U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

ý	Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.	~~Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934.~~
		For the quarterly period ended July 25, 2004.
	For the quarterly period ended July 24, 2005.
o	Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934.	~~Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934.~~
	For the transition period from to .	~~For the transition period from to .~~
Commission File Number
0-18369

~~BOSTON~~Commission ~~RESTAURANT~~File ~~ASSOCIATES, INC.~~Number

~~(Exact Name of Registrant as Specified in its Charter)~~0-18369

Delaware		61-1162263
(State or Other Jurisdiction of Incorporation or Organization)		IRS Employer Identification No.
999 Broadway Saugus, Massachusetts 01906
(Address of Principal Executive Offices)
(781) 231-7575
(Registrant’s Telephone Number Including area code)

BOSTON RESTAURANT ASSOCIATES, INC.

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

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

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

~~Indicate the number of shares outstanding of~~999 ~~each of the registrant classes of common stock as of the latest practical date. Common stock $0.01 par value 7,035,170 as of August 31, 2004.~~Broadway

~~BOSTON RESTAURANT ASSOCIATES~~Saugus, ~~INC.~~ Massachusetts 01906

~~INDEX~~(Address of Principal Executive Offices)

PART I - FINANCIAL STATEMENTS
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of July 25, 2004 (unaudited) and April 25, 2004
	Unaudited Condensed Consolidated Statements of Operations for the thirteen weeks ended July 25, 2004 and July 27, 2003
	Unaudited Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended July 25, 2004 and July 27, 2003
	Notes to Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosure About Market Risk
Item 4.	Controls and Procedures
PART II - OTHER INFORMATION
Item 6.	Exhibits and Reports on Form 8-K
	SIGNATURES

(781) 231-7575

~~PART~~(Registrant’s 1Telephone Number -Including ~~FINANCIAL INFORMATION~~area code)

~~ITEM~~Indicate by check whether the registrant: (1.) has filed ~~FINANCIAL~~all ~~STATEMENTS~~reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during 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.

~~BOSTON~~Indicate ~~RESTAURANT~~by ~~ASSOCIATES,~~check ~~INC~~whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ~~AND~~o No ~~SUBSIDIARIES~~ ý.

~~CONDENSED~~Indicate ~~CONSOLIDATED~~the ~~BALANCE~~number ~~SHEETS~~of shares outstanding of each of the registrant classes of common stock as of the latest practical date. Common stock $0.01 par value 7,035,170 as of August 26, 2005.

	JULY 25, 2004			April 25, 2004
	(unaudited)
ASSETS
Current:
Cash and cash equivalents	$	360,481		$	651,754
Accounts receivable	159,361			169,975
Inventories	730,944			735,910
Prepaid expenses and other	127,628			194,303
Total current assets	1,378,414			1,751,942
Property and equipment:
Building	512,500			512,500
Leasehold improvements	8,759,993			8,480,782
Equipment, furniture and fixtures	5,959,857			5,764,996
	15,232,350			14,758,278
Less accumulated depreciation and amortization	9,993,950			9,736,890
Net property and equipment	5,238,400			5,021,388
Goodwill	453,643			453,643
Other assets	496,003			513,834
Total assets	$	7,566,460		$	7,740,807
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	1,361,486		$	1,058,469
Accrued expenses	1,424,051			1,416,765
Current maturities:
Notes payable-stockholder	6,189			6,114
Long-term debt	3,203,070			3,383,158
Obligations under capital leases	198,461			191,845
Total current liabilities	6,193,257			6,056,351
Long-term obligations:
Notes payable-stockholder, less current maturities	87,275			88,850
Long-term debt, less current maturities	0			0
Obligations under capital leases, less current maturities	9,676			61,842
Subordinated debentures	1,450,000			1,450,000
Deferred rent	564,380			501,469
Other long-term liabilities	243,250			251,016
Total liabilities	8,547,838			8,409,528
Commitments and contingencies
Stockholders’ deficit :
Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued	0			0
Common stock, $.01 par value, 25,000,000 shares authorized, 7,060,170 shares issued	70,602			70,602
Additional paid in capital	10,952,635			10,952,635
Accumulated deficit	(11,979,923		)	(11,667,266		)
Total	(956,686		)	(644,029		)
Less:
Treasury stock, 25,000 shares at cost	(24,692		)	(24,692		)
Total stockholders’ deficit	(981,378		)	(668,721		)
Total liabilities and stockholders’ deficit	$	7,566,460		$	7,740,807

BOSTON RESTAURANT ASSOCIATES, INC.

~~See accompanying notes.~~INDEX

PART I - FINANCIAL STATEMENTS

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of July 24, 2005 (unaudited) and April 24, 2005

	Unaudited Condensed Consolidated Statements of Operations for the thirteen weeks ended July 24, 2005 and July 25, 2004

	Unaudited Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended July 24, 2005 and July 25, 2004

	Notes to Condensed Consolidated Financial Statements

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosure About Market Risk

Item 4.	Controls and Procedures

PART II - OTHER INFORMATION

Item 6.	Exhibits

	SIGNATURES

~~BOSTON~~PART 1 - ~~RESTAURANTS~~FINANCIAL ~~ASSOCIATES,INC. AND SUBSIDIARIES~~INFORMATION

~~CONDENSED~~ITEM ~~CONSOLIDATED~~1. ~~STATEMENTS OF~~FINANCIAL ~~OPERATIONS~~STATEMENTS

~~(unaudited)~~BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES

	Thirteen Weeks Ended
	July 25, 2004			July 27, 2003
Revenues:
Restaurant sales	$	6,526,635		$	5,270,967
Royalties	269			4,405
Total revenues	6,526,904			5,275,372
Costs and expenses:
Cost of food, beverages and liquor	1,531,820			1,046,489
Payroll	2,081,290			1,751,235
Other operating expenses	2,133,102			1,746,051
General and administrative	616,393			696,580
Depreciation and amortization	267,182			256,625
Pre-opening costs	89,954			57,170
Total costs and expenses	6,719,741			5,554,150
Operating Loss	(192,837		)	(278,778
Other income	2,548			217,351
Interest income	95			757
Interest expense	(122,463		)	(96,218
Net Loss	$	(312,657	)	$	(156,888
Loss per share-basic	$	(0.04	)	$	(0.02
Loss per share-diluted	$	(0.04	)	$	(0.02
Weighted average number of common shares outstanding-basic	7,035,170			7,035,170
Weighted average number of dilutive common shares outstanding	7,035,170			7,035,170

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes

	July 24,			April 24,
	2005			2005
	(unaudited)
ASSETS
Current:
Cash and cash equivalents	$	773,534		$	687,207
Accounts receivable	115,432			111,404
Inventories	504,668			460,745
Prepaid expenses and other	58,323			161,529
Current assets of discontinued operations	95,443			164,597

Total current assets	1,547,400			1,585,482

Property and equipment:
Building	512,500			512,500
Leasehold improvements	6,684,749			6,651,396
Equipment, furniture and fixtures	4,578,080			4,567,460

	11,775,329			11,731,356

Less accumulated depreciation and amortization	7,820,987			7,598,139

Net property and equipment	3,954,342			4,133,217

Goodwill	453,643			453,643

Other assets	430,490			443,495

Noncurrent assets of discontinued operations	0			125,464

Total assets	$	6,385,875		$	6,741,301

LIABILITIES AND STOCKHOLDERS’ EQUITY(DEFICIT)
Current liabilities:
Accounts payable	$	689,085		$	715,021
Accrued expenses	1,290,765			1,606,671
Current maturities:
Notes payable-stockholder	6,526			6,420
Long-term debt	360,349			353,396
Obligations under capital leases	3,695			31,152
Current liabilities of discontinued operations	124,707			211,335

