U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

ý Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

ý		Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

		For the fiscal year ended April 24, 2005.

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

		For the transition period from to .

For the fiscal year ended April 25, 2004.

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

For the transition period from to .

Commission File Number

0-18369

BOSTON RESTAURANT ASSOCIATES,. INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware		61-1162263
(State or Other Jurisdiction of		(I.R.S. Employer
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
Incorporation or Organization)		Identification No.)
999 Broadway, Suite 400
Saugus, Massachusetts		01906
Saugus. Massachusetts		01906
(Address of Principal Executive Offices)		(Zip Code)
(Address of Principal Executive Offices		(Zip Code)
(781) 231-7575
(Registrant’s Telephone Number Including Area Code)

(781) 231-7575

(Registrant’s Telephone Number Including Area Code)

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

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

None

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

Common Stock, $.01 par value per share

(Title of Class)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-K contained herein, and will not 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-K or any amendments to this Form 10-K. ý

Indicate by check mark whether the registrant is a accelerated filer (as defined in Exchange Act Rule 12b-2) Yes o No ý

The aggregate market value of registrant’s Common Stock, $.01 par value per share, held by non-affiliates of the registrant as of the end of the second quarter fiscal year ~~2004~~2005 was $42,~~221~~391,~~102~~856 based upon the average of the closing bid and asked prices of such stock on that date as reported on the OTC Bulletin Board. As of July 1915, ~~2004~~2005 there ~~were~~ were 7,035,170 shares of the registrant’s Common Stock, $.01 par value per ~~share~~ 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 the Report.None

INDEX

PART I		~~PART I~~
~~ITEM 1.~~	ITEM 1.	BUSINESS
~~ITEM 2.~~	ITEM 2.	PROPERTIES
~~ITEM 3.~~	ITEM 3.	LEGAL PROCEEDINGS
~~ITEM 4.~~	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
~~ITEM 5.~~	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
~~ITEM 6.~~	ITEM 6.	SELECTED FINANCIAL DATA
~~ITEM 7.~~	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
~~ITEM 7A.~~	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS.
~~ITEM 8.~~	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
~~ITEM 9.~~	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
~~ITEM 9A.~~	ITEM 9A.	CONTROLS AND PROCEDURES
PART III
	ITEM 9B.	OTHER INFORMATION
ITEM 10.		DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
PART III
ITEM 11.		EXECUTIVE COMPENSATION
	ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
ITEM 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
	ITEM 11.	EXECUTIVE COMPENSATION
ITEM 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 14.		PRINCIPAL ACCOUNTANT FEES AND SERVICES
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
	ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 15.		EXHIBITS , FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PART IV
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

2FORM 10-K

~~FORM~~CAUTIONARY STATEMENT ~~10-K~~FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

~~CAUTIONARY~~Forward-looking ~~STATEMENT~~statements ~~FOR~~in ~~THE~~this report, ~~PURPOSES~~including OFwithout ~~THE~~limitation statements relating to the adequacy of the Company’s working capital and other resources, ability to obtain additional financing, the timing of the Company’s new store openings and future expansion, and anticipated future cash flows from particular sources 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: risks associated wtih the Company’s ability to obtain funding; 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. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “~~SAFE~~may”, “will” ~~HARBOR~~“expect”, ~~PROVISIONS~~“intend”, “ “estimate”, “anticipate” or “believe” or the OFnegative ~~THE~~thereof ~~PRIVATE~~or ~~SECURITIES~~variations ~~LITIGATION~~thereon ~~REFORM~~or ~~ACT~~similar OFterminology. ~~1995~~Although the Company believes that the expectations reflected in such forward-looking statements will prove to have been correct, it can give no assurance that such expectations will prove to have been correct. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. (See “Item 1. Business - Risk Factors.’)

Forward-looking statements in this report, including without limitation statements relating to the adequacy of the Company’s working capital and other resources, ability to obtain additional financing, the timing of the Company’s new store openings and future expansion, and anticipated future cash flows from particular sources 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:PART 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. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will”, “expect,” “intend,” “estimate,” “anticipate” or “believe” or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to have been correct, it can give no assurance that such expectations will prove to have been correct. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. (See “Item 1. Business – Risk Factors.”)I

3ITEM 1. BUSINESS

~~PART I~~General

~~ITEM~~During 1the fiscal year ended April 24, 2005 (“Fiscal 2005”) Boston Restaurant Associates, Inc. ~~BUSINESS~~ (the “Company”) operated a chain of nineteen restaurants including twelve fast-service, high volume pizzerias under the “Pizzeria Regina”- name, four full-service family-style Italian/American restaurants under the “Polcari’s North End” name for the entire year, one Polcari’s North End restaurant for eleven months and one Pizzeria Regina kiosk for seven months and one Pizzeria Regina for nine months. A majority of the restaurants are located in the Boston, Massachusetts metropolitan area. In July, 2004 the Company opened a Pizzeria Regina in metropolitan Boston. In November, 2004 the Company discontinued operations of its Pizzeria Regina in Richmond, Virginia when the lease period for that location expired. In March 2005, the Company completed an assets sale of a Polcari’s North End Bistro in Hyannis, Massachusetts, Polcari’s North End of Cambridge, Massachusetts is scheduled to cease operations as of July 22, 2005 in connection with the sale of certain of the assets of that location to Technology Square Finance LLC pursuant to an agreement between the Company and Technology square dated October 22, 2004, therefore, these three locations are reported as discontinued operations.

~~General~~The Pizzeria Regina restaurants feature the Company’s signature product, its premium Neapolitan style, thin crust pizza, prepared in gas-fired brick ovens. The original Pizzeria Regina, located in Boston’s historic North End, has served the Company’s premium brick oven pizza since 1926. The Company believes that the Pizzeria Regina brand name and the pizza itself are local symbols of superior and distinctive pizza. Of the currently existing Pizzeria Regina restaurants, twelve are food court kiosks (self-service, take-out style emphasizing pizza slices with common area seating), while the original 1926 North End Pizzeria Regina is a wait service restaurant (full-service style emphasizing whole pizzas with in-restaurant seating). (See “Pizzeria Regina Restaurants.’)

~~During~~The ~~the~~Polcari’s ~~fiscal~~North ~~year~~End ~~ended April 25, 2004 (“Fiscal 2004”) Boston Restaurant Associates, Inc. (the “Company”) operated a chain of eighteen~~ restaurants –are ~~twelve fast~~full-service~~, high volume pizzerias~~ ~~under the Pizzeria Regina name~~Italian/American, ~~four full-service~~ family-style ~~Italian/American~~ restaurants ~~under~~that capture the ~~“Polcari’s~~community ~~North~~spirit ~~End ä“ name for~~ of the ~~entire~~1940s ~~year,~~and ~~one~~1950s ~~Polcari~~in Boston’s Italian North End ~~restaurant~~neighborhood. ~~for seven~~These ~~months~~restaurants ~~and~~highlight ~~one~~exposed ~~Pizzeria~~gas-fired ~~Regina~~brick ~~kiosk~~ovens ~~opened~~in ~~the~~open ~~last~~view ~~month~~ of ~~the year. In July~~diners, memorabilia ~~2004~~and ~~subsequent~~photographs todepicting ~~year~~1940s ~~end~~and ~~the Company~~1950s ~~opened~~scenes ~~a Pizzeria Regina kiosk~~ in Boston’s North End, ~~Massachusetts. A~~and ~~majority~~large oftables ~~the~~to ~~restaurants~~encourage ~~are~~family-style ~~located~~dining. ~~in the~~(See ~~Boston,~~“Polcari’s ~~Massachusetts~~North End ~~metropolitan area~~Restaurants.’)

The first Pizzeria Regina ~~restaurants~~was ~~feature~~opened ~~the Company’s~~in ~~signature product~~1926, ~~its~~and the ~~premium~~predecessor ~~Neapolitan~~corporation ~~style,~~was ~~thin~~incorporated ~~crust pizza, prepared~~ in ~~gas-fired brick ovens~~1986. The ~~original~~ ~~Pizzeria~~Company ~~Regina,~~became ~~located~~ public in ~~Boston’s~~1994, ~~historic~~and ~~North~~since ~~End,~~that date has ~~served the~~continuously ~~Company’s~~operated ~~premium~~a ~~brick~~restaurant ~~oven~~chain ~~pizza~~which has ~~since~~increased ~~1926. The~~over ~~Company~~time ~~believes~~to ~~that~~ the ~~Pizzeria~~present ~~Regina brand~~17 ~~name~~operating ~~and~~restaurants. ~~the~~The ~~pizza~~Company’s ~~itself~~principal offices are ~~local~~located ~~symbols~~at of999 ~~superior~~Broadway, Saugus, Massachusetts 01906 and ~~distinctive~~its ~~pizza.~~telephone Ofnumber ~~the~~is ~~fourteen~~(781) ~~Pizzeria~~231-7575 ~~Regina~~and ~~restaurants,~~its ~~thirteen~~corporate ~~are~~website ~~food court~~is ~~kiosks~~www.polcaris.com ~~(self-service,~~As ~~take-out~~used ~~style~~in ~~emphasizing~~this ~~pizza~~Report, ~~slices~~unless ~~with~~otherwise ~~common area seating)~~indicated, ~~while~~ the ~~original~~term ~~1926~~“Company” refers ~~North~~to ~~End~~Boston ~~Pizzeria~~Restaurant ~~Regina~~Associates, Inc. isand aits ~~wait~~subsidiaries. ~~service~~We make ~~restaurant~~available, ~~(full-service~~free ~~style~~of ~~emphasizing~~charge ~~whole~~through ~~pizzas~~our ~~with~~website, ~~in-restaurant seating). (See~~our ~~“Pizzeria Regina~~annual ~~Restaurants.”)~~report

The Polcari’s North End restaurants are full-service Italian/American, family-style restaurants that capture the community spirit of the 1940s and 1950s in Boston’s Italian North End neighborhood. These restaurants highlight exposed gas-fired brick ovens in open view of diners, memorabilia and photographs depicting 1940s and 1950s scenes in Boston’s North End, and large tables to encourage family-style dining. (See “Polcari’s North End Restaurants.”)1

The first Pizzeria Regina was opened in 1926, and the predecessor corporation was incorporated in 1986. The Company became public in 1994 and since that date has continuously operated a restaurant chain which has increased over time to the present 19 operating restaurants. The Company’s principal offices are located at 999 Broadway, Saugus, Massachusetts 01906 and its telephone number is (781) 231-7575 and its corporate website is www.polcaris.com As used in this Report, unless otherwise indicated, the term “Company” refers to Boston Restaurant Associates, Inc. and its subsidiaries. We make available, free of charge through our website, our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 as soon as practicable after we electronically file such material with or furnish it to the Securities and Exchange Commission.

4The information found on our website is not part of this or any other report we file with or furnish to the SEC.

~~The information found on our website is not part of this or any other report we file with or furnish to the SEC.~~Financing

~~Financing~~For the year ended April 24, 2005, the Company had income from continuing operations of approximately $200,000 and sustained net losses of approximately $429,000 after accounting for discontinued operations. As of that date, the Company had a working capital deficiency of approximately $1,339,000 and stockholders’ deficit of $164,000.

~~For the~~On ~~year ended April~~January 2520, ~~2004,~~2005 the Company ~~has sustained net losses of~~issued ~~approximately $3~~1,~~437~~147,~~000. As~~056 of ~~that date,~~Preferred ~~the~~Stock ~~Company~~in ~~had~~ a ~~working~~private ~~capital~~placement ~~deficiency~~transaction ofat ~~approximately~~a ~~$4,304,000~~purchase ~~and~~price ~~stockholders’ deficits~~ of $~~668,721~~. As85 aper ~~result~~share ~~BDO~~resulting ~~Seidman, LLP the Company’s auditors, included~~ in ~~their opinion~~approximately on the 2004 financial statements an explanatory paragraph expressing concern about the Company’s ability to continue as a going concern. The long-term financial stability of the Company will be dependent upon achieving sustained profitable operations$946,000 ~~and obtaining additional financing, as well as the possibility~~ of ~~closing~~net ~~the~~cash ~~Polcari’s~~proceeds ~~restaurant in Cambridge, Massachusetts, selling the business of the Polcari’s restaurant in Cambridge or its assets,~~ and orequity ~~subleasing~~for the ~~premises of the Cambridge restaurant~~Company.

~~There can~~On beApril 21, no2005, ~~assurance~~the ~~that~~Company ~~any~~entered ~~future~~into ~~additional~~a new ~~financing~~$2,300,000 ~~will~~Credit beFacility ~~available~~with onCommerce Bank and Trust Company. This ~~commercially~~Credit ~~reasonable~~Facility ~~terms,~~consists orof ata ~~all~~$1,500,000 ~~and~~4 ~~the~~year ~~success~~term ornote ~~lack~~bearing ofinterest ~~success of~~at the ~~Company~~bank’s ~~restaurants~~base ~~opened~~rate ~~within~~plus ~~the~~2% ~~last~~and ~~year~~an ~~and~~$800,000 ~~planned~~mortgage toat bea ~~opened~~fixed rate of 7%. ~~within~~This ~~fiscal~~facility ~~2005~~is ~~may~~secured ~~have~~by aall ~~critical~~of ~~effect~~the onassets of the Company’s. The ~~ability~~proceeds toof ~~raise funds~~the ~~through~~Credit ~~the~~Facility ~~sale~~were ofused to ~~stock~~retire orall ~~otherwise. In~~prior ~~addition,~~existing ~~the~~debt ~~Company~~with ~~may~~Commerce beBank ~~forced~~and toTrust ~~restructure~~Company. The ~~its~~Company ~~operations,~~was ~~by selling~~in orcompliance ~~subleasing~~with ~~the~~all financial ~~Polcari’s~~covenants ~~restaurant~~for infiscal ~~Cambridge~~year ended April 24, ~~Massachusetts~~2005.

OnThe ~~April 30, 2002, the~~ Company ~~entered~~has ~~into~~analyzed ~~a $3,500,000~~cash ~~Credit~~flow ~~Facility with Commerce Bank~~ and ~~Trust~~believes ~~Company. The~~that cash ~~Credit~~flow ~~Facility~~from ~~permits~~operations ~~the~~will ~~Company~~be ~~to borrow~~sufficient ~~amounts~~ to ~~pay~~fund ~~the~~operations ~~costs~~ for ~~new~~the ~~restaurant openings and repay over a~~next ~~fixed~~twelve ~~term of either four or five years~~months. The ~~As of April 25, 2004 the~~ Company ~~was~~’s ~~not~~growth ~~in compliance with certain financial covenants of the Credit Facility,~~will ~~including~~be independent ~~particular~~upon ~~the~~obtaining ~~requirement~~additional ~~that the Company not report two consecutive quarters of operating losses~~financing. ~~However,~~ There ~~Commerce~~can ~~Bank~~be ~~and~~no ~~Trust~~assurance ~~Company~~that ~~waived~~any ~~the covenants for the~~future ~~quarterly~~additional ~~fiscal~~financing ~~period~~will ~~ended~~be ~~January 25,~~available ~~2004~~on ~~and~~commercially ~~for~~reasonable ~~fiscal year ended April 25~~terms, ~~2004~~or ~~in exchange for a 1% waiver fee, a modification of the~~at ~~interest rate on~~ all ~~outstanding notes issued under the Credit Agreement from the current 6% to 7% per annum until the first quarter in which the Company is once again in compliance with all financial covenants~~, and the ~~grant~~success toor ~~the bank~~lack of asuccess ~~six year warrant to purchase 76,000 shares~~ of the Company’s ~~common~~restaurants opened ~~stock~~within atthe alast ~~price~~year ofand ~~$.50~~planned ~~per share. Subject~~ to ~~certain~~be ~~exceptions~~opened ~~pursuant~~in tothe ~~which~~future ~~the~~may ~~warrant~~have ~~will~~a becritical ~~exercisable~~effect ~~earlier,~~on the ~~warrant~~Company’s isability ~~not~~to ~~exercisable~~raise ~~until~~funds ~~February 13, 2005. In~~through ~~August 2004, in exchange for~~ the ~~establishment~~sale of ~~new~~stock ~~financial covenants for fiscal year 2005, the bank~~or ~~waived~~otherwise.

5Pizzeria Regina Restaurants

~~the~~The ~~covenants~~Company ~~for~~currently ~~the~~operates ~~first~~thirteen ~~quarter~~Pizzeria Regina ofrestaurants ~~fiscal~~which ~~year 2005. Because~~are offast-service, ~~the~~high ~~Company’s uncertainty~~volume ~~regarding~~pizzerias ~~its~~that ~~ability~~feature premium tobrick ~~satisfy~~oven ~~these~~pizza ~~covenants,~~and ~~all~~cater ~~bank~~primarily ~~debt~~to ~~has been~~the ~~reclassified~~lunchtime asdiner ~~current~~(with on the exception ~~balance~~of ~~sheet~~the ~~for~~original ~~year~~North ~~ended~~End ~~April 25~~location, ~~2004. If~~ ~~the~~which ~~Company~~serves ~~fails~~both tothe ~~comply~~lunch and ~~with~~dinner ~~these~~markets). ~~covenants,~~Of ~~the~~these ~~bank~~thirteen ~~debt~~restaurants, ~~would~~twelve beare ~~due~~food oncourt ~~demand. See “Item 7. Management’s~~kiosks ~~Discussion~~ and ~~Analysis~~the oforiginal ~~Financial~~North ~~Condition~~End ~~and~~Pizzeria ~~Results~~Regina ofis ~~Operations~~a wait-service restaurant.”

The Pizzeria Regina ~~Restaurants~~restaurants feature the Company’s premium Neapolitan style, thin crust, brick oven pizza. This pizza features a proprietary dough and pizza sauce, which the Company believes combine to produce a distinct flavor and superior

The Company currently operates fourteen Pizzeria Regina restaurants which are fast-service, high volume pizzerias that feature premium brick oven pizza and cater primarily to the lunchtime diner (with the exception of the original North End location, which serves both the lunch and dinner markets). Of these fourteen restaurants, thirteen are food court kiosks and the original North End Pizzeria Regina is a wait-service restaurant.2

~~The Pizzeria Regina restaurants feature the Company’s premium Neapolitan style, thin crust, brick oven~~ pizza. ~~This pizza features a proprietary dough and~~ ~~pizza sauce, which the Company believes combine to produce a distinct flavor and superior pizza.~~ These pizzas are offered with a wide variety of fresh vegetable and cured meat toppings. The Company believes that the premium quality of its pizza, a result of a proprietary ingredient mix and baking process, provides 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~~ since 1926.

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

The Company intends to seek locations for ~~additional~~ additional Pizzeria Regina food court kiosks in malls and high traffic areas. Management ~~Based~~estimates onthat the ~~Company’s~~cost ~~own~~of ~~experience~~opening ~~and~~a ~~articles~~typical ~~from~~food ~~trade~~court ~~journals,~~kiosk currently is ~~the~~approximately ~~Company~~$525,000. ~~believes~~The ~~there~~Company iscannot aguarantee ~~trend~~that atactual ~~retail~~costs ~~malls~~will tonot significantly ~~retrofit~~exceed ~~and~~these ~~upgrade food~~estimates, ~~courts~~that tothe ~~emphasize~~Company ~~fast~~will ~~food~~be asable ato ~~focal~~obtain financing ~~point~~necessary ofto ~~malls. The~~construct ~~Company~~additional ~~further~~food ~~believes~~courts kiosks, that ~~lunchtime~~the ~~diners~~Company ~~who~~will ~~visit~~be ~~retail~~able ~~shopping~~to ~~malls~~complete ~~seek~~the ~~high~~construction ~~quality,~~of ~~quick~~new ~~service~~kiosks ~~meals in~~on a ~~food~~timely basis ~~court~~and ~~setting~~within budget, ~~and~~if ~~that~~at ~~the~~all, ~~premium~~or ~~quality~~that of the Company’s ~~brick oven~~will ~~pizza~~be ~~should~~able ~~position it~~ to ~~compete~~operate these ~~effectively~~kiosks ~~in food court locations~~successfully.

~~Management~~Polcari’s ~~estimates~~North ~~that~~End ~~the cost of opening a typical food court kiosk currently is approximately $525,000. The Company cannot guarantee that actual~~Restaurants

6In March 1995, the Company opened its first Polcari’s North End restaurant in Saugus, Massachusetts, recreating a restaurant similar to one that the Company’s predecessor had operated from 1954-1989 in Boston’s North End. The Polcari’s North End restaurant concept is designed to create an Italian/American casual dining ambiance that captures the community spirit of the 1940s and 1950s in Boston’s Italian North End neighborhood. The restaurant highlights exposed gas-fired brick ovens in open view of diners. In addition, memorabilia and photographs depicting scenes in Boston’s North End in the 1940s and 1950s 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.

~~costs~~The ~~will~~Company ~~not~~has ~~significantly~~also ~~exceed~~developed ~~these~~a bistro-restaurant ~~estimates~~concept, ~~that~~which ~~the~~was ~~Company~~inspired ~~will~~by bethe ~~able~~success toof ~~obtain~~the ~~financing~~Saugus-based ~~necessary~~Polcari’s toNorth ~~construct~~End ~~additional~~™” ~~food~~restaurant. ~~courts~~Unlike ~~kiosks,~~the ~~that~~Saugus restaurant, the ~~Company~~bistro ~~will~~restaurants beare smaller ~~able~~in tosize, creating a more intimate family dining experience. In ~~complete~~addition, the ~~construction~~menu is a modified version of ~~new~~the ~~kiosks~~Saugus-based onofferings, providing for a ~~timely~~lighter ~~basis~~dining ~~and~~experience. ~~within~~The ~~budget,~~bistro ifrestaurants operate under atthe ~~all,~~Polcari’s orNorth End ™ trademark in order to capitalize on that ~~the~~mark’s recognition for quality. The Company ~~will~~currently beoperates ~~able~~two toPolcari’s North ~~operate~~End ~~these~~bistro ~~kiosks~~Restaurants ~~successfully~~in Woburn, Massachusetts and Salem, New Hampshire. In April 2005 the Company completed the asset sale of a Polcari’s bistro restaurant in Hyannis, Massachusetts. Polcari’s of Cambridge is scheduled to cease operations on July 22, 2005

~~Polcari’s North End Restaurants~~3

~~In March 1995, the Company opened its first~~when ~~Polcari’s~~Technology ~~North~~Square ~~End restaurant in Saugus~~Finance, ~~Massachusetts,~~LLC ~~recreating~~will ~~a restaurant~~be ~~similar~~required to ~~one~~purchase ~~that~~ the ~~Company’s~~assets ~~predecessor had operated from~~of ~~1954-1989 in Boston’s North End. The~~ Polcari’s ~~North End restaurant concept is designed to create an Italian/American casual dining ambiance that captures the community spirit~~ of ~~the~~ ~~1940s and 1950s in Boston’s Italian North End neighborhood~~Cambridge, Inc. ~~The~~ ~~restaurant~~for ~~highlights~~three ~~exposed~~hundred ~~gas-fired brick~~thousand ~~ovens in open view of diners~~dollars. In addition, ~~memorabilia~~rent ~~and~~will ~~photographs~~be ~~depicting~~forgiven ~~scenes~~for ~~in Boston’s North End in~~ the ~~1940s and 1950s are used to create a neighborhood atmosphere rich with~~ ~~history. The~~remainder ~~restaurant also features large tables~~ of ~~six~~the ~~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~~lease. ~~The Company opened a new Polcari’s North End restaurant in October of 2003 in Cambridge, Massachusetts.~~

~~The~~Site Company has also developed a bistro-restaurant concept, which was inspired by the success of the Saugus-based Polcari’s North End™ restaurant. Unlike the Saugus and Cambridge restaurants, the bistro restaurants are smaller in size, creating a more intimate family dining experience. In addition, the menu is a modified version of the Saugus-based offerings, providing for a lighter dining experience. The bistro restaurants operate under the Polcari’s North End™ trademark in order to capitalize on that mark’s recognition for quality. The Company currently operates three Polcari’s North End ä bistro Restaurants in Hyannis, Massachusetts, Woburn, Massachusetts and Salem, New Hampshire.Selection

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

The Company ~~considers~~seeks ~~the~~sites ~~specific~~for ~~location~~the ofPizzeria aRegina ~~restaurant~~kiosk torestaurants bewithin ~~critical~~high-traffic tolocations ~~the~~including ~~restaurant’s~~food ~~long~~courts ~~term~~and retail ~~success. It~~shopping ~~devotes~~malls ~~significant~~located ~~time~~in ~~and~~metropolitan ~~resources~~areas. ~~to the~~The ~~investigation~~Company ~~and~~also ~~evaluation~~considers existing oflocal ~~each~~competition ~~prospective site~~and, ~~including consideration~~to ofthe ~~local~~extent ~~market~~such ~~demographics,~~information ~~population~~is ~~density~~available, ~~average~~ ~~household~~the ~~income~~sales ~~levels~~of ~~and~~other ~~site~~comparably ~~characteristics~~priced ~~such~~restaurants asoperating ~~visibility, accessibility~~in ~~and~~the ~~traffic~~area.

~~The~~Restaurant Company seeks sites for the Pizzeria Regina kiosk restaurants within high-traffic food courts or retail shopping malls located in metropolitan areas. It seeks sites for Polcari’s North End restaurants located near high-volume, middle market traffic centers, such as retail and residential areas with populations of at least 50,000 persons within a five-mile radius. For each type of restaurant, theOperations

7The Company invests substantial time and effort in its training programs, which focus on all aspects of restaurant operations, including kitchen, bar and dining room operations, food quality and preparation, alcoholic beverage service, liquor liability avoidance, customer service and employee relations. The Company holds regular meetings of its managers to address new products, continuing training and other aspects of business management. Managers also attend periodic seminars conducted by Company personnel and outside experts on a broad range of topics.

~~Company~~New ~~also~~employees ~~considers~~are ~~existing~~trained ~~local~~by experienced employees ~~competition~~who ~~and,~~have demonstrated their ability to implement the ~~extent~~Company’s ~~such~~commitment ~~information~~to provide ishigh ~~available,~~quality ~~the~~food ~~sales~~and ofattentive service. The Company has developed ~~other~~manuals ~~comparably~~regarding ~~priced~~its policies and procedures for restaurant operations. Supervisory management regularly visits Company restaurants ~~operating~~and inmeets with their management teams to ensure compliance with the ~~area~~Company’s strategies and standards of quality in all aspects of restaurant operations and personnel development.

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

The ~~Company~~staff ~~invests~~for ~~substantial~~a ~~time~~typical ~~and~~Pizzeria ~~effort~~Regina inkiosk ~~its~~restaurant ~~training~~consists ~~programs,~~of ~~which~~one ~~focus~~general onmanager, ~~all~~two ~~aspects~~managers ofand ~~restaurant~~approximately ~~operations,~~12 ~~including~~to ~~kitchen,~~15 ~~bar~~hourly ~~and~~employees. ~~dining~~The ~~room~~staff ~~operations,~~of ~~food~~the ~~quality~~original ~~and~~Pizzeria Regina consists of a ~~preparation~~general manager, ~~alcoholic~~two ~~beverage service~~managers, ~~liquor~~and ~~liability~~approximately ~~avoidance,~~15 ~~customer service~~to ~~and~~25 ~~employee~~hourly ~~relations~~employees. The ~~Company~~staff ~~holds~~for ~~regular~~a ~~meetings~~typical ofPolcari’s ~~its~~North ~~managers~~End torestaurant ~~address~~consists ~~new~~of ~~products,~~one general ~~continuing~~manager, ~~training~~two ~~and~~managers, ~~other~~one ~~aspects~~kitchen ofmanager ~~business~~and ~~management. Managers~~approximately ~~also~~40 ~~attend~~to ~~periodic~~60 ~~seminars~~hourly ~~conducted~~employees. byMost of the Company’s hourly employees are part-time personnel. ~~and~~The general ~~outside~~manager ~~experts~~of oneach arestaurant ~~broad~~is ~~range~~primarily ofresponsible ~~topics.~~for

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. Supervisory management regularly visits Company restaurants and meets with their management teams to ensure compliance with the Company’s strategies and standards of quality in all aspects of restaurant operations and personnel development.4

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

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

~~Purchasing~~The ~~and~~Company ~~Commissary~~maintains ~~Operations~~a commissary where pizza dough is produced for the Company’s restaurants. The dough preparation requires a high degree of consistency that would be more difficult to maintain at the individual restaurant locations. The Company believes that close, centralized monitoring of the dough preparation ensures a more consistent premium product. All other food preparation is performed on site at the restaurant level.

The Company ~~maintains~~negotiates adirectly ~~commissary~~with ~~where~~wholesale suppliers ~~pizza~~of certain high volume food ingredients such as cheese, tomato sauce, ~~dough~~and isflour ~~produced~~to ~~for~~ensure ~~the~~consistent ~~Company’s~~quality and freshness of products across its restaurants and to obtain competitive pricing. ~~The~~ ~~dough~~These ~~preparation~~ingredients ~~requires~~are then purchased for the Company by a ~~high~~third ~~degree of~~party ~~consistency~~independent ~~that~~distributor ~~would~~at bethe negotiated ~~more~~price ~~difficult~~and redistributed to ~~maintain~~the atCompany’s restaurants. All other food ingredients and beverage products are purchased directly by the ~~individual~~general manager of each restaurant ~~locations~~in accordance with corporate guidelines. The Company believes that ~~close,~~essential ~~centralized~~food ~~monitoring~~and beverage products are available from a choice of ~~the~~many ~~dough~~qualified wholesale suppliers.

8Advertising and Marketing

~~preparation~~The ~~ensures~~Company’s atarget ~~more~~market ~~consistent~~for the Pizzeria Regina ~~premium~~restaurants ~~product~~is very broad, consisting of individuals and families who seek fast-service and high value-to-price meals during the lunch period. ~~All~~ ~~other~~The ~~food~~target ~~preparation~~market for the Polcari’s North End restaurants is ~~performed~~adults and families who seek moderately priced Italian dinner entrees in a comfortable environment. The Company believes that its focus on ~~site~~premium atquality, service and value is the most ~~restaurant~~effective ~~level~~approach to attracting customers. The Company plans to rely upon local advertising, high volume traffic flow at retail malls and word of mouth exposure to market its restaurants.

The Company negotiates directly with wholesale suppliers of certain 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 for the Company by a third party independent distributor at the negotiated price and redistributed to the Company’s restaurants. All other food ingredients and beverage products are purchased directly by the general manager of each restaurant in accordance with corporate guidelines. The Company believes that essential food and beverage products are available from a choice of many qualified wholesale suppliers.Competition

~~Advertising~~The restaurant business is highly competitive. Price, restaurant location, food quality, service and ~~Marketing~~attractiveness of facilities are important aspects of competition, and the competitive environment is often affected by factors beyond the Company’s or a particular restaurant’s control, including changes in the public’s tastes and eating and drinking habits, population and traffic patterns and local economic conditions. The Company’s restaurants compete with a wide variety of restaurants ranging from national and regional restaurant chains (some of which have substantially greater financial resources than the Company) to locally-owned restaurants. There is also active competition for liquor licenses in certain markets and for advantageous commercial real estate sites suitable for restaurants. The Pizzeria Regina restaurants compete with other fast-service, high volume food providers on the basis of price, value, location, menu and speed of service. The Polcari’s North End restaurants compete with other casual, full-service restaurants primarily on the basis of menu selection, quality, price, service, ambiance and location.

