10.09*
                  issued by Boston Restaurant Associates,
                  Inc. in favor of Haymarket Co-Operative
                  Bank

(ss)              $500,000 Note, dated July 26, 1996,                I-10.10*
                  issued by Boston Restaurant Associates,
                  Inc. in favor of Haymarket Co-Operative
                  Bank

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


(uu)              Lease dated 16 November, 1995 between                Filed
                  Braintree Property Associates, LLP and               Herewith
                  Ocean, Inc. regarding a Pizzeria Regina
                  Location in South Shore Plaza, 
                  Braintree, Massachusetts

11                Calculation of net income (loss) 
                  per share of common stock                            Filed
                                                                       Herewith

21                Subsidiaries of the Registrant                       A-21*

23                Consent of BDO Seidman, LLP                          Filed
                                                                       Herewith

27                Financial Schedule                                   Filed
                                                                       Herewith


                                       29
<PAGE>


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 28 April, 1996. The number at
                  forth herein is the number of the Exhibit in said annual
                  report.

*                 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



                                       30
<PAGE>

-------
 (b)      REPORTS ON FORM 8-K                                      *by reference
          -------------------

     Boston Restaurant Associates, Inc. filed a report on Form 8-K date 31
December, 1996 reporting the issuance of 15-year subordinate convertible
debentures.





                                       31
<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:  25, July, 1997                       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.

          SIGNATURE                                           DATE
          ---------                                           ----

         /s/ George R. Chapdelaine                            25 July, 1997
         -------------------------
         George R. Chapdelaine, Chief
         Executive Officer, President
         and Director


         /s/John P. Polcari                                   25 July, 1997
         ------------------
         John P. Polcari, Jr.,
         Treasurer and Director


         /s/Joseph J. Caruso                                  25 July, 1997
         -------------------
         Joseph J. Caruso, Director


         /s/Richard J. Reeves                                 25 July, 1997
         --------------------
         Richard J. Reeves, Director


         /s/Terrance A. Smith                                 25 July, 1997
         --------------------
         Terrance A. Smith, Director


         /s/Lucille Salhany                                   25 July, 1997
         ------------------
         Lucille Salhany, Director


         /s/Roger Lipton                                      25 July, 1997
         ---------------
         Roger Lipton, Director


<PAGE>
                                                               Boston Restaurant
                                                                Associates, Inc.
                                                                and Subsidiaries






--------------------------------------------------------------------------------
                                               Consolidated Financial Statements
                                                  Years Ended April 27, 1997 and
                                                                  April 28, 1996



<PAGE>

                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                                   Index to Financial Statements
--------------------------------------------------------------------------------





Report of Independent Certified Public Accountants                         F-2

Consolidated Financial Statements:

    Balance sheets                                                  F-3 to 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 to F-10

    Notes to consolidated financial statements                    F-11 to F-27


                                      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 27, 1997 and April 28,
1996, and the related consolidated statements of operations, 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 27, 1997 and April 28, 1996, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.



                                                               BDO Seidman, LLP


Boston, Massachusetts
July 2, 1997


                                      F-2


<PAGE>


                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                                     Consolidated Balance Sheets
--------------------------------------------------------------------------------
                                                        April 27,      April 28,
                                                          1997           1996
--------------------------------------------------------------------------------
Assets (Note 4)

Current:
    Cash and cash equivalents                             $726 054     $159 564
    Accounts receivable                                     69 729       65 079
    Inventories (Note 1)                                   209 295      232 427
    Prepaid expenses and other                              27 532       66 609
--------------------------------------------------------------------------------
        Total current assets                             1 032 610      523 679
--------------------------------------------------------------------------------
Property and equipment (Notes 9 and 12):
    Building                                               512 500      512 500
    Leasehold improvements                               2 591 941    2 759 369
    Equipment, furniture and fixtures                    1 799 061    1 995 784
--------------------------------------------------------------------------------
                                                         4 903 502    5 267 653

    Less accumulated depreciation and amortization       2 247 174    2 527 972
--------------------------------------------------------------------------------
        Net property and equipment                       2 656 328    2 739 681
--------------------------------------------------------------------------------
Other assets (Notes 2 and 12)                              944 180      752 624

--------------------------------------------------------------------------------
                                                        $4 633 118   $4 015 984
================================================================================
          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)
--------------------------------------------------------------------------------
                                                        April 27,     April 28,
                                                          1997          1996
--------------------------------------------------------------------------------
Liabilities and Stockholders' Equity

Current liabilities:
    Accounts payable (Note 12)                          $   382 294  $  885 791
    Accrued expenses (Notes 3 and 12)                       628 277   1 021 641
    Current maturities (Notes 4, 5, 6 and 9):
        Long-term debt                                      200 000     144 836
        Notes payable - stockholder                           4 261       4 038
        Obligations under capital leases                     30 850         -
        Subordinated debentures                               -          84 000
--------------------------------------------------------------------------------
          Total current liabilities                       1 245 682   2 140 306