Total current liabilities	2,475,127			2,923,995

Long-term obligations:
Notes payable-stockholder, less current maturities	80,748			82,430
Long-term debt, less current maturities	1,853,831			1,946,604
Obligations under capital leases, less current maturities	0			0
Subordinated debentures	1,450,000			1,450,000
Deferred rent	364,673			367,206
Other long-term liabilities	127,601			135,046
Noncurrent liabilities of discontinued operations	0			0

Total liabilities	6,351,980			6,905,281

Commitments and contingencies

Stockholders’ equity(deficit) :
Preferred stock, $.01 par value, 10,000,000 shares authorized, 1,147,056 shares issued	946,278			946,278
Common stock, $.01 par value, 25,000,000 shares authorized, 7,060,170 shares issued	70,602			70,602
Additional paid in capital - common	10,960,396			10,960,396
Accumulated deficit	(11,918,689		)	(12,116,564		)

Total	58,587			(139,288		)
Less:
Treasury stock, 25,000 shares at cost	(24,692		)	(24,692		)
Total stockholders’ equity(deficit)	33,895			(163,980		)

Total liabilities and stockholders’ equity(deficit)	$	6,385,875		$	6,741,301

4See accompanying notes.

~~BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES~~3

~~CONDENSED~~BOSTON ~~CONSOLIDATED~~RESTAURANTS ~~STATEMENTS~~ASSOCIATES,INC. OFAND ~~CASH FLOWS~~SUBSIDIARIES

~~(unaudited)~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	July 25, 2004			July 27, 2003
Net cash provided by (used for) operating activities	$	409,937		$	(122,816	)
Cash flows from investing activities:
Capital expenditures	(474,072		)	(1,404,794		)
Net cash used for investing activities	(474,072		)	(1,404,794		)
Cash flows from financing activities:
Repayments of long-term debt	(180,088		)	(54,242		)
Repayments of capital lease obligations	(45,550		)	(58,968		)
Repayments of stockholder loans	(1,500		)	(1,428		)
Repayments of subordinated convertible debentures	0			0
Proceeds from long-term debt	0			1,666,000
Net cash provided by (used for) financing activities	(227,138		)	1,551,362
Net increase (decrease) in cash and cash equivalents	(291,273		)	23,752
Cash and cash equivalents at beginning of period	651,754			1,106,701
Cash and cash equivalents at end of period	$	360,481		$	1,130,453

(unaudited)

See accompanying notes.

	Thirteen Weeks Ended
	July 24,			July 25,
	2005			2004

Revenues:
Restaurant sales	$	5,736,842		$	5,385,450
Franchise fees	0			269

Total revenues	5,736,842			5,385,719

Costs and expenses:
Cost of food, beverages and liquor	1,105,941			1,172,575
Payroll	1,652,659			1,567,639
Other operating expenses	1,867,298			1,687,480
General and administrative	643,683			616,393
Depreciation and amortization	231,845			229,354
Pre-opening costs	0			89,954

Total costs and expenses	5,501,426			5,363,395

Operating Income	235,416			22,324

Other income	1,953			2,505
Interest income	2,418			95
Interest expense	(95,729		)	(119,089		)

Income (Loss) from continuing operations before discontinued operations	144,058			(94,165		)

Discontinued operations :
Income (Loss) from operations	(58,468		)	(218,492		)
Gain (Loss) from disposal of discontinued operations	132,004			0

Income (Loss) from discontinued operations	73,536			(218,492		)

Net Income (Loss)		217,594			(312,657	)

Less: preferred stock dividends	(19,719		)		0

Income (Loss) available to common shareholders	$	197,875		$	(312,657	)

Income (Loss) per share of common stock (Basic and Diluted)

Continuing Operations	$	0.02		$	(0.01	)

Discontinued Operations	$	0.01		$	(0.03	)

Net Income (Loss)	$	0.03		$	(0.04	)

Weighted average number of common shares outstanding-basic	7,035,170			7,035,170

Weighted average number of dilutive common shares outstanding	7,125,068			7,035,170

5See accompanying notes.

~~BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES~~4

~~NOTES~~BOSTON TORESTAURANT ~~CONDENSED~~ASSOCIATES, ~~CONSOLIDATED~~INC. ~~FINANCIAL~~AND ~~STATEMENTS~~SUBSIDIARIES

~~JULY~~CONDENSED ~~25,~~CONSOLIDATED STATEMENTS ~~2004~~OF CASH FLOWS

(unaudited)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

	Thirteen Weeks Ended
	July 24,			July 25,
	2005			2004

Net cash provided by operating activities	$	163,439		$	409,937

Cash flows from investing activities:
Capital expenditures	(43,973		)	(474,072		)
Proceeds from sale of assets	81,714			0

Net cash provided by (used for) investing activities	37,741			(474,072		)

Cash flows from financing activities:
Repayments of long-term debt	(85,820		)	(180,088		)
Repayments of capital lease obligations	(27,457		)	(45,550		)
Repayments of stockholder loans	(1,576		)	(1,500		)

Net cash used for financing activities	(114,853		)	(227,138		)

Net increase (decrease) in cash and cash equivalents	86,327			(291,273		)

Cash and cash equivalents at beginning of period	687,207			651,754

Cash and cash equivalents at end of period	$	773,534		$	360,481

~~The~~See accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Qnotes. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the thirteen-week period ended July 25, 2004 are not necessarily indicative of the results that may be expected for the year ending April 24, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended April 25, 2004 The balance sheet at April 25, 2004 has been derived from the audited financial statements at that date. The opinion of BDO Seidman, LLP on the Company's fiscal 2004 financial statement included an explanatory paragraph expressing concern about the Company's ability to continue as a going concern.

The accompanying statements of operations and cash flows for the fiscal 2005 period reflects the consolidated operations and cash flow of five casual dining Italian restaurants and thirteen Pizzeria Reginas for the 13 weeks and one Pizzeria Regina for 2 days and fiscal 2004 periods reflect the consolidated operations and cash flow of four casual dining Italian restaurant and twelve Pizzeria Regina restaurants for the entire period.5

2BOSTON RESTAURANT ASSOCIATES, INC. ~~NET INCOME~~AND ~~(LOSS) PER SHARE~~SUBSIDIARIES

~~The~~NOTES ~~Company~~TO ~~follows~~CONDENSED ~~Statement~~CONSOLIDATED ofFINANCIAL ~~Financial Accounting Standards No. 128, “Earnings per Share” (“SFAS 128”).~~STATEMENTS

~~The following is a reconciliation of the denominator (number of shares) used in the computation of earnings per share.~~JULY ~~The numerator~~24, ~~net income (loss), is the same for the basic and diluted computations.~~2005

~~The Company accounts for stock options using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,”~~ (~~“APB 25”~~unaudited) and related interpretations. Accordingly, the Company has recognized no compensation cost for its stock option plans. The Company follows the disclosure provisions of Statement of Financial Accounting Standards No. 123 (“SFAS No. 123”), “Accounting for Stock-Based Compensation,” and SFAS No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure” (“SFAS No. 148”), which require the disclosure of the effects of fair value accounting on earnings and earnings per share of common stock on a pro forma basis.