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 market for the Polcari’s North End restaurants is adults and families who seek moderately priced Italian dinner entrees in a comfortable environment. The Company believes that its focus on premium quality, service and value is the most effective approach to attracting customers. The Company plans to rely upon local advertising, high volume traffic flow at retail malls and word of mouth exposure to market its restaurants.5

~~Competition~~Seasonality

~~The~~Certain ~~restaurant business is highly competitive. Price, restaurant location, food quality, service and attractiveness~~ of ~~facilities are important aspects of competition, and~~ the ~~competitive environment is often affected by factors beyond the~~ Company’s ~~or a particular restaurant’s control, including changes in the public’s tastes and eating and drinking habits, population and traffic patterns and local economic conditions. The Company’s~~ restaurants ~~compete~~are ~~with~~subject ~~a wide variety of restaurants ranging from national and regional restaurant chains (some of which have substantially greater financial resources than the Company)~~ to ~~locally-owned~~ ~~restaurants. There~~seasonal isfluctuations ~~also active competition for liquor licenses~~ in ~~certain~~sales ~~markets~~volume. ~~and~~Sales ~~for~~at ~~advantageous commercial~~the ~~real estate sites suitable for restaurants. The~~ Pizzeria Regina restaurants ~~compete with~~ ~~other~~are ~~fast-service,~~typically ~~high~~higher ~~volume~~in ~~food~~June through ~~providers on the basis of price~~August, ~~value, location,~~and ~~menu~~in November and ~~speed of service. The~~December due ~~Polcari’s~~to ~~North~~increased ~~End~~volume ~~restaurants~~in ~~compete~~shopping ~~with~~malls ~~other~~during ~~casual, full-service restaurants primarily on~~ the ~~basis~~holiday ofand ~~menu~~tourist ~~selection, quality, price, service,~~seasons ~~ambiance~~ and ~~location~~school vacations.

~~Seasonality~~Employees

~~Certain~~As of July 15, 2005 the Company had approximately 450 employees, of whom 11 were corporate and administrative personnel, approximately 56 were field supervision or restaurant managers or management trainees, and the remainder were hourly restaurant personnel. Many of the Company’s ~~restaurants~~hourly ~~are~~employees ~~subject~~work topart-time. ~~seasonal~~The ~~fluctuations~~Company inbelieves ~~sales~~that its ~~volume~~relationship with its employees is good. ~~Sales~~ atNone of the ~~Pizzeria~~Company’s ~~Regina restaurants~~employees are covered ~~typically~~by ~~higher~~a incollective bargaining agreement.

9Trademarks and Service Marks

~~June through~~The ~~August,~~Company ~~and~~regards inits ~~November~~ trademarks and ~~December due~~its toservice ~~increased~~marks ~~volume~~as having significant value and as being important factors in ~~shopping~~the marketing ~~malls~~of ~~during~~its products. The Company’s most significant trademarks are “Pizzeria Regina,” the ~~holiday~~Regina crown design logo, and ~~tourist~~“Polcari’s ~~seasons~~North End,” each of which are U.S. registered trademarks owned by the Company. The Company has also registered with the U.S. Patent and ~~school~~Trade ~~vacations~~Office “Regina,” the “Polcari’s” logo, “Pizzeria Regina of Boston’s North End” and “Pizzeria Regina, Boston’s Brick Oven Pizza” as service marks.

~~Employees~~Government Regulation

AsThe Company is subject to a variety of ~~July 19~~federal, state, ~~2004~~local laws, and regulations. Each of the Company’s ~~had~~restaurants is ~~approximately~~subject ~~750~~to ~~employees,~~licensing ofand ~~whom~~regulation 13by ~~were~~a ~~corporate~~number ~~and~~of ~~administrative personnel~~government authorities, including ~~approximately~~alcoholic 70beverage ~~were~~control, ~~field~~health, ~~supervision~~safety, orsanitation, ~~restaurant~~building ~~managers or~~and ~~management~~fire ~~trainees,~~agencies ~~and~~in the ~~remainder~~state ~~were~~or ~~hourly~~municipality ~~restaurant~~in ~~personnel. Many~~which of the ~~Company’s~~restaurant ~~hourly~~is ~~employees work part-time~~located. ~~The~~ Difficulties ~~Company~~in ~~believes~~obtaining ~~that~~or ~~its relationship~~failure ~~with~~to ~~its~~obtain ~~employees~~required islicenses ~~good.~~ or approvals ~~None~~could ofdelay or prevent the ~~Company’s~~development ~~employees~~of ~~are~~a ~~covered~~new byrestaurant in a ~~collective bargaining~~particular ~~agreement~~area.

~~Trademarks~~The selection of new restaurant sites is affected by federal, state, local laws, regulations regarding environmental matters, zoning and ~~Service~~land ~~Marks~~use and the sale of alcoholic beverages. Various requirements (particularly at the local level) may result in increases in the cost and time required for opening new restaurants, as well as increases in the cost of operating restaurants. Difficulties in obtaining necessary licenses or permits could cause delays in or cancellations of new restaurant openings.

~~The~~A ~~Company~~significant ~~regards~~portion ~~its~~of ~~trademarks~~the ~~and~~Company’s ~~its~~revenues ~~service~~at ~~marks~~the asPolcari’s ~~having~~North ~~significant~~End ~~value~~restaurants and asthe ~~being~~original ~~important~~Pizzeria ~~factors~~Regina location in the ~~marketing~~ ofNorth ~~its~~End ~~products. These~~is ~~marks, which~~attributable ~~appear~~to inthe ~~its~~sale ~~advertisements,~~of ~~menus~~alcoholic ~~and~~beverages. ~~elsewhere,~~Alcoholic beverage ~~are~~control ~~widely recognized. The~~regulations require each of the Company’s ~~most~~restaurants that ~~significant~~serve ~~trademarks~~alcohol ~~are~~to ~~“Pizzeria~~apply ~~Regina,”~~to ~~the~~both ~~Regina~~a ~~crown~~state ~~design~~authority ~~logo,~~ and ~~“Polcari’s~~ ~~North~~municipal ~~End,”~~authorities ~~each~~for a oflicense ~~which~~or ~~are~~permit ~~U.S.~~to ~~registered~~sell ~~trademarks~~alcoholic ~~owned~~beverages by on the ~~Company~~premises. ~~The~~ ~~Company has also~~Typically, ~~registered~~licenses ~~with~~must ~~the~~be ~~U.S.~~renewed ~~Patent~~annually and ~~Trade~~may ~~Office “Regina,”~~be ~~the~~revoked ~~“Polcari’s”~~or ~~logo,~~suspended ~~“Pizzeria Regina~~for ofcause ~~Boston’s~~at any ~~North~~time. ~~End”~~Alcoholic ~~and “Pizzeria~~beverage ~~Regina,~~control ~~Boston’s~~regulations ~~Brick~~affect ~~Oven~~numerous ~~Pizza”~~aspects asof ~~service marks.~~

~~Government Regulation~~6

~~The~~restaurant operations, ~~Company~~including isminimum ~~subject~~age ~~to a variety~~ of ~~federal, state~~patrons and ~~local~~employees, ~~laws~~hours ~~and~~of ~~regulations.~~ operation, ~~Each~~advertising, ofwholesale ~~the~~purchasing, ~~Company’s~~inventory ~~restaurants~~control isand ~~subject~~handling, tostorage ~~licensing~~ and ~~regulation~~ bydispensing ~~a number~~ of ~~government authorities, including~~ alcoholic ~~beverage~~beverages. ~~control, health,~~The ~~safety,~~failure ~~sanitation,~~of ~~building~~the ~~and~~Company ~~fire~~to ~~agencies~~obtain ~~in the state~~ or ~~municipality~~retain inliquor ~~which~~service ~~the~~licenses ~~restaurant~~could ishave ~~located. Difficulties~~a inmaterial ~~obtaining~~adverse oraffect ~~failure~~on tothe ~~obtain~~particular ~~required~~restaurant’s ~~licenses~~operations orand ~~approvals could delay or prevent~~ the ~~development~~business of a ~~new~~the ~~restaurant~~Company ~~in a particular area~~overall.

The ~~selection~~Company ofis ~~new~~subject ~~restaurant~~to ~~sites~~“dram isshop” ~~affected~~statutes, bywhich ~~federal,~~generally ~~state~~provide ~~and~~a ~~local~~person ~~laws~~injured ~~and~~by ~~regulations~~an ~~regarding~~intoxicated ~~environmental matters,~~person ~~zoning~~the ~~and~~right ~~land~~to recover ~~use~~damages ~~and~~from ~~the~~an ~~sale~~establishment ofthat ~~alcoholic~~wrongfully served alcoholic beverages~~. Various~~ ~~requirements~~to ~~(particularly at~~ the ~~local~~ ~~level)~~intoxicated ~~may~~person. ~~result~~The inCompany ~~increases~~presently incarries ~~the~~liquor liability ~~cost~~coverage ~~and time required~~ for ~~opening new~~its restaurants, as well as ~~increases~~excess liability coverage. The Company has never been named as a defendant in ~~the~~a ~~cost~~lawsuit ofinvolving ~~operating~~“dram ~~restaurants~~shop” liability. ~~Difficulties~~ inThe ~~obtaining~~Company cannot guarantee that dram shop insurance will ~~necessary~~continue ~~licenses~~to orbe ~~permits~~available ~~could~~to ~~cause~~the ~~delays~~Company inat commercially reasonable prices, if at all, or ~~cancellations~~that ofsuch ~~new~~insurance, if maintained, will be sufficient to cover any ~~restaurant~~claims ~~openings~~against the Company for dram shop liability for which it may be held liable.

10The Company’s restaurant operations are all subject to federal and state laws governing such matters as minimum wage and health insurance requirements. A significant number of the Company’s personnel are paid at rates related to the federal minimum wage, and increases in the minimum wage could increase the Company’s labor costs.

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

~~The~~In ~~Company~~addition ~~is subject~~ to ~~“dram shop” statutes, which generally provide a person injured by an intoxicated person~~ the ~~right~~risks ~~to recover~~discussed ~~damages~~elsewhere ~~from~~in ~~an establishment that wrongfully served alcoholic beverages~~this ~~to the intoxicated person. The Company presently carries liquor liability coverage for its restaurants~~Form 10-K, asinvestors ~~well~~should ~~as excess~~consider ~~liability~~carefully ~~coverage. The Company has never been named as a defendant in a lawsuit involving “dram shop” liability. The Company cannot guarantee that dram shop insurance will continue to be available to~~ the ~~Company~~following ~~at commercially~~risk ~~reasonable prices, if at all, or that such insurance, if~~factors ~~maintained,~~in ~~will~~evaluating bean ~~sufficient~~investment toin ~~cover any claims against~~ the Company ~~for dram shop liability for which it may be held liable~~.

The Company’s ~~restaurant~~Ability ~~operations~~To ~~are~~Grow ~~all~~May Be ~~subject~~Dependent toOn ~~federal~~Additional and state laws governing such matters as minimum wage and health insurance requirements. A significant number of the Company’s personnel are paid at rates related to the federal minimum wage, and increases in the minimum wage could increase the Company’s labor costs.Funding

~~Risk~~For ~~Factors~~the year ended April 24, 2005, the Company has sustained net losses of approximately $429,000. As of that date, the Company had a working capital deficiency of approximately $1,257,000 and stockholders’ deficit of $164,000. The long-term financial stability of the Company and compliance with the bank covenants will be substantially dependent upon achieving sustained profitable operations. If the Company fails to comply with bank covenants, the bank debt could be due on demand. The Company’s growth will be dependent upon obtaining adequate additional financing. There can be no assurance that any future additional financing will be available on commercially reasonable terms, or at all, and the success or lack of success of the Company’s restaurants opened within the last year may have a critical effect on the Company’s ability to raise funds through the sale of stock or otherwise.

InThe ~~addition~~Company toMay Be ~~the~~Unable ~~risks~~to ~~discussed~~Expand ~~elsewhere~~As ~~in this Form 10-K, investors should consider carefully the following risk factors in evaluating an investment in the Company.~~Planned

The Company intends to open additional restaurants in an orderly manner as conditions permit. The Company’s ~~Financial~~ability ~~Condition~~to ~~And~~open additional ~~Ability~~Company Torestaurants will depend upon a number of factors, such as ~~Grow~~identifying ~~May~~satisfactory Besites, ~~Dependent~~negotiating Onsatisfactory ~~Additional~~leases, ~~Funding~~securing required governmental permits and approvals, obtaining of

For the year ended April 25, 2004, the Company has sustained net losses of approximately $3,437,000. As of that date, the Company had a working capital deficiency of approximately $4,304,000 and stockholders’ deficit of $668,721. As a result BDO Seidman, LLP the Company’s auditors included in their opinion on the 2004 financial statement an explanatory paragraph expressing concern about the Company’s ability to continue as a going concern . In addition, because of the Company’s uncertainty regarding its ability to satisfy bank financial covenants, all bank debt totaling approximately $3,200,000 has been reclassified as current in the balance sheet for year ended April 25, 2004. If7

11any required financing on acceptable terms, providing adequate supervision of construction, and recruiting and training management personnel, some of which are beyond the control of the Company. The Company cannot guarantee that it will be able to open any other future restaurants within budget or on a timely basis, if at all, or that any of the new restaurants will operate profitably. If the Company is unable to expand, it may reduce the Company’s ability to increase profitability.

~~the Company fails to comply with these covenants, the bank debt could be due on demand.~~ The ~~long-term financial stability of the Company and compliance~~ ~~with~~Restaurant ~~the~~Business ~~bank~~Is covenants will be substantially dependent upon achieving sustained profitable operations, and obtaining additional financing, as well as the possibility of closing, selling or subleasing the Polcari’s restaurant located in Cambridge, Massachusetts.Risky

~~There can~~The beCompany’s ~~no assurance that any~~ future ~~additional~~performance ~~financing~~ will be ~~available~~subject onto ~~commercially~~a ~~reasonable~~number ~~terms,~~of orfactors atthat ~~all,~~affect ~~and~~ the ~~success~~restaurant orindustry ~~lack~~generally, ofincluding: ~~success~~(i) the highly competitive nature of the ~~Company’s~~industry, ~~restaurants~~(ii) general ~~opened~~and ~~within~~local ~~the~~economic conditions, ~~last~~(iii) changes ~~year~~in tastes and ~~planned~~eating toand bedrinking ~~opened~~habits, (iv) changes ~~within~~in ~~fiscal~~food ~~2005~~costs ~~may~~due ~~have~~to ashortages, ~~critical~~inflation ~~effect~~or onother ~~the~~causes, ~~Company’s~~(v) population and ~~ability~~traffic topatterns, ~~raise funds~~(vi) demographic ~~through~~trends, ~~the~~(vii) general ~~sale~~employment, and ofwage ~~stock~~and orbenefit ~~otherwise. In~~levels ~~addition,~~in the ~~Company~~restaurant industry, which may be ~~forced~~affected by tochanges ~~restructure~~in ~~its~~federal ~~operations,~~and local minimum wage requirements or by ~~closing~~ ~~the~~federally ~~Polcari’s~~or locally ~~restaurant~~mandated inhealth ~~Cambridge~~insurance, ~~Massachusetts,~~(viii) the ~~selling~~number ~~that business~~of orpeople ~~its~~willing ~~assets,~~to work ~~and~~at or ~~subleasing~~near the ~~premises~~minimum ofwage ~~that~~and ~~restaurant~~(ix) weather conditions. (See “Competition.”)

~~The~~We ~~Company~~Are ~~May~~Dependent Beon ~~Unable~~Key toExecutive ~~Expand As Planned~~Officers

The ~~Company~~future ~~intends~~success toof ~~open~~the ~~additional restaurants in an orderly manner as conditions permit. The~~ Company’s ~~ability to open additional Company restaurants~~ will depend in ~~upon~~large apart ~~number~~on ofthe ~~factors,~~continued ~~such~~services asof ~~identifying~~its ~~satisfactory sites~~President, ~~negotiating satisfactory~~George ~~leases,~~R. ~~securing required governmental permits and approvals~~Chapdelaine, ~~obtaining~~as ofwell ~~any~~as ~~required financing~~ on ~~acceptable~~the ~~terms,~~Company’s ~~providing~~ability ~~adequate supervision~~to ofattract ~~construction,~~ and ~~recruiting~~retain ~~and~~other ~~training~~qualified senior management personnel~~, some of which are beyond the control of the Company~~. The Company ~~cannot guarantee~~carries ~~that it will be able to open any other future restaurants within budget or on a timely basis~~$2, ~~if at all~~000,000 ~~or that any~~ of ~~the~~key ~~new~~man ~~restaurants will~~life ~~operate~~insurance ~~profitably. If~~on the ~~Company~~life ~~is unable~~of ~~to expand, it may reduce the Company’s ability to increase profitability~~Mr. Chapdelaine.

~~An Unfavorable~~Insiders ~~Outcome~~Control Orthe ~~Prolonged Litigation In A Charge Of Discrimination Filed Against The~~ Company ~~Could Harm The Company’s Business.~~

The ~~Company,~~ ~~and a~~ Company’s ~~employee~~executive ~~are~~officers, ~~respondents~~directors inand ~~a pending Charge of~~their ~~Discrimination. The~~affiliates ~~Charge alleges that the Company~~ and ~~the~~members ~~employee discriminated on the basis~~ of ~~sex~~their ~~against~~immediate ~~certain of~~families ~~the~~control ~~Company’s personnel, known as complainants. The Charge further alleges that~~ the ~~Company~~vote ~~failed to investigate complaints~~ of ~~discrimination~~approximately ~~made by the complainants~~68. ~~The~~2% ~~Charge~~ of ~~Discrimination does not specify~~ the ~~relief~~outstanding ~~sought. The~~shares ~~Company~~of ~~intends to defend against~~ the ~~claims~~ ~~vigorously. However,~~Common ~~the Company could incur substantial costs defending the Charge~~Stock. ~~Moreover,~~ ~~although~~As ~~the Company has established~~ a ~~liability for settlement costs of $35~~result,~~000,~~ they ~~the~~have ~~reserve may be inadequate. The Charge could also divert~~ the ~~time~~practical ~~and attention~~ability ofto ~~the~~implement ~~Company’s~~or ~~management~~block orchanges ~~cause~~in the Company’s ~~business to~~ ~~decline~~management ~~due~~and todirection ~~adverse~~which ~~publicity. The Company~~may ~~cannot~~or ~~predict~~may ~~the~~not ~~outcome of the Charge at this time, and there can~~ be no ~~assurance~~in ~~that~~ the ~~Company~~best ~~will~~interest ~~not have to expend a significant amount~~ of ~~money~~stockholders ~~in the course of litigation~~generally. An

12The Company’s Restaurants Are Concentrated in Massachusetts

~~unfavorable~~A ~~outcome~~total orof ~~prolonged~~twelve ~~litigation~~of the Company’s seventeen existing restaurants are located in ~~this~~eastern ~~Charge~~Massachusetts. ~~could~~As a result, the Company’s results of operations may be materially ~~impact~~affected by changes in the Massachusetts economy. The Pizzeria Regina at the Burlington Mall, Burlington, Massachusetts is currently a tenancy at will and the Landlord has commenced a summary process to terminate the tenancy at will. The Company’s ~~business~~intends to vigorously defend this action. Should the Company be required to vacate this space, the Company would suffer material revenue and income loss.

~~The~~Our ~~Restaurant~~Stock ~~Business~~ Is ~~Risky~~Relatively Illiquid and the Price Is Volatile

~~The~~Compared ~~Company’s future performance will be subject~~ to a ~~number~~many of factors that affect the restaurant industry generally, including: (i) the highly competitive nature of the industry, (ii) general and local economic conditions, (iii) changes in tastes and eating and drinking habits, (iv) changes in food costs due to shortages, inflation or other ~~causes,~~publicly ~~(v)~~traded ~~population and traffic patterns~~companies, ~~(vi) demographic trends, (vii) general employment, and wage and benefit levels in~~ the ~~restaurant~~Company ~~industry,~~is ~~which~~relatively ~~may~~small ~~be affected by changes in federal~~ and ~~local~~ ~~minimum~~has ~~wage~~a ~~requirements~~relatively orlow byaverage ~~federally~~daily ~~or locally mandated health~~trading ~~insurance,~~volume. ~~(viii)~~Quarterly ~~the~~operating ~~number~~results ~~of people willing to work at or near the minimum wage and (ix) weather conditions. (See “Competition.”)~~

~~We Are Dependent on Key Executive Officers~~8

~~The~~of the ~~future~~Company ~~success~~or ofother ~~the~~restaurant ~~Company~~companies, ~~will~~changes ~~depend~~in general conditions in the ~~large~~economy, ~~part~~the onrestaurant industry, or the ~~continued~~financial ~~services~~markets, ofor ~~its~~other developments ~~President~~affecting the Company, ~~George~~its R.competitors ~~Chapdelaine,~~or the financial markets ascould ~~well~~cause asthe onmarket price of the ~~Company’s~~Common ~~ability~~Stock to ~~attract~~fluctuate ~~and~~significantly. These ~~retain~~broad ~~other~~market ~~qualified~~fluctuations may adversely affect the market price of the ~~senior~~Common ~~management~~Stock. ~~personnel~~In addition, the low trading volume may make it difficult for a stockholder to buy or sell a significant amount of stock without affecting the market price. The Company ~~carries~~’s $2securities are,~~000,000~~ ofand ~~key~~will ~~man~~likely ~~life~~continue ~~insurance~~to be, principally traded on the ~~life~~OTC ofBulletin MrBoard or its successor. ~~Chapdelaine~~(See “item 5. Market for Registrant Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”)

~~Insiders~~ITEM ~~Control the Company~~2. PROPERTIES

~~The~~Of the Company’s ~~executive~~seventeen ~~officers,~~restaurants ~~directors~~operating ~~and their~~on ~~affiliates and members of their immediate families control the vote of~~April 24, ~~approximately~~2005, ~~53% of~~sixteen ~~the~~were ~~outstanding~~located ~~shares~~in ofleased ~~the Common~~space ~~Stock.~~and Asone ~~a result~~restaurant, ~~they have~~ the ~~practical~~North ~~ability to implement or~~End ~~block~~Pizzeria ~~changes~~Regina inlocation, ~~the~~is ~~Company’s~~owned ~~management~~by ~~and direction which may or may not be in~~ the ~~best interest of stockholders generally~~Company.

~~The~~All of the Company’s ~~Restaurants~~leases ~~Are~~provide ~~Concentrated~~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 ~~Massachusetts~~activities.

AThe ~~total~~following oftable ~~fourteen~~sets offorth ~~the~~certain ~~Company’s nineteen~~information ~~existing~~with ~~restaurants~~respect ~~are~~to ~~located in eastern Massachusetts. As a result,~~ the Company’s ~~results~~restaurant ~~of operations may be materially affected by changes in the Massachusetts economy.~~properties:

Our Stock Is Relatively Illiquid and the Price Is Volatile

Location		Type (1)

Auburn Mall Auburn, MA		food court
North End Boston, MA (2)		wait service
Faneuil Hall Marketplace Boston, MA		food court
Prudential Center Boston, MA		food court
South Station Boston, MA		food court
Burlington Mall(3) Burlington, MA		food court
Technology Square(4) Cambridge, MA		Polcari’s North End
Holyoke Mall Holyoke, MA		food court

Compared to many other publicly traded companies, the Company is relatively small and has a relatively low average daily trading volume. Quarterly operating results of the Company or other restaurant companies, changes in general conditions in the economy, the restaurant industry, or the financial markets, or other developments affecting the Company, its competitors or the financial markets could cause the market price of the Common Stock to fluctuate9

13Independence Mall Kingston, MA food court South Shore Plaza Braintree, MA food court Solomon Pond Mall Marlborough, MA food court Oviedo Market Place Oviedo, FL food court Paramus Park Paramus, NJ food court Providence Place Providence, RI food court Salem, NH Polcari’s North End (bistro) Saugus, MA Polcari’s North End Woburn, MA Polcari’s North End (bistro)

~~significantly.~~(1) Pizzeria ~~These~~Regina ~~broad~~food ~~market~~court ~~fluctuations~~locations ~~may~~have no ~~adversely~~independent ~~affect~~seating ~~the~~capacity. ~~market~~Seating ~~price~~is ofcentralized in the ~~Common~~common ~~Stock.~~areas Inof ~~addition,~~ the ~~low~~ ~~trading~~food ~~volume~~courts. ~~may~~The ~~make~~North itEnd ~~difficult~~seats ~~for~~approximately a75 ~~stockholder~~customers; ~~to buy or sell a significant amount of stock without affecting~~ the ~~market~~Saugus ~~price. The Company~~Polcari’s ~~securities are, and will likely~~ ~~continue~~North toEnd ~~be,~~location ~~principally~~seats ~~traded~~approximately on360 customers; the ~~OTC~~two ~~Bulletin Board or its successor.~~bistro ~~(See~~restaurants ~~“Item~~each 5.seat ~~Market~~approximately ~~for~~200 ~~Registrant Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~customers.”)

~~ITEM~~ (2) Company-owned. ~~PROPERTIES~~ This property is subject to a mortgage in favor of Commerce Bank and Trust Company. (See “Item 7. Management’s Discussion And Analysis Of Financial Condition and Results of Operations — Liquidity and Capital Resources.’)

Of(3) The ~~the~~Pizzeria ~~Company’s~~Regina ~~nineteen currently~~at ~~operating~~the ~~restaurants,~~Burlington ~~eighteen are located in leased space and one~~Mall, ~~restaurant~~Burlington, ~~the~~Massachusetts ~~North~~is ~~End~~currently ~~Pizzeria~~a ~~Regina~~tenancy ~~location,~~at iswill. See ~~owned~~Item by3. ~~the~~Legal ~~Company~~Proceedings.

~~All~~(4) This ofproperty ~~the~~is ~~Company’s leases~~scheduled 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~~close ~~the cost of insurance~~July 22, ~~taxes and a portion of the~~ ~~lessor’s operating costs~~2005. ~~Certain mall locations also require the Company to participate in upkeep of common areas and promotional activities.~~

The ~~following~~Company ~~table~~occupies ~~sets~~approximately ~~forth~~5,325 ~~certain~~square ~~information~~feet ~~with~~of ~~respect~~executive tooffice space in Saugus, Massachusetts. The lease for this location expires on October 31, 2006. The Company also leases approximately 5,000 square feet of warehouse space located in Somerville, Massachusetts under a lease expiring on July 31, 2007 (including all extension options that may be exercised by the Company’s ~~restaurant~~in ~~properties:~~its discretion) and approximately 2,741 square feet for its commissary located in Charlestown, Massachusetts under a lease expiring on August 14, 2006.

Location		Type (1)
Auburn Mall		food court
Auburn, MA
North End		wait service
Boston, MA (2)
Faneuil Hall Marketplace		food court
Boston, MA
Prudential Center		food court
Boston, MA
South Station		food court
Boston, MA
Burlington Mall		food court
Burlington, MA
Technology Square		Polcari’s North End
Cambridge, MA
Holyoke Mall		food court
Holyoke, MA
Cape Cod Mall		Polcari’s North
Hyannis, MA		End (bistro)
Independence Mall		food court
Kingston, MA
South Shore Plaza		food court
Braintree, MA
Solomon Pond Mall		food court
Marlborough, MA

ITEM 3. LEGAL PROCEEDINGS

14On June 15, 2004 a Charge of Discrimination was filed by certain of the Company’s personnel with the Massachusetts Commission Against Discrimination and with the Equal Opportunity Commission. The charge was withdrawn on October 20, 2004 from both agencies and the parties have settled the complaint. The settlement did not materially adversely affect the Company. The Pizzeria Regina at the Burlington Mall, Burlington, Massachusetts is currently a tenancy at will and the Landlord has commenced a summary process to terminate the tenancy at will. The Company intends

Oviedo Market Place food court Oviedo, FL Paramus Park food court Paramus, NJ Providence Place food court Providence, RI Regency Square food court Richmond, VA Salem, NH Polcari’s North End (bistro) Saugus, MA Polcari’s North End Woburn, MA Polcari’s North End (bistro)10

~~(1) Pizzeria~~to ~~Regina~~vigorously ~~food~~defend ~~court~~this ~~locations have no independent seating capacity~~action. ~~Seating is centralized in the common areas of~~Should the ~~food~~Company ~~courts. The~~be ~~North~~required ~~End~~to ~~seats approximately~~vacate 75this ~~customers;~~space, the ~~Saugus~~Company ~~Polcari’s~~would ~~North~~suffer ~~End location seats~~material ~~approximately~~revenue ~~360~~and ~~customers;~~income ~~the Cambridge Polcari’s North End location seats approximately 300 customers; the three bistro restaurants each seat approximately 200 customers~~loss..

~~(2)~~ From time to time the Company~~-owned. This~~ ~~property~~has isbeen, ~~subject~~and expects to acontinue ~~mortgage~~to ~~in favor~~be, ofsubject ~~Commerce~~to ~~Bank~~legal proceedings and ~~Trust~~claims ~~Company.~~ in the ordinary course ~~(See~~of ~~“Item~~its 7business. ~~Management’s~~ ~~Discussion~~Such ~~And~~claims, ~~Analysis~~even Ofif ~~Financial~~not ~~Condition~~meritorious, ~~and~~could ~~Results~~result in the expenditure of ~~Operations~~significant —financial ~~Liquidity~~ and ~~Capital~~managerial ~~Resources~~resources.”)

~~The Company~~ITEM ~~occupies approximately 5,325 square feet of executive office space in Saugus, Massachusetts~~4. ~~The~~ SUBMISSION ~~lease~~OF ~~for this~~MATTERS ~~location~~TO ~~expires on October 31, 2006.~~ A ~~The~~VOTE ~~Company~~OF ~~also~~SECURITY leases approximately 5,000 square feet of warehouse space located in Somerville, Massachusetts under a lease expiring on July 31, 2005 (including all extension options that may be exercised by the Company in its discretion) and approximately 2,741 square feet for its commissary located in Charlestown, Massachusetts under a lease expiring on August 14, 2005.HOLDERS

~~ITEM 3. LEGAL PROCEEDINGS~~None

~~A Charge of Discrimination was filed on June~~PART 15, 2004 by certain of the Company’s personnel, known as complainants, with the Massachusetts Commission Against Discrimination and with the Equal Employment Opportunity Commission. The Charge was filed against the Company and a Company employee. The Charge alleges that the Company and the employee discriminated against the complainants on the basis of sex. The Charge further alleges that the Company failed to investigate complaints of discrimination made by the complainants. The Charge of Discrimination does not specify the relief sought. The Company strongly believes that the Charge lacks merit, and the Company intends to defend against the claims vigorously. However, the Company could incur substantial costs defending the Charge. The Charge could also divert the time and attention of the Company’s management or cause the Company’s business to decline due to adverse publicity. The Company cannot predict the outcome of the Charge at this time, and there can be no assurance that the litigation will not have a material adverse impact on its financial condition or results of operation.II

~~From time~~ITEM to5. MARKET ~~time~~FOR ~~the~~REGISTRANT’S COMMON ~~Company has been~~EQUITY, ~~and~~RELATED ~~expects~~STOCKHOLDER toMATTERS ~~continue~~AND toISSUER ~~be,~~PURCHASES ~~subject~~OF toEQUITY ~~legal proceedings and claims in the ordinary course of its business.~~SECURITIES

The Company’s Common Stock is traded publicly on the OTC Bulletin Board ). As of July 16, 2005, there were approximately 600 holders of record of the Company’s Common Stock. On July 15, 2005, the last bid and asked price of the Company’s Common Stock as reported on the OTC Bulletin Board were $.40 and $.55 per share, respectively.

~~Such~~The table below represents the quarterly high and ~~claims,~~low ~~even~~bid ifand ~~not~~asked ~~meritorious~~prices for the Company’s Common Stock for the Company’s last two fiscal years, ~~could~~as ~~result~~reported inon the ~~expenditure~~OTC ofBulletin ~~significant~~Board. The prices listed in ~~financial~~this table reflect quotations without adjustment for retail mark-up, mark-down or commission, and ~~managerial~~may ~~resources~~not represent actual transactions.

~~ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~11

During the fourth quarter of the fiscal year covered by this report, the election of the Board of Directors of the Company was submitted to a vote of security holders of the Company at a special meeting in lieu of the annual meeting of the Company’s stockholders. On April 23, 2004, the Company’s stockholders voted to elect the following directors:

	High Bid		Low Bid		High Asked		Low Asked

Fiscal Year Ended April 24, 2005

First Quarter	$	.65	$	.53	$	.75	$	.65
Second Quarter	$	.60	$	.30	$	.70	$	.36
Third Quarter	$	.63	$	.25	$	.75	$	.30
Fourth Quarter	$	.62	$	.40	$	1.00	$	.50

Fiscal Year Ended April 25, 2004

First Quarter	$	.65	$	.30	$	.95	$	.35
Second Quarter	$	.94	$	.48	$	1.01	$	.80
Third Quarter	$	.65	$	.40	$	.85	$	.58
Fourth Quarter	$	.55	$	.26	$	.80	$	.39

~~George~~The Company has never paid cash dividends on its Rcapital stock and does not anticipate paying any cash dividends in the foreseeable future other than dividends on Series A Preferred Stock. ~~Chapdelaine~~The Company ~~with~~intends ~~5,014,251~~to ~~shares~~retain ~~voting~~most ~~for~~of ~~and~~its ~~55,123~~future ~~shares~~earnings ~~withheld;~~to finance future growth. The Company’s Credit Facility prohibits the payment of cash dividends without the lender’s prior consent.