Long-term obligations:
    Long-term debt, less current maturities (Note 4)        625 000     474 414
    Notes payable - stockholder, less current
     maturities (Note 5)                                    125 810     130 072
    Obligations under capital leases, less
     current maturities (Note 9)                            138 850         -
    Deferred rent (Note 9)                                   67 024      60 871
    Subordinated debentures (Note 6)                      1 118 750         -
--------------------------------------------------------------------------------
          Total liabilities                               3 321 116   2 805 663
--------------------------------------------------------------------------------

Commitments and contingencies (Notes 4, 6, 9, 10 and 13)

Stockholders' equity (Notes 5, 6, 10 and 11):
    Common stock, $.01 par value, 25,000,000
     shares authorized; shares issued 5,015,693
      and 5,015,293                                          50 157      50 153
    Additional paid-in capital                            9 043 199   8 953 785
    Accumulated deficit                                  (7 781 354) (7 793 617)
--------------------------------------------------------------------------------
          Total stockholders' equity                      1 312 002   1 210 321
--------------------------------------------------------------------------------
                                                        $ 4 633 118  $4 015 984
================================================================================

          See accompanying summary of accounting policies and notes to
                       consolidated financial statements.


                                      F-4
<PAGE>





                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                           Consolidated Statements of Operations





<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
                                                               April 27,            April 28,
Years ended                                                      1997                 1996
----------------------------------------------------------------------------------------------
<S>                                                           <C>                  <C>        
Net sales                                                     $11 410 886          $10 864 418
                                                              
                                                              
Costs and expenses:                                           
    Cost of food, beverages and liquor                          2 532 050            2 618 187
    Other operating expenses                                    7 119 142            7 287 378
    General and administrative                                  1 020 796            1 996 752
    Depreciation and amortization                                 579 071              635 378
    Loss from valuation of assets impaired, assets to         
     to be disposed of and restaurant closures (Note 12)              -              1 355 034
                                                              
----------------------------------------------------------------------------------------------
        Total costs and expenses                               11 251 059           13 892 729
----------------------------------------------------------------------------------------------
                                                              
Operating income (loss)                                           159 827           (3 028 311)
                                                              
Interest expense, net of interest income of $4,983 and        
 $5,305 in 1997 and 1996, respectively                            151 941               29 185
                                                              
Other (income) expense, net (Note 7)                               (4 377)              50 404

----------------------------------------------------------------------------------------------
Net income (loss)                                             $    12 263          $(3 107 900)
==============================================================================================
                                                              
                                                              
Net income (loss) per share                                   $       -            $      (.62)
                                                              
==============================================================================================
Weighted average number of common and                         
 dilutive common equivalent shares outstanding                  5 015 306            5 015 293
==============================================================================================
</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
                                           $.01 Par Value       Additional                               Total
Years ended April 27, 1997 and           -----------------        Paid-In              Accumulated     Stockholders'
April 28, 1996                           Shares     Amount        Capital               Deficit          Equity
---------------------------------------------------------------------------------------------------------------------
<S>                                      <C>         <C>          <C>                   <C>                <C>       
Balance, April 30, 1995                  5 015 293   $50 153      $8 953 785            $(4 685 717)       $4 318 221
                                         
    Net loss for the year                        -         -               -             (3 107 900)       (3 107 900)
                                         
---------------------------------------------------------------------------------------------------------------------
Balance, April 28, 1996                  5 015 293    50 153       8 953 785             (7 793 617)        1 210 321
                                         
    Exercise of stock options (Note 13)        400         4             384                      -               388
                                         
    Issuance of options and warrants in
    exchange for services (Note 11)              -         -          89 030                      -            89 030
                                         
    Net income for the year                      -         -               -                 12 263            12 263
                                         
                                         
---------------------------------------------------------------------------------------------------------------------
Balance, April 27, 1997                  5 015 693   $50 157      $9 043 199            $(7 781 354)       $1 312 002
=====================================================================================================================
</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 11)



<TABLE>
-----------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                             April 27,           April 28,
Years ended                                                                    1997                1996
-----------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                  <C> 
Cash flows from operating activities:
    Net income (loss)                                                      $    12 263          $(3 107 900)
    Adjustments to reconcile net income (loss) to net cash
     used for operating activities:
        Loss on disposal of fixed assets                                             -               46 477
        Depreciation and amortization                                          579 071              635 378
        Loss from valuation of assets impaired, assets to be
         disposed of and restaurant closures                                     -                1 355 034
        Options granted in exchange for services                                20 300                    -
        Changes in operating assets and liabilities:
          Accounts receivable                                                   (4 650)              33 233
          Inventories                                                           23 132              108 394
          Prepaid expenses and other                                            39 077                  749
          Other assets                                                        (142 570)             (13 025)
          Accounts payable                                                    (503 497)             134 654
          Accrued expenses                                                    (393 364)             174 302
          Deferred rent                                                          6 153                  138

-----------------------------------------------------------------------------------------------------------
               Net cash used for operating activities                         (364 085)            (632 566)
-----------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
    Capital expenditures                                                      (331 430)            (661 054)
    Proceeds from sales of fixed assets                                         99 811              265 747