61. NATURE OF BUSINESS AND BASIS OF PRESENTATION

~~Had~~The ~~compensation~~accompanying ~~cost~~unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions ~~Company’s~~to ~~stock~~Form 10-Q. ~~options~~Accordingly, ~~been~~they ~~determined~~do ~~based~~not ~~upon~~include all of the ~~fair~~information ~~value~~and atfootnotes required ~~the~~by ~~grant~~generally ~~date~~accepted accounting principles for ~~awards~~complete financial ~~under~~statements. In the ~~plans~~opinion ~~consistent~~of management, ~~with~~all ~~the~~adjustments ~~methodology~~(consisting ~~prescribed~~of ~~under~~normal ~~SFAS~~recurring accruals) Noconsidered necessary for a fair presentation have been included. Operating results for the thirteen-week period ended July ~~123~~24, 2005 are not necessarily indicative of the ~~Company’s~~results that ~~net~~may ~~income~~be ~~(loss)~~expected ~~would~~for ~~have~~the ~~been~~year ~~adjusted~~ending April 30, 2006. For further information, refer to the ~~pro~~consolidated ~~forma~~financial ~~amounts~~statements ~~indicated~~and ~~below~~footnotes ~~along~~thereto ~~with~~included in the ~~additional disclosures~~Company’s ~~required~~annual byreport ~~SFAS~~on ~~No.~~Form ~~148~~10-K for the year ended April 24, 2005. asThe balance sheet at April 24, 2005 has ~~follows:~~been derived from the audited financial statements at that date.

	Thirteen Weeks Ending July 25, 2004			Thirteen Weeks Ending July 27, 2003
Net loss as reported	$	(312,657	)	$	(156,888	)
Add:
Stock-based employee compensation expense included in reported net loss, net of tax	—			—
Deduct:
Total stock-based compensation expense determined under fair value based method	(20,369		)	(10,337		)
Net loss - pro forma	$	(333,026	)	$	(167,225	)
Basic and diluted loss per share:
As reported	$	(.04	)	$	(.02	)
Pro forma	$	(.05	)	$	(.02	)

The accompanying statements of operations and cash flows for the fiscal 2006 period reflect the consolidated operations and cash flow of three casual dining Italian restaurants and thirteen Pizzeria Reginas for the 13 weeks and fiscal 2005 periods reflect the consolidated operations and cash flow of three casual dining Italian restaurant and twelve Pizzeria Regina restaurants for the entire period and one Pizzeria Regina for 2 days.

7In fiscal 2005, the Company completed the asset sale of Polcari’s of Hyannis, Inc. and closed the Pizzeria Regina in Richmond, Virginia at the end of the lease term. The sale of Polcari’s of Cambridge, Inc. was completed on July 22, 2005. The accompanying financial statements have been reclassified to reflect Polcari’s of Hyannis, Inc., Polcari’s of Cambridge, Inc. and Pizzeria Regina at Richmond, Virginia as discontinued operations.

	Thirteen weeks ended
	July 25, 2004	July 27, 2003
Basic Shares	7,035,170	7,035,170
Effect of Dilutive Securities:
Options	0	0
Diluted Shares	7,035,170	7,035,170

2. NET INCOME (LOSS) PER SHARE

The ~~following~~Company ~~table~~follows ~~summarizes securities~~Statement ~~that were outstanding as~~ of ~~July~~Financial ~~25,~~Accounting ~~2004~~Standards ~~and July 27~~No. 128, ~~2003,~~“Earnings ~~but not included in the calculation of net loss~~ per ~~share~~Share” ~~because~~(“SFAS ~~such securities are anti-dilutive:~~128”).

	Thirteen weeks ended
	July 25, 2004	July 27, 2003
Options	834,800	713,800
Warrants	576,000	500,000
Convertible Debentures	1,160,000	1,160,000

The following is a reconciliation of the denominator (number of shares) used in the computation of earnings per share. The numerator, net income (loss), is the same for the basic and diluted computations.

3. NEW ACCOUNTING PRONOUNCEMENTS

	Thirteen weeks ended
	July 24, 2005	July 25, 2004

Basic Shares	7,035,170	7,035,170

Effect of Dilutive Securities:

Options	89,898	0
Diluted Shares	7,125,068	7,035,170

~~None~~The following table summarizes securities that were outstanding as of July 24, 2005 and July 25, 2004, but not included in the calculation of net income (loss) per share because such securities are anti-dilutive:

	Thirteen weeks ended
	July 24, 2005	July 25, 2004

Options	737,410	834,800

Warrants	601,000	576,000

Convertible Debentures	1,160,000	1,160,000

Convertible Preferred Stock	1,147,056	—

~~ITEM~~The 2Company accounts for stock options using the intrinsic value method in accordance with Accounting Principles Board Opinion No. ~~Management’s~~ 25, ~~Discussion~~“Accounting for Stock Issued to Employees,” (“APB 25”) and ~~Analysis~~related interpretations. Accordingly, the Company has recognized no compensation cost for its stock option plans. The Company follows the disclosure provisions of Statement of Financial ~~Condition~~Accounting Standards No. 123 (“SFAS No. 123”), “Accounting for Stock-Based Compensation,” and ~~Results~~SFAS ofNo. 148, ~~Operations~~“Accounting

~~RESULTS OF OPERATIONS~~6

~~Overview~~for Stock-Based Compensation - Transition and Disclosure” (“SFAS No. 148”), which require the disclosure of the effects of fair value accounting on earnings and earnings per share of common stock on a pro forma basis.

~~The Company’s restaurant sales in the most~~ Had ~~recent~~compensation ~~quarter~~cost ~~were~~for ~~$6,527,000 compared to sales of $5,271,000 in~~ the ~~first quarter of fiscal 2004, an increase of 23.8%. The~~ Company’s ~~management~~stock ~~believes~~options ~~that~~been ~~the~~determined ~~increase~~based ~~in revenue is~~upon ~~primarily attributable to~~ the ~~opening~~fair ofvalue ~~the new Polcari’s in Cambridge, Massachusetts in October, 2003, the new Pizzeria Regina~~ at the ~~Prudential Center~~grant indate ~~Boston,~~for ~~Massachusetts~~awards inunder ~~April 2004, and~~ the ~~new~~plans ~~Pizzeria~~consistent ~~Regina~~with at the ~~South Station in Boston, Massachusetts in July 2004. The Company had a net~~ ~~loss~~methodology ~~for~~prescribed ~~the~~under ~~first~~SFAS ~~quarter of fiscal 2005 of $313~~No. 123,~~000,~~ ~~compared to a net loss of $157,000 for~~ the ~~same quarter of fiscal 2004. The~~ Company’s ~~management~~net ~~believes~~income ~~that the~~(loss) ~~decrease~~would inhave ~~profit~~been isadjusted ~~the~~to ~~result of operating losses incurred by~~ the ~~Polcari’s North~~pro ~~End~~forma ~~restaurant~~amounts inindicated ~~Cambridge,~~below ~~Massachusetts~~along ~~and of an increase in~~with ~~pre-opening expenses related to~~ the ~~new~~additional ~~Pizzeria~~disclosures ~~Regina~~required atby ~~the~~SFAS ~~South~~No. 148 ~~Station~~as ~~in Boston, Massachusetts.~~follows:

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 change the absolute dollar amounts of revenues and expenses, and the build out and opening of new stores can 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’s North End units.

