CHICAGO PIZZA & BREWERY INC, 424B4, 1996-10-10

CHICAGO PIZZA & BREWERY INC
424B4, 1996-10-10
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<PAGE>
PROSPECTUS

[LOGO]
CHICAGO PIZZA & BREWERY, INC.

1,800,000 SHARES OF COMMON STOCK AND
1,800,000 REDEEMABLE WARRANTS
------------------

Chicago Pizza & Brewery, Inc. (the "Company" or "BJ's") hereby offers
1,800,000 shares (the "Shares") of common stock of the Company, no par value
(the "Common Stock"), and 1,800,000 redeemable warrants of the Company (the
"Redeemable Warrants") (the Shares and the Redeemable Warrants are sometimes
collectively referred to herein as the "Securities"). The Shares and the
Redeemable Warrants will be separately tradeable immediately upon issuance and
may be purchased separately. Each Redeemable Warrant entitles the holder thereof
to purchase one share of Common Stock at a purchase price equal to 110 percent
of the initial public offering price of the Shares, subject to adjustment, at
any time during the 54-month period commencing one year after the date of this
Prospectus, and is redeemable by the Company at a redemption price of $.25 per
Redeemable Warrant commencing one year after the date of this Prospectus,
provided that the average closing bid price of the Common Stock equals or
exceeds 140 percent of the initial public offering price per share for any 20
trading days within a period of 30 consecutive trading days ending on the fifth
trading day prior to the date of the notice of redemption. See "Description of
Securities -- Redeemable Warrants."

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL
DILUTION.
SEE "RISK FACTORS" AND "DILUTION" COMMENCING ON PAGES 11 AND 21, RESPECTIVELY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS (1) COMPANY (2)
<S> <C> <C> <C>
Per Share.......................... $5.00 $.456 $4.544
Per Redeemable Warrant............. $0.25 $.0228 $.2272
Total (3).......................... $9,450,000 $861,840 $8,588,160
</TABLE>

(1) Does not include additional compensation to the Representative in the form
of a nonaccountable expense allowance. For indemnification arrangements
with, and additional compensation payable to, the Underwriters, see
"Underwriting."

(2) Before deducting expenses of this Offering payable by the Company, estimated
at approximately $1,083,500 in the aggregate, including the Representative's
nonaccountable expense allowance. See "Underwriting."

(3) For the purpose of covering over-allotments, if any, the Company has granted
to the Underwriters an option, exercisable within 45 days from the date of
this Prospectus, to purchase up to 270,000 additional shares of Common Stock
and/or up to 270,000 additional Redeemable Warrants. If such over-allotment
options are exercised in full, the total Price to Public, Underwriting
Discounts and Commissions, and Proceeds to Company will be $10,867,500,
$991,116 and $9,876,384, respectively. See "Underwriting."

The Securities are offered by the Underwriters, when, as and if delivered to
and accepted and subject to their right to withdraw, cancel, or modify this
Offering and to reject any orders in whole or in part. It is expected that
delivery of the Securities will be made on or about October 15, 1996.

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

THE BOSTON GROUP, L.P.

The date of this Prospectus is October 8, 1996
<PAGE>
(THIS IS A NARRATIVE DESCRIPTION OF THE PHOTOS)

[On the front cover will be the logo with pictures of pizza boxes as well as
of a menu cover. On the first inside flap there will be a picture of the
Westwood restaurant. On the further inside flap of the inner flap will be a map
of locations and a picture collage of the Westwood restaurant interior with
photos of the brewmaster looking through a microscope as well as photos of food.
On the other inside front flap there will be a picture of the Brea microbrewery
and a collage with employees pouring beer, photographs of food, and employees in
uniform. On the inside back cover will be a photograph of the bar at Brea with
the microbrewery showing in the background. On the outside back cover there will
be a picture of the exterior of the Brea restaurant.]