-----------------------------------------------------------------------------------------------------------
               Net cash used for investing activities                         (231 619)            (395 307)
-----------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
    Proceeds from issuance of long-term debt                                   380 750              619 250
    Repayments of long-term debt                                              (175 000)                (971)
    Repayments of capital lease obligations                                    (20 300)                   -
    Repayments of stockholder loans                                             (4 039)              (3 820)
    Repayments of subordinated debentures                                      (84 000)            (116 000)
    Proceeds from issuance of subordinate debentures                         1 118 750                    -
    Proceeds from exercise of stock options                                        388                    -
    Debt issuance costs                                                        (54 355)                   -

-----------------------------------------------------------------------------------------------------------
               Net cash provided by financing activities                     1 162 194              498 459
-----------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                           566 490             (529 414)

Cash and cash equivalents, beginning of year                                   159 564              688 978


-----------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                                     $   726 054          $   159 564
===========================================================================================================
</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
and Basis of                        business. As of April 27, 1997, the Company
Presentation                        operated nine pizza and two casual Italian
                                    dining restaurants, including one held for
                                    sale. As of April 28, 1996, the Company
                                    operated eight pizza and two casual Italian
                                    dining restaurants, including one held for
                                    sale. Another of the Company's restaurant
                                    locations has been closed since June 1995
                                    and was sold in April 1997. In May 1997, the
                                    lease for a pizza restaurant location
                                    expired and was not renewed.

                                    The consolidated financial statements
                                    include the accounts of the Company and its
                                    wholly-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 1997 and 1996
                                    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.


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 lease, including
                                    anticipated renewal periods, whichever is
                                    shorter.


                                      F-8
<PAGE>





                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                                  Summary of Accounting Policies
--------------------------------------------------------------------------------



Other Assets

      Goodwill                      Goodwill resulting from the excess of cost
                                    over fair value of net assets acquired is
                                    being amortized on a straight-line basis
                                    over 20 years. The Company evaluates the
                                    recoverability and remaining life of its
                                    goodwill and determines whether the goodwill
                                    should be completely or partially
                                    written-off or the amortization period
                                    accelerated. The Company will recognize an
                                    impairment of goodwill if undiscounted
                                    estimated future operating cash flows of the
                                    acquired business are determined to be less
                                    than the carrying amount of the goodwill. If
                                    the Company determines that the goodwill has
                                    been impaired, the measurement of the
                                    impairment will be equal to the excess of
                                    the carrying amount of the goodwill over the
                                    amount of the undiscounted estimated future
                                    operating cash flows. If an impairment of
                                    goodwill were to occur, the Company would
                                    reflect the impairment through a reduction
                                    in the carrying value of goodwill. During
                                    fiscal 1996, goodwill was reduced due to the
                                    Company's determination that impairments had
                                    occurred (see Note 12).

      Deferred                      Costs incurred in connection with obtaining
      Financing Costs               financing are amortized over the terms of
                                    the related debt.

      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 109"), "Accounting for Income
                                    Taxes." Under SFAS 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. Under SFAS 109, the
                                    effect on deferred taxes of a change in tax
                                    rates is recognized in income in the period
                                    that includes the enactment date.


                                      F-9
<PAGE>





                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                                  Summary of Accounting Policies
--------------------------------------------------------------------------------



Cash Equivalents                    For purposes of the statements of cash 
                                    flows, the Company considers all highly
                                    liquid debt instruments purchased with a
                                    maturity of three months or less to be cash
                                    equivalents.


Net Income (Loss)                   Net income (loss) per share is based on the
Per Share                           weighted average number of common and
                                    dilutive common equivalent shares
                                    outstanding. Common stock equivalents in the
                                    form of stock options and warrants when
                                    dilutive are also considered in the
                                    computation.

New Accounting                      Effective April 29, 1996, the Company
Standards                           adopted the provisions of Statement of
                                    Financial 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 net earnings (loss) and
                                    earnings (loss) per share on a pro forma
                                    basis.

                                    Statement of Financial Accounting Standards
                                    No. 128, "Earnings per Share," (FAS No.
                                    128") issued by the Financial Accounting
                                    Standards Board is effective for financial
                                    statements for fiscal years ending after
                                    December 15, 1997. The new standard
                                    establishes standards for computing and
                                    presenting earnings per shares.

                                    The effect of adopting Statement of
                                    Financial Accounting Standards No. 128,
                                    "Earnings per Share," is not expected to be
                                    material. The Company is required to adopt
                                    the disclosure requirements of FAS No. 128
                                    during the year ended April 26, 1998.


Reclassifications                   Certain reclassifications have been made to
                                    the 1996 financial statements to conform to
                                    the 1997 presentation.