	Thirteen Weeks Ending			Thirteen Weeks Ending
	July 24, 2005			July 25, 2004

Net income (loss)	$	217,594		$	(312,657	)
Less dividends	(19,719		)	-0-
Net income (loss) available to Common Stockholders as reported	197,785			(312,657		)
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	(3,709		)	(20,369		)
Net loss – pro forma	$	194,166		$	(333,026	)
Basic and diluted loss per share:
As reported	$	.03		$	(.04	)
Pro forma	$	.03		$	(.05	)

In the fiscal 2005 period, there were 18 units in operation for the entire period and 1 Pizzeria Regina in operation for 2 days, and in fiscal 2004 period there were 16 units in operation for the entire period. The following table sets forth all revenues, costs and expenses as a percentage of total revenues for the periods indicated for revenue and expense items included in the consolidated statements of operations:7

93. CONTINGENCY

	July 25, 2004		July 27, 2003
Revenues:
Restaurant sales	100	%	100	%
Other	—		—
Total revenues	100	%	100	%
Costs and expenses:
Cost of food, beverages and liquor	23		20
Other operating expenses- payroll	32		33
Other operating expenses exclusive of payroll	33		33
General and administrative	10		13
Depreciation and amortization	4		5
Pre-opening costs	1		1
Operating income (loss)	(3	)	(5	)
Interest expense, net	(2	)	(2	)
Other income	—		4
Net income (loss)	(5	)%	(3	)%

The Pizzeria Regina at the Burlington Mall, Burlington, Massachusetts is currently operating under a tenancy at will and the Landlord commenced a summary process on July 14, 2005 to terminate the tenancy at will. The Company intends to vigorously defend this action however, the outcome is uncertain. Should the Company be required to vacate this space, the Company would suffer material revenue and income loss.

~~Thirteen Weeks Ended July 25, 2004 as~~4. NEW ~~Compared~~ACCOUNTING ~~to Thirteen Weeks ended July 27, 2003~~PRONOUNCEMENTS

~~Restaurant Sales.~~None

~~Restaurant~~ITEM ~~sales in the most recent quarter were $6,527,000 compared to restaurant sales in the prior year’s period of $5,271,000~~2. ~~The Company~~ Management’s ~~management believes that the~~Discussion ~~increase~~and inAnalysis ~~revenue~~of isFinancial ~~primarily~~Condition ~~attributable~~and toResults ~~the opening~~ of ~~the new Polcari’s in Cambridge, Massachusetts in October, 2003, the new Pizzeria Regina at the Prudential~~Operations

10RESULTS OF OPERATIONS

Center in Boston, Massachusetts in April 2004, and the new Pizzeria Regina at the South Station in Boston, Massachusetts in July 2004.Overview

~~Net~~The ~~sales at the~~ Company’s ~~Pizzeria~~restaurant ~~Regina~~sales in ~~restaurants~~the ~~increased~~most to recent quarter were $35,~~293~~737,000 incompared ~~the~~to ~~current~~sales ~~period~~of ~~from~~ $25,~~580~~385,000 in the first ~~prior~~quarter ~~year’s period~~of fiscal 2005, an increase of 6.5%. The Company’s management believes that the increase in ~~restaurant~~revenue ~~sales was~~is ~~principally~~primarily ~~due~~attributable to the opening of the new Pizzeria Regina at the ~~Prudential Center,~~South ~~the~~Station ~~new~~in ~~Pizzeria~~Boston, ~~Regina~~Massachusetts atin ~~South~~July 2004 ~~Station,~~ and ~~the~~an increase ~~Faneuil~~in ~~Hall~~same ~~Pizzeria Regina~~store ~~location~~sales. ~~which~~The ~~was~~Company ~~open~~had a net income for the ~~entire~~first quarter ~~current~~of ~~period~~fiscal 2006 of $218,000, compared to ~~its temporary~~a ~~closing~~net ~~from~~loss ~~May~~of 9$313,000 ~~2003~~for tothe same ~~July~~quarter 2,of ~~2003~~fiscal 2005. The Company’s management believes that the increase in profit is the ~~prior~~result ~~year~~of the gain on the sale of Polcari’s ~~period~~of Cambridge, Inc. and the contribution of the two additional Pizzeria Regina’s opened in the spring and summer of last year.

~~Net~~The ~~sales~~key atfactors that affect our operating results are the ~~Company’s~~impact ~~full~~of ~~service~~new ~~casual~~store ~~dining~~openings, ~~restaurants~~comparable restaurant sales, which are ~~increased~~driven by comparable customer counts and check average, and our ability to manage $3operating expenses such as food cost,~~228,000~~ labor and benefits and other costs. Changes in the ~~current~~number ~~period~~of restaurants ~~from~~in $2operation can change the absolute dollar amounts of revenues and expenses,~~680,000~~ inand the ~~prior~~build out and opening of new stores can affect operating ~~year~~profits. Each restaurant unit’s contribution ~~period~~margin will vary over the life of the restaurant. ~~This~~Margins ~~increase~~tend ~~was~~to be low when a restaurant is ~~primarily~~first ~~attributable~~opened tountil ~~the~~customer ~~opening~~traffic ofreaches planned levels. Margins can also deteriorate at the ~~new~~end ~~Polcari~~of a unit’s inlife ~~Cambridge, Massachusetts~~cycle ~~and~~due anto ~~increase~~a decline in ~~same~~customer ~~store~~traffic ~~sales~~caused by a variety of factors 2outside the control of the Company.0% These economic conditions impact both the Pizzeria Regina units and the Polcari’s North End units.

~~Net~~The ~~sales~~Pizzeria Regina at the ~~Company’s~~Burlington ~~commissary~~Mall, Burlington, ~~were~~Massachusetts ~~$6,000~~is incurrently ~~the~~operating ~~current~~under ~~period~~a tenancy at will and ~~compared~~the toLandlord ~~$11~~commenced a summary process on July 14,~~000~~ in2005 ~~the~~to ~~prior~~terminate ~~year’s~~the tenancy ~~period~~at will. The Company intends to vigorously defend

~~Royalties~~8

~~During~~this ~~the~~action. Should ~~current year period,~~ the Company ~~recognized~~be $0required into ~~royalties from~~vacate athis ~~domestic Pizzeria Regina franchise compared to $4~~space,~~000~~ ~~in royalties in~~ the ~~prior year’s period. The~~ Company~~’s domestic~~ ~~Pizzeria Regina franchise at the Palms Casino in Las Vegas, Nevada was~~would ~~closed~~suffer onmaterial ~~April~~revenue ~~30,~~and ~~2004~~income loss.

In the fiscal 2006 period, there were 16 units in operation for the entire period, and in the fiscal 2005 period there were 15 units in operation for the entire period and one Pizzeria Regina in operations for two days. The following table sets forth all revenues, costs and expenses as a percentage of total revenues for the periods indicated for revenue and expense items included in the consolidated statements of operations:

	July 24, 2005		July 25, 2004
(1)
Revenues:
Restaurant sales	100	%	100	%
Other	—		—

Total revenues	100	%	100	%

Costs and expenses:
Cost of food, beverages and liquor	19.3		21.8
Other operating expenses- payroll	28.9		29.1
Other operating expenses exclusive of payroll	32.5		31.3
General and administrative	11.2		11.4
Depreciation and amortization	4.0		4.3
Pre-opening costs	—		1.7
Operating income (loss)	4.1		.4
Interest expense, net	(1.6	)	(2.2	)
Other income	—		—
Income (loss) from continuing operations before discontinued operations	2.5		(1.8	)
Income (loss) from discontinued operations	1.3		(4.0	)
Net Income (loss)	3.8	%	(5.8	)%

(1) In fiscal 2005, the Company completed the asset sale of Polcari’s of Hyannis, Inc. and closed the Pizzeria Regina in Richmond, Virginia at the end of the lease term. The sale of Polcari’s of Cambridge, Inc. was completed on July 22, 2005. The financial statements included with this report have been reclassified to reflect Polcari’s of Hyannis, Inc., Polcari’s of Cambridge, Inc., and Pizzeria Regina at Richmond, Virginia as discontinued operations.