Prior to this Offering, there has been no public market for the Securities
and there is no assurance that such a market for the Securities will develop or,
if a market develops, that it will be sustained. The Common Stock and Redeemable
Warrants have been approved for listing on the Nasdaq Small-Cap Market
("Nasdaq") under the symbols CHGO and CHGOW, respectively. The initial public
offering prices for the Shares and Redeemable Warrants and the exercise price of
the Redeemable Warrants have been determined by negotiation between the Company
and The Boston Group, L.P., as representative of the several Underwriters (the
"Representative"), and are not necessarily related to the Company's asset value,
net worth or other established criteria of value. See "Risk Factors" and
"Underwriting."

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND/OR THE REDEEMABLE WARRANTS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

The Company intends to furnish its security holders annual reports
containing audited consolidated financial statements with a report thereon by
independent accountants, and such other periodic reports as the Company may
determine to be appropriate or as required by law.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION AND COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES
THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

Chicago Pizza & Brewery, Inc. (the "Company" or "BJ's") owns eight
restaurants in Southern California (the "California Restaurants") and an
interest in one restaurant in Lahaina, Maui, each of which are currently
operated as either a BJ'S PIZZA, GRILL & BREWERY or a BJ'S PIZZA & GRILL. The
Company recently acquired 19 additional restaurants in Oregon and Washington
(the "Northwest Restaurants") which it plans to convert into BJ's restaurants.
The Company has recently completed a refurbishment program and the expansion of
its menu around its core pizza products in its California Restaurants. In
addition, the Company has introduced handcrafted, micro-brewed beers in its
California Restaurants and has built a micro-brewery in Brea, California. The
Company plans to refurbish the Northwest Restaurants and add its award-winning
pizza products, some or all of the expanded BJ's menu and handcrafted,
micro-brewed beers to the menu offerings at the Northwest Restaurants. If this
plan can be successfully executed, all 28 of the Company's restaurants will fit
into one of the three following BJ's concepts:

- BJ'S PIZZA, GRILL & BREWERY is designed to provide a dining experience in
an operating micro-brewery environment where a variety of proprietary,
hand-crafted beers are produced on-site. The menu features the core pizza
products surrounded by a selection of appetizers, entrees, pastas,
sandwiches, specialty salads and desserts. Currently, the Company operates
one of its California Restaurants as, and plans to convert four of its
Northwest Restaurants into, the BJ'S PIZZA, GRILL & BREWERY concept, as
well as developing a BJ'S PIZZA, GRILL & BREWERY restaurant in Boulder,
Colorado.

- BJ'S PIZZA & GRILL is designed to provide a casual dining experience with
table-service featuring a menu of pizza, pasta, sandwiches, salads and
desserts. Currently, the Company operates seven of its California
Restaurants and the Lahaina, Maui restaurant as, and plans to convert
seven of its Northwest Restaurants into, the BJ'S PIZZA & GRILL concept.

- BJ'S PIZZA is designed to provide an informal dining experience with
counter-service and a menu featuring pizza and a limited selection of
pastas, sandwiches and salads. Currently, the Company plans to operate
none of the California Restaurants as, and plans to convert eight of the
Northwest Restaurants into, the BJ'S PIZZA concept.

Management believes that having three concepts, which can be utilized in
alternative locations, facilities and markets, provides the Company a broader
scope of potential acquisitions and development sites.

According to certain newspaper polls, BJ's pizza is considered among the
best in Orange County, California. It has won numerous awards over the past
years from publications such as the Orange County edition of the Los Angeles
Times, Orange Coast Magazine, Daily Pilot and The Metropolitan, and BJ's pizza
was featured in 1994 on the TV show "Live in LA" as one of the five best pizzas
in the Los Angeles area. Finally, BJ's pizza was voted number one by the readers
of the Orange County Register, a leading Orange County, California-based
newspaper and by the readers of the Maui News.

The Company was formed in 1991 to assume the management of five "BJ's
Chicago Pizzeria" restaurants and to develop additional BJ's restaurants.
Between 1992 and 1995, the Company developed five additional restaurants,
purchased three of those original five restaurants that it managed and
discontinued one of those that it had developed. As a result of these
transactions, at the end of 1995, the Company owned restaurants in California
located in La Jolla Village, Laguna Beach, Belmont Shore, Seal Beach, Huntington
Beach and Balboa in Newport Beach, as well as an interest in a restaurant in
Lahaina, Maui.