~~Hugh Devine with 5,035,259 shares voting for and 34,115 shares withheld;~~12

~~Edward~~Company P.Equity ~~Grace~~Compensation ~~III with 5,055,759 shares voting for and 13,615 shares withheld;~~Plans

~~Roger~~The Company presently maintains a 1994 Employee ~~Lipton~~Combination ~~with~~Stock 4Option Plan under which options are no longer issued,~~409~~ a 1994 Director Stock Option Plan,~~036~~ ~~shares~~and ~~voting~~the ~~for~~Combination Stock Option and ~~660~~Share Award Plan (the “2002 Plan”),~~338~~ ~~shares~~pursuant ~~withheld;~~to which it granted equity awards to eligible persons. The following table gives information about those plans.

John P. Polcari, Jr. with 5,035,259 shares voting for and 34,115 shares withheld; and

Plan category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights	(b) Weighted average exercise price of outstanding options, warrant and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)

Equity compensation plans approved by security holders	1,274,800	$	.77	0

Equity compensation plans not approved by security holders	0	0		0


Total	1,274,800	$	.77	0

~~Robert C. Taft with 5,055,759 shares voting for and~~ 13~~,615 shares withheld;~~

inITEM ~~each~~6. SELECTED ~~case,~~FINANCIAL ~~there were no shares abstaining and no broker nonvoting shares cast.~~DATA

16The following table sets forth selected financial data for the fiscal periods indicated, a 52 week period for fiscal 2005, 2004, 2003, 2002, and 2001 which have been derived from the audited financial statements.

PART II

	April 24, 2005			April 25, 2004 (1)			April 27, 2003 (1)			April 28, 2002			April 29, 2001
Income Statement Data:)
Total revenues	$	22,629,052		$	19,482,986		$	19,697,538		$	23,854,439		$	21,707,907
Costs and expenses:
Cost of food, beverages and liquor	4,628,052			3,769,034			3,620,451			4,885,952			4,644,810
Other operating expenses	13,912,348			12,044,045			11,666,240			14,293,083			13,052,040
General and administrative	2,450,578			2,738,690			2,610,666			2,132,756			1,837,085
Depreciation an amortization	976,686			930,272			922,366			1,152,860			1,161,628
Pre-opening costs	93,196			77,140			—			—			658,090
Litigation and settlement costs (credits)	(98,259		)	(246,228		)	(443,445		)	—			1,847,487
Charge for asset impairment	—			—			—			—			580,000
Total costs and expenses	21,962,601			19,312,953			18,376,278			22,464,651			23,781,140
Operating income (loss)	666,451			170,033			1,321,260			1,389,788			(2,073,233		)
Interest expense, net	(475,132		)	(493,200		)	(377,829		)	(508,072		)	(456,842		)
Other income, net	8,418			221,630			9,436			9,015			19,771
Income (loss) from continuing operations	199,737			(101,537		)	952,867			890,731			(2,510,304		)
Income (loss) from discontinued operations	(628,452		)	(3,335,741		)	40,022			—			—
Net income (loss)	(428,715		)	(3,437,278		)	992,889			890,731			(2,510,304		)
Less: Preferred stock dividends	(20,583		)	—			—			—			—
Net Income (loss) available to common shareholders	$	(449,298	)	$	(3,437,278	)	$	992,889		$	890,731		$	(2,510,304	)
Income (loss) per share of common stock (Basic and Diluted):
Continuing Operations	$	.03		$	(.01	)	$	.13		$	.13		$	(.36	)

Discontinued Operations	$	(.09	)	$	(.48	)	$	.01		$	—		$	—

Net income (loss)	$	(.06	)	$	(.49	)	$	.14		$	.13		$	(.36	)
Balance Sheet Items:
Total Assets	$	6,741,301		$	7,740,807		$	8,273,745		$	8,640,734		$	9,000,203
Long Term Obligations	$	3,981,286		$	2,353,177		$	3,213,292		$	3,750,876		$	4,527,914
Total Liabilities	$	6,905,281		$	8,409,528		$	5,535,187		$	6,895,065		$	8,145,265

~~ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~14

~~The~~(1) In ~~Company’s~~fiscal ~~Common~~2005, ~~Stock~~the isCompany ~~traded~~closed ~~publicly~~its onPizzeria ~~the~~Regina ~~OTC~~in ~~Bulletin~~Richmond, ~~Board~~Virginia, completed ~~and on~~ the ~~Boston~~ ~~Stock~~assets ~~Exchange~~sale ~~(BSE~~of ~~symbol:~~Polcari’s ~~“BNR”). As~~ of ~~July 16~~Hyannis, Inc. ~~2004,~~and ~~there~~entered ~~were~~into an ~~approximately~~agreement ~~600~~for ~~holders~~the asset sale of ~~record~~ Polcari’s of ~~the~~Cambridge, Inc. The ~~Company~~sale of Polcari’s ~~Common~~of ~~Stock~~Cambridge, Inc. On, is scheduled to be completed on July 2122, ~~2004,~~2005. The ~~the~~Income ~~last~~Statement ~~bid~~Data for fiscal 2004 and 2003 ~~asked~~has ~~price~~been ofreclassified ~~the~~to ~~Company~~reflect Polcari’s ~~Common~~of ~~Stock~~Haynnis, Inc., Polcari’s asof ~~reported~~Cambridge, Inc., onand ~~the~~Pizzeria ~~OTC~~Regina ~~Bulletin~~at ~~Board~~Richmond, ~~were $.63and~~Virginia $as discontinued operations.65 See ~~per~~Note ~~share,~~13 to ~~respectively~~the Company’s Consolidated Financial Statement.

~~The table~~ITEM ~~below represents the quarterly high and low bid and asked prices for the Company~~7. MANAGEMENT’sS ~~Common~~DISCUSSION ~~Stock for the Company’s last two fiscal years, as reported on~~AND ~~the~~ANALYSIS ~~OTC~~OF ~~Bulletin~~FINANCIAL ~~Board. The~~CONDITION ~~prices listed~~AND inRESULTS ~~this~~OF ~~table reflect quotations without adjustment for retail mark-up, mark-down or commission, and may not represent actual transactions.~~OPERATIONS

	High Bid		Low Bid		High Asked		Low Asked
Fiscal Year Ended April 25, 2004
First Quarter	$	.65	$	.30	$	.95	$	.35
Second Quarter	$	.94	$	.48	$	1.01	$	.80
Third Quarter	$	.65	$	.40	$	.85	$	.58
Fourth Quarter	$	.55	$	.26	$	.80	$	.39
Fiscal Year Ended April 27, 2003
First Quarter	$	.90	$	.65	$	1.01	$	.75
Second Quarter	$	.75	$	.60	$	1.01	$	.68
Third Quarter	$	.70	$	.50	$	1.01	$	.65
Fourth Quarter	$	.60	$	.37	$	.85	$	.60

This Management’s Discussion and Analysis describes the principal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies of the Company. This discussion should be read in conjunction with the accompanying audited financial statements, which include additional information about our significant accounting policies and practices and the transactions that underlie our financial results.

The Company ~~has~~reports ~~never~~the ~~paid~~results ~~cash~~of ~~dividends on~~ its Pizzeria ~~capital~~Regina ~~stock~~restaurants and ~~does not anticipate paying any cash dividends in the foreseeable future. Rather, the Company intends to retain all of~~ its ~~future~~Polcari ~~earnings~~North toEnd ~~finance~~restaurants ~~future~~as ~~growth. The~~one ~~Company’s Credit Facility prohibits the~~operating ~~payment~~segment ofsince ~~cash~~they ~~dividends~~have ~~without~~similar ~~the~~economic ~~lender’s prior consent~~characteristics.

17Except as otherwise indicated, references to years mean our fiscal year ended April 24, 2005, April 25, 2004 and April 27, 2003.

~~Company~~RESULTS ~~Equity~~OF ~~Compensation Plans~~OPERATIONS

The Company presently maintains a 1994 Director Stock Option Plan and a 1994 Employee Combination Stock Option Plan under which options are no longer issued, and the Combination Stock Option and Share Award Plan (the “2002 Plan”), pursuant to which it may grant equity awards to eligible persons. The following table gives information about those plans.Overview:

	(a)	(b)		(c)
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted average exercise price of outstanding options, warrant and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
Equity compensation plans approved by security holders	775,800	$	1.085	440,000
Equity compensation plans not approved by security holders	0	0		0
Total	775,800	$	1.085	440,000

The key factors that affect our operating results are the impact of new store openings, comparable restaurant sales, which are driven by comparable customer counts and check average, and our ability to manage operating expenses such as food cost, labor and benefits and other costs. Changes in the number of restaurants in operation can dramatically change the absolute dollar amounts of revenues and expenses, and opening of new stores can dramatically affect operating profits. Each restaurant unit’s contribution margin will vary over the life of the restaurant. Margins tend to be low when a restaurant is first opened until customer traffic reaches planned levels. Margins can also deteriorate at the end of a unit’s life cycle due to a decline in customer traffic caused by a variety of factors outside the control of the Company. These economic conditions impact both the Pizzeria Regina units and the Polcari North End units.

~~On February~~ ~~13,~~There ~~2004,~~were ~~the Company issued Commerce Bank & Trust Company a~~15 ~~warrant~~units ~~to purchase 76,000 shares of the Company’s common stock. The warrant issued~~ in ~~this~~operation ~~transaction~~for ~~was issued~~all infiscal ~~reliance upon the exemption from registration set forth in Section 4 (2) of the Securities Act relating to sales by an issuer not involving any public offering. The warrant expires on February 13~~2005, ~~2010~~one ~~and~~new ~~has~~Pizzeria anRegina ~~exercise~~was ~~price~~added ~~of $0.50 per share. The warrant becomes exercisable~~ in ~~full on the first to occur of February 13, 2005, a default~~ ~~under~~ the ~~Company’s~~third ~~loan~~month ~~agreement with Commerce Bank & Trust Company or a change~~ of ~~control~~fiscal ~~of the Company~~2005. ~~The~~There ~~holder~~were of14 ~~the~~units ~~warrant has the right~~ in ~~certain~~operation ~~circumstances~~for toall ~~require~~fiscal ~~the Company~~2004, ~~to register with the Securities~~ and ~~Exchange~~one ~~Commission~~new ~~for~~Pizzeria ~~resale~~Regina ~~the~~was ~~shares~~added ~~issuable upon exercise of the warrant. The warrant was issued~~ in ~~connection with a waiver by Commerce Bank and Trust Company of~~ the ~~Company’s~~twelfth ~~failure~~month ~~to comply with certain financial covenants. (See “Item 7. Management’s Discussion And Analysis Of Financial Condition and Results~~ of ~~Operations~~fiscal ~~— Liquidity and Capital Resources”)~~2004.

1815

~~ITEM~~On 6January 20, 2005 the Company issued 1,147,056 shares of Preferred Stock at a purchase price of $. ~~SELECTED~~85 ~~FINANCIAL~~per ~~DATA~~share resulting in approximately $946,000 of net proceeds for the Company.

~~The~~On April 21, 2005, the Company entered into a ~~following~~new ~~table~~$2,300,000 ~~sets~~Credit ~~forth~~Facility ~~selected~~with ~~financial~~Commerce ~~data~~Bank ~~for~~and ~~the~~Trust ~~fiscal~~Company. ~~periods~~This ~~indicated,~~Credit Facility consists of a 52$1,500,000 ~~week~~4 ~~period~~year ~~for~~term ~~fiscal~~note ~~2004,~~bearing ~~2003,~~interest ~~2002,~~at the ~~2001,~~bank’s base rate plus 2% and an $800,000 mortgage at a 53fixed ~~week~~rate of 7%. ~~period~~This facility is secured by all of the assets of the Company. Commerce Bank and Trust Company waived the covenants for fiscal ~~2000~~year ended April 24, 2005. The proceeds of the Credit Facility were used to retire all prior existing debt with Commerce Bank and Trust Company.

	April 25, 2004			April 27, 2003			April 28, 2002			April 29, 2001			April 30, 2000
Income Statement Data:
Total revenues	$	23,290,256		$	22,541,875		$	23,854,439		$	21,707,907		$	16,013,321
Costs and expenses:
Cost of food, beverages and liquor	4,847,294			4,348,095			4,885,952			4,644,810			3,284,015
Other operating expenses	15,310,776			13,570,421			14,293,083			13,052,040			9,471,227
General and administrative	2,738,690			2,610,666			2,132,756			1,837,085			1,719,071
Depreciation and amortization	1,231,399			1,056,889			1,152,860			1,161,628			762,346
Pre-opening costs	392,308			8,545			—			658,090			453,002
Litigation and settlement costs (credits)	(246,228		)	(443,445		)	—			1,847,487			—
Charge for asset impairment	2,162,584			—			—			580,000			—
Total costs and expenses	26,436,823			21,151,171			22,464,651			23,781,140			15,689,661
Operating income (loss)	(3,146,567		)	1,390,704			1,389,788			(2,073,233		)	323,660
Interest expense, net	(512,668		)	(407,243		)	(508,072		)	(456,842		)	(327,164		)
Other income, net	221,957			9,428			9,015			19,771			5,171
Income (loss) before minority interest	(3,437,278		)	992,889			890,731			(2,510,304		)	1,667
Minority interest in net loss of subsidiary	—			—			—			—			63,867
Net income (loss)	$	(3,437,278	)	$	992,889		$	890,731		$	(2,510,304	)	$	65,534
Net income (loss) per share of common stock:
Basic and Diluted	$	(.49	)	$	.14		$	.13		$	(.36	)	$	.01
Balance Sheet Items:
Total Assets	$	7,740,807		$	8,273,745		$	8,640,734		$	9,000,203		$	8,307,876
Long Term Obligations	$	2,353,177		$	3,213,292		$	3,750,876		$	4,527,914		$	2,964,630
Total Liabilities	$	8,409,528		$	5,535,187		$	6,895,065		$	8,145,265		$	4,942,634

Our fiscal 2005 results reflect the effects of opening a new Pizzeria Regina Kiosk in Boston, Massachusetts, and the opening of a new Pizzeria Regina at the Prudential Center in Boston, Massachusetts.

19During fiscal 2005 the Company completed the asset sale of Polcari’s of Hyannis and entered into an agreement to sell the assets of Polcari’s of Cambridge, Inc. on July 22, 2005 and closed the Pizzeria Regina in Richmond, Virginia at the end of the lease term therefore the accompanying financial table has been reclassified to reflect Polcari’s of Hyannis, Inc., Polcari’s of Cambridge, inc. and Pizzeria Regina in Richmond, Virginia as discontinued operations.

~~ITEM~~The ~~7. MANAGEMENT’S~~following ~~DISCUSSION~~table ~~AND~~sets forth all revenues, costs ~~ANALYSIS~~and OFexpenses ~~FINANCIAL~~as ~~CONDITION~~a ~~AND~~percentage ~~RESULTS~~of OFtotal ~~OPERATIONS~~revenues for the periods indicated for revenue and expense items included in the consolidated statements of operations:

The Company reports the results of its Pizzeria Regina restaurants and its Polcari North End restaurants as one operating segment since they have similar economic characteristics.

	April 24,		April 25,		April 27,
	2005		2004		2003

Revenues:
Restaurant Sales	100.0	%	99.9	%	99.7	%
Other	—		.1		.3
Total Revenues	100.0		100.0		100.0
Costs and expenses:
Cost of food, beverages and liquor	20.4		19.3		18.4
Other operating expenses-payroll	29.5		30.3		29.5
Other operating expenses exclusive of payroll	32.0		31.5		29.7
General and administrative	10.8		14.1		13.2
Depreciation and amortization	4.3		4.8		4.7
Pre-opening costs	.4		.4		—
Litigation and settlement costs (credits)	(.4	)	(1.3	)	(2.2	)
Operating income (loss)	3.0		.9		6.7
Interest expense, net	(2.1	)	(2.5	)	(1.9	)
Other income, net	—		1.1		—
Income (loss) from continuing operations before discontinued operations	.9		(.5	)	4.8
Income (loss) from discontinued operations	(2.8	)	(17.1	)	.2
Net income (loss)	(1.9	)%	(17.6	)%	5.0	%

~~Except as otherwise indicated, references to years mean our fiscal year ended April 25, 2004, April 27, 2003 and April 28, 2002.~~17

~~RESULTS~~Results OFof ~~OPERATIONS~~Operations for the Years Ended April 24, 2005 and April 25, 2004

~~Overview:~~During fiscal 2005 the Company closed the Pizzeria Regina in Richmond, Virginia at the end of the lease term, completed the asset sale of Polcari’s of Hyannis, Inc. and entered into an agreement to sell the assets of Polcari’s of Cambridge, Inc. on July 22, 2005 therefore the following results of operations for fiscal year ended April 24, 2005, April 25, 2004, and April 27, 2003 have been reclassified to reflect Polcari’s of Hyannis, Inc., Polcari’s of Cambridge, Inc., and Pizzeria Regina in Richmond, Virginia as discontinued operations.

~~The key factors that affect our operating results~~Restaurant are the impact of new store openings, comparable restaurant sales, which are driven by comparable customer counts and check average, and our ability to manage operating expenses such as food cost, labor and benefits and other costs. Changes in the number of restaurants in operation can dramatically change the absolute dollar amounts of revenues and expenses, and opening of new stores can dramatically affect operating profits. Each restaurant unit’s contribution margin will vary over the life of the restaurant. Margins tend to be low when a restaurant is first opened until customer traffic reaches planned levels. Margins can also deteriorate at the end of a unit’s life cycle due to a decline in customer traffic caused by a variety of factors outside the control of the Company. These economic conditions impact both the Pizzeria Regina units and the Polcari North End units.Sales

~~There~~Restaurant sales in fiscal 2005 were 16$22,629,000 compared ~~units~~to $19,466,000 in ~~operation~~fiscal ~~throughout~~2004. The ~~each~~Company ~~of fiscal~~believes ~~2003~~the ~~and~~increase ~~2002. There~~in ~~were~~restaurant ~~16 units~~sales in ~~operation~~fiscal ~~for~~2005 compared ~~all~~to fiscal 2004, ~~one~~was ~~new~~attributable ~~Polcari’s~~to ~~North~~the ~~End~~opening ~~unit~~of ~~was~~the new Pizzeria ~~added~~Regina inat the ~~sixth~~Prudential ~~month~~Center ~~and~~in ~~one~~Boston, Massachusetts in April 2004, the new Pizzeria Regina ~~was~~at ~~added~~South Station in Boston, Massachusetts in July 2004, and by the ~~twelfth~~improved economy in the Northeastern United States. Sales volume for ~~month~~the ofrestaurants open throughout both fiscal 2005 and 2004 increased by 3.8%

~~Our~~Net ~~fiscal~~sales ~~2004~~at ~~results reflect~~ the ~~effects of opening a new Polcari~~Company’s ~~North~~Pizzeria ~~End in Cambridge, Massachusetts and the~~Regina ~~impairment~~restaurants ofincreased ~~this~~25.5% ~~location~~to $13,785,000 ain ~~new~~fiscal ~~Pizzeria~~2005 ~~Regina~~from at$10,985,000 ~~the~~in fiscal ~~Prudential~~2004. The ~~Center~~increase in restaurant ~~Boston,~~sales ~~Massachusetts~~volume ~~and~~was ~~consumer~~principally ~~behavior~~due ~~during~~to the ~~economic~~opening ~~slowdown. The~~of ~~following~~the ~~table~~new ~~sets~~Pizzeria ~~forth~~Regina ~~all revenues,~~at ~~costs~~the ~~and~~Prudential ~~expenses~~Center, asthe anew ~~percentage~~Pizzeria ofRegina ~~total~~at ~~revenues~~South ~~for~~Station ~~the~~and ~~periods~~to ~~indicated~~an ~~for~~increase ~~revenue and expense items included~~ in ~~the~~same ~~consolidated~~store ~~statements~~sales of ~~operations:~~ 3.4%.

20Net sales at the Company’s full service casual dining restaurants increased by 4.4% to $8,806,000 in fiscal 2005 from $8,436,000 in fiscal 2004. The increase in restaurant sales was primarily attributable to an increase in same store sales of 4.4%.

	April 25,		April 27,		April 28,
	2004		2003		2002
Revenues:
Restaurant sales	99.9	%	99.7	%	99.9	%
Other	.1		.3		.1
Total revenues	100.0		100.0		100.0
Costs and expenses:
Cost of food, beverages and liquor	20.8		19.3		20.5
Other operating expenses- payroll	32.8		30.4		31.1
Other operating expenses exclusive of payroll	32.9		29.8		28.8
General and administrative	11.8		11.6		9.0
Depreciation and amortization	5.3		4.7		4.8
Pre-opening costs	1.7		—		—
Litigation and settlement costs (credits)	(1.1	)	(2.0	)	—
Charge for asset impairment	9.3		—		—
Operating income (loss)	(13.5	)	6.2		5.8
Interest expense, net	(2.2	)	(1.8	)	(2.1	)
Other income, net	1.0		—		—
Net income (loss)	(14.7	)%	4.4	%	3.7	%

Sales at the Company’s commissary were $38,000 in fiscal 2005 compared to $45,000 in fiscal 2004. The decrease in commissary sales was primarily attributable to the closing of a domestic Pizzeria Regina franchise in Las Vegas, Nevada in April 2004.

~~Results of Operations for~~Franchise ~~the~~Fees ~~Years Ended April 25, 2004~~ and ~~April 27, 2003~~Royalties

~~Restaurant~~During ~~Sales~~fiscal 2005, the Company recognized approximately $300 in royalties from a domestic Pizzeria Regina franchise at the Palms Casino Resort in Las Vegas, Nevada which closed on April 30, 2004, compared to approximately $17,000 in royalties in fiscal 2004.

~~Restaurant sales~~Costs ~~in fiscal 2004 were $23,274,000 compared to $22,478,000 in fiscal 2003. Sales for the restaurants open throughout both fiscal 2004~~ and 2003 decreased by 1.8%. The Company believes the decrease in restaurant sales in fiscal 2004 compared to fiscal 2003 was attributable to the impact on consumer behavior of the economic slowdown in the Northeast.Expenses

~~Net~~Cost sales at the Company’s Pizzeria Regina restaurants decreased 1.4% to $11,281,000 in fiscal 2004 from $11,445,000 in fiscal 2003. The decrease in restaurant sales was principally due to the temporary closing of ~~the Faneuil Hall location from May 9~~Food, ~~2003~~Beverages toand ~~July 2, 2003. The loss of revenue from that location was partially compensated by payments under the Company’s insurance policies, which are included in other income.~~Liquor

~~Net~~Cost ~~sales~~of atfood, ~~the~~beverages ~~Company’s~~and ~~full~~liquor ~~service~~as ~~casual~~a percentage ~~dining~~of ~~restaurants~~total ~~increased~~revenues byfor ~~8.6%~~all torestaurants ~~$11,947,000~~was 20% in fiscal ~~2004~~2005 ~~from $11,005,000~~compared into 19% in fiscal ~~2003~~2004. The increase in ~~restaurant~~as ~~sales~~a percentage of total revenues was primarily attributable to the ~~opening~~two ofPizzeria Regina locations which have higher food costs than the ~~new~~other Pizzeria Regina units due to the

2118

~~Polcari’s~~addition of infood ~~Cambridge,~~items ~~Massachusetts~~to intheir ~~October, 2003~~menus ~~partially~~and ~~offset~~to byan ~~the~~increase ~~continued~~in ~~economic~~costs ~~slow~~from ~~down~~suppliers in ~~the Northeast~~ general.

~~Sales~~The atcost ~~the~~of ~~Company’s~~food, ~~commissary~~beverages ~~were~~and liquor was $464,628,000 in fiscal ~~2004~~2005 compared to $283,769,000 in fiscal ~~2003~~2004. The dollar increase ~~in commissary sales~~ was ~~primarily~~due ~~attributable to an increase~~ in ~~product~~part ~~shipments~~ to ~~our~~the ~~distributors~~two ~~for~~additional ~~the~~Pizzeria ~~out-of-state~~Regina ~~Pizzeria Reginas~~locations and ~~the~~an increase ~~Pizzeria~~in ~~Regina~~costs ~~franchise~~from suppliers in ~~Las Vegas, Nevada~~general.

~~Franchise~~The ~~Fees~~cost of food, beverages, and ~~Royalties~~liquor as a percentage of restaurant sales at the Pizzeria Regina restaurants was 18% in fiscal 2005 compared to 16% in fiscal 2004. The increase as a percentage of restaurant sales was primarily due to the opening of the two new Pizzeria Regina restaurants which have higher food costs due to the additional food items to their menus and from an increase in cost from suppliers in general.

~~During~~The ~~fiscal~~cost ~~2004,~~of ~~the Company recognized $17~~food,~~000 in~~ ~~royalties~~beverages ~~from~~and aliquor ~~domestic~~at the Pizzeria Regina ~~franchise~~restaurants atwas ~~the~~$2,447,000 ~~Palms Casino Resort~~ in ~~Las~~fiscal ~~Vegas,~~2005 ~~Nevada~~compared ~~which~~to ~~closed on April 30~~$1,741,000 in fiscal 2004. ~~During~~ ~~fiscal~~The ~~2003,~~dollar ~~the~~increase ~~Company~~was ~~recognized $50,000~~primarily indue ~~franchise~~to ~~fee~~the ~~revenues~~opening ~~and~~of ~~$14,000~~two additional ~~related~~Pizzeria toRegina ~~royalties~~restaurants.

~~Costs~~The cost of food, beverages and ~~Expenses~~liquor as a percentage of restaurant sales at the Company’s full service casual dining restaurants increased to 25% in fiscal 2005 from 24% in fiscal 2004. The increase as a percentage of restaurant sales was principally due to increases in costs from suppliers in general.

~~Cost~~The cost of ~~Food~~food, ~~Beverages~~beverages and ~~Liquor~~liquor at the Company’s full service casual dining restaurants was $2,181,000 in fiscal 2005 compared to $2,028,000 in fiscal 2004. The dollar increase was primarily due to increases in costs from suppliers in general.

~~Cost~~Other ofOperating food, beverages and liquor as a percentage of total revenues for all restaurants was 21% in fiscal 2004 compared to 19% in fiscal 2003. The increase as a percentage of total revenues was primarily attributable to increases in costs from suppliers in general.Expenses

~~The~~Payroll ~~cost~~Expenses. Payroll expenses as a percentage of ~~food,~~total ~~beverages~~revenues ~~and~~for ~~liquor~~all ~~was~~restaurants ~~$4,847,000~~were 29% in fiscal ~~2004~~2005 compared to ~~$4,348,000~~30% in ~~fiscal~~ ~~2003~~fiscal 2004. The ~~dollar~~decrease ~~increase~~as ~~was~~a ~~due~~percentage inof ~~part~~total revenues was attributable to the opening of the ~~new~~two additional Pizzeria Regina locations which generally have ~~Cambridge,~~lower ~~Massachusetts~~payroll ~~Polcari~~costs than the Company’s ~~North~~full ~~End~~service casual dining restaurants. This was partially offset by startup costs associated with the opening of these two locations because, as is typical in the restaurant industry, the Company overstaffed these locations during the first few months of their operations to help them succeed.

~~The~~Payroll ~~cost~~expenses offor ~~food,~~all ~~beverages, and liquor as a percentage of restaurant sales at~~ the ~~Pizzeria Regina~~ restaurants ~~was~~were $6,676,000 ~~16%~~ in fiscal ~~2004~~2005 compared to ~~15%~~$5,914,000 in fiscal ~~2003~~2004. The dollar increase asin apayroll ~~percentage~~expenses ~~of restaurant sales~~ was primarily due to the two new Pizzeria Regina ~~higher~~restaurants ~~cheese~~in ~~costs~~Boston, Massachusetts.

~~The~~Payroll ~~cost~~expenses ~~of food, beverages and liquor~~ at the Pizzeria Regina restaurants were ~~was~~26% ~~$1,810,000~~of restaurant sales in fiscal ~~2004~~2005 compared to ~~$1,752,000~~ 25% in fiscal ~~2003~~ 2004. The ~~dollar~~ increase as a percentage of restaurant sales was ~~primarily~~principally due to ~~higher~~the ~~cheese~~two ~~costs~~new ~~and~~Pizzeria ~~increases~~Regina ~~in costs from~~restaurants ~~suppliers~~ in ~~general~~Boston, ~~which~~Massachusetts ~~were partially~~and ~~offset~~to byincreased ~~the~~costs ~~Company’s~~in ~~lower~~employee ~~consumption~~health ~~of these supplies due to lower sales from these restaurants~~benefits.

The cost of food, beverages and liquor as a percentage of restaurant sales at the Company’s full service casual dining restaurants increased to 25% in fiscal 2004 from 24% in fiscal 2003. The increase as a percentage of restaurant sales was principally due to the opening of the new Cambridge, Massachusetts Polcari’s North End restaurant which is open for lunch seven days a week resulting in higher food costs and increases in costs from suppliers in general and weak revenue generation by the Cambridge location compared to the Company’s other full service casual dining restaurants.19

22Payroll expenses at the Pizzeria Regina restaurants were 26% of restaurant sales in fiscal 2005 compared to 25% in fiscal 2004. The increase as a percentage of restaurant sales was principally due to the two new Pizzeria Regina restaurants in Boston, Massachusetts and to increased costs in employee health benefits.

~~The~~Payroll ~~cost~~expenses ~~of food, beverages and liquor~~ at the ~~Company’s~~Pizzeria ~~full service casual dining~~ Regina restaurants ~~was~~were $3,~~037~~585,000 in fiscal ~~2004~~ 2005 compared to $2,~~596~~798,000 in fiscal ~~2003.~~ ~~The~~2004. This dollar increase was primarily due to the opening of ~~the~~two new Pizzeria ~~Cambridge,~~Regina ~~Massachusetts~~locations ~~Polcari’s~~and ~~North~~to ~~End~~increased ~~restaurant~~costs in employee health benefits.

~~Other~~Payroll ~~Operating~~expenses ~~Expenses~~at the Company’s full service casual dining restaurants decreased to 30% of restaurant sales in fiscal 2005 from 32% of restaurant sales in fiscal 2004. The decrease as a percentage of restaurant sales was primarily attributable to lower employee incentive costs.

Payroll ~~Expenses. Payroll~~ expenses asat athe ~~percentage~~Company’s ~~of total~~full ~~revenues~~service ~~for~~casual ~~all~~dining restaurants were ~~33%~~$2,678,000 in fiscal ~~2004~~2005 compared to $2,712,000 ~~30%~~ in fiscal ~~2003~~ 2004. ~~The~~ ~~increase~~This asdollar adecrease ~~percentage of total revenues~~ was ~~attributable~~primarily todue ~~the opening of the new Cambridge, Massachusetts Polcari’s North End restaurant, as well as~~ to ~~the fact that~~lower ~~during the temporary closing of the Faneuil Hall location the Company continued to incur payroll costs associated with that location and to the increased~~ employee ~~health~~incentive ~~benefit~~ costs.

Payroll expenses ~~for~~at ~~all~~ the ~~restaurants~~Company’s Commissary were $7413,~~639,~~000 infor fiscal ~~2004~~2005 as compared to $6404,~~860,~~000 in fiscal ~~2003~~2004. ~~The dollar increase in payroll expenses was primarily due to the opening of the new Cambridge, Massachusetts Polcari’s North End restaurant.~~

~~Payroll expenses at the Pizzeria Regina~~Other ~~restaurants~~Operating ~~were~~Expenses, ~~26%~~Exclusive of ~~restaurant sales in fiscal 2004 compared to 25% of restaurant sales in fiscal 2003~~Payroll. ~~The increase as a percentage of restaurant sales was primarily due to the temporary closing of the Faneuil Hall location and to an increase in employee benefit costs.~~

~~Payroll~~Other operating expenses, atexclusive ~~the Pizzeria Regina~~of ~~restaurants~~payroll, were ~~$2,945,000~~32% of total revenues in fiscal ~~2004~~2005 compared to ~~$2,893,000~~31% in fiscal ~~2003~~2004. ~~This~~The ~~dollar~~ increase ~~was~~as ~~primarily~~a percentage of ~~due~~total torevenues anwas ~~increased~~attributable ~~cost~~to inhigher ~~employee~~promotion, ~~health~~energy ~~benefits~~and maintenance costs.