Thirteen Weeks Ended July 24, 2005 as Compared to Thirteen Weeks ended July 25, 2004

Restaurant Sales

Restaurant sales in the most recent quarter were $5,737,000 compared to restaurant sales in the prior year’s period of $5,386,000. The Company’s management believes that the increase in revenue is primarily attributable to the Pizzeria Regina at the South Station in Boston, Massachusetts being open for the entire period and an increase in same store sales. Sales volume for the restaurants open throughout both fiscal 2006 and 2005 periods increased by 1.3%

Net sales at the Company’s Pizzeria Regina restaurants increased to $3,489,000 in the current period from $3,228,000 in the prior year’s period. The increase in restaurant sales was principally due to the Pizzeria Regina at South Station being opened for the entire period. This increase was partially offset by a decline in same store sales of 0.6%

Net sales at the Company’s full service casual dining restaurants increased to $2,233,000 in the current period from $2,152,000 in the prior year’s period. The increase in restaurant sales was primarily attributable to an increase in same store sales of 3.8%.

Net sales to third parties at the Company’s commissary were $15,000 in the current period compared to $6,000 in the prior year’s period.

Costs and Expenses

Cost of Food, Beverages and Liquor.

Cost of food, beverages and liquor as a percentage of total revenues for all restaurants was 2319% in the fiscal ~~2005~~2006 period compared to 2022% in the fiscal ~~2004~~2005 period. The ~~increase~~ decrease as a percentage of total revenues was primarily attributable to ~~increase~~two ~~in costs~~Pizzeria Regina locations that eliminated certain food items from ~~suppliers~~their menus and to a decrease in ~~general~~cheese costs.

The cost of food, beverage and liquor was $1,~~532~~106,000 in the fiscal ~~2005~~ 2006 period compared to $1,~~046~~173,000 in the fiscal ~~2004~~2005 period. The dollar ~~increase~~ decrease was due in part to the ~~opening of a new Pizzeria Regina kiosk in Boston, the Cambridge, Massachusetts Polcari’s North End restaurant, and an increase in costs from suppliers in general.~~

The cost of food, beverages and liquor as a percentage of restaurant sales at the Pizzeria Regina restaurants was 19% in the current period compared to 16% in the prior year’s period. The increase as a percentage of restaurant sales was primarily due to higher cheese costs.10

11elimination of certain food items at two Pizzeria Regina locations and to a decrease in cheese costs.

The cost of food, ~~beverage~~beverages and liquor as a percentage of restaurant sales at the Pizzeria Regina restaurants was ~~$627,000~~16% in the current period compared to ~~$400,000~~19% in the prior year’s period. The ~~dollar~~decrease ~~increase~~as ~~was primarily~~a ~~due~~percentage ~~to the opening~~ of ~~the~~restaurant sales ~~new~~was ~~Pizzeria~~primarily ~~Regina~~due atto the ~~Prudential Center~~elimination inof ~~Boston,~~food ~~Massachusetts,~~items ~~the new Pizzeria Regina~~ at ~~South~~two ~~Station in Boston, Massachusetts,~~ Pizzeria Regina ~~at Fanueil Hall Marketplace open for the~~ ~~entire~~locations ~~period,~~ and to ~~higher~~a decrease in cheese costs.

The cost of food, ~~beverages~~beverage and liquor ~~as a percentage of restaurant sales~~ at ~~the~~Pizzeria ~~Company’s~~Regina ~~full service casual dining~~ restaurants ~~increased~~was to$549,000 ~~28%~~ in the current period compared to ~~24%~~$605,000 in the prior year’s period. The ~~increase~~dollar ~~as a percentage of current sales~~ decrease was ~~principally~~primarily due to ~~the opening~~two ofPizzeria ~~the~~Regina ~~new~~locations ~~Cambridge, Massachusetts Polcari’s North End restaurant~~ which iseliminated ~~open for lunch 5 days a week resulting in higher~~ food ~~costs, and~~items ~~increase~~from intheir ~~costs~~menus ~~from~~and ~~suppliers~~reduced incheese ~~general~~costs.

The cost of food, ~~beverage~~beverages and liquor as a percentage of restaurant sales at the Company’s full service casual dining restaurants decreased ~~was~~to ~~$905,000~~25% in the ~~current~~ period compared to ~~$646,000~~ 26% in the prior year’s period. The ~~dollar~~ ~~increase~~decrease ~~was~~as ~~primarily~~a ~~due~~percentage ~~to the opening~~ of ~~the~~restaurant ~~new Cambridge,~~sales ~~Massachusetts~~was ~~Polcari’s~~principally ~~North~~due ~~End~~to ~~restaurant~~improved ~~and~~cost ~~increase~~control insystems ~~costs~~and ~~from suppliers~~lower incheese ~~general~~costs.

The cost of food, beverage and liquor at the Company’s full service casual dining restaurants was $557,000 in the current period compared to $568,000 in the prior year’s period. The dollar decrease was primarily due to improved cost control systems and lower cheese costs.

Other Operating Expenses

Payroll Expenses.

Payroll expenses as a percentage of total revenues for all restaurants were 3229% in ~~the~~both ~~fiscal 2005 period compared to 33% in~~ the fiscal ~~2004~~2006 period. The decrease as a percentage of total revenues was attributable to the opening of the new Pizzeria Regina at the Prudential Center in Boston, Massachusetts which generally have lower payroll expenses as a percentage of total revenues than the Company’s full service casual dining restaurants and ~~to the temporary closing of the Faneiul Hall location in the~~ fiscal ~~2004~~2005 ~~period in which the Company continued to incur payroll costs without any corresponding revenue~~periods.

Payroll expenses were $21,~~081~~653,000 in the fiscal ~~2005~~ 2006 period, compared to $1,~~751~~568,000 in the fiscal ~~2004~~2005 period. The dollar increase in payroll expenses was primarily due to the ~~opening of the new Cambridge, Massachusetts Polcari’s North End restaurant, the new~~ Pizzeria Regina aat ~~the~~South ~~Prudential~~Station ~~Center~~ in Boston, Massachusetts ~~and the new~~ ~~Pizzeria~~being ~~Regina~~open atfor ~~South~~the ~~Station~~entire ~~in Boston, Massachusetts~~period.

Payroll expenses at the Pizzeria Regina restaurants were 2625% of restaurant sales in both the current ~~period~~and ~~compared to 29% of restaurant sales in~~ the prior year’s period. ~~The decrease as a percentage of restaurant sales was primarily due to the temporary closing~~

Payroll expenses of the Pizzeria Regina restaurants were $864,000 in the current period compared to $805,000 in the prior year’s period. This dollar increase was primarily due to the Pizzeria Regina at South Station in Boston, Massachusetts being opened for the entire period.

Payroll expenses at the Company’s full service casual dining restaurants were 31% of restaurant sales in both the current and the prior year’s period.

Payroll expenses at the Company’s full service casual dining restaurants were $688,000 in the current period compared to $664,000 in the prior year’s period. This dollar increase was primarily due to higher employee incentive costs.