3
<PAGE>
Beginning in November 1995, the Company embarked on a campaign to broaden
its customer base by: (i) surrounding its core pizza product with a more
expansive menu including appetizers, grilled sandwiches, specialty salads and
pastas, ii) adding hand-crafted, micro-brewed beers through on-site
micro-breweries in certain locations and the sale of internally-produced beer
through other Company restaurants and iii) differentiating the BJ's identity and
expanding merchandising opportunities through a comprehensive new logo and
identity program, a new interior design concept and redesigned signage.

The Company has also sought to expand through acquisitions and conversions,
such as the acquisition of the Northwest Restaurants and the Brea, California
restaurant. The Company intends to seek other acquisitions if financing is
available.

The first BJ'S PIZZA GRILL & BREWERY opened in Brea, California in April
1996. This 10,000-square-foot restaurant features elaborate brick walls and
archways, high molded tin ceilings, warm lighting and industrial railings. The
on-premises brewing equipment includes a 30-barrel, copper-clad kettle,
60-barrel, stainless steel fermentation tank, kegging equipment and a
40,000-pound-capacity corrugated metal grain silo located at the front entrance
to the restaurant. Management believes the brewery capacity is sufficient to
supply beer for all of the Company's existing Southern California restaurants.
Management believes the low production cost relative to purchased beer and the
premium price often obtained for micro-brewed beer can significantly improve
gross margins.

The Company's current objectives after the closing of this Offering are to
remodel and refurbish each of the Northwest Restaurants into one of the three
BJ's concepts over the next 12 to 18 months while it consolidates the management
of the Northwest Restaurants and the rest of the Company's operations and
attempts to reduce overhead. The Company also plans to acquire and develop
additional BJ's restaurants in order to expand operations to other cities and
towns consistent with the Company's location strategy and market niche. In this
regard, the Company has executed a lease for an approximately 5,500-square-foot
facility in the Pearl Street Mall, a popular, high-traffic pedestrian promenade
in Boulder, Colorado. The Company expects to open a BJ'S PIZZA, GRILL & BREWERY
in this location in Winter of 1996. No assurance can be given that the Company's
objectives can be achieved or that sufficient capital will be available to
finance the Company's business plan. See "Risk Factors."

The Company is organized under the laws of the State of California. The
Company's offices are located at 26131 Marguerite Parkway, Suite A, Mission
Viejo, California 92692. Its telephone number is (714) 367-8616.

4
<PAGE>
THE OFFERING (1)

<TABLE>
<S> <C>
Securities Offered by the Company........ 1,800,000 shares of Common Stock and 1,800,000
Redeemable Warrants. The Common Stock and
Redeemable Warrants can be purchased and will be
tradable separately upon issuance. See
"Description of Securities."
Terms of the Redeemable Warrants......... Each Redeemable Warrant entitles the holder
thereof to purchase one share of Common Stock at
a price equal to 110% of the initial public
offering price of the Shares, subject to
adjustment, during the 54-month period
commencing one year after the date of this
Prospectus.
Redemption of the Redeemable Warrants.... Commencing one year after the date of this
Prospectus, the Redeemable Warrants will be
subject to redemption at the Company's option at
$.25 per Redeemable Warrant if the average
closing bid price of the Common Stock equals or
exceeds 140 percent of the initial public
offering price per Share for any 20 trading days
within a period of 30 consecutive trading days
ending on the fifth trading day prior to the
date of the notice of redemption. In the event
of a proposed redemption by the Company, the
Company will provide the holders with a 30-day
notice, during which period the holders will
have the right to exercise the Redeemable
Warrants in lieu of redemption. See "Description
of Securities -- Redeemable Warrants."
Shares of Common Stock Outstanding:
Before the Offering.................... 4,608,321 shares (1)
After the Offering..................... 6,408,321 shares (1)
Redeemable Warrants Outstanding:
Before the Offering.................... 10,014,584 Redeemable Warrants (1)
After the Offering..................... 11,814,584 Redeemable Warrants (1)
Use of Proceeds.......................... To refurbish certain existing restaurants, to
convert the Northwest Restaurants to one of the
BJ's concepts, to repay certain indebtedness, to
acquire and/or develop additional restaurants
and for working capital purposes. See "Use of
Proceeds."
Risk Factors............................. An investment in the Shares of Common Stock and
Redeemable Warrants involves a high degree of
risk and immediate substantial dilution. See
"Risk Factors" and "Dilution."
Securities Being Registered for the
Account of the Selling Security
Holders.................................. 1,766,864 shares of Common Stock, 10,014,584
Redeemable Warrants (hereinafter "Selling
Security Holders' Redeemable Warrants") and
10,014,584 shares of Common Stock issuable upon
exercise of such Selling Security Holders'
</TABLE>