~~Payroll~~Other operating expenses, atexclusive ~~the Company’s full~~of ~~service~~payroll ~~casual~~were ~~dining~~$7,237,000 ~~restaurants increased to 36% of restaurant sales~~ in fiscal ~~2004~~2005 ~~from~~compared ~~33%~~to of$6,130,000 ~~restaurant sales~~ in fiscal ~~2003~~2004. This ~~The~~dollar increase asis ~~a percentage of restaurant sales was~~ primarily attributable to the ~~opening of the~~ new ~~Polcari’s~~Pizzeria ~~North~~Regina ~~End~~at Prudential ~~restaurant~~Center in ~~Cambridge~~Boston, Massachusetts, ~~and~~the tonew anPizzeria Regina at South ~~increase~~Station in ~~employee~~Boston, ~~health~~Massachusetts ~~benefit~~and higher energy costs.

~~Payroll~~Other ~~expenses~~operating ~~at the Company’s full service casual dining restaurants were $4~~expenses,~~291,000~~ inexclusive ~~fiscal 2004 compared to~~of $3payroll,~~595,000~~ infrom ~~fiscal~~the ~~2003. This~~Pizzeria ~~dollar increase~~Regina ~~was~~restaurants ~~primarily~~were ~~due~~33% ~~to the opening~~ of ~~the~~restaurant ~~new~~sales ~~Polcari’s North End restaurant~~ in both ~~Cambridge,~~fiscal ~~Massachusetts~~2005 and ~~an increase~~ in ~~employee~~fiscal ~~health benefit costs~~2004.

~~Payroll~~Other operating expenses, atexclusive of payroll from the ~~Company’s~~Pizzeria ~~Commissary~~ Regina restaurants were $~~403~~4,540,000 ~~for~~in fiscal ~~2004 as~~ 2005 compared to $~~372~~3,624,000 in fiscal ~~2003~~2004. This dollar increase was primarily attributable to the addition of two new Pizzeria Regina locations and higher energy costs.

Other ~~Operating~~operating ~~Expenses~~expenses, ~~Exclusive~~ exclusive of payroll, ~~Payroll. Other~~from ~~operating~~the Company’s full service casual dining restaurants increased to ~~expenses,~~29 ~~exclusive~~% of ~~payroll,~~restaurant ~~were~~sales 33in fiscal 2005 from 28% of ~~total~~restaurant ~~revenues~~sales in fiscal 2004. The increase as a percentage of restaurant sales was primarily attributable to an increase in promotions at the Polcari’s bistro restaurant in Salem, New Hampshire and higher energy costs and maintenance at the Company’s full service casual dining restaurants.

23Other operating expenses, exclusive of payroll, from the Company’s full service casual dining restaurants were $2,569,000 in fiscal 2005 compared to $2,381,000 in fiscal 2004. The dollar increase was primarily attributable to the increase in promotions at the Polcari’s bistro restaurant in Salem, New Hampshire and higher energy costs and maintenance at the Company’s full service casual dining restaurants.

compared to 30% in fiscal 2003. The increase in operating expenses, exclusive of payroll, as a percentage of total revenues was primarily due to the opening of the new Cambridge, Massachusetts Polcari’s North End restaurant and to a reduction in revenue.20

Other operating expenses, ~~exclusive~~also ofinclude ~~payroll~~commissary expenses, which were $7128,~~672,~~000 in fiscal ~~2004~~2005 ~~compared~~and to $6125,~~710,~~000 in fiscal ~~2003. This dollar increase is primarily~~ ~~attributable to the opening of the new Cambridge, Massachusetts Polcari’s North End restaurant~~2004.

~~Other operating expenses, exclusive of~~General ~~payroll,~~and ~~from~~Administrative the Pizzeria Regina restaurants were 34% of restaurant sales in fiscal 2004 compared to 33% in fiscal 2003. The increase as a percentage of sales was primarily attributable to the temporary closing of the Faneuil Hall location, where the Company nonetheless continued to incur some of such costs without any corresponding revenue.Expenses

~~Other~~General ~~operating~~and administrative expenses, ~~exclusive~~were of11% ~~payroll~~of ~~from~~total ~~the~~revenues ~~Pizzeria Regina restaurants were $3,858,000~~ in fiscal ~~2004~~ 2005 compared to ~~$3,775,000~~14% in fiscal ~~2003~~2004. ~~This~~ The ~~dollar~~decrease ~~increase~~as ~~was~~a ~~primarily~~percentage of total revenues was attributable to ~~the~~a ~~temporary~~higher ~~closing of~~revenue ~~the~~base ~~Faneuil~~and ~~Hall~~lower ~~location~~employee ~~which~~incentive costs ~~resulted~~and inlower ~~additional~~consulting ~~operating expenses~~costs.

~~Other~~General ~~operating~~and administrative expenses, ~~exclusive of~~were ~~payroll~~$2,451,000 ~~from the Company’s full service casual dining restaurants increased to 31% of total revenues~~ in fiscal ~~2004~~2005, ~~from~~compared ~~26%~~to of$2,739,000 ~~total revenues~~ in fiscal ~~2003~~2004. The ~~increase as a percentage of restaurant~~dollar ~~sales~~decrease was primarily attributable to ~~the~~lower ~~opening~~employee ofincentive ~~the~~costs ~~new Polcari’s North End~~and ~~restaurant~~consulting ~~in Cambridge, Massachusetts, increased rent expenses, and the reduction in same stores revenue~~costs.

~~Other operating expenses, exclusive of~~Depreciation payroll, from the Company’s full service casual dining restaurants were $3,688,000 in fiscal 2004 compared to $2,826,000 in fiscal 2003. The dollar increase was primarily due to a $618,000 increase attributable to Cambridge and a ~~$126,000~~Amortization ~~increase in rent expenses.~~Expenses

~~Other~~Depreciation ~~operating~~and amortization expenses ~~also~~as ~~include commissary~~a ~~expenses,~~percentage ~~which~~of total revenues were ~~$126,000~~4% in the fiscal ~~2004~~2005 ~~and~~period ~~$109,000~~compared to 5% in the fiscal 2004 ~~2003~~period. The decrease as a percentage of total revenue was attributable to a higher revenue base.

~~General~~Depreciation and ~~Administrative~~amortization expense was ~~Expenses~~$977,000 in fiscal 2005, as compared to $930,000 in fiscal 2004. The increase in depreciation and amortization expense was primarily due to the addition of two Pizzeria Regina restaurants in Boston, Massachusetts.

~~General and administrative expenses were 12%~~Pre-Opening ~~of total revenues in both fiscal 2004 and fiscal 2003 periods.~~Costs

~~General~~Pre-opening ~~and~~expenses ~~administrative~~in ~~expenses~~fiscal 2005 were $293,~~739~~000 compared to $77,000 in fiscal 2004. The costs which consist of labor, ~~compared~~rent and training materials are primarily attributable to $2the opening of the new Pizzeria Regina restaurant at South Station in Boston,~~611,000~~ Massachusetts in fiscal ~~2003. The~~2005 ~~dollar~~and ~~increase~~to ~~were~~the ~~primarily~~new Pizzeria ~~attributable~~Regina torestaurant ~~consulting~~at ~~costs~~the Prudential Center restaurant in Boston, Massachusetts in fiscal 2004.

24Litigation and Settlement Credits

~~Depreciation~~In 1998 the Company formed a joint venture with Italian Ventures, LLC, a Kentucky limited liability company (“Italian Ventures”), and ~~Amortization~~entered into a development agreement with it. Approximately eight months ~~Expenses~~after the joint venture and development agreement were entered into, the Company filed a lawsuit against Italian Ventures and certain related parties seeking dissolution of the joint venture. In fiscal 2001, the Company reached a settlement of the dispute with Italian Ventures, LLC in which it agreed to pay royalties on future revenues from certain “Bistro restaurants”, as defined in the settlement agreement. The Company accrued a liability of $955,000 in the fourth quarter of fiscal 2001 as the estimated cost of the obligation to pay the future royalties, based upon a forecast of Bistro restaurant gross sales for the period May 2001 through April 2008 using historical information and estimates of growth of existing Bistro units, as well as anticipated future Bistro unit openings and closings. In the fourth quarter of fiscal 2003, the Company reduced the accrual by $443,000 to reflect the Company’s revised estimate of its remaining obligation under the settlement agreement with Italian

~~Depreciation and amortization expense was $1,231,000 in fiscal 2004, as compared to $1,057,000 in fiscal 2003, amounting to 5% of total revenues in both fiscal years.~~21

~~Pre-Opening~~Ventures. ~~Costs~~In 2004, the Company experienced the opening of an under performing Polcari’s in Cambridge, Massachusetts, which caused the Company to reassess its expansion plans due to financial constraints. As a result of this reassessment in fiscal 2004 the amount of accrual was reduced by $246,000 to $258,000 to reflect the Company’s revised estimates of the remaining obligations under the settlement agreement with Italian Ventures. In fiscal 2005, the Company closed a Polcari’s bistro restaurant in Hyannis, Massachusetts. As a result, the Company reduced the accrual by $98,000 to reflect the Company’s revised estimate of its remaining obligation under the settlement agreement with Italian Ventures. As of the end of fiscal 2005, the total remaining accrual was $126,000.

~~Pre-opening expenses in fiscal 2004 were~~Other $392,000 compared to $9,000 in fiscal 2003. The pre-opening expenses were related to the new Cambridge, Massachusetts Polcari’s North End restaurant which consisted of labor, advertising, rent and training materials, the new Pizzeria Regina restaurant at the Prudential Center in Boston, Massachusetts and the planned opening of the new Pizzeria Regina restaurant at South Station in Boston, Massachusetts.Income

~~Litigation~~Other ~~and~~income ~~Settlement~~was ~~Costs~~$8,000 in fiscal 2005 compared to $222,000 in fiscal 2004. The prior year’s other income mainly consisted of insurance proceeds related to the temporary closing of the Faneuil Hall Pizzeria Regina restaurant.

~~In 1998 the Company formed a joint venture with~~Interest ~~Italian~~Expense ~~Ventures, LLC, a Kentucky limited liability company (“Italian Ventures”),~~ and ~~entered~~Interest into a development agreement with it. Approximately eight months after the joint venture and development agreement were entered into, the Company filed a lawsuit against Italian Ventures and certain related parties seeking dissolution of the joint venture. In fiscal 2001, the Company reached a settlement of the dispute with Italian Ventures, LLC in which it agreed to pay royalties on future revenues from certain “Bistro restaurants”, as defined in the settlement agreement. The Company accrued a liability of $955,000 in the fourth quarter of fiscal 2001 as the estimated cost of the obligation to pay the future royalties, based upon a forecast of Bistro restaurant gross sales for the period May 2001 through April 2008 using historical information and estimates of growth of existing Bistro units, as well as anticipated future Bistro unit openings and closings. In the fourth quarter of fiscal 2003, the Company reduced the accrual by $443,000 to reflect the Company’s revised estimate of its remaining obligation under the settlement agreement with Italian Ventures. In 2004, the Company experienced the opening of an under performing Polcari’s in Cambridge, Massachusetts, which caused the Company to reassess its expansion plans due to financial constraints. As a result of this reassessment in fiscal 2004 the amount of accrual was reduced by $246,000 to $258,000 to reflect the Company’s revised estimates of the remaining obligations under the settlement agreement with Italian Ventures.Income

25Interest expense decreased to $478,000 in fiscal 2005, compared to $496,000 in fiscal 2004. This decrease was primarily due to a decrease in interest expense under the Company’s credit facility.

~~Loss~~Interest orincome ~~Impairment~~was of$3,000 ~~Long-Lived~~in ~~Assets~~both fiscal 2005 and fiscal 2004 years.

The Company recorded an impairment charge of $2,163,000 in the fourth quarter of fiscal 2004 which is included in the consolidated statements of operations related to the write-down of certain long-lived assets. The Company reviewed the carrying value of its long-lived assets and noted that the expected future cash flows for the Polcari’s North End in Cambridge, Massachusetts were not sufficient to recover the recorded carrying value of long-lived assets at this location. Accordingly, the Company recognized an impairment charge to reduce the carrying value of leasehold improvements to zero and restaurant equipment to an estimated fair market value based on the estimated residual value of the equipment.22

~~Other Income~~Discontinued Operations

~~Other~~In ~~income~~fiscal ~~was~~2005, ~~$222~~the Company completed the asset sale of Polcari’s of Hyannis,~~000~~ inInc. ~~fiscal~~and ~~2004~~entered ~~compared~~into an agreement for the asset sale of Polcari’s of toCambridge, Inc. The Company received approximately $9552,000 inof ~~fiscal~~net ~~2003~~proceeds from the sale of Polcari’s of Hyannis. The ~~increase in~~sale ~~other~~of ~~income~~Polcari’s isof ~~attributable~~Cambridge, Inc. is scheduled to ~~insurance~~be completed on July 22, 2005 and the net proceeds will be recorded when the sale is completed. In November 2004, at the end of ~~$184~~the lease term,~~000~~ ~~related~~the toCompany ceased operations of the ~~temporary~~Pizzeria ~~closing~~Regina in Richmond, Virginia. The Company has reclassified its financial results to reflect Polcari’s of ~~the~~Hyannis, ~~Faneuil~~Inc., ~~Hall~~Polcari’s of Cambridge, Inc., and Pizzeria Regina in Richmond, Virginia as discontinued operations.

~~Interest~~The ~~Expense~~loss from discontinued operations was $628,000 in fiscal 2005 compared to $3,336,000 in fiscal 2004. In fiscal 2005, the loss from discontinued operations represents operating losses from the Polcari’s bistro restaurant in Hyannis, Massachusetts, the Polcari’s North End restaurant in Cambridge, Massachusetts, and ~~Interest~~the Pizzeria Regina restaurant in Richmond, ~~Income~~Virginia of $643,000 and a gain of $15,000 from the disposal of certain assets of the Polcari’s bistro in Hyannis, Massachusetts. In fiscal 2004, the loss of $3,336,000 from discontinued operations represents operating losses from the Polcari’s bistro restaurant in Hyannis, Massachusetts the Pizzeria Regina restaurant in Richmond, Virginia and the Polcari’s North End in Cambridge, Massachusetts, including an impairment charge of $2,163,000 related to the write-down of certain long lived assets for that location.

~~Interest~~The ~~expense~~Company ~~increased~~reviewed tothe ~~$516,000~~carrying invalue of its long lived assets and ~~fiscal~~noted ~~2004,~~that ~~compared~~the expected future cash flows for this location were not sufficient to ~~$410,000~~recover inthe ~~fiscal~~recorded ~~2003~~carrying value of long-lived assets at this location. ~~This~~Accordingly, ~~increase~~the ~~was~~Company recognized ~~primarily~~an ~~due~~impairment charge to anreduce the carrying value of long lived ~~increase~~assets inat ~~interest~~this ~~expense~~location. The ~~under~~Company recognized an impairment charge to reduce the ~~Company’s~~carrying ~~credit~~value ~~facility~~of ~~due~~leasehold improvements to zero and restaurant equipment to an estimated fair market value ~~additional~~based ~~borrowing~~on the estimated residual value of the equipment.

~~Interest~~Results ~~income~~of Operations ~~was~~for ~~$3,000~~the inYears ~~both~~Ended ~~fiscal~~ April 25, 2004 and ~~fiscal~~April ~~2003~~27, ~~years.~~2003

~~Results~~During fiscal 2005 the Company closed the Pizzeria Regina in Richmond, Virginia at the end of ~~Operations~~the ~~for~~lease term, completed the asset sale of Polcari’s of Hyannis, Inc. and entered into an agreement to sell the ~~Years~~assets ~~Ended~~of Polcari’s of Cambridge, Inc. on July 22, 2005 therefore the following results of operations for fiscal year ended April 24, 2005, April 25, 2004, and April 27, 2003 have been reclassified to reflect Polcari’s of Hyannis, Inc., Polcari’s of Cambridge, Inc., and ~~April 28~~Pizzeria Regina in Richmond, ~~2002~~Virginia as discontinued operations.

~~Restaurant Sales~~23

Restaurant ~~sales~~ ~~in fiscal 2003 were $22,478,000 compared to $23,828,000 in fiscal 2002.~~ Sales for the restaurants open throughout both fiscal 2003 and 2002 decreased by 5.7%. The Company believes the decrease in restaurant sales in fiscal 2003 compared to fiscal 2002 was attributable to the impact on consumer behavior of the continuing economic slowdown, the war with Iraq, and harsh winter weather in the Northeast.

~~Net~~Restaurant sales atin ~~the~~fiscal ~~Company’s~~2004 ~~Pizzeria Regina~~were ~~restaurants~~$19,466,000 ~~decreased~~compared ~~3.9%~~ to $1119,~~445~~633,000 in fiscal 2003. ~~from~~Sales ~~$11,905,000~~for inthe restaurants open throughout both fiscal ~~2002~~2004 and 2003 decreased by . ~~Net~~9%. ~~sales~~The atCompany believes the decrease ~~Company’s~~in restaurant sales in fiscal 2004 compared to fiscal 2003 was ~~full~~attributable ~~service~~to ~~casual~~the ~~dining~~impact ~~restaurants~~on ~~decreased~~consumer bybehavior ~~7.6%~~of the economic slowdown in the Northeast and to ~~$11~~the temporary closing of the Faneuil Hall Pizzeria Regina restaurant in Boston,~~005,000~~ Massachusetts. The Faneuil Hall location was closed as the result of a fire that occurred in the ~~fiscal~~common ~~2003~~duct ~~from~~work ~~$11,906,000~~located in ~~fiscal~~its ~~2002~~mall complex. The Company believes ~~these~~that ~~decreases~~this ~~were~~is ~~attributable~~unlikely to occur in the ~~same factors~~future. The ~~listed~~Company’s ~~above~~loss ~~for~~of ~~both~~sales ~~types~~as a result of this ~~restaurants~~closing however was offset by $176,000 ~~but~~of ~~affected~~insurance ~~the~~proceeds ~~slightly~~that were ~~more~~included ~~expensive~~in ~~casual~~revenue ~~dining~~for ~~restaurants~~fiscal ~~more~~2004.

26Net sales at the Company’s Pizzeria Regina restaurants decreased .7% to $10,985,000 in fiscal 2004 from $11,061,000 in fiscal 2003. The decrease in restaurant sales was principally due to the temporary closing of the Faneuil Hall location from May 9, 2003 to July 2, 2003. The loss of revenue from that location was partially compensated by payments under the Company’s insurance policies, which are included in other income.

~~Sales~~Net sales at the Company’s ~~commissary~~full ~~were~~service casual dining restaurants decreased by 1.3% to $288,436,000 in fiscal ~~2003~~2004 ~~compared to~~ from $178,545,000 in fiscal ~~2002~~2003. The ~~increase~~decrease in ~~commissary~~restaurant sales was ~~primarily~~ attributable to ~~the~~ ~~Pizzeria~~the ~~Regina~~continued ~~franchise~~economic inslow ~~Las~~down ~~Vegas,~~in ~~Nevada being opened for~~ the ~~entire fiscal 2003~~Northeast.

~~Franchise~~Sales ~~Fees~~at the Company’s commissary were $45,000 in fiscal 2004 compared to $27,000 in fiscal 2003. The increase in commissary sales was primarily attributable to an increase in product shipments to our distributors for the out-of-state Pizzeria Reginas and ~~Royalties~~the Pizzeria Regina franchise in Las Vegas, Nevada.

~~During~~Franchise ~~fiscal~~Fees ~~2003, the Company recognized $50,000 in franchise fee revenues~~ and $14,000 in royalties from a domestic Pizzeria Regina franchise at the Palms Casino Resort in Las Vegas, Nevada. During fiscal 2002, the Company recognized $20,000 in franchise fee revenues and $6,000 related to royalties.Royalties

~~Costs~~During fiscal 2004, the Company recognized $17,000 in royalties from a domestic Pizzeria Regina franchise at the Palms Casino Resort in Las Vegas, Nevada which closed on April 30, 2004. During fiscal 2003, the Company recognized $50,000 in franchise fee revenues and $14,000 ~~Expenses~~related to royalties.

~~Cost~~Costs ~~of Food, Beverages~~ and ~~Liquor~~ Expenses

Cost of ~~food~~ Food, ~~beverages and~~Beverages liquor as a percentage of total revenues for all restaurants was 19% in fiscal 2003 compared to 20% in fiscal 2002. The decrease as a percentage of total revenues was primarily attributable to improved cost control systems and ~~lower cheese costs.~~Liquor

~~The~~Cost ~~cost~~ of food, beverages and liquor as a percentage of total revenues for all restaurants was ~~$4,348,000~~19 % in fiscal ~~2003~~ 2004 compared to ~~$4,886,000~~18% in fiscal ~~2002~~2003. The ~~dollar~~increase ~~decrease~~as ~~was~~a ~~due~~percentage inof ~~part~~total ~~to the reduction in the amount~~revenues ofwas ~~product~~primarily ~~sold~~attributable ~~for~~to ~~fiscal~~increases ~~2003 and~~ in ~~part~~costs tofrom ~~improved~~suppliers ~~cost~~in ~~control systems~~general.

The cost of food, beverages, and liquor ~~as a~~was ~~percentage~~$3,769,000 ofin ~~total~~fiscal ~~revenues~~2004 atcompared ~~the~~to ~~Pizzeria~~$3,620,000 ~~Regina~~in ~~restaurants~~fiscal ~~was~~2003. ~~15%~~The ~~for~~dollar ~~both~~increase ~~fiscal~~was ~~2003~~due ~~and~~to ~~fiscal~~increase ~~2002~~in costs from suppliers in general.

The cost of food, beverages and liquor at the Pizzeria Regina restaurants was $1,752,000 in fiscal 2003 compared to $1,790,000 in fiscal 2002. The dollar decrease was principally due to the reduction in the amount of product sold.24

The cost of food, beverages, and liquor as a percentage of ~~total~~restaurant ~~revenues~~sales at the ~~Company’s~~Pizzeria ~~full~~Regina ~~service~~restaurants ~~casual~~was ~~dining~~16% in ~~restaurants~~fiscal ~~decreased~~2004 compared to 24 15% in fiscal 2003. ~~from~~The ~~26%~~increase inas ~~fiscal~~a ~~2002,~~percentage of restaurant sales was primarily due to ~~improved~~higher ~~cost~~cheese ~~controls~~costs.

The cost of food, beverages and liquor at the Pizzeria ~~Company’s~~Regina ~~full service casual dining~~ restaurants was $21,~~596~~741,000 in fiscal ~~2003~~ 2004 compared to $31,~~096~~666,000 in fiscal ~~2002~~2003. ~~This~~ The dollar ~~decrease~~increase was primarily due to ~~the~~higher cheese ~~reduction~~costs and increases in ~~the~~costs ~~amount~~from ofsuppliers in general, which were ~~product~~partially ~~sold~~offset ~~for~~by ~~fiscal~~the ~~2003~~Company’s ~~and~~lower inconsumption ~~part~~of these supplies due to lower ~~improved~~sales ~~cost~~from ~~control~~these ~~systems~~restaurants.

27The cost of food, beverages and liquor as a percentage of restaurant sales at the Company’s full service casual dining restaurants increased to 24% in fiscal 2004 from 23% in fiscal 2003. The increase as a percentage of restaurant sales was principally due to the increases in costs from suppliers in general.

~~Other~~The ~~Operating~~cost ~~Expenses~~of food, beverages and liquor at the Company’s full service casual dining restaurants was $2,028,000 in fiscal 2004 compared to $1,954,000 in fiscal 2003. The dollar increase was primarily due to increases in costs from suppliers in general.

~~Payroll Expenses. Payroll expenses as a percentage of total~~Other ~~revenues~~Operating ~~for all restaurants were 30% in fiscal 2003 compared to 31% in fiscal 2002.~~Expenses

Payroll ~~expenses~~Expenses. ~~for~~Payroll ~~all~~expenses ~~the~~as ~~restaurants~~a ~~were~~percentage ~~$6,860,000~~of intotal ~~fiscal~~revenues ~~2003~~for ~~compared~~all torestaurants ~~$7,424,000~~were in30% ~~fiscal 2002. The dollar decrease~~ in ~~payroll~~both ~~expenses~~fiscal ~~was~~2004 ~~primarily~~and ~~due to a reduction~~ in ~~hours~~fiscal ~~worked as a result of diminished sales, and improved labor efficiency~~2003.

Payroll expenses atfor all the ~~Pizzeria Regina~~ restaurants were $5,914,000 ~~25% of total revenues~~ in fiscal ~~2003~~2004 compared to ~~26%~~$5,811,000 ~~of total revenues~~ in fiscal ~~2002~~2003. The ~~decrease as~~dollar aincrease ~~percentage~~in ofpayroll ~~total~~expenses ~~revenues~~ was primarily ~~attributable~~due to ~~improved~~increased ~~labor~~employee incentives ~~efficiency~~and health benefit costs.

Payroll expenses at the Pizzeria Regina restaurants were ~~$2,893,000~~25% inof ~~fiscal~~restaurant ~~2003~~sales ~~compared to $3,041,000~~ in both fiscal ~~2002. This~~ ~~dollar~~2004 ~~decrease~~and ~~was primarily due to a reduction~~ in ~~man-hours as a result of diminished sales and improved labor~~fiscal ~~efficiency~~2003.

Payroll expenses at the ~~Company’s~~Pizzeria ~~full~~Regina ~~service~~restaurants ~~casual~~were ~~dining~~$2,798,000 ~~restaurants~~in ~~decreased~~fiscal to2004 ~~33%~~compared ofto ~~total~~$2,742,000 ~~revenues~~ in fiscal 2003. ~~from~~This ~~34%~~dollar ofincrease ~~total~~was ~~revenues~~primarily indue ~~fiscal~~to ~~2002.~~an ~~The~~increased ~~percentage~~cost ~~decrease~~in ~~was~~employee ~~primarily~~incentives ~~attributable~~and tohealth ~~improved labor efficiency~~benefits.

Payroll expenses at the Company’s full service casual dining restaurants ~~were~~was ~~$3,595,000~~32% inof ~~fiscal~~restaurant ~~2003~~sales ~~compared to $4,001,000~~ in ~~fiscal~~both ~~2002. This dollar~~fiscal ~~decrease~~2004 ~~was~~and ~~primarily due to a reduction~~ in ~~man-hours~~fiscal ~~due to diminished sales and improved labor efficiency~~2003.

Payroll expenses at the Company’s ~~Commissary~~full service casual dining restaurants were $~~372~~2,712,000 ~~for~~in fiscal ~~2003~~2004 as compared to $~~382~~2,698,000 in fiscal ~~2002~~2003. This dollar increase was primarily due to an increase in employee incentives and health benefit costs.

~~Other~~Payroll ~~Operating~~expenses ~~Expenses,~~at the Company’s Commissary ~~Exclusive~~were of$404,000 ~~Payroll~~for fiscal 2004 as compared to $371,000 in fiscal 2003.

Other Operating ~~operating expenses~~Expenses, ~~exclusive~~Exclusive of ~~payroll,~~ ~~were 30% of total revenues in fiscal 2003 compared to 29% in fiscal 2002~~Payroll. ~~The increase as a percentage of restaurant sales is a reflection of the reduced revenue base.~~

Other operating expenses, exclusive of ~~payroll~~ payroll, were ~~$6,710,000~~31% of total revenues in fiscal ~~2003~~2004 compared to ~~$6,869,000~~30% in fiscal ~~2002~~ 2003. ~~This~~ ~~dollar decrease is primarily~~The ~~due~~increase ~~to a reduction~~ in ~~costs~~operating asexpenses, ~~a result of diminished sales.~~

~~Other operating expenses, exclusive of payroll, from the Pizzeria Regina restaurants were 33% of total revenues in fiscal 2003 compared to 32% in fiscal~~25

28exclusive of payroll, as a percentage of total revenues was primarily due to the temporary closing of Faneuil Hall location, where the Company nonetheless continued to incur some of such costs without any corresponding revenue, to an increase in rent expense and to higher energy costs.

~~2002~~Other operating expenses, exclusive of payroll were $6,130,000 in fiscal 2004 compared to $5,855,000 in fiscal 2003. This ~~The~~dollar increase asis aprimarily ~~percentage~~attributable to the temporary closing of ~~restaurant~~the ~~sales~~Faneuil isHall alocation, ~~reflection~~where the Company nonetheless continued to incur some of such ~~the~~costs ~~reduced~~without any corresponding revenue, ~~base~~to an increase in rent expense and to higher energy costs.

Other operating expenses, exclusive of payroll, from the Pizzeria Regina restaurants were ~~$3,775,000~~33% inof ~~fiscal~~restaurant ~~2003~~sales in fiscal 2004 compared to ~~$3,798,000~~32% in fiscal ~~2002~~2003. ~~This~~ ~~dollar~~The ~~decrease~~increase as a percentage of sales was primarily attributable to the ~~result~~temporary closing of ~~diminished~~the ~~sales~~Faneuil Hall location, where the Company nonetheless continued to incur some of such costs without any corresponding revenue.

Other operating expenses, exclusive of payroll, from the ~~Company’s~~Pizzeria ~~full~~Regina ~~service~~restaurants ~~casual~~were ~~dining~~$3,624,000 ~~restaurants~~in ~~increased~~fiscal to2004 ~~26%~~compared ofto ~~total~~$3,567,000 ~~revenues~~ in fiscal 2003. ~~from~~This ~~25%~~dollar ofincrease ~~total~~was ~~revenues in fiscal 2002.~~primarily ~~The~~attributable ~~increase~~to asthe atemporary ~~percentage~~closing of ~~restaurant~~the ~~sales~~Faneuil isHall alocation ~~reflection~~which resulted ofin ~~the~~additional ~~reduced revenue~~operating ~~base~~expenses.

Other operating expenses, exclusive of payroll, from the Company’s full service casual dining restaurants ~~were~~increased to ~~$2,826,000~~28 % of total revenues in fiscal ~~2003~~2004 ~~compared~~from to25% ~~$2,958,000~~of total revenues in fiscal ~~2002~~ 2003. ~~This~~ ~~dollar~~The ~~decrease~~increase as a percentage of restaurant sales was primarily ~~attributable~~ attributable to ~~diminished~~an ~~sales~~increased rent expenses, higher energy costs and the reduction in same stores revenue.

Other operating expenses, ~~also~~exclusive ~~include~~of ~~commissary expenses~~payroll, ~~which~~from ~~were~~the Company’s full service casual dining restaurants were $~~109~~2,381,000 in fiscal ~~2003~~2004 ~~and~~compared to $~~107~~2,178,000 in fiscal 2003. The dollar ~~2002,~~increase ~~respectively,~~was ~~and~~primarily ~~franchise~~due ~~costs~~to ofa $6126,000 increase in ~~fiscal~~rent ~~2002~~expenses and to higher energy costs.

~~General~~Other operating expenses also include commissary expenses, which were $125,000 in fiscal 2004 and ~~Administrative~~$110,000 in fiscal ~~Expenses~~2003.

General and ~~administrative~~Administrative ~~expenses were 12% of total revenues in fiscal 2003 compared to 9% in fiscal 2002.~~Expenses

General and administrative expenses were 14% ~~$2,611,000~~of total revenues in fiscal ~~2003,~~2004 as compared to ~~$2,133,000~~13% in fiscal ~~2002~~2003. ~~Both the percentage and dollar increase were primarily attributable to consulting costs and employee incentives.~~

~~Depreciation~~General and ~~Amortization~~administrative expenses were ~~Expenses~~$2,739,000 in fiscal 2004, compared to $2,611,000 in fiscal 2003. The dollar increase were primarily attributable to consulting costs.