Payroll expenses at the Company’s Commissary were $101,000 for the current period as compared to $99,000 in the prior year’s period.

Other Operating Expenses, Exclusive of Payroll

Other operating expenses, exclusive of payroll, were 33% of total revenues in the fiscal 2006 period compared to 31% in the fiscal 2005 period. The increase as a percentage of total revenues was primarily attributable to costs associated with the Pizzeria Regina at the BurlingtonMall, Burlington, Massachusetts including legal costs.

Other operating expenses, exclusive of payroll, were $1,867,000 in the fiscal 2006 period compared to $1,687,000 in the fiscal 2005 period. The increase in operating expenses, exclusive of payroll, was primarily due to the Pizzeria Regina at South Station in Boston, Massachusetts being open for the entire period and the costs associated with the Pizzeria Regina at the Burlington Mall, Burlington, Massachusetts.

Other operating expenses, exclusive of payroll, for the Pizzeria Regina restaurants as a percentage of restaurant sales were 34% in the current period compared to 32% in the prior year’s period. The increase as a percentage of restaurant sales was primarily attributable to costs associated with the Pizzeria Regina at the Burlington Mall.

Other operating expenses, exclusive of payroll, from the Pizzeria Regina restaurants were $1,202,000 in the current period, compared to $1,049,000 in the prior year’s period. The dollar increase was primarily attributable to the Pizzeria Regina at South Station in Boston, Massachusetts being open for the entire period and costs associated with the Pizzeria Regina at the Burlington Mall, Burlington, Massachusetts,

Other operating expenses, exclusive of payroll, for the Company’s full service casual dining restaurants as a percentage of restaurant sales were 28% in both the current and the prior year’s period.

Other operating expenses, exclusive of payroll, for the ~~Faneuil~~Company’s ~~Hall~~full ~~location~~service casual dining restaurants were $630,000 in the current period compared to $611,000 in the prior year’s period. The ~~which~~dollar ~~incurred~~increase was primarily attributable ~~payroll~~to higher energy costs ~~without~~and ~~any~~maintenance ~~corresponding~~at ~~revenue~~the Company’s full service casual dining restaurants.

~~Payroll~~Other operating expenses, exclusive of ~~the~~payroll, ~~Pizzeria~~also include ~~Regina~~commissary ~~restaurants~~expenses which were $~~842~~35,000 in the current period compared to $~~745~~27,000 in the prior ~~year’s~~years period. ~~This dollar increase was primarily due to the opening of the new Pizzeria Regina at the Prudential Center in Boston, Massachusetts and the new Pizzeria Regina at South Station in Boston, Massachusetts~~

~~Payroll~~General ~~expenses~~and atAdministrative the Company’s full service casual dining restaurants increased to 35% of restaurant sales in the current period compared to 34% of restaurant sales in the prior year’s period. The increase as a percentage of restaurant sales was primarily attributable to the opening of the new Polcari’s North End restaurant in Cambridge, Massachusetts.Expenses

~~Payroll~~General ~~expenses~~and atadministrative ~~the~~expenses ~~Company’s~~were ~~full~~11% ~~service~~of ~~casual dining~~total ~~restaurants~~revenues ~~were $1,140,000~~ in ~~the~~both ~~current~~fiscal ~~period~~2006 ~~compared~~and tofiscal ~~$909,000~~2005 ~~in the prior year’s~~ period. ~~This dollar increase was primarily due to the opening of the new Polcari’s North End restaurant in Cambridge, Massachusetts.~~

~~Payroll~~General ~~expenses~~and atadministrative ~~the~~expenses ~~Company’s Commissary~~ were $99644,000 ~~for the~~in the current period, as compared to $97616,000 in the prior year’s period. This dollar increase was primarily attributable to higher employee incentive costs.

~~Other~~Depreciation ~~Operating~~and ~~Expenses,~~Amortization ~~Exclusive of Payroll.~~Expenses

~~Other~~Depreciation ~~operating~~and amortization expenses, ~~exclusive of payroll,~~ were 334% of total revenues in both the fiscal ~~2005~~2006 and fiscal ~~2004~~ 2005 periods.

~~Other~~Depreciation ~~operating~~and ~~expenses,~~amortization ~~exclusive~~expense ofwas ~~payroll, were~~ $2232,~~133,~~000 in the ~~fiscal~~ ~~2005~~current period, compared to $1229,~~746,~~000 in the ~~fiscal~~prior ~~2004 period. The increase in operating expenses, exclusive of payroll, was primarily due to the opening of the new Cambridge, Massachusetts Polcari~~year’s ~~North End restaurant, the new Pizzeria Regina at Prudential Center in Boston, Massachusetts and the new Pizzeria Regina at South Station in Boston, Massachusetts~~period.

Other operating expenses, exclusive of payroll, for the Pizzeria Regina restaurants as a percentage of restaurant sales were 33% in the current period compared to 37% in the prior year’s period. The decrease as a percentage of sales was primarily attributable to the temporary closing of the Faneuil Hall location in the prior year’s period, where the Company nonetheless continued to incur some of such costs without any corresponding revenue.

Other operating expenses, exclusive of payroll, from the Pizzeria Regina restaurants were $1,100,000 in the current period, compared to $951,000 in the prior year’s period

Other operating expenses, exclusive of payroll, for the Company’s full service casual dining restaurants as a percentage of restaurant sales were 31% in the current period compared to 29% in the prior year’s period. The increase as a percentage of restaurant sales was primarily due to the opening of the new Polcari’s North End restaurant in Cambridge, Massachusetts.

Other operating expenses, exclusive of payroll, for the Company’s full service casual dining restaurants were $1,006,000 in the current period compared to $771,000 in the prior year’s period. The dollar increase was primarily attributable to the opening of the new Polcari’s North End restaurant in Cambridge, Massachusetts.

Other operating expenses, exclusive of payroll, also include commissary expenses which were $27,000 in the current period compared to $24,000 in the prior years period.

General and Administrative Expenses.

General and administrative expenses were 9% of total revenues in fiscal 2005 period compared to 13% in the fiscal 2004 period. The decrease as a percentage of total revenues was attributable to a higher revenue base, and lower employee incentive costs and consulting costs.

General and administrative expenses were $616,000 in the current period, compared to $697,000 in the prior year’s period. This dollar decrease was primarily attributable to lower employee incentive costs and consulting costs.

Depreciation and Amortization Expenses.

Depreciation and amortization expenses was 4% of total revenues in the fiscal 2005 period compared to 5% of total revenues in the fiscal 2004 period. This percentage decrease was primarily the result of a higher revenue base.

Depreciation and amortization expense was $267,000 in the current period, compared to $257,000 in the prior year’s period.

Pre-Opening Costs

Pre-opening costs were $~~90,000~~0 in the fiscal ~~2005~~2006 period compared to $5790,000 in the fiscal ~~2004~~2005 period. The pre-opening expenses, which consists of labor, advertising, rent and training materials, related primarily to the opening of the new Pizzeria Regina at South Station in Boston, Massachusetts in July 2004.

and training materials, relates primarily to the opening of the new Pizzeria Regina at South Station in Boston, Massachusetts.

Other Income

Other income was $32,000 in the fiscal ~~2005~~2006 period compared to $~~217~~3,000 in the fiscal ~~2004~~2005 period. ~~The prior year’s other income mainly consisted of insurance proceeds related to the temporary closing of Faneuil Hall Pizzeria Regina.~~

Interest Expense and Interest Income.