                                      F-10
<PAGE>


                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
1.    Inventories                   Inventories consist of the following:


                                                                                            April 27,        April 28,
                                                                                              1997             1996
                                    ----------------------------------------------------------------------------------
<S>                                                                                         <C>              <C>     
                                    Food, beverages and liquor                              $110 732         $131 098
                                    Paper goods and supplies                                  98 563          101 329


                                    Total                                                   $209 295         $232 427
                                    ==================================================================================
</TABLE>



2.    Other Assets                  Other assets consist of the following:

<TABLE>
<CAPTION>
                                                                                             April 27,        April 28,
                                                                                               1997             1996
                                    ----------------------------------------------------------------------------------
<S>                                                                                         <C>              <C>     
                                    Goodwill                                                $   765 133      $765 133
                                    Deferred financing costs                                    212 100        13 015
                                    Deposits and other                                           99 859        31 762
                                    Favorable lease                                              41 590        41 590
                                    ----------------------------------------------------------------------------------
                                                                                              1 118 682       851 500
                                    Less accumulated amortization                               174 502        98 876

                                    ----------------------------------------------------------------------------------
                                    Total                                                   $   944 180      $752 624
                                    ==================================================================================
</TABLE>



3.    Accrued Expenses              Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                                                           April 27,      April 28,
                                                                                             1997           1996
                                    ---------------------------------------------------------------------------------
<S>                                                                                        <C>            <C>       
                                    Compensation                                           $230 117       $  226 015
                                    Accrued rent                                             89 455            9 953
                                    Taxes other than income taxes                            88 786          117 534
                                    Professional fees                                        50 000           84 484
                                    Reserves for store closures (Note 12)                    46 325          263 599
                                    Gift certificates                                        37 365           31 694
                                    Interest                                                 35 315            5 576
                                    Insurance                                                10 873           41 708
                                    Reserve for legal contingencies (Note 9)                  -              200 000
                                    Other                                                    40 041           41 078

                                    ---------------------------------------------------------------------------------
                                    Total                                                  $628 277       $1 021 641
                                    =================================================================================
</TABLE>



                                      F-11
<PAGE>





                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements




4.    Long-Term Debt                Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                            April 27,        April 28,
                                                                                              1997             1996
<S>                                                                                         <C>              <C>     
                                    ----------------------------------------------------------------------------------
                                    Note payable to a bank, interest at prime
                                     plus 2% (10.5% at April 27, 1997), payable
                                     in monthly installments of $8,333 plus
                                     interest, due April, 2001.
                                                                                            $400 000         $500 000

                                    Note payable to a bank, interest at 12.0%,
                                     payable in monthly installments of $8,333
                                     plus interest, due July, 2001.
                                                                                             425 000          119 250

                                    ----------------------------------------------------------------------------------
                                    Total                                                    825 000          619 250

                                    Less current maturities                                  200 000          144 836

                                    ----------------------------------------------------------------------------------
                                    Long-term debt                                          $625 000         $474 414
                                    ==================================================================================
</TABLE>


                                    During fiscal 1997, the Company amended the
                                    12% note and borrowed an additional
                                    $380,750. The terms of the amended note
                                    include interest at 12%, payable in monthly
                                    installments of $8,333 plus interest, due
                                    July 2001.

                                    The notes payable to a bank are
                                    collateralized by substantially all of the
                                    Company's assets, excluding real estate, and
                                    are personally guaranteed by both the
                                    Company's President and Treasurer.

                                    In connection with their guarantees of the
                                    notes payable, the Company issued options to
                                    purchase an aggregate of 115,500 shares of
                                    the Company's common stock in fiscal 1997
                                    and 357,000 shares of the Company's common
                                    stock in fiscal 1996 to the Company's
                                    President and Treasurer. The Company also
                                    issued warrants to purchase a total of
                                    42,500 shares of the Company's common stock
                                    to the bank in connection with the issuance
                                    of the notes payable (see Note 10). The
                                    value of these options and warrants was not
                                    material as of their issuance dates. A
                                    member of the Company's Board of Directors
                                    also serves as a member of the bank's Board
                                    of Directors.


                                      F-12
<PAGE>


                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements



--------------------------------------------------------------------------------
4.    Long-Term Debt                Maturities of the long-term debt are as
      (Continued)                   follows:

                                    Fiscal year ending            Amount
                                    --------------------------------------------
                                    1998                          $200 000
                                    1999                           200 000
                                    2000                           200 000
                                    2001                           200 000
                                    2002                            25 000
                                    --------------------------------------------
                                    Total                         $825 000
                                    ============================================


5.    Notes Payable -               Notes payable - stockholder consists of two
      Stockholder                   notes, with interest at 7.18% and 8%,
                                    payable in aggregate monthly installments of
                                    principal and interest of $810, maturing
                                    January, 2017.