Depreciation and ~~amortization~~Amortization ~~expense was $1,057,000 in fiscal 2003, as compared to $1,153,000 in fiscal 2002, amounting to 5% of total revenues in both fiscal years.~~Expenses

~~Pre-Opening~~Depreciation ~~Costs~~and amortization expense was $930,000 in fiscal 2004, as compared to $922,000 in fiscal 2003, amounting to 5% of total revenues in both fiscal years.

Pre-opening expenses in fiscal 2003 were $9,000 compared to none in fiscal 2002. The pre-opening expenses were related to the new Cambridge, Massachusetts Polcari’s North End restaurant projected to open in the second quarter of fiscal 2004.26

~~Litigation and Settlement~~ Pre-Opening Costs

InPre-opening ~~1998~~expenses ~~the~~in ~~Company~~fiscal ~~formed~~2004 awere $77,000 ~~joint~~compared ~~venture~~to ~~with~~$0 in fiscal 2003. The pre-opening expenses which consisted ~~Italian~~of ~~Ventures~~labor, ~~LLC~~advertising, arent and training materials were related to the new Pizzeria Regina restaurant at the Prudential Center in Boston, Massachusetts and the planned opening of the new Pizzeria Regina restaurant at South Station in Boston, Massachusetts.

29Litigation and Settlement Credits

In 1998 the Company formed a joint venture with Italian Ventures, LLC, a Kentucky limited liability company (“Italian Ventures”), and entered into a development agreement with it. ~~Approximately~~ Approximately eight months after the joint venture and development agreement were entered into, the Company filed a lawsuit against Italian Ventures and certain related parties seeking dissolution of the joint venture. In fiscal 2001, the Company reached a settlement of the dispute with Italian Ventures, LLC in which it agreed to pay royalties on future revenues from certain “Bistro restaurants”, as defined in the settlement agreement. The Company accrued a liability of $955,000 in the fourth quarter of fiscal 2001 as the estimated cost of the obligation to pay the future royalties, based upon a forecast of Bistro restaurant gross sales for the period May 2001 through April 2008 using historical information and estimates of growth of existing Bistro units, as well as anticipated future Bistro unit openings and closings. In the fourth quarter of fiscal 2003, the Company ~~reviewed~~reduced the accrual by $443,000 to reflect the Company’s revised estimate of ~~future~~its remaining obligation under the settlement ~~royalties~~agreement ~~based~~with ~~upon~~Italian ~~changes~~Ventures. inIn ~~anticipated~~2004, ~~future~~the ~~growth~~Company experienced the opening of ~~existing~~an ~~Bistro~~under performing Polcari’s in Cambridge, Massachusetts which caused the ~~unit~~Company ~~sales~~to ~~and~~reassess ~~future~~its ~~Bistro~~expansion ~~unit~~plans ~~openings~~due ~~and~~to ~~closings.~~financial constraints. As a result ~~the~~of ~~amount~~this reassessment in fiscal of2004 the amount of accrual was reduced by $~~443~~246,000 to $~~524~~258,000 to reflect the Company’s revised ~~estimate~~ estimates of ~~its~~the remaining ~~obligation~~obligations under the settlement agreement with Italian Ventures.

~~Interest Expense and Interest~~Other Income

~~Interest~~Other ~~expense~~income ~~decreased~~was to $~~410~~222,000 in fiscal ~~2003,~~ 2004 compared to $~~508~~9,000 in fiscal ~~2002~~2003. ~~This~~ ~~decrease~~The ~~was~~increase ~~primarily~~in ~~due~~other toincome ais ~~decrease~~attributable into ~~interest~~insurance ~~expense~~proceeds ~~under~~of ~~the~~$184,000 ~~Company’s~~related ~~credit~~to ~~facility and~~ the ~~expiration~~temporary closing of the ~~some~~Faneuil ~~equipment~~Hall ~~leases~~Pizzeria Regina.

Interest ~~income was $3,000 in fiscal 2003 as~~ ~~compared~~Expense toand $0Interest ~~in fiscal 2002.~~Income

~~LIQUIDITY~~Interest ~~AND~~expense ~~CAPITAL~~increased ~~RESOURCES~~to $496,000 in fiscal 2004, compared to $381,000 in fiscal 2003. This increase was primarily due to a increase in interest expense under the Company’s credit facility.

~~Our~~Interest ~~primary~~income ~~sources~~was ~~of funding during fiscal 2004 were cash provided by operations and borrowings under a~~ $3,~~500,~~000 ~~credit facility~~in ~~with~~both ~~Commerce~~fiscal 2004 ~~Bank~~ and ~~Trust~~fiscal ~~Company entered into April 30,~~ 2002 ~~(the “Credit Facility”)~~.

At April 25, 2004, the Company had a working capital deficit of $4,304,000 compared to a deficit of $372,000 at the end of fiscal 2003, and cash and cash equivalents of approximately $652,000, compared to $1,107,000 at the end of fiscal 2003. The principal reasons for the increase in the working capital deficit were the reclassification of the bank debt and the loss incurred in fiscal 2004. The Company’s financial condition and growth will be dependent upon obtaining adequate additional financing until profitable operations are achievable. The Company cannot guarantee that it will be successful in obtaining additional financing.27

~~On April 30, 2002, the Company entered into~~Discontinued ~~its $3,500,000 Credit Facility~~Operations

30The loss from discontinued operations was $3,336,000 in fiscal 2004, compared to income of $40,000 in fiscal 2003. In fiscal 2004, the loss from discontinued operations represents operating losses from the Polcari’s bistro restaurant in Hyannis, Massachusetts, the Pizzeria Regina in Richmond, Virginia, and the Polcari’s North End restaurant in Cambridge, Massachusetts, which includes an impairment charge of $2,163,000.

~~with Commerce Bank and Trust Company.~~ The ~~Credit Facility has permitted the~~ Company to ~~borrow~~reviewed ~~amounts to pay~~ the ~~costs~~carrying ~~for~~value ~~new restaurant openings and repay over a fixed term~~ of ~~either~~its ~~four~~long orlived ~~five~~assets ~~years.~~ and ~~Each~~noted ~~borrowing~~that ~~under~~ the ~~Credit~~expected ~~Facility~~future ~~bears~~cash ~~interest~~flows atfor ~~the~~this ~~bank’s base~~location ~~rate~~were ~~plus~~not ~~1.75% until the conversion date, subject to an annual adjustment~~sufficient to ~~the~~recover ~~bank’s then current base rate plus 2.0%. The Company borrowed $922,000 under~~ the ~~Credit~~recorded ~~Facility~~carrying ~~on April 30,~~value ~~2002 to pay off the prior bank facility. The note for that borrowing bore interest at 6.75% for the first year, 6.25% as~~ of ~~April 30,~~long-lived ~~2003 and 7.25% as of April 25, 2004 and is payable over four years. All borrowings under the Credit Facility are collateralized by substantially all of the~~ assets ofat ~~the~~this ~~Company and are subject to various financial covenants~~location. OnThe ~~June 6, 2003, the~~ Company ~~committed to~~recognized ~~borrow~~ an impairment ~~additional~~charge ~~$2.5 million under the Credit Facility~~ to ~~finance~~reduce the ~~costs~~ ofcarrying ~~the~~value ~~new Cambridge, MA Polcari’s North End restaurant. The note for that borrowing has a term~~ of ~~five~~ ~~years~~long ~~and~~lived ~~currently~~assets ~~bears interest~~ at ~~7% for the first year~~this location. On The ~~February 13, 2004 the~~ Company ~~committed~~ torecognized ~~borrow~~ an impairment ~~additional~~charge ~~$535,000 under the Credit Facility~~ to ~~partially~~ ~~finance~~reduce the ~~cost~~carrying ofvalue ~~opening two new Pizzeria Regina Kiosks. As~~ of ~~April 25,~~leasehold ~~2004~~improvements the Company was not in compliance with the certain financial covenants of the Credit Facility. However, Commerce Bank and Trust Company waived the covenants for the quarterly fiscal period ended January 25, 2004 and for fiscal year ended April 25, 2004 in exchange for a 1% waiver fee, a modification of the interest rate on all outstanding notes issued under the Credit Agreement from the current 6% to ~~7% per annum until the first quarter in~~ ~~which~~zero ~~the Company is once again in compliance with all financial covenants,~~ and ~~the~~ ~~grant~~restaurant toequipment ~~the bank of a six year warrant~~ to ~~purchase~~an ~~76,000~~estimated ~~shares~~fair ofmarket ~~the Company’s~~value ~~common~~based ~~stock~~on ~~at a price of $.50 per share. Subject to certain exceptions pursuant to which~~ the ~~warrant will be exercisable earlier, the warrant is not exercisable~~ ~~until~~estimated ~~February 13,~~residual ~~2005.~~value ~~In August 2004, in exchange for the establishment~~ of ~~new financial covenants for fiscal year 2005,~~ the ~~bank waived the covenants for the first quarter of fiscal year 2005~~equipment. Because of the Company’s uncertainty regarding its ability to satisfy these covenants, all bank debt has been reclassified as current on the balance sheet for year ended April 25, 2004. If the Company fails to comply with these covenants, the bank debt would be due on demand.

~~During~~In fiscal ~~2004,~~2003 the ~~Company~~income ~~had~~from adiscontinued ~~net~~operations ~~decrease~~relate to inPolcari’s ~~cash~~bistro ~~and~~restaurant ~~cash~~in ~~equivalents~~Hyannis, ~~of $455~~Massachusetts,~~000,~~ ~~reflecting~~the ~~net~~Pizzeria ~~cash provided by~~Regina ~~operating~~restaurant ~~activities~~in ~~of $136~~Richmond,~~000,~~ ~~net cash used for investing activities of $3~~Virginia,~~040,000~~ and ~~net~~the ~~cash~~Polcari’s ~~provided~~North byEnd ~~financing~~restaurant ~~activities of $2~~in Cambridge,~~449,000~~ Massachusetts.

~~Net cash provided by operating activities of~~LIQUIDITY ~~$136,000~~AND ~~included~~CAPITAL depreciation and amortization expense of $1,231,000, warrants granted in exchange for the bank’s waiver of $30,000, a charge for an asset impairment of $2,163,000, an increase in accounts payable of $478,000, an increase of accrued expenses of $97,000 and an increase of deferred rent of $105,000. This was partially offset by a net loss of $3,437,000, an increase in accounts receivables of $33,000, an increase of inventories of $195,000, an increase of prepaid expenses of $27,000, an increase of other assets of $18,000, a decrease in other long-term liabilities of $9,000 and a reduction of the litigationRESOURCES

31Our primary sources of funding during fiscal 2005 were cash provided by operations, the disposition of assets relating to the Company’s discontinued operations and the issuance of Preferred Stock.

~~settlement~~On ofJanuary ~~$246~~20,~~000. Net~~ ~~cash~~2005 ~~used for investing activities of $3,040,000 reflects capital expenditures associated with~~ the ~~new~~Company ~~Cambridge, Massachusetts~~completed ~~Polcari’s North End restaurant,~~ the ~~new Pizzeria Regina at the~~ ~~Prudential~~private ~~Center~~placement intransaction ~~Boston,~~of ~~Massachusetts~~1, ~~the new Pizzeria Regina at South Station in Boston~~147,056 ~~Massachusetts~~of ~~and~~Preferred ~~various~~Stock ~~other~~with ~~Pizzeria~~a ~~Regina restaurants~~purchase ~~and~~price ~~Polcari’s~~of ~~North End bistro restaurants~~$. ~~Net~~85 ~~cash~~per ~~provided~~share byresulting ~~financing~~in ~~activities~~approximately of $2975,~~449,~~000 ~~consisted~~ of ~~proceeds~~ ~~from~~equity ~~the Credit Facility partially offset by net repayments~~ for ~~long-term~~ ~~debt, capital lease obligations and stockholder loans~~the Company.

AtOn April 25 21, ~~2004~~2005, the Company ~~had~~entered ~~current~~into a ~~liabilities~~new of $62,~~056~~300,000, ~~including~~Credit ~~$1,059,000~~Facility ofwith ~~accounts~~Commerce ~~payable,~~Bank and Trust Company. This Credit Facility consists of a $1,~~417~~500,000 of ~~accrued~~4 ~~expenses~~year ~~and~~term ~~current~~note ~~maturities~~bearing ofinterest ~~long~~at prime ~~term~~plus ~~obligations~~2% inand ~~the amount~~an of $3800,~~581,~~000 mortgage at a fixed rate of 7%. At ~~April 25,~~This facility is ~~2004,~~secured by all of the ~~Company~~assets ~~had~~of ~~long-term~~the ~~obligations,~~Company. ~~less~~The ~~current~~Company ~~maturities,~~was in ~~the~~compliance with ~~amount~~the ofbank $2covenants for fiscal year ended April 24,~~353,000,~~ ~~including~~2005. ~~$89,000~~ The proceeds of ~~notes~~the ~~payable~~Credit Facility were used to aretire ~~stockholder,~~all ~~$62,000~~prior ~~due~~existing ~~under~~debt with Commerce Bank and Trust Company. During April 2005, the ~~capital~~Company ~~lease~~completed the ~~obligations,~~asset ~~$1,450,000~~sale of ~~convertible~~Polcari’s ~~subordinated~~of ~~debentures~~Hyannis, Massachusetts for approximately $~~501~~552,000 of ~~deferred~~net ~~rent,~~proceeds. The ~~and~~Company ~~$251,000~~believes ofthat ~~other~~income ~~long-term~~and ~~liabilities~~cash flow ~~primarily~~for ~~related~~operations will be sufficient to meet the ~~litigation~~Company’s ~~settlement~~financial requirements ~~agreement~~for ~~with~~the ~~Italian~~next ~~Ventures,~~twelve ~~LLC~~months.

~~The opinion~~At ofApril ~~BDO~~24, ~~Seidman~~2005, ~~LLP on~~ the Company’s ~~fiscal~~had ~~2004~~a ~~financial statement~~working ~~included~~capital andeficit ~~explanatory~~of ~~paragraph~~$1,339,000 ~~expressing~~compared ~~concern about the Company’s ability~~ to ~~continue as~~ a ~~going~~deficit ~~concern. In addition, because~~ of ~~the Company’s concern regarding its ability to satisfy bank financial covenants, all bank debt totaling approximately~~ $34,~~200~~304,000 ~~has~~at ~~been reclassified as current in~~ the ~~balance~~end ~~sheet for year ended~~of ~~April 25,~~fiscal 2004~~. If the Company fails to comply with these covenants~~, ~~the bank debt could be due on demand. The Company’s financial condition~~ and ~~compliance~~cash ~~with the bank covenants will be substantially dependent upon obtaining adequate additional financing~~ and ~~achieving~~ lcash ~~profitable~~equivalents ~~operations. The Company~~of ~~cannot~~approximately ~~guarantee that it will be able to raise the necessary capital to continue in operation or that it will be able to achieve profitable operations. In addition~~$687,000, ~~the Company may~~compared ~~be forced~~ to ~~restructure its operations by closing the Polcari’s restaurant in Cambridge~~$652,000 ~~Massachusetts,~~at ~~selling that business or its assets, and/or subleasing~~ the ~~premises~~end of ~~that~~fiscal ~~restaurant~~2004. ~~Public~~ ~~financing~~The ~~would~~principal bereasons ~~subject~~for tothe ~~market conditions and other~~larger ~~uncertainties,~~working ~~and~~capital nodeficit ~~assurance~~in ~~can~~fiscal be2004 ~~given~~were ~~that~~ the ~~Company~~classification ~~could~~of ~~obtain public~~the ~~financing~~bank ~~at any time. Either~~debt ~~public~~as orcurrent ~~private~~due ~~equity~~to ~~financing~~covenant ~~would~~violations ~~likely~~at ~~result~~the inend ~~dilution~~ of ~~the Company’s~~fiscal ~~existing stockholders.~~

3228

~~Loss~~2004 and the larger loss incurred in fiscal 2004. For the year ended April 24, 2005, the Company has sustained net losses of approximately ~~Impairment~~$429,000. As of ~~Long~~that ~~Lived~~date, ~~Assets~~the Company had a stockholders’ deficit of $164,000 as compared to a deficit of $669,000 at the end of fiscal 2004.

~~The Company recorded an impairment charge of~~ During ~~$2,163,000 in the fourth quarter of~~ fiscal ~~2004~~2005, ~~which is included in~~ the ~~consolidated statements of operations related to the write-down of certain long-lived assets. The~~ Company ~~reviewed~~had ~~the carrying~~a ~~value~~net ofincrease ~~its~~in ~~long-lived~~cash ~~assets~~ and ~~noted that the expected future~~ cash ~~flows~~ ~~for~~equivalents ~~the Polcari’s North End in Cambridge~~of $35,000, ~~Massachusetts~~reflecting ~~were not~~net ~~sufficient~~cash toprovided ~~recover~~by ~~the~~operating ~~recorded carrying~~activities ~~value~~ of ~~long-lived assets at that location. Accordingly~~$651,000, ~~the~~net ~~Company~~cash ~~recognized~~used anfor ~~impairment~~investing ~~charge~~activities ~~to reduce the carrying value~~ of ~~leasehold~~ ~~improvements~~$250,000 ~~to zero~~ and ~~restaurant~~net ~~equipment~~cash toused anfor ~~estimated fair~~by ~~market~~financing ~~value~~activities of $366,000.

~~Contractual~~Net ~~Obligations~~cash provided by operating activities of $650,000 included depreciation and amortization expense of $1,103,000, warrants granted in exchange for the stockholder loan of $8,000, an increase of accrued expenses of $314,000 a decrease in accounts receivable of $29,000, a decrease in inventories of $139,000, and a decrease in prepaid expenses of $33,000. This was partially offset by a net loss of $429,000, an increase of other assets of $20,000, a decrease in other long-term liabilities of $18,000 a decrease in deferred rent of $134,000, a decrease in accounts payable of $277,000 and a reduction of the litigation settlement of $98,000. Net cash used for investing activities of $250,000 reflects capital expenditures associated with the new Pizzeria Regina at the Prudential Center in Boston, Massachusetts, the new Pizzeria Regina at South Station in Boston, Massachusetts and various other Pizzeria Regina restaurants and Polcari’s North End bistro restaurants partially offset by the asset sale of Polcari’s of Haynnis, Massachusetts. Net cash used for financing activities of $366,000 consisted of proceeds from the Credit Facility and, the preferred stock subscription, and sale of assets partially offset by net repayments for long-term debt, capital lease obligations and stockholder loans.

~~The~~At April 24, 2005, the Company ~~has~~had current liabilities of $2,924,000, including $715,000 of accounts payable, $1,607,000 of accrued expenses, current maturities of long- term ~~contractual~~ obligations ~~primarily~~ in the ~~form~~ amount of ~~leases~~$391,000 and ~~debt~~current ~~obligations~~liabilities for discontinued operations of $211,000. ~~The~~ ~~following~~At April ~~table~~24, ~~summarizes~~2005, the Company~~’s contractual~~ ~~obligations~~had ~~and~~long-term ~~their~~obligations, ~~aggregate~~less current maturities, in asthe amount of ~~April 25~~$3, ~~2004.~~981,000, ~~(See~~including ~~discussions~~$82,000 of ~~cash~~notes ~~flows~~payable to a stockholder, ~~financial~~$1,947,000 ~~position~~due ~~and~~under ~~capital~~its ~~resources~~credit facility with Commerce Bank and asTrust ~~well~~Company, as$1,450,000 ~~the~~of ~~Notes~~convertible tosubordinated ~~the~~debentures, ~~April 25~~$367,000 ~~2004~~of deferred ~~consolidated~~rent, ~~financial~~and $135,000 of other long-term liabilities primarily related to ~~statements~~the ~~for~~litigation ~~further~~settlement ~~details)~~agreement with Italian Ventures, LLC.

Contractual Obligations	Total		Less than 1 year		1-3 years	3-5 years	More than 5 years
Long term debt obligations (1)	$	4,833,158	$	3,383,158	—	—	$	1,450,000
Capital lease obligations (2)	253,687		191,847		61,840	—	—
Operating lease obligations	19,089,730		3,436,742		5,919,636	4,663,883	5,069,469
Purchase obligations	—		—		—	—	—
Shareholder Note (3)	94,964		6,114		13,155	14,440	61,255
Total	24,271,539		7,017,861		5,994,631	4,678,323	6,580,724

The Company has no additional significant capital commitments in fiscal 2006. The Company believes that its existing resources, including its loan facility, together with cash flow generated from operations, will be sufficient to fund its cash flow requirements and maintain debt covenant compliance for the next twelve months. However, the Company’s growth will be dependent upon obtaining additional financing. There can be no assurance that any future additional financing will be available on commercially reasonable terms, or at all, and the success or lack of success of the Company’s restaurants opened within the last year and planned to be opened in the future may have a critical effect on the Company’s ability to raise funds through the sale of stock or otherwise.

~~(1) Consists principally of bank borrowings under the Credit Facility and the $1,450,000 principal amount of long term convertible debentures.~~29

~~(2) Consists principally of equipment leases.~~Contractual Obligations

~~(3)~~The ~~Consists~~Company ~~principally~~has long-term contractual obligations primarily in the form of ~~shareholder~~leases ~~note~~and debt obligations. The following table summarizes the Company’s contractual obligations and their aggregate maturities as of April 24, 2005. (See discussions of cash flows, financial position and capital resources as well as the Notes to the April 24, 2005 consolidated financial statements for further details).

The Company requires cash to pay its operating expenses and to service the obligations listed above. The Company’s principal sources of funds are its operations. The Company cannot guarantee that its operations will generate cash in future periods.

Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long term debt obligations (1)	$	3,750,000	$	353,396	$	793,720	$	1,152,884	$	1,450,000
Capital lease obligations (2)	31,152		31,152		—		—		—
Operating lease obligations	14,041,249		2,850,575		5,001,633		3,479,641		2,709,400
Purchase obligations	—		—		—		—		—
Shareholder Note (3)	88,850		6,420		13,785		15,123		53,522
Total	17,911,251		3,241,543		5,809,138		4,647,648		4,212,922

33(1) Consists principally of bank borrowings under the Credit Facility and the $1,450,000 principal amount of long term convertible debentures.

~~The Credit Facility requires compliance with~~(2) Consists ~~various~~principally ~~financial covenants,~~ of ~~which~~equipment ~~the most restrictive are cash to debt ratio and profitability~~leases. If the Company defaults under any of the provisions of the Credit Facility, all amounts outstanding under each of the term facilities become due and payable, and the bank may proceed against its collateral, which includes substantially all of the Company’s assets. As of April 25, 2004 the Company was not in compliance with certain financial covenants of the Credit Facility. However, Commerce Bank and Trust Company waived the covenants violations for the quarterly fiscal period ended January 25, 2004 and for fiscal year ended 2004 in exchange for a 1% waiver fee, a modification of the interest rate on all outstanding notes issued under the Credit Agreement from the current 6% to 7% per annum until the first quarter in which the Company is once again in compliance with all financial covenants, and the grant to the bank of a six year warrant to purchase 76,000 shares of the Company’s common stock at a price of $.50 per share. Subject to certain exceptions pursuant to which the warrant will be exercisable earlier, the warrant is not exercisable until February 13, 2005. In August 2004, in exchange for the establishment of new financial covenants for fiscal year 2005, the bank waived the covenants for the first quarter of fiscal year 2005. Because of the Company’s uncertainty regarding its ability to satisfy these covenants, all bank debt has been reclassified as current on the balance sheet for year ended April 25, 2004. If the Company fails to comply with these covenants, the bank debt would be due on demand.

~~CRITICAL~~(3) Consists principally ~~ACCOUNTING~~of ~~POLICIES~~shareholder note.

The Company ~~considers~~ ~~its~~requires ~~accounting~~cash ~~policies~~to ~~with~~pay ~~respect~~its operating expenses and to service the ~~use~~obligations listed above. The Company’s principal sources of funds are its operations. The Company cannot guarantee that its operations will generate cash in future periods.

~~estimates~~The Credit Facility requires compliance with various financial covenants, ~~long-lived~~of ~~assets~~which the most restrictive are cash to debt ratio and ~~goodwill~~profitability. If the Company defaults under any of the provisions of the Credit Facility, all amounts outstanding under each of the term facilities ~~and~~become ~~revenue~~due ~~recognition~~and aspayable, and the ~~most~~bank ~~critical~~may toproceed against its ~~results~~collateral, which includes substantially all of ~~operations~~the ~~and~~Company’s assets. As of April 24, 2005 the Company was in compliance with the financial ~~condition~~covenants of the Credit Facility.

~~Use~~CRITICAL ofACCOUNTING ~~Estimates~~POLICIES

The ~~preparation~~Company ~~of financial~~considers ~~statements~~its inaccounting ~~conformity~~ policies with ~~generally~~respect ~~accepted accounting principles requires management~~ to ~~make estimates and assumptions that affect~~ the ~~reported~~use ~~amounts~~ of ~~assets and liabilities~~estimates, ~~and~~long-lived ~~disclosure of contingent~~ assets and ~~liabilities at the date of the financial statements~~goodwill, and ~~reported~~ ~~amounts~~revenue ofrecognition ~~revenues~~as ~~and~~the ~~expenses~~most ~~during~~critical ~~the~~to ~~reporting~~its ~~period. Actual~~ results ~~could differ from those estimates. For example, in fiscal 2001 the Company recorded a non-recurring charge for a litigation settlement agreement. This estimate was based on projected sales~~ of ~~current~~operations and ~~future bistro restaurants, which assumed the~~ ~~number~~financial ~~and timing of new Bistro Restaurants as defined in the settlement agreement~~condition. ~~The actual royalty payments ultimately required to be paid may vary significantly from both the Company’s original and its revised estimates.~~

3430

~~Long-Lived~~Use ~~Assets~~of Estimates

The ~~Company~~preparation ~~evaluates~~of ~~its~~financial statements in ~~long-lived~~conformity ~~assets~~with ~~under~~generally accepted accounting principles in the ~~provisions~~United States of ~~Statement~~America ofrequires ~~Financial~~management ~~Accounting Standards~~to ~~No. 144~~make ~~(“SFAS~~estimates ~~No. 144”).~~ and assumptions that affect ~~SFAS~~the ~~No. 144~~reported ~~establishes~~amounts ~~accounting~~of ~~standards~~assets ~~for~~and ~~the~~liabilities, ~~impairment~~and disclosure of ~~long-lived~~ contingent assets and ~~certain~~liabilities ~~identifiable~~at ~~intangibles~~the todate beof ~~held~~the financial statements, and ~~used~~reported amounts of revenues and expenses during the reporting period. Actual results ~~for~~could ~~long~~differ from those estimates. For example, in fiscal 2001 the Company recorded a non-~~lived~~recurring ~~assets~~charge for a litigation settlement agreement. This estimate was based on projected sales of current and future bistro restaurants, which assumed the number and ~~certain~~timing ~~identifiable~~of ~~intangibles~~new toBistro beRestaurants ~~disposed~~as defined in the settlement agreement as demonstrated by our discussion of the this accrual in our results of operations. The actual royalty payments ultimately required to be paid may vary significantly from both the Company’s original and its revised estimates.

~~Whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable, the Company reviews the carrying values of its long~~Long-~~lived and~~Lived identifiable intangible assets for possible impairment, as appropriate. In fiscal 2004, the Company recorded an impairment charge of $2,163,000 related to the write-down of certain long-lived assets. The Company determined that the future cash flows which the Company estimated would be received from Polcari’s North End located in Cambridge, Massachusetts would not be sufficient to recover the recorded carrying value of the long-lived assets applicable to that location.Assets

~~Goodwill~~The Company evaluates its long-lived assets under the provisions of Statement of Financial Accounting Standards No. 144 (“SFAS No. 144”). SFAS No. 144 establishes accounting standards for the impairment of long-lived assets and certain identifiable intangibles to be held and used and for long-lived assets, and certain identifiable intangibles to be disposed of.

~~Goodwill~~Whenever ~~resulting from~~events ~~the~~or ~~excess~~changes ofin ~~cost~~circumstances indicate ~~over~~that ~~fair~~the ~~value~~carrying amounts of ~~net~~the assets ~~acquired~~may isnot ~~being~~be ~~tested~~recoverable, the ~~for~~Company ~~impairment~~reviews ~~in accordance with~~ the ~~guidelines~~carrying invalues ~~SFAS~~of ~~No.~~its ~~142. SFAS~~long-lived ~~No.~~and ~~142~~identifiable intangible ~~requires~~assets ~~among~~for ~~other~~possible ~~things~~impairment, ~~that~~ ~~companies~~as noappropriate. ~~longer~~In ~~amortize~~fiscal ~~goodwill~~2004, ~~but~~the Company ~~test~~recorded ~~goodwill~~an ~~for~~ impairment ~~at least~~charge ~~annually. As~~ of ~~April 27~~$2, ~~2003~~163,000, ~~the~~included ~~Company’s~~in ~~goodwill of $453~~discontinued operations,~~643~~ ~~was~~related ~~associated~~to ~~with~~ the ~~acquisition~~write-down of ~~Capucino’s,~~ ~~Inc.~~certain inlong-lived ~~1994~~assets. No ~~adjustment~~The Company todetermined that the ~~$453,643~~future ~~balance~~cash offlows ~~goodwill~~which ~~was~~the ~~deemed~~Company ~~necessary~~estimated ~~during~~would ~~the year~~be ~~ended April 25,~~received ~~2004. Prior~~from toPolcari’s ~~the~~North ~~adoption~~End oflocated ~~SFAS~~in ~~142~~Cambridge, ~~the Company~~Massachusetts ~~amortized~~would ~~goodwill~~not be ~~over~~sufficient ~~twenty~~to ~~years,~~recover ~~which~~the ~~resulted~~recorded incarrying ~~amortization~~value of ~~$37,806~~ inthe ~~both~~long-lived ~~2002~~assets applicable ~~and~~to ~~2001~~that location.

~~Revenue Recognition~~Goodwill

~~Substantially~~Goodwill ~~all~~resulting from the excess of cost ~~restaurant~~over ~~sales~~fair ~~represent~~value ~~retail~~of ~~sales~~net toassets acquired is being tested for impairment in accordance with the ~~general~~guidelines ~~public~~in ~~through~~SFAS No. 142. SFAS No. 142 requires among other things, that companies no longer amortize goodwill but test goodwill for impairment at least annually. As of April 27, 2003, the Company~~-owned~~’s ~~restaurants~~goodwill of $453,643 was associated with the acquisition of Capucino’s, Inc. ~~Such~~ ~~amounts~~in 1994. No ~~are~~adjustment ~~recognized~~to asthe ~~revenue~~$453,643 atbalance of goodwill was deemed necessary during the year ~~point~~ended April 24, 2005. Prior to the adoption of ~~sale~~SFAS 142, the Company amortized goodwill over twenty years, which resulted in amortization of $37,806 in both 2002 and 2001.

Franchise fees resulting from the sale of individual franchise locations are recognized as revenue upon the commencement of franchise operations. Revenues from the sale of area development rights are recognized proportionately as the franchised restaurants commence operations. Franchise royalties, which are based on a percentage of franchised restaurants’ sales are recognized when revenue is earned.31

35Revenue Recognition

~~Recently~~Substantially all restaurant sales represent ~~Issued~~retail ~~Accounting~~sales ~~Standards~~to the general public through Company-owned restaurants. Such amounts are recognized as revenue at the point of sale.