Interest expense was $~~122~~96,000 in the current period as compared to $96119,000 in the prior year’s period. This dollar ~~increase~~decrease was primarily due to ~~an increase~~a decrease in ~~borrowing and related~~ interest expense under the Company’s new credit facility.

~~Interest income was $0 in the current period compared to $1,000 in the prior year’s period.~~13

Interest income was $2,000 in the current period compared to $0 in the prior year’s period.

Discontinued Operations

In the fiscal 2006 period, the sale of Polcari’s of Cambridge, Inc. was completed on July 22, 2005. In fiscal 2005, the Company completed the asset sale of Polcari’s of Hyannis, Inc. and closed the Pizzeria Regina in Richmond, Virginia at the end of the lease term. The Company has reclassified its financial results to reflect Polcari’s of Hyannis, Inc., Polcari’s of Cambridge, Inc. and Pizzeria Regina in Richmond, Virginia as discontinued operations.

The income from discontinued operations was $74,000 in the fiscal 2006 period compared to a loss of $218,000 in fiscal 2005 period. In the fiscal 2006 period the income 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 the Pizzeria Regina restaurant in Richmond, Virginia of $58,000 and a gain of $132,000 from the disposal of certain assets of the Polcari’s North End Restaurant in Cambridge, Massachusetts. In the fiscal 2005 period, the loss of $218,000 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 the Pizzeria Regina restaurant in Richmond, Virginia.

LIQUIDITY AND CAPITAL RESOURCES

At July 25 24, ~~2004~~2005, the Company had negative net working capital of $4928,~~815,~~000 compared to negative working capital of $41,~~304~~339,000 at April 25 24, ~~2004~~2005. It During ~~is common for companies in~~ the ~~restaurant~~thirteen ~~industry~~weeks toended ~~operate with net~~July 24, ~~working~~2005, ~~capital~~the ~~deficits. We~~Company ~~are~~had ~~able to operate with~~ a ~~substantial~~net ~~working~~increase ~~capital~~in ~~deficit~~cash ~~because (1) restaurant operations~~ and ~~most food service operations are conducted primarily on a~~ cash ~~(and~~ ~~cash~~equivalents ~~equivalent) basis with a low level~~ of ~~accounts receivable~~$86, ~~(2) rapid~~000 ~~turnover~~reflecting ~~allows~~net acash ~~limited~~provided ~~investment~~by inoperating ~~inventories,~~activities ~~and~~of ~~(3) accounts payable for food~~$163,000, ~~beverages~~net ~~and supplies usually become due after the receipt of~~ cash ~~from~~provided ~~the~~by ~~related~~investing ~~sales. The~~activities ~~Company’s~~of ~~financial condition~~$38,000 and ~~growth~~net ~~will~~cash beused ~~dependent~~for ~~upon obtaining adequate additional~~ financing ~~until profitable operations are achievable. The Company cannot guarantee that it will be~~ ~~successful~~activities ~~in obtaining additional financing. The opinion~~ of ~~BDO Seidman~~$115, ~~LLP on the Company’s fiscal 2004 financial statement included an explanatory paragraph expressing concern about the Company’s ability to continue as a going concern~~000.

~~During~~Net ~~the~~cash ~~thirteen~~provided ~~weeks~~by ~~ended~~operating activities included ~~July~~income ~~25,~~of ~~2004~~$218,000, ~~the~~a ~~Company~~decrease ~~had~~in inventories of $92,000, a ~~net~~decrease in prepaid expenses of $103,000, a decrease in ~~cash~~other assets of $4,000, and ~~cash~~depreciation ~~equivalents~~and amortization expenses of $~~291~~232,000, ~~reflecting~~which ~~net~~were ~~cash~~partially ~~provided~~ offset by ~~operating~~ ~~activities~~a decrease in other long-term liabilities of $~~410~~7,000, ~~net~~an increase in accounts receivables of ~~cash~~$27,000, ~~used~~a ~~for~~decrease ~~investing~~in ~~activities~~accounts payable of $~~474~~48,000, a decrease in accrued expenses of $401,000, and ~~net~~decrease ~~cash~~in ~~used~~deferred ~~for~~rent of $3,000. ~~financing~~Net cash provided by investing activities of $~~227~~38,000. included the asset sale of Polcari’s North End in Cambridge, Massachusetts partially offset by capital expenditures related to various Pizzeria Reginas and Polcari’s North End bistro restaurants and a Polcari’s North End

Net cash provided by operating activities included a decrease in accounts receivables of $11,000, a decrease in inventories of $5,000, a decrease in prepaid expenses of $67,000, a decrease in other assets of $8,000, an increase in accounts payables of $303,000, an14

15restaurant. Net cash used for financing activities of $115,000 consisted of net repayments of long term debt, lease obligations and stockholders loans.

~~increase~~At inJuly 24, ~~accrued~~2005, ~~expenses~~the Company had current liabilities of $72,475,000, anincluding ~~increase~~$689,000 ~~in deferred rent~~ of accounts payable, $631,291,000 ~~and~~of ~~depreciation~~accrued ~~and~~liabilities, ~~amortization~~current ~~expenses~~maturities of ~~$267,000,~~long ~~which~~term ~~were~~obligations ~~partially~~in ~~offset~~the byamount ~~a net loss~~ of $~~313~~370,000 and acurrent ~~decrease~~liabilities infrom ~~other~~discontinued ~~long-term~~operations ~~liabilities~~ of $8125,000. ~~Net~~ At ~~cash~~July 24, ~~used~~2005, ~~for~~the ~~investing~~Company ~~activities~~had ~~reflects~~long-term ~~costs~~obligations, ~~associated~~less ~~with~~current ~~leasehold~~maturities, ~~improvements~~in ~~and with~~ the ~~purchase~~amount of ~~equipment~~ $3,877,000, ~~furniture~~including ~~and~~$81,000 ~~fixtures~~of ~~for~~notes ~~the~~payable ~~new~~to ~~Pizzeria Regina~~a ~~at the Prudential Center in Boston~~stockholder, ~~Massachusetts~~$1,854,000 ~~the new Pizzeria~~due ~~Regina~~under atits ~~South~~credit ~~Station~~facility inwith ~~Boston,~~Commerce ~~Massachusetts~~Bank and ~~the~~Trust ~~other~~ Company ~~restaurants. Net~~, ~~cash~~$1,450,000 ~~used for financing~~of ~~activities~~convertible ofsubordinated debentures, $~~227~~365,000 ~~consisted~~ of ~~net~~deferred ~~repayments~~rent, ofand ~~long term debt~~$127,000 ~~lease~~of ~~obligations~~other ~~and~~long-term ~~stockholders loans~~liabilities.

AtOn ~~July 25~~April 21, ~~2004,~~2005 the Company ~~had~~refinanced ~~current~~its ~~liabilities~~debt ofwith ~~$6,193,000,~~Commerce ~~including~~Bank and Trust Company and a new $12,~~361~~300,000 ofCredit ~~accounts~~Facility was ~~payable,~~established. This Credit Facility consists of a $1,~~424~~500,000 of ~~accrued~~4 ~~liabilities~~year ~~and~~term ~~current~~note ~~maturities~~bearing ofinterest ~~long~~at ~~term~~the ~~obligations~~bank inbase ~~the~~rate ~~amount~~plus of2% and an $3800,~~408,~~000~~. At~~ ~~July~~mortgage ~~25,~~in ~~2004, the~~favor ~~Company~~of ~~had~~Commerce ~~long-term~~bank ~~obligations,~~and ~~less~~Trust ~~current~~Company ~~maturities,~~at a infixed ~~the~~rate ~~amount~~ of ~~$2,355,000,~~7%. The ~~including~~mortgage ~~$87,000~~has ofa twenty ~~notes~~year ~~payable~~amortization toschedule with a ~~stockholder,~~complete ~~$10,000~~payment of principal due at the end of five years. All borrowing under ~~capital~~the ~~lease~~Credit ~~obligations,~~Facility ~~$1,450,000~~are ofcollateralized ~~convertible~~by ~~subordinated debentures,~~substantially ~~$565,000~~all of ~~deferred~~the ~~rent,~~assets of the Company and ~~$243~~are subject to various financial covenants. At July 24,~~000~~ of2005 ~~other~~the ~~long-term~~Company was in ~~liabilities~~compliance with all financial covenants.