5
<PAGE>

<TABLE>
<S> <C>
Redeemable Warrants are being registered and may
be sold by the Selling Security Holders. The
Company will not receive any of the proceeds
from sales by the Selling Security Holders,
although it will receive the exercise price if
the Selling Security Holders' Redeemable
Warrants are exercised. The Selling Security
Holders' Shares and the Selling Security
Holders' Redeemable Warrants are not being
underwritten by the Underwriters. See "Resale of
Outstanding Securities" and "Underwriting."
Nasdaq Small-Cap Market Symbols (2):
Common Stock............................. CHGO
Redeemable Warrants...................... CHGOW
</TABLE>

- ------------------------
(1) Unless the context otherwise requires, the term "Company" refers to Chicago
Pizza & Brewery, Inc. and its subsidiaries, Chicago Pizza Northwest,
Inc.("CPNI"), a Washington corporation, and Blue Max, Inc., a Hawaii
corporation, as well as BJ's Lahaina, L.P., a California limited partnership
which owns the Company's Lahaina, Maui restaurant with the Company as
managing general partner and Blue Max, Inc. as the co-general partner.
Unless the context otherwise requires, all share and per-share information
in this Prospectus gives effect to a 19,000-for-one stock split effected in
December 1994 and a .34896-for-one reverse stock split effected in May 1995.
Unless otherwise indicated, such share and per-share information does not
give effect to: (i) the exercise of the Underwriters' over-allotment options
to purchase up to 270,000 Shares; (ii) the issuance of 1,800,000 shares of
Common Stock issuable upon exercise of the Redeemable Warrants being offered
by the Company; (iii) the issuance of 10,014,584 shares of Common Stock
issuable upon exercise of the Selling Security Holders' Redeemable Warrants
(see "Shares Eligible for Future Sale"); (iv) the issuance of 270,000 shares
of Common Stock issuable upon exercise of the Redeemable Warrants included
in the Underwriters' over-allotment option; (v) the issuance upon exercise
of the Representative's Warrants of 180,000 shares of Common Stock; or (vi)
600,000 shares of Common Stock reserved for issuance pursuant to the
Company's 1996 Stock Option Plan.

(2) The Common Stock and Redeemable Warrants have been approved for listing on
the Nasdaq Small-Cap Market. There is no assurance that a public trading
market will develop, or, if developed, will be sustained. See "Risk Factors
-- Absence of Public Market" and "Lack of Correlation between Offering Price
and Value of Shares or Company."

6
<PAGE>
SUMMARY COMBINED AND CONSOLIDATED FINANCIAL AND RESTAURANT DATA

The following table sets forth summary combined (1994) and consolidated
(1995) financial and restaurant data of Chicago Pizza & Brewery, Inc., excluding
the assets of Chicago Pizza Northwest, Inc. ("CPNI"), the Company's wholly-owned
subsidiary which owns the 26 restaurants acquired from Pietro's Corp., a
Washington corporation. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation -- Pietro's Corp.'s Business Related to
Purchased Assets." Chicago Pizza & Brewery, Inc., is referred to as the
"Parent." The 26 restaurants acquired and owned by CPNI on March 29, 1996 are
referred to as the "Purchased Assets." The following tables also set forth
summary financial and restaurant operating data for the Parent and the Purchased
Assets on a pro forma combined basis as if the Purchased Assets were acquired on
January 1, 1995. The summary financial data in the table are derived from the
financial statements of the Parent and the Purchased Assets and the pro forma
financial statements. The data should be read in conjunction with the financial
statements, related notes and other financial information included elsewhere
herein. The pro forma financial statements may not be indicative of the results
which may be obtained by the Company in any future period.