~~In April 2003,~~Franchise ~~the~~fees ~~FASB~~resulting ~~issued~~from ~~SFAS~~the ~~No.~~sale ~~149, “Amendment~~ of ~~Statement 133 on~~ ~~Derivative~~individual ~~Instruments~~franchise ~~and~~locations ~~Hedging~~are ~~Activities”. SFAS~~recognized ~~No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to~~ as ~~derivatives)~~revenue ~~and~~upon ~~for~~the ~~hedging activities under SFAS~~commencement ~~No.~~of ~~133. SFAS~~franchise Nooperations. ~~149~~Revenues isfrom ~~effective~~the ~~for~~sale ~~contracts~~of ~~entered~~area ~~into~~development orrights ~~modified~~are ~~after~~recognized ~~June 30,~~proportionately ~~2003,~~as ~~and~~the ~~hedging~~franchised ~~relations~~restaurants ~~designated~~commence ~~after June 30, 2003, except for those provisions of SFAS No~~operations. ~~149 which relate to SFAS No. 133~~ ~~implementation~~Franchise ~~issues that have been effective for fiscal quarters that began prior to June 15~~royalties, ~~2003. For~~which ~~those issues, the provisions that~~ are ~~currently~~ inbased ~~effect~~on ~~should~~a ~~continue~~percentage ~~to be applied in accordance with their respective effective dates. In addition, certain provisions~~ of ~~SFAS~~franchised ~~No.~~restaurants’ ~~149, which relate to forward purchases or~~ sales ofare recognized when~~-issued~~ ~~securities~~revenue ~~or other~~is ~~securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after June 30, 2003~~earned. ~~The adoption of SFAS No. 149 did not have a material effect on the Company’s financial statements.~~

InRecently ~~May 2003, the~~Issued ~~FASB issued SFAS No. 150, “~~Accounting for Certain Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires that an issuer classify a financial instrument that is within the scope of SFAS No. 150 as a liability. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective beginning September 1, 2003. The adoption of SFAS No. 150 did not have a material effect on the Company’s financial statements.Standards

~~ITEM~~In 7ADecember 2004, the FASB revised SFAS No. ~~QUANTITATIVE~~ 123, Share Based Payment, or SFAS No. 123R. ~~AND~~SFAS ~~QUALITATIVE~~No. ~~DISCLOSURE~~123R ~~ABOUT~~supersedes ~~MARKET~~APB ~~RISKS~~Opinion No. 25, Accounting for Stock Issued to Employees, and amends Statement No. 95, Statement of Cash Flows. Under SFAS No. 123R, companies must calculate and record in the income statement the cost of equity instruments, such as stock options, awarded to employees for services received. The cost of the equity instruments is to be measured based on the fair value of the instruments on the date they are granted and is required to be recognized over the period during which the employees are required to provide services in exchange for the equity instruments. SFAS No. 123R is effective for the Company commencing in fiscal year 2007.

~~Interest~~The adoption of SFAS No. 123R is expected to ~~Rate~~have ~~Risk~~a significant impact on the Company’s financial statements. The impact of adopting SFAS No. 123R cannot be accurately estimated at this time, as it will depend on the market value and the amount of share-based awards granted in future periods.

WeIn ~~have~~November ~~exposure~~2004, tothe ~~interest~~Financial ~~rate~~Accounting ~~risk related to~~Standards ~~certain~~Board, ~~instruments~~or ~~entered~~the ~~into~~FASB, ~~for~~issued ~~other~~SFAS ~~than trading purposes~~No. ~~Specifically~~ 151, ~~borrowings~~Inventory ~~under~~Costs, ~~the Credit Facility~~An ~~described~~Amendment inof ~~Item~~ARB. 7No. ~~bear~~43, ~~interest~~Chapter at4. aSFAS ~~variable~~No. ~~rate~~151 ~~based~~clarifies ~~on the bank’s prime~~that ~~rate.~~abnormal Aamounts ~~100 basis~~of ~~point~~idle ~~change~~facility inexpense, ~~the~~freight, ~~Credit~~handling ~~Facility~~costs ~~interest~~and ~~rate~~waste ~~(approximately~~materials 7%should atbe ~~April 25,~~recognized ~~2004)~~as ~~would~~current ~~cause~~period ~~the~~charges ~~interest~~in ~~expense for~~all ~~fiscal 2005 to change by approximately $34,000~~circumstances. The ~~This~~Company ~~computation~~ is ~~determined~~required byto ~~considering~~adopt ~~the~~SFAS ~~impact~~No. 151 ~~of hypothetical interest rates~~ on ~~our~~May ~~variable long-term debt at April 25~~1, ~~2004~~2006. We ~~However,~~do ~~the~~not ~~nature~~expect ~~and~~the ~~amount~~adoptions of ~~our borrowings~~SFAS ~~under~~No. ~~the~~151 ~~Credit~~to ~~Facility~~have ~~may vary as~~ a ~~result~~material ofimpact on ~~future~~our ~~business requirements~~financial position, ~~market~~results ~~conditions~~of ~~covenant~~operations ~~compliance~~or ~~and~~cash ~~other factors~~flow.

~~Our other outstanding long-term debt bears fixed rates of interest. The~~32

36ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS.

~~Company~~Interest ~~believes~~Rate ~~there is no material exposure to a market interest rate risk that could affect future results of operations or financial conditions~~Risk.

~~Commodity~~We ~~Price~~have ~~Risk~~exposure to interest rate risk related to certain instruments entered into for other than trading purposes. Specifically, borrowings under the Credit Facility described in Item 7 bear interest at a variable rate based on the bank’s prime rate. A 100 basis point change in the Credit Facility interest rate (approximately 7.75% at April 24, 2005) would cause the interest expense for fiscal 2005 to change by approximately $15,000. This computation is determined by considering the impact of hypothetical interest rates on our variable long-term debt at April 24, 2005. However, the nature and amount of our borrowings under the Credit Facility may vary as a result of future business requirements, market conditions covenant compliance and other factors.

Many of the food products and other operating essentials purchased by us are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors that are beyond our control. Our supplies and raw materials are available from several sources and we are not dependent upon any single source for these items. The Company negotiates directly with wholesale suppliers of certain high volume food ingredients such as cheese, tomato sauce, and flour to ensure consistent quality and competitive pricing. These ingredients are then purchased for the Company by a third party independent distributor at the negotiated price and redistributed to the Company’s restaurants. All other ~~food~~outstanding ~~ingredients~~long-term ~~and~~debt ~~beverage~~bears ~~products~~fixed ~~are~~rates ~~purchased directly by the general manager~~ of ~~each restaurant in accordance with corporate guidelines~~interest. ~~Certain~~ ~~significant items that could be subject to price fluctuations are cheese and flour products.~~ The Company believes ~~that~~there itis ~~will~~no bematerial ~~able~~exposure to ~~pass~~a ~~through~~market ~~increased~~interest ~~commodity~~rate ~~costs~~risk ~~by adjusting menu pricing in most cases. However, we believe~~ that ~~any~~could ~~changes~~affect infuture ~~commodity~~results ~~pricing~~of ~~that~~operations ~~cannot be offset by changes in menu pricing~~ or ~~other product delivery strategies would not be~~ ~~material~~financial conditions.

37Commodity Price Risk.

~~ITEM~~Many 8of the food products and other operating essentials purchased by us are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors that are beyond our control. ~~FINANCIAL~~ ~~STATEMENTS~~Our supplies ~~AND~~and raw materials are available from several sources and we are not ~~SUPPLEMENTARY~~dependent ~~DATA~~upon any single source for these items. The Company negotiates directly with wholesale suppliers of certain high volume food ingredients such as cheese, tomato sauce, and flour to ensure consistent quality and competitive pricing. These ingredients are then purchased for the Company by a third party independent 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. Certain significant items that could be subject to price fluctuations are cheese and flour products. The Company believes that it will be able to pass through increased commodity costs by adjusting menu pricing in most cases. However, we believe that any changes in commodity pricing that cannot be offset by changes in menu pricing or other product delivery strategies would not be material.

~~BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES~~33

~~INDEX TO~~ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

~~Index~~BOSTON toRESTAURANT ~~Financial~~ASSOCIATES, ~~Statements Report of Independent Registered Public Accounting Firm~~ INC. ~~Consolidated~~AND SUBSIDIARIES ~~Financial Statements Balance sheets Statements of operations Statements of stockholders’ equity Statements of cash flows Summary of accounting policies Notes to consolidated financial statements~~INDEX

~~The Company’s~~ TO ~~Financial~~FINANCIAL ~~Statements, together with the Report of Independent Certified Public Accountants have been included at Item 15 and appear at Pages F-1 through F-34.~~STATEMENTS

~~ITEM~~Index ~~9. CHANGES~~to INFinancial ~~AND~~Statements ~~DISAGREEMENTS~~Report ~~WITH ACCOUNTANTS~~of ONIndependent ~~ACCOUNTING~~Registered ~~AND~~Public ~~FINANCIAL~~Accounting ~~DISCLOSURE~~Firm Consolidated Financial Statements Balance sheets Statements of operations Statements of stockholders’ equity Statements of cash flows Summary of accounting policies Notes to consolidated financial statements

~~None~~The Company’s Financial Statements, together with the Report of the Registered Public Accounting Firm have been included at Item 15 and appear at Pages F-1 through F-36.

ITEM 9A 9. ~~CONTROLS~~ CHANGES IN AND ~~PROCEDURES~~DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

As of the end of the period covered by this report, the Company’s Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in SEC Rule 13a-15 or 15d-15), which have been designed to ensure that material information related to the Company is timely disclosedNone. ~~Based upon that evaluation, they concluded that the disclosure controls and procedures were effective and remained virtually unchanged in the fourth quarter of year ended April 25, 2004.~~

38ITEM 9A. CONTROLS AND PROCEDURES

~~PART~~As ~~III~~of the end of the period covered by this report, the Company’s Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in SEC Rule 13a-15 or 15d-15), which have been designed to ensure that material information related to the Company is timely disclosed. Based upon that evaluation, they concluded that the disclosure controls and procedures were effective and remained materially unchanged in the fourth quarter of year ended April 24, 2005.

ITEM ~~10. DIRECTORS~~ ~~AND EXECUTIVE OFFICERS~~9B. OTHER ~~OF THE REGISTRANT~~INFORMATION

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 2004 fiscal yearNone.

~~ITEM 11. EXECUTIVE COMPENSATION~~34

~~The information~~PART ~~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 of its 2004 fiscal year.~~III

ITEM 12 10. ~~SECURITY~~ ~~OWNERSHIP~~DIRECTORS ~~OF CERTAIN~~AND ~~BENEFICIAL~~EXECUTIVE ~~OWNERS~~OFFICERS ~~AND~~OF ~~MANAGEMENT~~THE ~~AND RELATED STOCKHOLDER MATTERS~~REGISTRANT

The ~~information~~ ~~required~~following bytable ~~this~~sets ~~Item~~forth ~~12 is hereby incorporated by reference to the~~information ~~Company’s~~with ~~definitive~~respect ~~proxy statement~~ to ~~be filed by the Company within 120 says after close if its 2004 fiscal year.~~directors:

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Directors	Age	Position	Since

George R. Chapdelaine	60	Chief Executive Officer, President and Director	1994

Hugh Devine	58	Director	2000

Edward P. Grace III	55	Director	2004

Roger Lipton	64	Director	1996

John P. Polcari, Jr.	74	Director	1994

Peter E. Salas	51	Director	2005

Robert C. Taft	51	Director	2004

~~The~~Mr. ~~information~~Chapdelaine ~~required~~was byelected ~~this~~President, ~~Item~~Chief 13Executive isOfficer ~~hereby~~and ~~incorporated~~a bydirector ~~reference~~of the toCompany in April 1994. Mr. Chapdelaine served as President, Chief Executive Officer and a director of Pizzeria Regina, Inc., a predecessor of the Company, from 1982 until it was acquired by the Company’s ~~definitive~~in ~~proxy~~April ~~statement~~1994. Prior to be1982, ~~filed~~Mr. byChapdelaine worked in the ~~Company~~food ~~within~~service ~~120~~industry ~~days~~in ~~after~~various capacities, including as an independent marketing consultant, a general manager of the ~~close~~Food Service division for H.P. Hood, Inc. and a sales manager for Chiquita Brands, a subsidiary of ~~its~~United ~~2004~~Brands. Mr. ~~fiscal~~Chapdelaine ~~year~~holds an MBA from Clark University and graduated with a B.S. in Hotel and Restaurant Management from Oklahoma State University. He currently serves on the Board of the Massachusetts Restaurant Association.

~~ITEM~~Mr. Devine has 14been the President of Devine & Pearson Advertising, Inc. ~~PRINCIPAL~~ ~~ACCOUNTANT~~(an ~~FEES~~advertising and ~~AND~~communications agency with 29 years experience marketing to the food ~~SERVICES~~service industry) since 1976. Mr. Devine is nationally recognized for identifying marketing opportunities for clients, both food service operators and manufacturers of food, beverages, equipment and supplies. He serves on the boards of directors of the YMCA, American Association of Advertising Agencies and Advertising Club of Greater Boston.

The information required by this Item 14 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 2004 fiscal year.35

~~PART~~Mr. IVGrace has been President of Phelps Grace International, Inc., an investment management company, and Managing Director of Grace Venture Partners, LP. since 1998. Mr. Grace has over 30 years experience in the food service industry. He was the founder, Chairman, President and CEO of Bugaboo Creek Steak House, Inc., operator of both The Capital Grill, a 20 location fine dining restaurant, and the Bugaboo Creek Steak House, a casual dining restaurant chain with locations throughout the East Coast, from 1989 until 1996. He was Vice Chairman and a Director of RARE Hospitality International, Inc. from 1996 to 1998. From 1992 until 1994 he was the Chairman of Homestyle Buffet, Inc., a 34 location buffet style restaurant chain. Mr. Grace has served as the director of a number of public and private companies, including Professional Facilities Management, Inc., Not Your Average Joe’s Inc., The Gemesis Corporation and PsiloQuest, Inc. He is currently a Trustee of Johnson & Wales University and of Bryant College and in the past has served on the boards of a number of other trade associations, and educational and philanthropic organizations, including the National Restaurant Association.

~~ITEM~~Mr. Lipton has 15been President of Lipton Financial Services, Inc. ~~EXHIBITS~~ (a money management and investment banking firm, ~~FINANCIAL~~specializing ~~STATEMENT~~in restaurant, franchising and retailing ~~SCHEDULES~~industries) ~~AND~~since ~~REPORTS~~1993. Since ONFebruary 1995, ~~FORM~~he ~~8-K~~has also been a Managing Director of Axiom Capital Management, Inc., a NASD broker/dealer. From 1981 until February 1995, he was Managing Director of Ladenburg, Thalmann & Co., Inc., a broker/dealer and investment banking firm.

(Mr. Polcari was a~~) FINANCIAL~~ ~~STATEMENTS~~founder ~~AND~~of ~~SCHEDULES~~Pizzeria Regina, Inc. and has been employed by the Company and its predecessor in various capacities from its inception. He is a recipient of the National Restaurant Association’s state restaurateur of the year award for the Commonwealth of Massachusetts.

~~(1) Financial~~Mr. ~~Statements~~Salas ~~listed~~has been ~~under~~President ~~Part~~of IIDolphin Asset Management Corp. and its related companies since he founded it in 1988. Prior to establishing Dolphin, he was with J.P. Morgan Investment, Inc. for ten years, ~~Item~~becoming 8Co-manager, Small Company Fund and Director-Small Cap Research.

~~(2) Financial~~Mr. ~~Statement~~Taft ~~Schedules~~has been ~~have~~the ~~been~~CEO of Caffino, Inc., a chain of double drive-through espresso bars, ~~omitted~~since ~~because~~September 2003. He has over 25 years experience in the ~~required~~food ~~information~~service isindustry. During ~~not~~2002 ~~applicable~~and or2003 ~~required~~Mr. Taft was Chief Concept Officer of Ultimate Franchise System, orInc., and was President of Sonofresco from 2001 to 2002 He was Chief Operating Officer of ~~because~~Fuddruckers, Inc., a fast casual restaurant chain with over 200 franchised and company owned locations, from 1999 until 2001. From 1996 until 1999, he served as President of the ~~required~~Au ~~information~~Bon isPain ~~shown~~Bakery Cafes ~~either~~unit inof Au Bon Pain, Inc., a fast service chain with over 250 locations. From 1993 until 1996, Mr. Taft was the President ~~Financial~~and ~~Statements~~CEO orof Papa Gino’s, Inc. He has served on the ~~notes~~boards ~~thereto~~of Ultimate Franchise Systems, Inc. and the Washington and Massachusetts Restaurant Associations.

~~(b) REPORTS ON FORM 8-K~~36

~~The Company~~Compensation ~~filed~~of ~~a Current Report on Form 8-K on March 29, 2004.~~Directors

39Non-employee directors of the Company presently do not receive cash compensation for their services as directors. The Company provides health insurance benefits or the cash equivalent to its directors and reimburses them for their out-of-pocket expenses in attending board meetings. In addition, directors were eligible for the grant of stock options under the 2002 Combination Stock Option and Share Award Plan. 400,000 options to purchase shares of common stock were awarded to directors under these plans during fiscal 2005; 100,000 shares each to Mr. Grace and Mr. Taft and 50,000 shares each to Mr. Chapdelaine, Mr. Devine, Mr. Lipton and Mr. Polcari.

~~EXHIBITS~~Management

Exhibit Number		Reference Number
3.01	Amended Certificate of Incorporation of the Registrant	G-3.01*
3.02	Amended By-Laws of the Registrant	A-3(b)*
4.01	Description of Stock (contained in the Amended Certificate of Incorporation of the Registrant, filed as Exhibit 3.01).	G-4.01*
4.02	Form of Certificate evidencing shares of Common Stock	D-4(b)*
10.01	Loan Agreement between Boston Restaurant Associates, Inc. and Commerce Bank & Trust Company dated April 30, 2002	K-6(a)(i)
10.02	Note from Boston Restaurant Associates, Inc. to Commerce Bank & Trust Company dated April 30, 2002	K-6(a)(ii)
10.03	Security Agreement between Boston Restaurant Associates, Inc. and Commerce Bank & Trust Company dated April 30, 2002	K-6(a)(iii)
10.04	Form of Indemnification Agreement with each of the directors and certain officers of the Registrant**	A-10(bb)*
10.05	Incentive Stock Option Plan**	B-10(h)*
10.06	2002 Combination Stock Option and Share Award Plan**	J-10(h)*
10.07	Charter of the Audit Committee of Boston Restaurant Associates, Inc., as adopted December 6, 2002 as amended March 5, 2004	I-99*
10.09	Second Allonge to Loan Agreement between Boston Restaurant Associates, Inc. and Commerce Bank & Trust Company dated February 13, 2004	Filed herewith
10.10	First Allonges to Notes from Boston Restaurant Associates, Inc. to Commerce Bank & Trust Company dated February 13, 2004	Filed herewith

Anthony Buccieri, 51, was appointed Vice President of Operations in April 1994. Mr. Buccieri joined a predecessor of the Company in 1974 and has served in various capacities since that date, including as operations supervisor since 1983. Ms. Fran Ross, 53, was appointed a Company Vice President in, February 1995 and Chief Financial Officer in October 1995.

40CORPORATE GOVERNANCE

10.11	Stock Purchase Warrant issued by Boston Restaurant Associates, Inc. in favor of Commerce Bank & Trust Company dated February 13, 2004	Filed herewith
10.12	Employment agreement between Boston Restaurant Associates, Inc. and George R. Chapdelaine dated April 23, 2004	Filed herewith
14	Code of Ethics	L-14*
21	Subsidiaries of the Registrant	A-21*
23	Consent of BDO Seidman, LLP	Filed herewith
31.01	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	Filed herewith
31.02	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.01	Certifications of Chief Executive Officer and Chief Financial Officer to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

General

*		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

The Board of Directors of the Company believes that good corporate governance is important to ensure that the Company is managed for the long-term benefit of its stockholders. In response to the wave of corporate scandals and Congress’s enactment of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), in the Fall of 2002 the Board reviewed our corporate governance policies and practices and compared them to the provisions of Sarbanes-Oxley, the new and proposed rules of the SEC under that statute and practices suggested by various authorities in corporate governance. Based upon that review, in December 2002 the Board of Directors took steps to implement the then proposed new rules and listing standards. In particular, the Board:

41• adopted a new charter for our Audit Committee reflecting the requirements of Sarbanes—Oxley and the rules adopted or then proposed for audit committees;

A• adopted ~~Incorporated~~a charter 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~~our ~~year~~Compensation 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 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. E Incorporated by reference to the Company’s quarterly report on Form 10-QSB for the period ended January 25, 1998. The number set forth herein is the number of the Exhibit in said quarterly report. F Incorporated by reference to the Company’s annual report on Form 10-KSB for the year ended April 26, 1998. The number set forth herein is the number of the Exhibit in said annual report. G Incorporated by reference to the Company’s annual report on Form 10-KSB for the year ended April 25, 1999. 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 period ended July 25, 1999. The number set forth herein is the number of the Exhibit in said quarterly report. I Incorporated by reference to the Company’s quarterly report on Form 10-QSB for period ending January, 2001. The number set forth herein is the number of the Exhibit in said quarterly report.Committee;

42• created a Corporate Governance and Nominating Committee (initially consisting of the entire Board) and adopted its charter;

J Incorporate by reference to the Company’s Annual report on Form 10-K for the year ended April 28, 2002. The number set forth herein is the number of the Exhibit in said annual report. K Incorporated by reference to the Company’s quarterly report on Form 10-Q for period ended July 28, 2002. The number set forth herein is the number of the Exhibit in said quarterly report. L Incorporated by reference to the Company’s quarterly report on Form 10-Q for period ended January 25, 2004. The number set forth herein is the number of the Exhibit in said quarterly report.37

~~(d) FINANCIAL~~• Reviewed ~~STATEMENT~~the independence ~~SCHEDULES~~standards for directors then being proposed or adopted by the SEC and Nasdaq and assessed the independence of existing board and committee members under those standards; and

~~The~~• adopted a Code ~~Financial~~of ~~Statement~~Ethics ~~Schedules~~and ~~required~~a byCode ~~this~~of ~~item,~~Conduct ifwhich ~~any,~~applies ~~are~~to ~~listed~~all ~~under~~executive officers, ~~Item~~directors, ~~14(a)(2)~~employees and agents of the Company.

43Subsequent to the December 2002 meeting, the Board also approved adjustments in the actions taken at that meeting to conform to changes in regulations subsequently adopted by the SEC and the Nasdaq Stock Market, Inc.

~~Boston~~Board ~~Restaurant~~of ~~Associates,~~Directors ~~Inc.~~ and ~~Subsidiaries~~Committees

~~Consolidated~~The ~~Financial~~Board ~~Statements~~of Directors has responsibility for establishing broad corporate policies and reviewing our overall performance rather than day-to-day operations. The Board’s primary responsibility is to oversee the management of the Company and, in so doing, to serve the best interests of the Company and its stockholders. Management keeps the directors informed of Company activity through regular written reports and presentations at Board and committee meetings.

~~Years~~The ~~Ended~~Board ~~April 25,~~of ~~2004~~Directors ~~and~~held five meetings during the fiscal year ended April 24, 2005. 27 All of the Company’s directors are encouraged to attend the Company’s annual meeting of stockholders. All of the Company’s directors were in attendance at the Company’s September, ~~2003~~2004 Annual Meeting.

~~Report~~The Board of ~~Independent~~Directors ~~Registered~~also ~~Public~~acted ~~Accounting~~by ~~Firm~~unanimous written ~~Consolidated~~consent ~~financial~~in ~~statements:~~lieu ~~Balance~~of ~~sheets~~a ~~Statements~~special meeting on two occasions. Each current director attended at least 75% of ~~operations~~the ~~Statements~~meetings of ~~stockholders’~~the ~~equity~~Board of Directors and of committees of which he or she was a member held during the last fiscal year. Under the standards of the Nasdaq Stock Market, Inc. (~~deficit~~NASD Rule 4200(a)(15)), ~~Statements~~the ofCompany ~~cash~~has ~~flows~~determined ~~Summary~~that five of ~~accounting~~the ~~policies~~seven ~~Notes~~directors, Messrs. Devine, Grace, Lipton, Salas and Taft, satisfy the requirements to ~~consolidated~~be ~~financial~~an ~~statements~~independent director.

~~F-1~~The Board currently has the following committees: an Audit Committee, a Compensation Committee, and a Corporate Governance and Nominating Committee.

~~Report~~Audit Committee. The primary function of our Audit Committee is to assist the Board in fulfilling its oversight responsibilities with respect to the management of ~~Independent~~the ~~Registered~~Company. The Audit ~~Public~~Committee ~~Accounting~~is ~~Firm~~directly responsible for the oversight of : (i) the integrity of the Company’s disclosure controls and procedures; (ii) the integrity of the Company’s internal controls over financial reporting; and (iii) the qualifications, independence, appointment, compensation and performance of the Company’s independent auditors. It also is responsible for administering the Company’s Code of

~~To the Board of Directors and Stockholders of~~38

~~Boston~~Ethics ~~Restaurant~~and Code of Conduct, the establishment ~~Associates~~of “whistle-blowing” procedures, ~~Inc~~and the oversight of certain other compliance matters.

WeUnder ~~have~~its ~~audited~~charter ~~the~~adopted in December 2002, ~~accompanying~~as ~~consolidated~~subsequently ~~balance~~amended ~~sheets~~and ofsupplemented ~~Boston~~by ~~Restaurant~~SEC ~~Associates~~and stock market rules, ~~Inc.~~the ~~and~~Audit ~~subsidiaries~~Committee asmust consist of ~~April 25,~~not ~~2004~~less ~~and~~than ~~April 27,~~one ~~2003~~or more than three directors, all ~~and~~of whom satisfy the ~~related~~ ~~consolidated~~independence ~~statements~~standards of ~~operations~~the SEC, ~~stockholders’~~the ~~equity~~Nasdaq ~~(deficit),~~Stock ~~and~~Market. The ~~cash~~Audit ~~flows~~Committee ~~for~~has ~~each~~been composed of ~~the~~Mr. ~~three~~Devine, ~~years~~Mr. inGrace and Mr. Taft, all of whom the ~~period~~Board ~~ended~~of ~~April 25,~~Directors ~~2004. These~~determined ~~financial~~satisfy ~~statements~~those ~~are~~standards. In 2005, the ~~responsibility~~Board of Directors reviewed the ~~Company’s~~qualifications ~~management~~of Mr. ~~Our~~ ~~responsibility~~Grace isand toMr. Taft ~~express~~and andetermined ~~opinion~~that oneach ~~these~~was an “audit committee financial expert” as ~~statements~~defined ~~based~~by onSEC ~~our~~rules. The ~~audits~~Audit Committee held five meetings during the fiscal year ended April 24, 2005.

WeCompensation ~~conducted~~Committee. The ~~our~~purpose ~~audits in~~of ~~accordance~~the ~~with~~Compensation ~~the~~Committee ~~standards~~is to ofassist the ~~Public~~Board ~~Company~~in ~~Accounting~~the ~~Oversight Board~~discharge ~~(United~~of ~~States). Those~~its ~~standards require~~responsibilities ~~that~~related weto ~~plan~~the fair and ~~perform~~competitive ~~the~~compensation ~~audit~~of toexecutives ~~obtain~~and ~~reasonable~~key ~~assurance~~employees ~~about whether~~of the Company. It ~~financial~~is ~~statements~~charged ~~are~~with ~~free~~periodic review of ~~material~~the ~~misstatement. An~~compensation ~~audit~~philosophy ~~includes~~of ~~examining~~the Company, onannual aevaluation ~~test~~of the ~~basis,~~performance ~~evidence~~of ~~supporting~~ the ~~amounts~~principal executives and ~~disclosures~~key inemployees, ~~the~~annual ~~financial statements. An~~review ~~audit~~of ~~also includes~~the ~~assessing~~total ~~the~~compensation ~~accounting~~of ~~principles~~those ~~used~~persons, ~~and~~approval ~~significant~~of ~~estimates~~grants ~~made~~under byand supervision ~~management,~~of asthe ~~well~~administration asof ~~evaluating~~stock ~~the~~plans, ~~overall~~and ~~financial~~issuance ~~statement presentation. We~~of ~~believe~~an ~~that~~annual ~~our~~report to ~~audits~~stockholders ~~provide~~in aaccordance ~~reasonable~~with ~~basis~~SEC ~~for our opinion~~rules.

InUnder ~~our~~its ~~opinion,~~charter ~~the~~as ~~consolidated financial~~adopted ~~statements referred to above present fairly,~~ in ~~all material~~December ~~respects~~2002, the ~~financial~~Compensation ~~position~~Committee must consist of ~~Boston~~a ~~Restaurant~~minimum ~~Associates,~~of ~~Inc.~~one director, and ~~subsidiaries~~each atmember ~~April 25,~~must ~~2004~~be ~~and~~a ~~April 27~~non-employee, ~~2003,~~outside ~~and~~director ~~the~~under ~~results~~various standards of ~~their~~the ~~operations~~tax laws and ~~their~~rules ~~cash~~of ~~flows~~the ~~for~~SEC, ~~each~~who ofalso satisfies the ~~three~~independence requirements ~~years~~of in the ~~period ended~~Nasdaq ~~April~~Stock Market. ~~25,~~ The ~~2004,~~Compensation inCommittee ~~conformity~~currently ~~with~~has Ubeen composed of Mr.S Devine, Mr. ~~generally~~Grace ~~accepted accounting~~and ~~principles~~Mr. Lipton all of whom the Board determined satisfy those standards.

The ~~accompanying consolidated~~Compensation ~~financial~~Committee ~~statements~~held ~~have~~one ~~been prepared assuming that the Company~~meeting ~~will~~during ~~continue as a going concern. As discussed in Note 1 to~~ the ~~consolidated~~fiscal ~~financial~~year ~~statements,~~ended ~~the Company has suffered losses from operations and has working capital and stockholder deficits as of~~ April 25 24, ~~2004~~2005. These matters raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

		BDO Seidman, LLP
Boston, Massachusetts
July 15, 2004
except for Note 1 and the fifth paragraph
of Note 6 which are as of
August 2, 2004

Corporate Governance and Nominating Committee. The purpose of the Corporate Governance and Nominating Committee is to review and evaluate the Company’s policies, codes of conduct and guidelines, evaluate and make recommendations to the Board concerning Board committees, review and evaluate the CEO and other senior management (other than related to compensation), serve as a focal point for management succession planning, and identify and evaluate candidates for nomination as directors.

FUnder its charter as adopted in December 2002, the Corporate Governance and Nominating Committee may consist of either the entire Board or, if less than the entire Board, a committee of not less than two non-2employee members of the Board of Directors, each of whom satisfies the independence requirements of the Nasdaq Stock Market. The Board of Directors considered the functions of the Corporate Governance and Nominating Committee and the fact that two of the directors who are not independent within the meaning of the Nasdaq definition are major stockholders and collectively the owners of approximately 20.8% of the Company’s outstanding capital

~~Boston Restaurant Associates, Inc. and Subsidiaries~~39

~~Consolidated~~stock, ~~Balance~~and determined that it was appropriate ~~Sheets~~for the entire Board of Directors to serve as the Corporate Governance and Nominating Committee. The Board met as the Corporate Governance and Nominating Committee once during the last fiscal year.

	April 25, 2004		April 27, 2003
Assets (Note 6)
Current:
Cash and cash equivalents	$	651,754	$	1,106,701
Accounts receivable	169,975		137,123
Inventories (Note 2)	735,910		541,030
Prepaid expenses and other	194,303		164,610
Total current assets	1,751,942		1,949,464
Property and equipment (Notes 10 and 14):
Building	512,500		512,500
Leasehold improvements	8,480,782		6,739,402
Equipment, furniture and fixtures	5,764,996		4,509,527
	14,758,278		11,761,429
Less accumulated depreciation and amortization	9,736,890		6,472,336
Net property and equipment	5,021,388		5,289,093
Other assets, net (Note 3)	513,834		581,545
Goodwill (Note 4)	453,643		453,643
	$	7,740,807	$	8,273,745

Under its charter, the Corporate Governance and Nominating Committee is responsible for identifying candidates to serve as directors (whether such directorships are filled by the Board or by stockholders), gathering information on such candidates, conducting interviews of candidates and their references, and making recommendations to the full Board of Directors.

~~See~~The ~~accompanying~~Corporate ~~summary~~Governance and Nominating Committee may consider nominees recommended by stockholders and other sources, such as directors, officers, third party search firms or other appropriate sources. In evaluating candidates, it will consider personal integrity, sound business judgment, business and professional skills and experience, independence (as defined under SEC and Nasdaq rules), diversity, potential conflicts of interest, the extent to which ~~accounting~~a ~~policies~~candidate would fill a present need, and ~~notes~~concern for the long term interests of stockholders. In any particular situation, the committee may focus on persons possessing a particular background, experience or qualifications which the Committee believes would be important to ~~consolidated~~enhance ~~financial~~the ~~statements~~effectiveness of the Board. The evaluation process for stockholder recommendations is the same as for candidates from any other source.