~~All~~The ~~borrowings~~Company ~~under~~has ~~the~~no ~~Credit~~additional ~~Facility~~significant ~~are~~capital ~~collateralized~~commitments byin ~~substantially~~fiscal ~~all~~2006. The ~~of the assets of the~~ Company ~~and are~~ ~~subject~~believes tothat ~~various~~its ~~financial~~existing ~~covenants. As of April 25~~resources, ~~2004~~including ~~the~~its ~~Company~~loan ~~was~~facility, ~~not in compliance~~ together with ~~the~~cash ~~certain financial~~flow ~~covenants~~generated offrom ~~the Credit Facility. However~~operations, ~~Commerce~~will ~~Bank~~be ~~and~~sufficient ~~Trust~~to ~~Company~~fund ~~waived~~its ~~the covenants for the~~cash ~~quarterly~~flow ~~fiscal~~requirements ~~period ended July 25, 2004~~ and ~~for~~maintain ~~fiscal~~debt ~~year~~covenant ~~ended~~compliance ~~April 25, 2004 in exchange~~ for athe 1%next ~~waiver fee~~twelve months. However, ~~a modification of~~ the ~~interest~~Company’s ~~rate on~~growth ~~all~~will ~~outstanding~~be ~~notes~~dependent ~~issued~~upon ~~under~~obtaining ~~the~~additional ~~Credit~~financing. There ~~Agreement~~can ~~from~~be ~~the~~no ~~current~~assurance 6%that toany future 7%additional ~~per~~financing ~~annum~~will ~~until~~be ~~the~~available ~~first~~on ~~quarter~~commercially inreasonable ~~which~~terms, ~~the~~or ~~Company is once again in~~at ~~compliance with~~ all ~~financial covenants~~, and the ~~grant~~success toor ~~the~~lack ~~bank~~ of asuccess ~~six year warrant to purchase 76,000 shares~~ of the Company’s ~~common~~restaurants ~~stock at a price~~opened ofwithin ~~$.50~~the ~~per~~last ~~share. Subject~~year toand ~~certain exceptions~~planned ~~pursuant~~ to ~~which the warrant will~~ be ~~exercisable~~opened ~~earlier,~~in the ~~warrant~~ isfuture ~~not~~may ~~exercisable~~have ~~until~~a ~~February 13, 2005. In August, 2004 the bank established new~~critical ~~covenants~~effect ~~for~~on ~~fiscal 2005. Because of~~ the Company’s ~~uncertainty regarding its~~ ability to ~~satisfy~~raise ~~these~~funds ~~covenants,~~through ~~all bank debt has been reclassified as current on~~ the ~~balance~~sale ~~sheet~~of ~~for~~stock ~~period~~or ~~ended July 25, 2004~~otherwise. ~~If the Company fails to comply with these covenants, the bank debt would be due on demand.~~

To finance capital expenditures, subsequent to July 25, 2004 the Company entered into an unsecured loan agreement with the spouse of a Company director in the amount of $200,000. Under the terms of the agreement the Company is obligated to pay interest at the rate of 14% on the outstanding balance. The Company granted the lender a five year warrant to purchase 25,000 shares of the Company’s common stock at a price of $.70 per share. The principal balance is payable on or before December 31, 2004.

The opinion of BDO Seidman, LLP on the Company’s fiscal 2004 financial statement included an explanatory paragraph expressing concern about the Company’s ability to continue as a going concern. In addition, because of the Company’s concern 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 and period ended July 25,2004. If the Company fails to comply with these covenants, the bank debt could be due on demand. The Company’s financial condition and compliance with the bank covenants will be substantially dependent upon obtaining adequate additional financing and achieving profitable operations. The Company cannot 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, the Company may be forced to restructure its operations by closing the Polcari’s restaurant in Cambridge, Massachusetts, selling that business or its assets, and/or subleasing the premises of that restaurant. Public financing would be subject to market conditions and other uncertainties, and no assurance can be given that the Company could obtain public financing at any time. Either public or private equity financing would likely result in dilution of the Company’s existing stockholders.

NEW ACCOUNTING PRONOUNCEMENTS

None

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

Forward-looking statements in this report, including without limitation statements relating to the adequacy of the Company’s working capital and other resources ability to obtain ~~additional~~ additional financing, the timing of the Company’s new store openings and future expansion, and anticipated future cash flows from particular locations are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including without limitation: potential ~~quarterly~~ 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 similar terminology.

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~~Although~~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”, “except,” “expect,” “intend,” “estimate,” “anticipate” or “believe” or the negative thereof or variations thereon 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.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Risk.

We have 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 2 bear interest at a variable rate based on the bank’s prime rate plus 32%. A 100 basis point change in the Credit Facility interest rate (approximately 7 8.25% at July 25 24, ~~2004~~2005) would cause the interest expense for fiscal ~~2005~~2006 to change by approximately $3110,000. This computation is determined by considering the impact of hypothetical interest rates on our variable long-term debt at July 25 24, ~~2004~~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.

Our other outstanding long-term debt bears fixed rates of interest. The Company believes there is no material exposure to a market interest rate risk that could affect future results of operations or financial conditions.

Commodity Price Risk.

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~~ 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.

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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.

ITEM 4. Controls and Procedures

As of July 25 24, ~~2004~~2005, our Chief Executive Officer and Chief Financial Officer performed an evaluation of ~~the~~ the effectiveness of the Company’s disclosure controls and procedures (as ~~defined~~ defined in SEC Rule 13a-15(e)), which have been designed to ensure that ~~material~~ material information related to the Company is made known to them and timely disclosed. The Company’s management, including the CEO and CFO, does not expect that the Company’s disclosure controls or internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. Notwithstanding the foregoing, however, based upon their evaluations, our CEO and CFO concluded that the Company’s disclosure controls are effective to provide a reasonable level of assurance that material information relating to the Company is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings.

None

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

ITEM 3. Defaults Upon Senior Securities.

None.

ITEM 4. Submission of Matters to a Vote of Security Holders.

None.

ITEM 5. Other Information.

None.

ITEM 6. Exhibits ~~and Reports On Form 8-k~~

Exhibit 31: Sarbanes-Oxley Section 302 Certification

Exhibit 32: Sarbanes-Oxley Section 906 Certification

~~None.~~18

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BOSTON RESTAURANT ASSOCIATES, INC.	~~BOSTON RESTAURANT ASSOCIATES, INC.~~
Date: September 1, 2004			By:	/s/ George R. Chapdelaine
Date: August 29, 2005		By:	/s/ George R. Chapdelaine
				George R. Chapdelaine, President and Chief Executive Officer
			George R. Chapdelaine, President and
			Chief Executive Officer

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