                                    Maturities of the stockholder notes are as
                                    follows:

                                    Fiscal year ending              Amount
                                    --------------------------------------------
                                    1998                            $  4 261
                                    1999                               4 494
                                    2000                               4 759
                                    2001                               4 993
                                    2002                               5 274
                                    Thereafter                       106 290
                                    --------------------------------------------
                                    Total                           $130 071
                                    ============================================

                                      F-13
<PAGE>


                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements

--------------------------------------------------------------------------------
6.    Subordinated                  Subordinated debentures outstanding at April
      Debentures                    27, 1997 consist of convertible debentures
                                    bearing interest at variable rates of 8%
                                    through December 31, 1997, 10% through
                                    December 31, 1998, 12% through December 31,
                                    1998 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
                                    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 has been
                                    equal to or greater than $3.00. The
                                    debentures are due December 31, 2011. The
                                    Company is authorized to issue an additional
                                    $381,250 of subordinated debentures.

                                    The subordinated debentures outstanding at
                                    April 28, 1996 consist of convertible
                                    subordinated debentures bearing interest at
                                    10% payable quarterly which were convertible
                                    into the Company's common stock at a
                                    conversion rate of $5.00 per share.
                                    These debentures were paid in full during
                                    fiscal 1997.


7.    Other (Income)                Other (income) expense, net consists of the
      Expense, Net                  following:

<TABLE>
<CAPTION>
                                                             April 27,            April 28,
                                    Years ended                1997                 1996
-------------------------------------------------------------------------------------------
<S>                                                          <C>                  <C>    
                                    Other (income) expense   $(4 377)             $ 3 927
                                    Loss on disposal
                                     of fixed assets               -               46 477
                                    -------------------------------------------------------
                                    Total                    $(4 377)             $50 404
                                    =======================================================
</TABLE>


                                      F-14
<PAGE>


                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------



8. Taxes on Income                  At April 27, 1997, the Company has the
                                    following net operating loss carryforwards,
                                    subject to review by the Internal Revenue
                                    Service, available to offset future taxable
                                    income for Federal income tax purposes
                                    as indicated:
<TABLE>
<CAPTION>
                                                                                                            Expiration
                                                                                                Amount         Dates
<S>                                                                                          <C>           <C>
                                    -----------------------------------------------------------------------------------
                                    Net operating losses purchased in a 1994 
                                     acquisition, whose use is limited                       $2 918 000       2004-2009

                                    Net operating losses incurred before and
                                     after acquisition and available for
                                     immediate offset against taxable income                  4 481 000       1998-2012

                                    Deferred tax assets are comprised of the
                                     following:

                                                                                            April 27,        April 28,
                                                                                              1997             1996
                                    ------------------------------------------------------------------------------------
                                    Deferred tax assets:
                                      Net operating loss carryforwards                      $ 2 960 000      $ 2 198 000
                                      Losses on store closures and
                                       write-downs not yet deductible
                                       for tax purposes                                         496 000          459 000
                                      Reserves and accruals not yet
                                       deductible for tax purposes                                    -           80 000
                                      Valuation allowance                                    (3 456 000)      (2 737 000)
                                    ------------------------------------------------------------------------------------
                                         Net deferred tax assets                            $         -      $         -
                                    ====================================================================================
</TABLE>

                                      F-15
<PAGE>





                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements



--------------------------------------------------------------------------------
8.    Taxes on Income               A reconciliation of the statutory federal
      (Continued)                   income tax rate (benefit) and the effective
                                    tax rate as a percentage of income (loss)
                                    before taxes on income is as follows:

<TABLE>
<CAPTION>
                                                                       April 27,        April 28,
                                    Years ended                          1997             1996

                                    -------------------------------------------------------------
<S>                                                                      <C>              <C>    
                                    Statutory rate (benefit)              34.0%           (34.0)%
                                    Operating income offset by
                                     current tax loss generating
                                     no current or deferred tax
                                     effect                              (34.0)               -
                                    Operating losses generating
                                     no current tax benefit                  -             34.0
                                    -------------------------------------------------------------

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


                                      F-16
<PAGE>





                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------



9.    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 provide options to extend
                                    the original term. 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
                                    rentals based on sales in excess of
                                    specified amounts. The Company also leases
                                    equipment under capital leases.

                                    The following is an analysis of leased
                                    property under capital leases, included in 
                                    property and equipment:

<TABLE>
<CAPTION>
                                                                                           April 27,     April 28,
                                                                                             1997          1996
                                    -------------------------------------------------------------------------------
<S>                                                                                        <C>            <C>   
                                    Equipment                                              $190 000       $    -
                                    -------------------------------------------------------------------------------
                                    Less: accumulated amortization                           19 724            -
                                    -------------------------------------------------------------------------------
                                    Net leased property under capital leases               $170 276       $    -
                                    ===============================================================================
</TABLE>


                                      F-17
<PAGE>


                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                                      Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------



9.    Commitments and
      Contingencies
      (Continued)

      Leases                        Aggregate minimum rental requirements under
      (Continued)                   capital leases and operating leases as of 
                                    April 27, 1997, are approximately
                                    as follows:

<TABLE>
<CAPTION>
                                                                                  Capital            Operating
                                    Fiscal year ending                            Leases             Leases
                                    ----------------------------------------------------------------------------
                                    <S>                                           <C>                <C>
                                    1998                                          $ 54 241           $1 524 000
                                    1999                                            54 241            1 156 000
                                    2000                                            54 241              896 000
                                    2001                                            54 241              789 000
                                    2002                                            13 560              764 000
                                    Thereafter                                           -            2 363 000
                                    ----------------------------------------------------------------------------