~~F-3~~ITEM 11. EXECUTIVE COMPENSATION

	April 25, 2004			April 27, 2003
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	1,058,469		$	580,070
Accrued expenses (Note 5)	1,416,765			1,319,805
Current maturities (Notes 6, 7 and 10):
Long-term debt	3,383,158			220,835
Notes payable - stockholder	6,114			5,820
Obligations under capital leases	191,845			195,365
Total current liabilities	6,056,351			2,321,895
Long-term obligations:
Long-term debt, less current maturities (Note 6)	—			511,671
Notes payable - stockholder, less current maturities (Note 7)	88,850			94,964
Obligations under capital leases, less current maturities (Note 10)	61,842			253,688
Deferred rent (Note 10)	501,469			396,271
Subordinated debentures (Notes 8 and 11)	1,450,000			1,450,000
Other long-term liabilities (Note 10)	251,016			506,698
Total liabilities	8,409,528			5,535,187
Commitments and contingencies (Notes 10 and 11)
Stockholders’ equity (deficit) (Notes 8 and 11):
Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued	—			—
Common stock, $.01 par value 25,000,000 shares authorized; issued 7,060,170 shares; outstanding 7,035,170 shares	70,602			70,602
Additional paid-in capital	10,952,635			10,922,636
Accumulated deficit	(11,667,266		)	(8,229,988		)
	(644,029		)	2,763,250
Less treasury stock, 25,000 shares at cost	(24,692		)	(24,692		)
Total stockholders’ equity (deficit)	(668,721		)	2,738,558
	$	7,740,807		$	8,273,745

The following Summary Compensation Table sets forth the compensation during each of the last three fiscal years of the Chief Executive Officer and of each executive officer and others whose annual salary and bonus exceeded $100,000 for services in all capacities to the Company during fiscal 2005 (collectively, the “Named Executive Officers”). There were no other compensation or long-term compensation awards for the Named Executive Officers during these periods.

~~See accompanying summary of accounting policies and notes to consolidated financial statements.~~40

F-4SUMMARY COMPENSATION TABLE

~~Boston Restaurant Associates, Inc.~~Annual ~~and Subsidiaries~~Compensation

Consolidated Statements of Operations

Name and Principal Positions	Fiscal Year Ended	Salary ($)	Bonus ($)

George R. Chapdelaine	4/24/2005	232,000	0
President and CEO	4/25/2004	222,000	0
	4/28/2003	215,000	73,000

Anthony Buccieri	4/24/2005	135,000	0
Vice President Operations	4/25/2004	129,000	0
	4/27/2003	123,000	42,000

Fran V. Ross	4/24/2005	130,000	0
Vice President and Chief	4/25/2004	125,000	0
Financial Officer	4/27/2003	119,000	40,000

John Polcari, Jr.	4/24/2005	105,000	0
	4/25/2004	99,900	25,000
	4/27/2003	99,900	0

Years ended	April 25, 2004			April 27, 2003			April 28, 2002
Revenues:
Restaurant sales	$	23,273,656		$	22,477,600		$	23,827,993
Franchise fees (Note 10)	16,600			64,275			26,446
Total revenues	23,290,256			22,541,875			23,854,439
Costs and expenses:
Cost of food, beverages and liquor	4,847,294			4,348,095			4,885,952
Other operating expenses	15,310,776			13,570,421			14,293,083
General and administrative	2,738,690			2,610,666			2,132,756
Depreciation and amortization	1,231,399			1,056,889			1,152,860
Pre-opening costs	392,308			8,545			—
Litigation credits (Note 10)	(246,228		)	(443,445		)	—
Charge for asset impairment (Note 14)	2,162,584			—			—
Total costs and expenses	26,436,823			21,151,171			22,464,651
Operating income (loss)	(3,146,567		)	1,390,704			1,389,788
Interest expense, net of interest income of $2,890, $2,987 and $0 in 2004, 2003 and 2002, respectively	(512,668		)	(407,243		)	(508,072		)
Other income, net	221,957			9,428			9,015
Net income (loss)	$	(3,437,278	)	$	992,889		$	890,731
Net income (loss) per share of common stock (Note 13):
Basic and diluted	$	(.49	)	$	.14		$	.13

Company Equity Compensation Plans

~~See~~The ~~accompanying~~Company ~~summary~~presently ofmaintains a 1994 Director Stock Option Plan and a ~~accounting~~1994 ~~policies~~Employee Combination Stock Option Plan under which options are no longer issued, and ~~notes~~the Combination Stock Option and Share Award Plan (the “2002 Plan”), pursuant to ~~consolidated~~which ~~financial~~it ~~statements~~granted equity awards to eligible persons. The following table gives information about those plans.

~~F-5~~41

Boston Restaurant Associates, Inc. and Subsidiaries

				(c)
				Number of
	(a)			securities remaining
	Number			available for future
	securities to be	(b)		issuance under
	issued upon	Weighted average		equity
	exercise of	exercise price of		compensation plans
	outstanding options,	outstanding options		(excluding securities
Plan category	warrants and rights	warrant and rights		reflected in column (a)

Equity compensation plans approved by security holders	1,274,800	$	.77	0

Equity compensation plans not approved by security holders	0	0		0

Total	1,274,800	$	.77	0

~~Consolidated Statements of Stockholders’ Equity~~Stock ~~(Deficit)~~Options

	Common Stock $.01 Par Value			Additional Paid-in Capital		Accumulated Deficit			Treasury Stock				Total Stockholders’ Equity (Deficit)
	Shares	Amount							Shares	Amount
Balance, April 29, 2001	7,060,170	$	70,602	$	10,922,636	$	(10,113,608	)	25,000	$	(24,692	)	$	854,938
Net income for the year	—	—		—		890,731			—	—			890,731
Balance, April 28, 2002	7,060,170	70,602		10,922,636		(9,222,877		)	25,000	(24,692		)	1,745,669
Net income for the year	—	—		—		992,889			—	—			992,889
Balance, April 27, 2003	7,060,170	70,602		10,922,636		(8,229,988		)	25,000	(24,692		)	2,738,558
Issuance of warrants in exchange for bank waiver	—	—		29,999		—			—	—			29,999
Net loss for the year	—	—		—		(3,437,278		)	—	—			(3,437,278		)
Balance, April 25, 2004	7,060,170	$	70,062	$	10,952,635	$	(11,667,266	)	25,000	$	(24,692	)	$	(668,721	)

The following table presents certain information concerning stock options held by the Named Executive Officers. No stock options were granted to or exercised by the Named Executive Officers during the last fiscal year.

~~See accompanying summary of accounting policies and notes to consolidated financial statements.~~42

FFISCAL YEAR-6END OPTION VALUES

Boston Restaurant Associates, Inc. and Subsidiaries

	Number of
	Shares of
	Common Stock	Value
	Underlying	Unexercised
	Unexercised	In-the-Money
	Options at	Options at
	April 24, 2005	April 24, 2005($)
	Exercisable/	Exercisable/
Name	Unexercisable	Unexercisable

George R. Chapdelaine
CEO	230,000/0	N/A
Anthony Buccieri	89,900/0	N/A
Fran V. Ross	89,900/0	N/A
John Polcari, Jr.	80,000/0	N/A

~~Consolidated~~Employment ~~Statements of Cash Flows (Note 12)~~Contract

Years ended	April 25, 2004			April 27, 2003			April 28, 2002
Cash flows from operating activities:
Net income (loss)	$	(3,437,278	)	$	992,889		$	890,731
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	1,231,399			1,056,889			1,152,860
Litigation credits	(246,228		)	(443,445		)	—
Warrants granted in exchange for the bank’s waiver	29,999
Charge for asset impairment	2,162,584			—			—
Changes in operating assets and liabilities:
Accounts receivable	(32,852		)	(13,283		)	472
Inventories	(194,880		)	5,658			32,582
Prepaid expenses and other	(29,693		)	(46,421		)	(78,924		)
Other assets	(18,429		)	(59,760		)	(20,024		)
Accounts payable	478,399			(225,649		)	(413,705		)
Accrued expenses	96,960			(120,432		)	(61,507		)
Deferred rent	105,198			19,446			94,466
Other long-term liabilities	(9,454		)	(27,883		)	20,026
Net cash provided by operating activities	135,725			1,138,009			1,616,977
Cash flows from investing activities:
Capital expenditures	(3,040,138		)	(402,199		)	(127,739		)
Net cash used for investing activities	(3,040,138		)	(402,199		)	(127,739		)
Cash flows from financing activities:
Repayments of long-term debt	(384,348		)	(1,064,509		)	(536,374		)
Repayments of capital lease obligations	(195,366		)	(364,178		)	(347,846		)
Repayments of stockholder loans	(5,820		)	(5,533		)	(5,260		)
Repayments of subordinated convertible debentures	—			(50,000		)	—
Proceeds from issuance of long-term debt	3,035,000			922,305			—
Net cash provided by (used for) financing activities	2,449,466			(561,915		)	(889,480		)
Net increase (decrease) in cash and cash equivalents	(454,947		)	173,895			599,758
Cash and cash equivalents, beginning of year	1,106,701			932,806			333,048
Cash and cash equivalents, end of year	$	651,754		$	1,106,701		$	932,806

The Company and Mr. Chapdelaine, the Chief Executive Officer and President of the Company, entered into a two year employment agreement dated April 23, 2004. Mr. Chapdelaine was also provided with an automobile plus the cost of annual insurance and with such other employee benefits as were generally available to employees or officers of the Company. Pursuant to the employment agreement, the Company agreed to grant Mr. Chapdelaine stock options to acquire 100,000 shares of Common Stock that vest over two years.

~~See~~Under ~~accompanying~~the ~~summary~~terms of the employment agreement, if Mr. Chapdelaine’s ~~accounting~~employment ~~policies~~with ~~and~~the ~~notes~~Company is terminated by the Company without cause, or if Mr. Chapdelaine terminates his employment with the Company for good reason (either a material reduction in his overall level of responsibility or the relocation of the Company’s executive offices to ~~consolidated~~a ~~financial~~location ~~statements~~that is more than 35 miles from Boston, Massachusetts, in each case without his consent) or due to a change in control of the Company, then the Company must continue to pay Mr. Chapdelaine his then-current base salary, payable monthly, during a one-year severance period, and Mr. Chapdelaine may not compete with the Company during that period.

FMr. Chapdelaine’s employment agreement also contains a non-7competition provision that prohibits Mr. Chapdelaine from directly or indirectly competing with the Company as long as he is an employee of the Company and, in the case of his

~~Boston Restaurant Associates, Inc. and Subsidiaries~~43

~~Summary~~voluntarily termination or his termination by the Company for cause, for a period of ~~Accounting~~two years ~~Policies~~thereafter. The agreement also contains confidentiality provisions that provide that Mr. Chapdelaine may not disclose proprietary information of the Company, other than in furtherance of the business of the Company or in response to a court order.

~~Nature~~Bonus ~~of Business And Basis of Presentation (see also Note 1)~~Program

The Company ishas ~~engaged~~adopted ~~in the~~an ~~restaurant~~incentive ~~business. As~~program ofunder which key ~~April 25~~contributors, ~~2004,~~selected by the ~~Company~~Compensation ~~operated~~Committee, ~~thirteen~~will ~~pizza~~be ~~restaurants~~paid ~~and~~cash bonuses. The ~~five~~aggregate amount of these ~~casual~~bonuses ~~Italian~~will ~~dining~~be ~~restaurants.~~based Asupon a formula related to the financial performance of the ~~April 27~~Company. Bonuses, ~~2003~~if ~~and April 28~~any, will be ~~2002,~~allocated by the ~~Company~~Compensation ~~operated~~Committee ~~twelve~~among ~~pizza~~the ~~restaurants~~individual ~~and~~employees ~~four~~based upon ~~casual~~their ~~Italian~~performance during the year. ~~dining~~No ~~restaurants~~bonuses were paid during the last fiscal year.

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

~~Fiscal~~The ~~Year~~Compensation Committee of the Board of Directors, comprised of independent directors, is responsible for assisting the Board in the discharge of its responsibilities related to the fair and competitive compensation of executives and key employees of the Company. Among other responsibilities, the Compensation Committee reviews and recommends to the Board of Directors the compensation of the Chief Executive Officer and each of the other executive officers of the Company.

The objective of the Compensation Committee in determining the compensation of the Company’s ~~fiscal~~executive ~~year~~officers is to provide a base ~~ends~~compensation which allows the Company to attract and retain experienced talent. The Compensation Committee’s philosophy is to align the executive officers’ interests with the success of the Company; therefore, the Committee has established bonus payments based on the Company’s performance. The cash compensation for each executive officer consists of a base salary plus the ~~last~~potential ~~Sunday~~for an annual performance bonus. Mr. Chapdelaine’s salary for fiscal 2005 was based upon his pre-existing contract, and the amount of his bonus for fiscal 2005 was based upon his performance in relation to financial targets. The Company entered into a new employment agreement with Mr. Chapdelaine in April 2004. ~~Fiscal~~The ~~years~~terms ~~2004,~~of ~~2003~~this ~~and~~new ~~2002~~employment ~~included~~agreement 52are ~~weeks~~in line with the Compensation Committee’s executive officer compensation philosophy.

~~Use~~COMPENSATION ofCOMMITTEE: ~~Estimates~~Hugh Devine, Edward P. Grace, III, Roger Lipton

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.44

~~Cash~~Performance ~~Equivalents~~Graph

~~For~~The ~~purposes~~following ofgraph compares the ~~statements~~ ofchange ~~cash~~in Boston ~~flows~~Restaurant Associates, Inc.’s ~~the~~cumulative ~~Company~~total ~~considers~~stockholder ~~all~~return the ~~highly~~last ~~liquid~~five ~~debt instruments~~fiscal ~~purchased~~years with ~~maturities~~the ofcumulative ~~three~~return ~~months~~on orthe ~~less~~Russell to2000 ~~be cash~~and ~~equivalents. As~~the ~~of April~~Standard ~~25,~~& ~~2004 and~~Poor ~~April 27,~~Index ~~2003~~for Hotel, ~~cash~~Restaurant ~~equivalents~~and ~~were~~Leisure ~~not~~for ~~material~~that period.

~~Financial Instruments~~ADDITIONAL INFORMATION

~~The~~Section 16(a) Beneficial ~~estimated fair values~~Ownership ofReporting the Company’s financial instruments, which consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and certain long-term obligations, approximate their carrying values based on their maturity dates and prevailing market interest rates.Compliance

~~Inventories~~Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s directors and executive officers, and persons who beneficially own more than 10% of the Company’s Common Stock, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. Reporting persons are also required to furnish the Company with copies of all Forms 3, 4, and 5 they file.

~~Inventories~~Based ~~are~~solely ~~valued~~on atthe Company’s review of the copies of Forms 3, 4 and 5 which it has received and written representations from certain reporting persons the ~~lower~~Company believes that all of ~~cost~~its ~~(first-in~~directors, executive ~~first-out~~officers, and greater than 10% stockholders complied with all Section 16(a) filing requirements orapplicable ~~market~~to them during the Company’s fiscal year ended April 24, 2005.

~~F-8~~45

~~Property and Equipment~~Indemnification Agreements

~~Property~~The ~~and~~Company ~~equipment are~~has ~~stated~~entered atinto ~~cost. Depreciation~~indemnification ~~is computed~~agreements ~~using~~with ~~accelerated~~each ~~and~~of ~~straight-line~~its ~~methods~~directors ~~over~~and ~~the~~anticipates ~~estimated useful~~that ~~lives~~it ofwill ~~the~~enter ~~assets. Leasehold~~into ~~improvements~~similar ~~are~~agreements ~~amortized~~with ~~over~~any ~~the~~future ~~estimated~~directors. ~~useful~~Generally, ~~lives of~~ the ~~improvements~~indemnification oragreements ~~the~~attempt ~~length~~to ofprovide the ~~related~~maximum ~~lease,~~protection ~~including~~permitted ~~anticipated~~by ~~renewal~~Delaware ~~periods,~~law ~~whichever~~with isrespect ~~shorter~~to indemnification of directors.

~~Other~~The ~~Assets~~indemnification agreements provide that the Company will pay certain amounts incurred by a director in connection with any civil or criminal action or proceeding and specifically including actions by or in the name of the Company (derivative suits) where the individual’s involvement is by reason of the fact that he is or was a director. Such amounts include, to the maximum extent permitted by law, attorney’s fees, judgments, civil or criminal fines, settlement amounts, and other expenses customarily incurred in connection with legal proceedings. Under the indemnification agreements, a director will not receive indemnification if he is found not to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.

~~Deferred~~ITEM ~~Financing~~12. SECURITY OWNERSHIP ~~Costs~~OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND ELATED STOCKHOLDER MATTERS

~~Costs~~The ~~incurred~~following intable sets forth certain ~~connection~~information ~~with~~regarding ~~obtaining~~the ~~financing~~beneficial ~~are~~ownership ~~amortized~~of ~~over~~the Company’s Common Stock as of July 15, 2005 by (i) each person who is known by the ~~terms~~Company to own beneficially more than five percent of the ~~related~~outstanding shares of Common ~~debt~~Stock, (ii) each current director and nominee for director of the Company, (iii) each of the Named Executive Officers listed in the Summary Compensation Table below, and (iv) all current directors, nominees and executive officers of the Company, as a group. Except where otherwise indicated, this information is based upon information provided to the Company by the named person.

~~Lease Acquisition Rights~~46

Costs incurred in connection with the purchases of leases are being amortized over the terms of the leases.

Name and Address	Number of Shares Beneficially Owned(1) (2)	Percentage of Outstanding Shares

George R. Chapdelaine (3) c/o Boston Restaurant Associates, Inc. 999 Broadway Saugus, MA 01906	960,390	13.7	%

Anthony Buccieri (9) c/o Boston Restaurant Associates, Inc. 999 Broadway, Suite 400 Saugus, MA 01906	95,000	1.3	%

Hugh Devine (4) Devine & Pearson Crown Colony Park 300 Congress Street Quincy, MA 02169	110,000	1.5	%

Edward P. Grace III (8) Grace Venture Partners Sun Trust Center, suite 1850 200 South Orange Avenue Orlando, FL 32801	243,547	3.4	%

Roger Lipton (5)(6) 983 Park Avenue New York, NY 10028	1,888,223	26.5	%

John P. Polcari, Jr. (5)(7) c/o Boston Restaurant Associates, Inc. 999 Broadway Saugus, MA 01906	947,745	13.3	%

Fran V. Ross (9) c/o Boston Restaurant Associates, Inc. 999 Broadway, suite 400 Saugus, MA 01906	114,801	1.6	%

~~Goodwill~~47

Goodwill resulting from the excess of cost over the fair value of net assets acquired is being tested for impairment in accordance with the guidelines in SFAS No. 142.

Peter E. Salas (10)(11) Dolphin Asset Management Corp. 129 East 17^th Street New York, NY 10003	1,625,588	21.7	%

Robert C. Taft (12) Caffino 3130 Crow Canyon Park Place, Suite 120 San Ramon, CA 94583	230,573	3.2	%

Jordan Index Fund, Lp. (13) 1876 Woodhollow Lane, Apt. 306 Maryland Heights, MO 63043	903,186	11.7	%

All directors, and executive officers as a group (9 persons) (14)	6,098,220	71.2	%

~~Revenue~~(1) Unless otherwise ~~Recognition~~indicated in other footnotes, to the knowledge of the Company, all persons listed have sole voting and investment power with respect to shares of Common Stock, except to the extent shared with spouses under applicable law.

~~Restaurant~~(2) In computing ~~Sales~~the number of shares beneficially owned and the percentage of ownership of that person, shares of Common Stock subject to options or warrants exercisable within 60 days after the date of the information in the table are deemed outstanding. However, such shares are not deemed outstanding for the purpose of computing percentage ownership of any other person.

~~Substantially all~~(3) Based ~~restaurant~~upon ~~sales~~information ~~represent~~contained ~~retail~~in ~~sales~~a toSchedule 13G ~~the~~Amendment ~~general~~as ~~public~~filed ~~through~~with the ~~Company-owned~~Securities ~~restaurants. Such~~and ~~amounts are~~Exchange ~~recognized~~Commission ason ~~revenue~~February 11, at2005. ~~the~~Includes ~~point~~230,000 shares ofissuable ~~sale~~pursuant to stock options.

~~Franchise~~(4) Includes 110,000 ~~Fees~~shares issuable pursuant to stock options.

~~Franchise fees resulting~~(5) Includes ~~from~~80,000 ~~the~~shares ~~sale~~issuable ofpursuant individual franchise locations are recognized as revenue upon the commencement of franchise operations. Revenues from the sale of area development rights are recognized proportionately as the franchised restaurants, subject to ~~the~~stock ~~area development agreements, commence operations~~options. ~~Franchise royalties, which are based on a percentage of franchised restaurants’ sales, are recognized as earned.~~

~~Advertising~~(6) Based upon ~~Costs~~information contained in a Schedule 13D, Amendment 2, as filed with the Securities and Exchange Commission on February 11, 2004.

~~Advertising costs are expensed when incurred. Advertising expense amounted to approximately $507,000, $380,000 and $385,000 in 2004, 2003 and 2002, respectively.~~48

~~F-9~~(7) Based upon information contained in a Schedule 13G Amendment as filed with the Securities and Exchange Commission on February 11, 2005. Includes 123,658 shares issued to Lucille Salhany and Mr. Polcari jointly with rights of survivorship and 12,741 shares held by Ms. Salhany for the benefit of certain family members.

~~Pre-Opening~~(8) Includes 100,000 ~~Costs~~shares issuable pursuant to stock options and 117,647 shares issuable pursuant to convertible Preferred Stock.

~~All nonrecurring costs,~~(9) Includes ~~such as recruiting~~89,900 ~~training~~shares ~~pre-opening~~issuable ~~rent~~pursuant ~~and~~to ~~other~~stock ~~initial direct administrative expenses associated with the opening of new restaurant locations, are expensed as incurred~~options.

~~Taxes~~(10) Based upon information contained in a Schedule 13D, as amended, as filed with the Securities and Exchange Commission on ~~Income~~March 31, 1998, and written information provided by Dolphin Management, Inc.

~~The Company accounts for income taxes under the asset and liability method pursuant to Statement of Financial Accounting Standards No. 109~~ (~~“SFAS No. 109”~~11)~~, “Accounting~~ Includes ~~for Income Taxes.” Under SFAS No. 109~~470,588 ~~deferred~~shares ~~income~~issuable ~~taxes~~pursuant ~~are recognized for the future tax consequences attributable~~ to ~~differences~~convertible ~~between~~Preferred ~~the financial statement carrying amounts of existing assets and liabilities and their respective tax basis~~Stock. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of any tax rate change on deferred taxes is recognized in income in the period that includes the enactment date of the tax rate change.

~~Stock~~(12) Based on ~~Options~~information provided by Mr.Taft does not include 77,800 shares held by relatives of Mr. Taft for which he disclaims any beneficial ownership, however 100,000 shares issuable pursuant to stock options and 29,411 shares issuable pursuant to convertible preferred stock are included.

~~The Company accounts for~~(13) Based ~~stock~~upon ~~options~~information ~~using~~contained ~~the intrinsic value method~~ in ~~accordance~~a ~~with Accounting Principles Board Opinion No.~~Schedule ~~25,~~13G ~~“Accounting~~as ~~for~~filed ~~Stock~~with ~~Issued~~the toSecurities ~~Employees,” (“APB 25”)~~ and ~~related~~Exchange ~~interpretations. Accordingly,~~Commission ~~the~~on ~~Company has recognized no compensation cost for its stock option plans. The Company follows the disclosure provisions of Statement of Financial Accounting Standards No.~~February ~~123~~13, ~~(“SFAS No~~1998. ~~123”),~~ ~~“Accounting~~Includes ~~for Stock-Based Compensation~~500,”000 ~~which require the disclosure of the effects of fair value~~shares ~~accounting~~issuable onpursuant ~~earnings~~to ~~and~~currently ~~earnings~~exercisable ~~per share of common stock on a pro forma basis~~warrants.

~~In December 2002, the Financial Accounting Standards Board~~ (~~“FASB”~~14) ~~issued SFAS No. 148,~~ Includes ~~“Accounting for Stock-Based Compensation - Transition and Disclosure (“SFAS No. 148”)~~879,800 ~~which~~shares ~~(i)~~issuable ~~amends~~pursuant ~~SFAS No. 123, “Accounting for Stock-Based Compensation,”~~ to ~~provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for~~ stock~~-based~~ ~~employee~~options ~~compensation~~and ~~(ii)~~617,646 ~~amends~~shares ~~the disclosure provisions of SFAS~~issuable ~~No. 123~~pursuant to ~~require~~convertible ~~prominent~~Preferred ~~disclosure about the effects on reported net income of an entity’s accounting policy decisions with respect to stock-based employee compensation and (iii) amends APB Opinion No~~Stock. ~~28.~~

~~F-10~~ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

~~“Interim~~The ~~Financial Reporting,”~~Company tohad ~~require~~subordinated debentures ~~disclosure~~outstanding ~~about~~at ~~those~~April 24, ~~effects~~2005 inconsisted ~~interim~~of ~~financial~~convertible ~~information. Items~~subordinated ~~(ii)~~debentures ~~and~~in ~~(iii) of~~ the ~~new~~amount ~~requirements~~of in$1,450,000 ~~SFAS~~bearing ~~No. 148~~interest ~~are~~at ~~effective for financial~~8% ~~statements~~through ~~for~~31 ~~fiscal~~December, ~~years~~1997; ~~ending~~10% ~~after~~through 31 December 15, ~~2002. The~~1998; ~~Company~~12% ~~adopted~~through ~~items~~31 ~~(ii)~~ December 1999; and ~~(iii)~~14% ~~of SFAS~~through ~~No. 148~~2011, ~~for~~equivalent ~~the~~to ~~fiscal~~a ~~year~~blended ~~ended~~rate ~~April 27,~~of ~~2003~~approximately ~~and continues~~13.2% toannually, ~~account~~payable ~~for stock~~semi-~~based~~annually ~~compensation~~and ~~utilizing~~convertible ~~the~~into ~~intrinsic value method. Had compensation cost for~~ the Company’s ~~stock~~Common ~~options~~Stock at ~~been~~a ~~determined~~conversion ~~based~~rate ~~upon~~of ~~the~~$1.25 ~~fair~~per ~~value~~share. atThe ~~the~~Company ~~grant date~~can ~~for~~redeem ~~awards~~the convertible debentures under ~~the~~certain ~~plans~~conditions. ~~consistent~~The ~~with~~debentures ~~the~~are ~~methodology~~due ~~prescribed under~~31 ~~SFAS No~~December 2011. Mr. ~~123~~Lipton, a member of the ~~Company’s~~Board ~~net~~of ~~income~~Directors ~~(loss)~~of ~~would~~the ~~have~~Company, ~~been~~received a ~~adjusted~~fee equal to ~~the~~5% ~~pro~~of ~~forma~~the ~~amounts~~proceeds ~~indicated~~as ~~below~~compensation ~~along~~for ~~with~~services ~~the~~in ~~additional~~connection with ~~disclosures~~this ~~required~~transaction byin ~~SFAS~~fiscal No1997. ~~148 are as follows:~~

Years ended April	2004			2003		2002
Net income (loss) as reported	$	(3,437,278	)	$	992,889	$	890,731
Add:
Stock-based employee compensation expense included in reported net income (loss), net of tax	—			—		—
Deduct:
Total stock-based compensation expense determined under fair value based method	11,429			53,853		58,870
Net income (loss) - pro forma	$	(3,448,707	)	$	939,036	$	831,861
Basic and diluted earnings per share:
As reported	$	(.49	)	$	0.14	$	0.13
Pro forma	$	(.49	)	$	0.13	$	0.12

On January 20, 2005, the Company sold 1,147,056 shares of our Series A Preferred Stock, $.01 par value per share, to 11 accredited investors in a private transaction pursuant to subscription agreements between each such investor and the Company. Each share of Series A Preferred Stock may be converted at any time at the option of the holder of such share into one share of the Company’s Common Stock, $.01 par value per share. The investors paid $0.85 per share, for aggregate gross proceeds of $975,000.

~~F-11~~49

~~Net~~The ~~Income~~Company agreed pursuant to a rights agreement between the Company and the investors to (~~Loss~~i) register ~~Per~~the ~~Share~~resale of the shares of Common Stock issuable upon the conversion of the shares of Series A Preferred Stock upon demand of a sufficient number of the holders of the Series A Preferred Stock and (ii) include such shares of Common Stock in any registration statement for the benefit of the Company or any third party upon request of a sufficient number of the holders of the Series A Preferred Stock.

The Company ~~follows Statement~~sold ~~of Financial Accounting Standards No. 128 (“SFAS No. 128”), “Earnings per Share.” Under SFAS No. 128, basic earnings per share excludes~~ the ~~effect~~shares of ~~any dilutive~~Series A ~~options,~~Preferred ~~warrants~~Stock orpursuant ~~convertible~~to ~~securities~~certain ~~and~~exemptions isfrom ~~computed~~registration byprovided ~~dividing the net income (loss) available to common shareholders~~ by ~~the weighted average number~~Rule 506 of ~~common~~Regulation ~~shares~~D ~~outstanding~~and ~~for the period.~~Section ~~Diluted earnings per share is computed by dividing the net income~~ 4(~~loss~~2) ~~available to common shareholders by the sum~~ of the ~~weighted~~Securities ~~average~~Act ~~number~~ of ~~common~~ ~~shares~~1933, ~~and~~as amended. ~~common~~Directors ~~share~~of ~~equivalents computed using~~ the ~~average~~Company ~~market price~~own ~~for~~147,501 ~~the~~shares ~~period~~of ~~under~~this ~~the treasury~~ stock ~~method~~.

~~Long-Lived~~During ~~Assets~~fiscal 2005 the Company completed the asset sale of Polcari’s of Hyannis to Not Your Average Joe’s for approximately $552,000 in net proceeds. Mr. Grace, a member of the board of directors for Boston Restaurant Associates, Inc. is also a member of the board of Not Your Average Joe’s and abstained from the voting on this matter, and did not participate in the negotiations.

~~The~~During ~~Company~~fiscal ~~follows Statement~~2005 ofa ~~Financial~~warrant ~~Accounting Standards No 144 (“SFAS 144”)~~to ~~“Accounting~~purchase ~~for~~25,000 ~~the~~shares ~~Impairment or Disposal~~ of ~~Long-Lived~~common ~~Assets”,~~stock ~~which addresses~~at ~~financial~~an ~~accounting~~exercise ~~and~~price ~~reporting for the impairment or disposal~~ of ~~long-lived~~ ~~assets~~$0. ~~Although SFAS 144~~70 ~~supersedes~~per ~~Statement of Financial Accounting Standard~~share ~~No. 121~~expiring ~~(“SFAS~~August ~~121”)~~19, ~~“Accounting~~2009 ~~for~~was ~~the~~granted ~~Impairment~~to ~~of Long-Lived Assets To Be Disposed Of”, it retains many of~~ the ~~fundamental~~spouse ~~provisions~~ of ~~SFAS 121. SFAS 144~~ ~~also supersedes~~, ~~the accounting and reporting provisions of Accounting Principles Board Opinion No~~Mr. ~~30 (“APB 30”)~~Polcari, ~~“Reporting the Results of Operations-Reporting~~ ~~the Effects of Disposal of~~ a ~~Segment of a Business~~director, in ~~and~~consideration ~~Extraordinary, Unusual and Infrequently Occurring Events and Transactions”~~ for ~~the disposal of~~ a ~~segment~~promissory ofnote awhich ~~business. However,~~was ~~it retains~~repaid ~~the requirement of ABP 30 to report separately discontinued operations and extends that reporting to a component of an entity that either has been disposed of, by sale, abandonment, or~~ in ~~a distribution to owners~~December, ~~or is classified as held for sale~~2004.

~~The~~ITEM Company reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable14. ~~In fiscal 2004, the Company recorded an~~ PRINCIPAL ~~impairment~~ACCOUNTANT ~~charge~~FEES ~~related~~AND ~~to the write-down of certain long-lived assets (see Note 14).~~SERVICES

~~F-12~~As noted, the Audit Committee appointed BDO Seidman, LLP as the Company’s independent registered public accounting firm to audit the consolidated financial statements of the Company and its subsidiaries for the fiscal year ending April 24, 2005. BDO Seidman, LLP has audited the Company’s financial statements annually since 1994, and has served either the Company or its predecessor as independent public accountants for more than 19 years. The Audit Committee believes it is desirable and in the best interest of the Company to continue employment of that firm.