<TABLE>
<CAPTION>
PRO FORMA
PURCHASED COMBINED
THE PARENT (1) ASSETS (2)(5) YEAR ENDED
YEAR ENDED DECEMBER YEAR ENDED DECEMBER
31, DECEMBER 25, 31,
-------------------- ------------- -----------
1994 1995 1995 1995
--------- --------- ------------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE AND
RESTAURANT OPERATING DATA)

<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (1)
Revenues................................ $ 6,453 $ 6,586 $ 14,634 $ 21,220
Cost of sales........................... 1,638 1,848 4,277 6,125
--------- --------- ------------- -----------
Gross profit............................ 4,815 4,738 10,357 15,095
Cost and expenses....................... 5,338 5,789 10,808 16,597
--------- --------- ------------- -----------
Loss from operations.................... (523) (1,051) (451) (1,502 )
Net loss................................ (550) (1,606) (451) (2,057 )
Pro forma net loss (3).................. (2,057 )
Pro forma net loss per common share
(4).................................... (.45 )
Pro forma weighted average common shares
outstanding (4)........................ 4,608,321

RESTAURANT OPERATING DATA (5):
Average sales per restaurant open for
full period (6)........................ $ 888,000 $ 854,000 $ 578,000 $ 616,000
Total number of restaurants open at end
of each period......................... 10 7 26 33
Average sales per square foot for
restaurants open for full period (7)... $ 332 $ 320 $ 114 $ 130
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA COMBINED
PARENT (1) PURCHASED ASSETS (2) AS OF DECEMBER 31,
AS OF DECEMBER 31, 1995 AS OF DECEMBER 25, 1995 1995
----------------------- ----------------------- ----------------------
<S> <C> <C> <C>
BALANCE SHEET DATA: (1)
Working capital (deficit).................. $ 22 $ (247) $ (225)
Intangible assets, net..................... 5,558 5,558
Total assets............................... 9,943 1,541 11,484
Total long-term debt (including current
portion).................................. 4,127 4,127
Minority interest (8)...................... 253 253
Shareholders' equity....................... 4,023 1,091 5,114
</TABLE>

- ------------------------
(1) Statement of Operations Data includes the operating results for the combined
(1994) and consolidated (1995) information for the Parent and the combined
information for the Purchased Assets.

7
<PAGE>
Balance Sheet Data includes the consolidated balance sheet information for
the Parent and the combined balance sheet information for the Purchased
Assets. The 1994 information for the Parent is presented on a combined basis
due to common ownership and control. The Parent acquired the Purchased
Assets on March 29, 1996.

(2) The Purchased Assets represent the 26 restaurants acquired (the "Pietro's
Acquisition") from the former Pietro's Corp., a Washington corporation
("Pietro's"). The financial results for the Purchased Assets represent the
Pietro's Corp.'s Business Related to Purchased Assets acquired by the
Parent. On May 15, 1996 the Parent agreed to sell seven of the restaurants
purchased from Pietro's. The sale was completed during the second quarter of
1996. The operating results of those seven restaurants are still included in
the table. The Company recognized no gain or loss on the sale and adjusted
the goodwill recorded in the acquisition of the Purchased Assets. The sales
for the seven restaurants which the Company sold totaled approximately
$3,492,000 and $3,683,000 for the years ended December 25, 1995 and December
26, 1994, respectively. Operating profit for the seven restaurants excluding
overhead allocation totaled approximately $268,000 and $313,000 for the
years ended December 25, 1995 and December 26, 1994, respectively. Loss
after overhead allocation relating to the seven restaurants totaled
approximately $327,000 and $454,000 for the years ended December 25, 1995
and December 26, 1994, respectively. See the Combined Financial Statements,
Pietro's Corp.'s Business Related to Purchased Assets.