                                    Total minimum lease payments                   230 524           $7 492 000
                                    ------------------------------------------------------           ==========

                                    Amount representing interest                    60 824
                                    ------------------------------------------------------

                                    Present value of net minimum
                                     lease payments                                169 700
                                    Less current maturities                         30 850

                                    ------------------------------------------------------
                                    Total long term portion                       $138 850
                                    ======================================================
</TABLE>


                                    Deferred rent liabilities of $67,024 and
                                    $60,871 as of April 27, 1997 and April 28,
                                    1996, 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 was
                                    approximately $1,481,000 and $1,497,000
                                    which included contingent rentals of
                                    approximately $13,500 and $10,000 in 1997
                                    and 1996, respectively.


                                      F-18
<PAGE>


                                  

                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------



9.    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 the lease payments under
                                    the leases assumed by the buyer expiring in
                                    fiscal 2001. At April 27, 1997, the Company
                                    is contingently liable for approximately
                                    $684,000 under the guarantees. The Company
                                    is of the opinion that the buyer of the
                                    location will be able to perform under the
                                    terms of the lease agreement and that no
                                    payments will be required or losses will be
                                    incurred by the Company under the
                                    guarantees.


      Employment                    The Company has an employment agreement with
      Agreement and                 its President, which expires April 29, 1999.
      Guaranty                      In addition to a base salary, adjusted
                                    annually for cost-of-living changes and an
                                    annual bonus, the agreement provides for a
                                    performance bonus, as defined. The
                                    commitment for future compensation,
                                    excluding the performance bonus amounts to
                                    $200,000 per year. The employment agreement
                                    further provides that upon the termination
                                    of the President for reasons, as defined,
                                    the President will agree not to compete with
                                    the Company for a three year period and the
                                    Company will continue to pay the President's
                                    then current base salary and annual bonus
                                    for three years effective at the date of
                                    such termination.


      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.


                                      F-19

<PAGE>

                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------



10.   Stock Options                 At April 27, 1997, outstanding options  
      and Warrants                  consist of the following:

                                    The Company has an Employee Stock Option
                                    Plan (the "Employee Plan") and a Directors'
                                    Stock Option Plan (the "Directors' Plan")
                                    which was assumed by the Company in
                                    connection with a fiscal 1994 acquisition.
                                    Under both the Employee and Directors'
                                    Plans, options are granted at the fair
                                    market value on the date of the grant and
                                    are exercisable in part beginning one year
                                    after the grant date and ending six years
                                    from the grant date under the Employee Plan
                                    and five years after the grant date under
                                    the Directors' Plan.

                                    In July, 1994, the Company's stockholders
                                    approved the 1994 Combination Stock Option
                                    Plan (the "1994 Combination Plan") and the
                                    1994 Non-Employee Director Stock Option Plan
                                    (the "1994 Director Plan"), which replace
                                    the previously existing Employee and
                                    Directors' Plans.

                                    The 1994 Combination Plan provides for the
                                    grant 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.

                                    Incentive stock options may be granted to
                                    holders of more than 10% of the Company's
                                    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 subject to shareholder
                                    approval for the increase of 365,000 shares
                                    in 1997.

                                      F-20

<PAGE>


                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------



10.   Stock Options                 The 1994 Director Plan provides for the
      and Warrants                  granting to each eligible non-employee
      (Continued)                   director of the Company an option to
                                    purchase 5,000 shares of the Company's
                                    common stock. Options granted under the 1994
                                    Director Plan become exercisable over a five
                                    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 1997, the Company issued
                                    options to the Company's President and
                                    Treasurer to purchase an aggregate of
                                    115,500 shares of the Company's common stock
                                    in connection with guarantees of certain
                                    notes payable (see Note 4) and a new lease
                                    facility. Options for an aggregate of 75,600
                                    shares are exercisable at $0.94 per share
                                    and expire July 26, 2001. The remaining
                                    options for an aggregate of 39,900 shares
                                    are exercisable at $1.00 per share and
                                    expire October 18, 2001.

                                    During fiscal 1996, the Company issued
                                    options to the Company's President and
                                    Treasurer to purchase an aggregate of
                                    357,000 shares of the Company's common
                                    stock, in connection with their guarantees
                                    of certain notes payable (see Note 4).
                                    Options for an aggregate of 210,000 shares
                                    are exercisable at $0.94 per share and
                                    expire December 16, 2000. The remaining
                                    options for an aggregate of 147,000 shares
                                    are exercisable at $0.88 per share and
                                    expire April 19, 2001.