~~New~~Audit ~~Accounting~~Fees. BDO ~~Pronouncements~~Seidman, LLP billed the Company an aggregate of $132,625 and $117,000 for the fiscal years ended April 24, 2005 and April 25, 2004, respectively, for professional services rendered by BDO Seidman, LLP in connection with its audit of the Company’s financial statements, its review of the Company’s quarterly reports on Form 10-Q, and services normally provided in connection with statutory or regulatory filings or engagements.

~~In April 2003, the~~Audit ~~FASB~~Related ~~issued SFAS No~~Fees. ~~149~~BDO Seidman, ~~“Amendment~~LLP ofbilled ~~Statement~~the ~~133~~Company ~~on Derivative Instruments~~an ~~and~~aggregate ~~Hedging~~of ~~Activities”. SFAS~~$9,735 ~~No. 149 amends~~ and ~~clarifies financial accounting and reporting for derivative instruments~~$10,250 ~~including certain derivative instruments embedded~~ in ~~other~~the ~~contracts~~fiscal ~~(collectively~~years ~~referred~~ended ~~to as derivatives) and for hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered into or modified after June~~April 3024, ~~2003,~~2005 and ~~hedging relations designated after June~~April 3025, ~~2003~~2004, ~~except~~respectively, for ~~those provisions~~professional ofservices ~~SFAS~~rendered ~~No. 149 which relate to SFAS No. 133 implementation issues~~by ~~that~~BDO ~~have~~Seidman, ~~been~~LLP ~~effective~~ for ~~fiscal~~assurance ~~quarters~~and ~~that~~related ~~began~~services ~~prior~~reasonably related to ~~June 15, 2003. For those issues,~~ the ~~provisions that are currently in effect~~ ~~should~~performance ~~continue to be applied in accordance with their respective effective dates. In addition, certain provisions~~ of ~~SFAS~~an ~~No.~~audit ~~149, which relate to forward purchases~~ or ~~sales of when-issued securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after June 30, 2003~~review. ~~The adoption of SFAS No. 149 did not have a material effect on the Company’s financial statements.~~

InTax ~~May 2003, the FASB issued SFAS No~~Fees. ~~150~~BDO Seidman, ~~“Accounting~~LLP ~~for~~billed ~~Certain~~the ~~Instruments~~Company ~~with Characteristics~~$28,225 ~~of both Liabilities~~ and ~~Equity”. SFAS~~$30,000 ~~No. 150 establishes standards~~ for ~~how~~the anfiscal ~~issuer~~years ~~classifies~~ended ~~and measures certain financial~~April 24, ~~instruments~~2005 ~~with characteristics of both liabilities~~ and equity. SFAS No. 150 requires that an issuer classify a financial instrument that is within the scope of SFAS No. 150 as a liability. SFAS No. 150 is effective for financial instruments entered into or modified after MayApril 3125, ~~2003~~2004, ~~and otherwise~~respectively isfor ~~effective~~tax ~~beginning September 1~~compliance, ~~2003. The~~tax ~~adoption~~advice ofand ~~SFAS~~tax Noplanning. ~~150 did not have a material effect on the Company’s financial statements.~~

~~F-13~~50

~~Boston~~All ~~Restaurant~~Other Fees. ~~Associates~~BDO Seidman, ~~Inc.~~LLP did not bill the Company for professional services not otherwise described above in the fiscal years ended April 24, 2005 and ~~Subsidiaries~~April 25, 2004, respectively.

~~Notes~~Commencing January 1, 2003, in each case where approval was sought for the provision of non-audit services, the Audit Committee considered whether the independent auditors’ provision of such services to ~~Consolidated~~the ~~Financial~~Company is compatible with maintaining the auditors’ ~~Statements~~independence and determined that they were.

~~1. Going~~Audit ~~Concern~~Committee Policy on Pre-Approval of Services of Independent Auditors

The ~~Company~~Audit Committee’s ~~consolidated~~ ~~financial~~policy ~~statements have been presented on the basis that it~~ is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In fiscal 2004 the Company has experienced significant losses from operations and has a net working capital deficit totaling $4,304,000 and stockholders' deficit of $668,700 as of April 25, 2004. As further explained, the Company is exploring raising additional capital. As of April 25, 2004 the Company was not in compliance with certain financial covenants of the Credit Facility with Commerce Bank and Trust Company. However the bank waived the covenants for fiscal year ended April 25, 2004 in exchange for a 1% waiver fee, a modification on the interest rate on all outstanding notes issued under the Credit Agreement from 6% to ~~7% per annum until the first quarter in that the Company is once again in~~ ~~compliance~~pre-approve ~~with~~ all ~~financial~~audit ~~covenants~~ and apermissible ~~grant~~non-audit toservices ~~the~~provided ~~bank~~by ~~of a six year warrant to purchase 76,000 shares of~~ the ~~Company’s common stock at a price of~~ ~~$.50~~independent ~~per share~~auditors. In ~~addition~~These ~~the~~services ~~bank has~~may ~~established~~include ~~new~~audit ~~financial covenants for fiscal year 2005. In August 2004~~services, ~~in exchange for the establishment of new financial covenants~~audit-related ~~for fiscal year 2005~~services, ~~the~~tax ~~bank~~services ~~waived~~and ~~the~~other ~~covenants for the first quarter of fiscal year 2005~~services. Because of the Company’s uncertainty regarding its ability to satisfy these covenants, all bank debt has been reclassified as current on the balance sheet for year ended April 25, 2004. If the Company fails to comply with these covenants, the bank debt would be due on demand. The Company may be forced to restructure its operations by selling, closing, or sublease the Polcari’s restaurant in Cambridge, Massachusetts.

InAudit ~~August 2004,~~Committee the Company completed a $400,000 bridge financing, provided bythe spouse of a director, to fund its capital improvements. This financing is in the form of a note due in August of 2005 and bears interest at 14% payable every two months in arrears. In addition, the Company issued a warrant to purchase 50,000 shares of the Company’s common stock with an exercise price of $.70 per share exercisable over a five year period.Report

2Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal control over financial reporting. ~~Inventories~~ Management has represented to the Audit Committee that the Company’s consolidated financial statements for the fiscal year ended April 24, 2005 were prepared in accordance with accounting principles generally accepted in the United States. The Audit Committee has reviewed and discussed the consolidated financial statements with management and separately with the independent accountants. The Audit Committee also reviewed with the independent auditors the accounting policies and practices critical to the Company’s financial statements, the alternative treatments within generally accepted accounting principles for policies and practices related to material items that have been discussed with management, the ramifications of each alternative, and the independent auditors’ preferred treatment. It also reviewed the material written communications between management and the independent auditors.

~~Inventories~~The ~~consist~~Company’s independent auditors provided the Audit Committee with the written disclosures and the letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). Independence Standards Board Standard No. 1 requires auditors annually to disclose in writing all relationships that in the auditor’s professional opinion may reasonably be thought to bear on independence, to confirm their independence and to engage in a discussion of independence. The Audit Committee also reviewed with the ~~following:~~independent auditors the SEC rules with respect to independence of auditors. The audit committee received from the Company’s auditors written communication of the matters required by Statement on Auditing Standards No. 61 and discussed these matters with the Company’s auditors.

	April 25, 2004		April 27, 2003
Food, beverages, and liquor	$	323,268	$	198,599
Paper goods and supplies	412,642		342,431
Total	$	735,910	$	541,030

The Audit Committee assumed the responsibility for pre-approval of the performance of all audit and non-audit services by its independent auditors effective

~~F-14~~51

3January 1, 2003. ~~Other~~ In each case where approval was sought for the ~~Assets~~provision of non-audit services after that date, the Audit Committee considered whether the independent auditors’ provisions of such services to the Company is compatible with maintaining the auditors’ independence, and determined that they were compatible.

~~Other~~Based ~~assets~~on ~~consist~~the above review and procedures, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements for fiscal year April 24, 2005 be included in the ~~following:~~Company’s Annual Report on Form 10-K for that fiscal year. Further, the Audit Committee has appointed BDO Seidman, LLP as the Company’s Independent Registered Public Accounting Firm for the fiscal year ending April 30, 2006.

	April 25, 2004		April 27, 2003
Deposits and other	$	297,926	$	276,165
Lease acquisition rights	290,700		290,700
Deferred financing costs	346,882		342,198
	935,508		909,063
Less accumulated amortization	421,674		327,518
Other assets, net	$	513,834	$	581,545

AUDIT COMMITTEE; Hugh Devine, Edward P. Grace III, Robert C. Taft

~~4. Goodwill~~PART IV

~~Effective~~ITEM ~~April 29, 2002 the Company adopted FASB Statement No~~15. ~~141, Business Combinations~~ EXHIBITS ~~(“SFAS 141”)~~AND ~~and~~FINANCIAL ~~No. 142,~~STATEMENT ~~Goodwill~~SCHEDULES and Other Intangible Assets (“SFAS 142”). SFAS 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interest method of accounting for business combinations initiated after June 30, 2001. SFAS 141 also requires that the Company recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certain criteria. SFAS 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS 142, that the Company reclassify the carrying amounts of intangible assets and goodwill based on the criteria in SFAS 141.

~~SFAS~~(a) FINANCIAL ~~142 requires, among~~STATEMENTS ~~other~~AND things, that companies no longer amortize goodwill, but test goodwill for impairment at least annually. In addition, SFAS 142, requires that the Company identify reporting units for the purpose of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidelines in SFAS 142. SFAS 142 is required to be applied to all goodwill and other intangible assets regardless of when those assets were initially recognized.SCHEDULES

~~As of April 29,~~(1) Financial ~~2002,~~Statements ~~the~~listed ~~Company’s~~under ~~goodwill of $453,643 was associated with the acquisition of Capucino’s, Inc. in 1994. No adjustment to the $453,643 balance of goodwill was deemed necessary through April~~Part 25II, ~~2004.~~Item 8

~~F-15~~(2) Financial Statement Schedules have been omitted because the required information is not applicable or required, or because the required information is shown either in the Financial Statements or the notes thereto.

~~The effect on reported net income (loss) due to the discontinuance of goodwill amortization is as follows:~~EXHIBITS

	2004			2003		2002
Exhibit Number			Reference Number
Reported net income (loss)	$	(3,437,278	)	992,889		$	890,731
3.01	Amended Certificate of Incorporation of the Registrant		G-3.01*
Goodwill amortization	—			—		37,806
3.02	Amended By-Laws of the Registrant		A-3(b)*
Adjusted net income (loss) after discontinuance of goodwill amortization	$	(3,437,278	)	$	992,889	$	928,537
3.03	Designation of Preferred Stock		O-3.02*
Basic earnings (loss) per share as	$	(.49	)	$	.14	$	.13
4.01	Description of Stock (contained in the Amended Certificate of Incorporation of the Registrant, filed as Exhibit 3.01).		G-4.01*
reported Goodwill amortization	—			—		—
4.02	Form of Certificate evidencing shares of Common Stock		D-4(b)*
Basic earnings (loss) per share after discontinuance of goodwill amortization	$	(.49	)	$	.14	$	.13
10.01	Loan Agreement between Boston Restaurant Associates, Inc. and Commerce Bank & Trust Company dated April 30, 2002		K-6(a)(i)
Diluted earnings (loss) per share as reported	$	(.49	)	$	.14	$	.13
Goodwill amortization	—			—		—
Diluted earnings (loss) per share after discontinuance of goodwill amortization	$	(.49	)	$	.14	$	.13

~~5. Accrued Expenses~~52

Accrued expenses consist of the following:

10.02	Note from Boston Restaurant Associates, Inc. to Commerce Bank & Trust Company dated April 30, 2002	K-6(a)(ii)

10.03	Security Agreement between Boston Restaurant Associates, Inc. and Commerce Bank & Trust Company dated April 30, 2002	K-6(a)(iii)

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

10.05	Incentive Stock Option Plan**	B- I 0(h)*

10.06	2002 Combination Stock Option and Share Award Plan**	J-10(h)*

10.07	Charter of the Audit Committee of Boston Restaurant Associates, Inc., as adopted December 6, 2002 as amended March 5, 2004	1-99*

10.09	Second Allonge to Loan Agreement between Boston Restaurant Associates, herewith Inc. and Commerce Bank & Trust Company dated February 13, 2004	M-6(2)(i))*

10.10	First Allonges to Notes from Boston Restaurant Associates, Inc. to Commerce Bank & Trust Company dated February 13, 2004	M-6(a) (ii) *

10.11	Stock Purchase Warrant issued by Boston Restaurant Associates, Inc. in favor of Commerce Bank & Trust Company dated February 13, 2004	M-6a(iii)*

10.12	Employment agreement between Boston Restaurant Associates, Inc. and George R. Chapdelaine dated April 23, 2004**	M-99*

10.13	Stock Option Agreement	N-10(h)*

10.14	Loan Agreement between Boston Restaurant Associates, Inc. and Commerce Bank & Trust Company dated April 21, 2005	Filed Herewith

10.15	Loan Agreement between Boston Restaurant Associates, Inc. and Commerce Bank & Trust Company dated April 21, 2005	Filed Herewith

	April 25, 2004		April 27, 2003
Professional fees	$	187,935	$	195,250
Compensation	663,299		568,241
Interest	150,421		153,712
Accrued rent	24,992		45,266
Gift certificates	158,638		171,759
Other	139,675		96,156
Taxes other than income taxes	91,805		89,421
Total	$	1,416,765	$	1,319,805

F-16

10.16	Mortgage in favor of Commerce Bank & Trust Company dated April 21, 2005	Filed Herewith

10.17	Security Agreement between Boston Restaurant Associates, Inc. and Commerce Bank & Trust Company dated April 21, 2005	Filed Herewith

14	Code of Ethics	L-14*

21	Subsidiaries of the Registrant	A-21*

23	Consent of BDO Seidman, LLP	Filed herewith

31.01	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

31.02	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32.01	Certifications of Chief Executive Officer and Chief Financial Officer to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

6. Revolving Credit Facility and Long-Term Debt

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

**		Management Contract or Compensatory Plan or Arrangement

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

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

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

D		Incorporated by reference to the Company’s 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.

On April 30, 2002, the Company entered into a $3,500,000 credit facility with Commerce Bank and Trust Company. The credit facility permits the Company to borrow amounts to pay the costs for new restaurant openings and repay over a fixed term of either four or five years. No new borrowings may be made under the credit facility after April 30, 2005. Each borrowing under the credit facility bears interest at the bank’s base rate plus 1.75% until the conversion date, subject to an annual adjustment to the bank’s then current base rate plus 2.0%.54

~~The~~E Incorporated by reference to the Company’s ~~borrowed $922~~quarterly report on Form 10-QSB for the period ended January 25,~~000,~~ ~~under~~1998. The number set forth herein is the ~~facility~~number of the Exhibit in said quarterly report. F Incorporated by reference to the Company’s annual report on Form 10-KSB for the year ended April 30 26, ~~2002~~1998. toThe ~~pay~~number ~~off~~set forth herein is the ~~term~~number ~~notes under~~of the ~~prior~~Exhibit ~~bank~~in ~~facility~~said annual report. G Incorporated by reference to the Company’s annual report on Form 10-KSB for the year ended April 25, 1999. The ~~note~~ 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 ~~that~~period ~~borrowing~~ended ~~bore~~July ~~interest~~25, at1999. 6The number set forth herein is the number of the Exhibit in said quarterly report.~~75%~~ I Incorporated by reference to the Company’s quarterly report on Form 10-QSB for period ending January, 2001. The number set forth herein is the ~~first~~number of the Exhibit in said quarterly report. J Incorporate by reference to the Company’s Annual report on Form 10-K for the year ~~through~~ ended April ~~27,~~ ~~2003~~28, ~~was~~2002. ~~adjusted~~The number set forth herein is the number of the Exhibit in said annual report. K Incorporated by reference to 6the Company’s quarterly report on Form 10-Q for period ended July 28, 2002. The number set forth herein is the number of the Exhibit in said quarterly report. L Incorporated by reference to the Company’s quarterly report on Form 10-Q for period ended January 25%, ~~after~~2004. The number set forth herein is the number of the Exhibit in said quarterly report. M Incorporated by reference to the Company’s annual ~~adjustment~~report on Form 10-K for period ended April 30 25, ~~2003~~2004. It ~~was~~The ~~further adjusted~~number set forth herein is the number of the Exhibit in said annual report N Incorporated by reference to ~~7.25%~~the Company’s annual report on ~~February 13~~Form 8-K dated September 16, 2004. ~~and~~The 7number set forth herein in the number of the Exhibit in said schedule.~~00%~~ ~~after~~O Incorporated by reference to the Company’s annual ~~adjustment~~ report on ~~April 30~~Form 8-K dated January 21, ~~2004~~2005. The number set forth herein in the number of the Exhibit in said schedule.

During the first quarter of fiscal 2004 the Company borrowed $2,500,000 under the facility for the capital expenses associated with the construction of Polcari’s North End in Cambridge, Massachusetts, at an interest rate of 6% adjusted to 7% in February 13, 2004.55

On February 13, 2004 the Company borrowed $535,000 for further expansion at in an interest rate of 5.75% adjusted to 6.75% in February 13, 2004. The note is payable in monthly installments over four years.Signatures

AtPursuant April 25, 2004, the amount available for borrowing under the credit facility was $117,000. All borrowings under the credit facility are collateralized by substantially all of the assets of the Company and are subject to ~~various financial covenants. As of April 25, 2004~~ the ~~Company~~requirements ~~was not in compliance with certain financial covenants~~ of ~~the Credit Facility. However, on February~~Section 13, ~~2004 the~~or Company entered into an agreement with the bank under which Commerce Bank and Trust Company waived the covenants for year ended April 25, 2004 in exchange for a 1% waiver fee, a modification of the interest rate on all outstanding notes issued under the Credit Agreement from the current 6% to 7% per annum until the first quarter in which the Company is once again in compliance with all financial covenants, and the grant to the bank of warrants to purchase 76,000 shares of the Company’s common stock at a price of $.50 per share with a life of six year. The warrants are not exercisable for a period of one year from date of grant. The warrants had a fair value of $30,000 based on the Black Scholes pricing model and they were recorded in interest expense in the consolidated statement of operations in fiscal 2004. 15(~~see note 11~~d)~~. In August~~ ~~2004, in exchange for the establishment~~ of ~~new financial covenants for fiscal year 2005,~~ the ~~bank~~ ~~waived~~Securities ~~the~~Exchange ~~covenants~~Act ~~for the first quarter~~ of ~~fiscal~~1934, ~~year 2005. Because of~~ the ~~Company’s~~registrant ~~uncertainty regarding~~caused ~~its~~this ~~ability~~report to ~~satisfy~~be ~~these covenants, all bank debt has been~~signed ~~reclassified as current~~ on ~~the~~its ~~balance~~behalf ~~sheet~~by ~~for year ended April 25, 2004. If~~ the ~~Company fails to comply with these covenants~~undersigned, ~~the~~thereunto ~~bank~~duly ~~debt would be due on demand~~authorized.

F-17

	BOSTON RESTAURANT ASSOCIATES, INC.
	By:	s/George R. Chapdelaine
Date: July 19, 2005		George R. Chapdelaine, President

~~Long-Term~~Pursuant ~~Debt~~to the requirements of 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.

Long-term debt consists of the following:

SIGNATURES				DATE

/s/ George R. Capdelaine				July 19, 2005
George R. Chapdelaine, Chief
Executive Officer, President and Director (principal executive officer)

/s/Fran V. Ross				July 19, 2005
Fran V. Ross, Chief Financial Officer

/s/Robert Fabrizio				July 19, 2005
Robert Fabrizio, Chief Accounting Officer

/s/Hugh Devine				July 19, 2005
Hugh Devine, Director

/s/Edward P. Grace, III				July 19, 2005
Edward P. Grace, III, Director

/s/Roger Lipton				July 19, 2005
Roger Lipton, Director

/s/John P. Polcari. Jr.				July 18, 2005
John P. Polcari, Jr., Director

/s/ Peter E. Salas				July 19, 2005
Peter E. Salas, Director

/s/Robert C. Taft				July 19, 2005
Robert C. Taft, Director

	April 25, 2004		April 27, 2003
Notes payable to a bank bearing interest at 7.25% (subject to adjustment each year to the bank’s base rate plus 2%), representing borrowings against the Company’s revolving credit facility, payable in aggregate monthly installments of $22,108 through April 2006.	$	509,471	$	732,506
Notes payable to a bank bearing interest at 7.00%, (subject to adjustment each year to the bank’s base rate plus 2% representing borrowings against the Company’s revolving credit facility, payable in aggregate monthly installments of $54,187 through June 2008	2,338,687		—
Notes payable to a bank bearing interest at 6.75% (subject to adjustment at the conversion date of the note to the bank’s base rate plus 2%) representing borrowings against the Company’s revolving credit facility, payable of interest only payments until August 13, 2004 and then in monthly installments of $10,767 through February, 2009	$	535,000	—
Total	3,383,158		732,506
Less current maturities	3,383,158		220,835
Long-term debt	—		$	511,671

~~F-18~~Boston Restaurant Associates, Inc. and Subsidiaries

~~Maturities~~Consolidated ofFinancial ~~long-term debt are as follows:~~Statements

Fiscal year ending	Amount
2005	$	3,383,158
2006	—
2007	—
2008	—
2009	—
Thereafter
Total	$	3,383,158

April 24, 2005

7. Consolidated financial statements: Report of Independent Registered Public Accounting Firm Balance sheets as of April 24, 2005 and April 25, 2004 Statements of operations for each of the three years in the period ended April 24, 2005 Statements of stockholders’ equity (deficit) for each of the three years in the period ended April 24, 2005 Statements of cash flows for each of the three years in the period ended April 24, 2005 Summary of accounting policies Notes ~~Payable~~ -to ~~Stockholder~~consolidated financial statements

~~Notes~~Report ~~payable - stockholder consists~~ of ~~two~~Independent ~~notes,~~Registered ~~with~~Public anAccounting aggregate principal amount of $94,964 and interest at 7.18% and 8%, payable in aggregate monthly installments of principal and interest of $810, maturing January 2017. Maturities of notes payable - stockholder are as follows:Firm

Fiscal year ending	Amount
2005	$	6,114
2006	6,419
2007	6,736
2008	7,049
2009	7,391
Thereafter	61,255
Total	$	94,964

To the Board of Directors and Stockholders of

~~F-19~~Boston Restaurant Associates, Inc.

8We have audited the accompanying consolidated balance sheets of Boston Restaurant Associates, Inc. ~~Subordinated~~ and subsidiaries as of April 24, 2005 and ~~Debentures~~April 25, 2004, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the three years in the period ended April 24, 2005. 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.

~~Subordinated~~We ~~debentures with~~conducted anour ~~outstanding~~audits ~~balance~~in ofaccordance ~~$1,450,000~~with atthe ~~April 25,~~standards ~~2004~~of ~~and~~the Public ~~April 27,~~Company ~~2003~~Accounting ~~consist~~Oversight ofBoard ~~convertible~~(United ~~debentures~~States). ~~bearing~~Those ~~interest~~standards atrequire ~~variable~~that ~~rates~~we ofplan 8%and ~~through~~perform ~~December 31,~~the ~~1997,~~audit ~~10%~~to ~~through~~obtain reasonable assurance about whether ~~December 31,~~the ~~1998,~~financial ~~12%~~statements ~~through~~are ~~December 31,~~free ~~1999~~of ~~and~~material ~~14%~~misstatement. ~~through~~The Company is not ~~December 31,~~required ~~2011~~to have, ~~payable~~nor ~~semi-annually~~were ~~and~~we ~~convertible~~engaged ~~into~~to ~~the Company’s~~perform ~~common~~an ~~stock~~audit atof aits ~~conversion~~internal ~~rate~~control over offinancial $1reporting.25 ~~per~~Our ~~share. The~~audits ~~Company~~included ~~has~~consideration ~~recorded~~of ~~interest~~internal ~~costs~~control ~~related~~over tofinancial ~~these~~reporting ~~debentures~~as at a ~~straight-lined~~basis ~~rate~~for ofdesigning ~~13.2%. The~~audit ~~convertible~~procedures ~~debentures~~that are appropriate ~~convertible~~in the circumstances, but not for the purpose of expressing an atopinion on the ~~option~~effectiveness of the ~~holder,~~Company’s atinternal ~~any~~control ~~time~~over financial reporting. Accordingly, ~~and~~we ~~automatically~~express ~~convert~~no ~~into~~such ~~shares~~opinion. An audit includes ofexamining, ~~common~~on ~~stock~~a attest basis, evidence supporting the ~~conversion~~amounts ~~rate~~and ifdisclosures in the ~~average~~financial ~~bid~~statements, ~~price~~assessing of the ~~Company’s~~ ~~common~~accounting ~~stock~~principles ~~for~~used ~~any~~and significant ~~sixty~~estimates ~~consecutive~~made ~~trading~~by ~~days~~management, isas ~~equal~~well toas orevaluating the overall ~~greater~~financial ~~than~~statement $3presentation.~~00. The~~ ~~debentures~~We ~~are~~believe that our audits provide a ~~due~~reasonable onbasis ~~December 31,~~for ~~2011~~our opinion.

9In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Boston Restaurant Associates, Inc. ~~Taxes~~ and subsidiaries at April 24, 2005 and April 25, on2004, ~~Income~~and ~~(Loss)~~the results of their operations and their cash flows for each of the three years in the period ended April 24, 2005, in conformity with accounting principles generally accepted in the United States of America.

At/s/ ~~April 25,~~BDO ~~2004~~Seidman, ~~the~~ ~~Company has the following net operating loss carryforwards, subject to review by the Internal Revenue Service, available to offset future federal taxable income:~~LLP

	Amount		Expiration Dates
Net operating losses purchased in a 1994 acquisition, whose use is limited.	$	911,650	2005 - 2009
Net operating losses incurred before and after acquisition and available for immediate offset against taxable income.	$	3,096,000	2008 - 2024

Boston, Massachusetts

~~F-20~~June 24, 2005

~~Deferred tax assets are comprised of the following:~~F-2

	April 25, 2004			April 27, 2003
Deferred tax assets:
Net operating loss carryforwards	$	1,603,000		$	1,895,000
Fixed assets	1,780,000			791,000
Pre-opening costs	238,000			172,000
Accruals and other reserves	117,000			223,000
Valuation allowance	(3,738,000		)	(3,081,000		)
Net deferred tax assets	$	—		$	—

Boston Restaurant Associates, Inc.
and Subsidiaries
Consolidated Balance Sheets

The Company has provided a valuation allowance equal to 100% of its total deferred tax assets in recognition of the uncertainty regarding the ultimate amount of the deferred tax assets that will be realized. Pre-opening costs have been capitalized and amortized over a five year period for tax purposes.

	April 24, 2005		April 25, 2004
Assets (Note 5)

Current:
Cash and cash equivalents	$	687,207	$	651,754

Accounts receivable	111,404		113,985

Inventories (Note 1)	460,745		478,524

Prepaid expenses and other	161,529		189,119

Current assets of discontinued operations (Note 13)	164,597		318,560

Total current assets	1,585,482		1,751,942

Property and equipment (Notes 9 and 13):
Building	512,500		512,500
Leasehold improvements	6,651,396		6,169,369
Equipment, furniture and fixtures	4,567,460		4,255,627
	11,731,356		10,937,496

Less accumulated depreciation and amortization	7,598,139		6,664,446

Net property and equipment	4,133,217		4,273,050

Other assets, net (Note 2)	443,495		463,270

Goodwill (Note 3)	453,643		453,643
Noncurrent assets of discontinued operations (Note 13)	125,464		798,902
Total Assets	$	6,741,301	$	7,740,807

ASee ~~reconciliation~~accompanying summary of ~~the statutory~~accounting ~~federal~~policies ~~income tax rate~~ and ~~the~~notes ~~effective tax rate as a percentage of~~to ~~income~~consolidated ~~(loss)~~financial ~~before taxes on income (loss) is as follows:~~statements.

	April 25, 2004		April 27, 2003		April 28, 2002
Statutory rate	(34.0	)%	34.0	%	34.0	%
Change in valuation allowance	34.0		(34.0	)	(34.0	)
Effective tax rate	—	%	—	%	—	%

F-3

~~F-21~~Boston Restaurant Associates, Inc. and Subsidiaries Consolidated Balance Sheets

10. Commitments and Contingencies

	April 24, 2005			April 25, 2004

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	715,021		$	838,431

Accrued expenses (Note 4)	1,606,671			1,396,930

Current maturities (Notes 5, 6 and 9):
Long-term debt	353,396			3,383,158
Notes payable – stockholder	6,420			6,114
Obligations under capital leases	31,152			106,997
Current liabilities of discontinued operations (Note 13)	211,335			324,721

Total current liabilities	2,923,995			6,056,351

Long-term obligations:
Long-term debt, less current maturities (Note 5)	1,946,604			—
Notes payable - stockholder, less current maturities (Note 6)	82,430			88,850
Obligations under capital leases, less current maturities (Note 9)	—			31,152

Deferred rent (Note 9)	367,206			351,880

Subordinated debentures (Notes 7 and 10)	1,450,000			1,450,000
Other long-term liabilities (Note 9)	135,046			251,016
Noncurrent liabilities of discontinued operations (Note 13)	—			180,279

Total liabilities	6,905,281			8,409,528

Commitments and contingencies (Notes 9 and 10)

Stockholders’ equity (deficit) (Notes 7 and 10):
Preferred stock, $.01 par value, 10,000,000 shares authorized; 1,147,056 shares issued and outstanding at April 24, 2005	946,278			—
Common stock, $.01 par value 25,000,000 shares authorized; issued 7,060,170 shares; outstanding 7,035,170 shares as of April 24, 2005 and April 25, 2004	70,602			70,602
Additional paid-in capital	10,960,396			10,952,635
Accumulated deficit	(12,116,564		)	(11,667,266		)
	(139,288		)	(644,029		)

Less: treasury stock, 25,000 shares at cost as of April 24, 2005 and April 25, 2004	(24,692		)	(24,692		)

Total stockholder’s deficit	(163,980		)	(668,721		)

Total liabilities and stockholders’ deficit	$	6,741,301		$	7,740,807

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

The Company is obligated under noncancellable operating leases for its leased restaurant locations, office, commissary and warehouse space. Lease terms range from five to twenty years and, in certain instances, include options to extend the original terms. Generally, the Company is required to pay its proportionate share of real estate taxes, insurance, common area, and other operating costs in addition to annual base rent. Substantially all restaurant leases provide for contingent rent based on sales in excess of specified amounts. The Company also leases equipment under capital leases.F-4

~~The~~Boston ~~following~~Restaurant ~~is an analysis of equipment held under capital leases~~Associates, ~~included in property and equipment in the accompanying consolidated balance sheets:~~Inc.

	April 25, 2004		April 27, 2003
Equipment	$	1,739,896	$	1,739,896
Less accumulated amortization	1,266,454		1,017,897
Net leased property under capital leases	$	473,442	$	721,999

and Subsidiaries

~~F-22~~Consolidated Statements of Operations

Aggregate minimum rental requirements under capital leases and operating leases as of April 25, 2004, are approximately as follows:

Years ended	April 24, 2005			April 25, 2004			April 27, 2003

Revenues:
Restaurant sales	$	22,628,783		$	19,466,386		$	19,633,263
Franchise fees (Note 9)	269			16,600			64,275

Total revenues	22,629,052			19,482,986			19,697,538

Costs and expenses:
Cost of food, beverages and liquor	4,628,052			3,769,034			3,620,451
Other operating expenses	13,912348			12,044,045			11,666,240

General and administrative	2,450,578			2,738,690			2,610,666

Depreciation and amortization	976,686			930,272			922,366
Pre-opening costs	93,196			77,140			—
Litigation and settlement credits (Note 9)	(98,259		)	(246,228		)	(443,445		)

Total costs and expenses	21,962,601			19,312,953			18,376,278

Filing Compare · BOSTON RESTAURANT ASSOCIATES INC