                                      F-21


<PAGE>

                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
10.   Stock Options
      and Warrants
      (Continued)                   Changes in options outstanding under the
                                    Employee and Directors' Plans, the 1994
                                    Plans and options issued in connection with
                                    the guarantee of certain debt by the
                                    Company's President and Treasurer are
                                    summarized as follows:

<TABLE>
<CAPTION>
                                                                                                            Weighted-Average
                                                                                   Shares                   Exercise Price
                                    ----------------------------------------------------------------------------------------
                                    <S>                                              <C>                    <C>

                                    Balance, April 30, 1995                            38 480               $4.58
                                    Granted                                           432 000                0.92
                                    Exercised                                           -                    -
                                    Cancelled or expired                              (43 500)               3.37
                                    ----------------------------------------------------------------------------------------

                                    Balance, April 28, 1996                           426 980                1.00
                                    Granted                                           328 500                1.04
                                    Exercised                                            (400)               0.96
                                    Cancelled or expired                               (1 480)               7.00
                                    ----------------------------------------------------------------------------------------

                                    Balance, April 27, 1997                           753 600               $1.01
                                    ========================================================================================
</TABLE>


                                    As of April 27, 1997, options for 544,200
                                    shares are exercisable at prices ranging
                                    from $0.88 to $4.38. At April 28, 1996,
                                    options for 375,230 shares were exercisable
                                    at prices ranging from $0.88 to $7.00.

                                      F-22


<PAGE>

                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------



10.   Stock Options                 The following table summarizes information
      and Warrants                  about stock options outstanding at
      (Continued)                   April 27, 1997:

<TABLE>
<CAPTION>
                                                                         Options Outstanding
                                       --------------------------------------------------------------------------------
                                                                                        Weighted-
                                                                                         Average             Weighted-
                                          Range of              Number                  Remaining             Average
                                          Exercise           Outstanding at            Contractual            Exercise
                                           Prices            April 27, 1997            Life (years)            Price
                                       --------------------------------------------------------------------------------
<S>                                     <C>                       <C>                       <C>                   <C>

                                        $         4.38              3 500                   1.0                   $4.38
                                                  2.38              5 000                   3.5                    2.38
                                                  1.56             10 000                   3.8                    1.56
                                           0.88 - 1.25            735 100                   4.8                    0.97
                                       --------------------------------------------------------------------------------
                                        $  0.88 - 4.38            753 600                   4.77                  $1.01
                                       ================================================================================

                                                                          Options Exercisable
                                       --------------------------------------------------------------------------------
                                                                                                             Weighted-
                                          Range of                         Number                             Average
                                          Exercise                     Exercisable at                        Exercise
                                           Prices                       April 27, 1997                         Price
                                       --------------------------------------------------------------------------------

                                        $         4.38                         3 500                              $4.38
                                                  2.38                         2 000                               2.38
                                                  1.56                         4 000                               1.56
                                           0.88 - 1.25                       534 700                                .94
                                       --------------------------------------------------------------------------------
                                        $  0.88 - 4.38                       544 200                             $  .97
                                       ================================================================================
</TABLE>


                                    At April 27, 1997, warrants and units
                                    outstanding, all of which are exercisable,
                                    consist of the following:

                                    (a)   Warrant 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 from March 8, 1997
                                          through September 7, 1999, issued in
                                          connection with the Company's
                                          September 7, 1994 public offering.

                                      F-23

<PAGE>

                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

10.   Stock Options                       (c) Warrants to purchase 75,000 units
      and Warrants                        (375,000 shares) at a purchase price
      (Continued)                         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 and 17,500
                                          shares of common stock at a purchase
                                          price of $2.00 per share through June
                                          28, 1998 and October 19, 1998,
                                          respectively, or at a purchase price
                                          of $2.80 per share from June 29, 1998
                                          through December 28, 2000 and October
                                          20, 1998 through April 19, 2001,
                                          respectively, issued to the bank in
                                          connection with the issuance of the
                                          notes payable (see Note 4).

                                    (e)   Warrants to purchase 350,000 shares of
                                          common stock at an exercise price of
                                          $3 per share, expiring December 31,
                                          2006, issued in consideration for
                                          brokerage services connected with the
                                          issuance of the convertible
                                          subordinated debentures (see Notes 6
                                          and 11).

                                    The convertible subordinated debentures with
                                    an outstanding balance of $1,118,750 as of
                                    April 27, 1997 are convertible into common
                                    shares at a conversion price of $1.25 per
                                    share. Accordingly, 895,000 shares have been
                                    reserved for conversion. Additionally, the
                                    Company is authorized to issue warrants for
                                    305,000 shares of common stock upon the
                                    issuance of the remaining $381,250 of
                                    convertible debentures and warrants for
                                    150,000 shares for the related brokerage
                                    services (see Note 6).

                                    There were 5,516,250 shares reserved with
                                    respect to the above options, warrants,
                                    convertible debentures and the anti-dilution
                                    provisions related to a fiscal 1994
                                    acquisition at April 27, 1997.

                                    During fiscal 1997 and 1996, the following
                                    units, warrants and options expired:

                                    (a)   Options to purchase 1,480 shares of 
                                          common stock at $7.00 per share.

                                    (b)   Options to purchase 18,500 shares of
                                          common stock at prices ranging from 
                                          $3.44 to $13.30 per share granted 
                                          under the Employee and Directors'
                                          Plans.

                                      F-24

<PAGE>

                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
10.   Stock Options                 (c)   Options to purchase 25,000 shares of 
      and Warrants                        common stock at $0.94 per share 
      (Continued)                         granted under the 1994 Combination 
                                          Plan.
                                    
                                    (d)   Warrants for the purchase of 6,000 
                                          shares of common stock at $5.00 per 
                                          share.

                                    At April 27, 1997, the Company has four
                                    stock-based compensation plans, which are
                                    described above. 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 four 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 27,          April 28,
                                                                                           1997              1996
                                    ---------------------------------------------------------------------------------
                                    <S>                                                  <C>             <C> 
                                    Net income (loss)        As reported                 $ 12 263        $(3 107 900)
                                                             Pro forma                    (55 769)        (3 262 573)

                                    Earnings (loss)          As reported                 $   0.00        $      (.62)
                                    per share                Pro forma                      (0.01)              (.65)
</TABLE>

                                    In determining the pro forma amounts above,
                                    the Company estimated the fair value of each
                                    option granted using the Black-Scholes
                                    option pricing model with the following
                                    weighted-average assumptions used for grants
                                    in 1997 and 1996, respectively: dividend
                                    yield of 0% for both years and expected
                                    volatility of 35% for both years, risk free
                                    rates ranging from 6.3% to 6.6% for 1997,
                                    and 5.5% to 6.5% for 1996, and expected
                                    lives ranging from 5 to 10 years for both
                                    1997 and 1996. The weighted average fair
                                    value of options granted in fiscal 1997 and
                                    1996 were $90,000 and $172,000,
                                    respectively.

                                      F-25
<PAGE>


                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------



11.   Supplemental Cash             Cash paid for interest and income taxes are
      Flow Information              as follows:
                                    

<TABLE>
<CAPTION>
                                                                                        April 27,            April 28,
                                    Years ended                                           1997                 1996
                                    ----------------------------------------------------------------------------------
                                    <S>                                                  <C>                   <C>
                                    Interest                                             $127 185              $29 166
                                    Income taxes                                                -                    -

                                    Supplemental schedule of noncash operating
                                    and financing activities are as follows:

                                                                                        April 27,            April 28,
                                    Years ended                                           1997                 1996
                                    ----------------------------------------------------------------------------------
                                    Stock options and warrants issued
                                     in exchange for services                            $  89 030                -

                                    Capital leases entered into during
                                     the year                                              190 000                -
</TABLE>


12.   Assets Impaired,              Charges included in the results of 
      Assets to be                  operations of $1,355,034 in fiscal 1996 are
      Disposed of and               summarized as follows:
      Restaurant
      Closures

                                    (a)  During fiscal 1997, the Company sold a
                                         restaurant closed since June 1995. A
                                         charge of $1,049,835 for the closed
                                         restaurant is included in the results
                                         of operations for the year ended April
                                         28, 1996 for the write-down to net
                                         realizable value of leasehold
                                         improvements ($216,000), goodwill
                                         ($635,000) and other assets ($96,000)
                                         and an accrual for buy-out of the lease
                                         ($102,000). The consolidated balance
                                         sheet at April 28, 1996 includes assets
                                         of $265,000, and liabilities of
                                         $240,000, related to this location.

                                    (b)  A charge of $159,228 is included in the
                                         results of operations for the year
                                         ended April 28, 1996 for the write-down
                                         resulting from the impairment of
                                         leasehold improvements ($53,000) and
                                         other assets and expenses ($106,000) at
                                         an operating restaurant held for sale.

                                      F-26

<PAGE>

                                              Boston Restaurant Associates, Inc.
                                                                and Subsidiaries

                   Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

12.   Assets Impaired,              (c)  A charge of $145,971 is included in
      Assets to be                       the results of operations for the year
      Disposed of and                    ended April 28, 1996 for the write-down
      Restaurant                         resulting from the impairment of
      Closures                           leasehold improvements at one of the
      (Continued)                        Company's pizza restaurants.

                                    (d)  In May 1995, the Company notified the
                                         landlord of its Cambridge,
                                         Massachusetts restaurant that it was
                                         exercising its option to cancel the
                                         lease and fulfill its guarantee with
                                         the payment of six months rent. On May
                                         26, 1995, the restaurant was closed.

                                    The historic and projected cash flows for
                                    these restaurants were not sufficient for
                                    the Company to recover the historical
                                    carrying amount of those assets. The assets
                                    were revalued at their estimated fair market
                                    value based upon sales of comparable assets
                                    in the case of leasehold improvements, and
                                    at zero for the goodwill, covenant and
                                    favorable lease, based upon an estimate of
                                    the amount recoverable.

13.   Subsequent Events             In July 1997, the Company entered into a 
                                    lease agreement for a new pizza restaurant
                                    location. The lease agreement is for a term
                                    of ten years and requires an aggregate of
                                    approximately $1,000,000 of minimum lease
                                    payments over  the lease term.

                                      F-27