(3) Presented on page 26 of this Prospectus is a more detailed Combined Pro
Forma Statement of Operations showing the net loss as if the Parent had
acquired the Purchased Assets as of the beginning of the period (January 1,
1995).

(4) In December 1994, the Parent effected a 19,000-for-one stock split of its
Common Stock. In May, 1995, the Parent effected a .34896-for-one reverse
stock split of its Common Stock. The weighted-average shares outstanding are
based on the pro forma weighted-average shares outstanding of 4,608,321.

(5) Restaurant Operating Data includes the financial results for restaurants
open for the entire comparable period. The following restaurants were opened
or closed during the period and are therefore excluded due to
noncomparability: Huntington Beach; Seal Beach; and Lahaina, Maui. The
Parent managed but did not subsequently purchase the Santa Ana and San Juan
Capistrano restaurants; instead, they were closed in 1995 along with the La
Jolla -- Prospect restaurant. The Purchased Assets include 26 former
Pietro's restaurants, but the Woodstock restaurant, which opened in 1995 is
excluded as noncomparable.

(6) Determined as total sales divided by the number of all restaurants open for
the full period. Restaurants open for the full period in both years
presented totaled four for the Parent and 25 for the Purchased Assets. The
seven restaurants owned and operated by the Parent for all of 1995 averaged
$916,000 in sales for that period.

(7) Determined as total sales divided by total square feet for all restaurants
open for the full period. Restaurants open for the full period in both years
presented totaled four for the Parent and 25 for the Purchased Assets. The
seven restaurants owned and operated by the Parent for all of 1995 averaged
sales of $323 per square foot for that period.

(8) The minority interest represents the 46.32% limited partners' share in
equity and the accumulated results from operations for the Lahaina, Maui
restaurant, not owned directly by the Parent.

8
<PAGE>

<TABLE>
<CAPTION>
THE PARENT (1)
SIX-MONTH
PERIODS PURCHASED ASSETS (2) PRO FORMA
ENDED JUNE 30, THREE-MONTH COMBINED
----------------------------- PERIOD ENDED JUNE 30,
1995 1996 MARCH 29, 1996 1996 (3)
------------ ------------ --------------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE AND
RESTAURANT OPERATING DATA)

<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (1)
Revenues................................ $ 3,207 $ 8,308 $ 3,780 $ 12,088
Cost of sales........................... 894 2,614 1,188 3,802
------------ ------------ ------- --------------
Gross profit............................ 2,313 5,694 2,592 8,286
Cost and expenses....................... 2,745 6,382 2,758 9,140
------------ ------------ ------- --------------
Loss from operations.................... (432) (688) (166) (854)
Net loss................................ (798) (1,075) (166) (1,241)
Pro forma net loss (3).................. (1,241)
Pro forma net loss per common share
(4).................................... (0.27)
Pro forma weighted average common shares
outstanding (4)........................ 4,608,321

RESTAURANT OPERATING DATA: (5)
Average sales per restaurant open for
full period............................ $ 434,000(6) $ 517,000(6) N/A $ 373,000(7)
Total number of restaurants open at end
of each period......................... 7 28 N/A 28
Average sales per square foot for
restaurants open for full period....... $ 153(8) $ 182(8) N/A $ 79(9)
</TABLE>

<TABLE>
<CAPTION>
PARENT (1) ADJUSTED (10)
AS OF JUNE 30, AS OF JUNE 30,
1996 1996
------------------ ------------------
<S> <C> <C>
BALANCE SHEET DATA: (1)
Working capital (deficit)................................................. $ (5,206)(11) $ 5,081
Intangible assets, net.................................................... 5,790 5,790
Total assets.............................................................. 14,890 21,372
Total long-term debt (including current portion).......................... 8,146 4,416
Minority interest (12).................................................... 254 254
Shareholders' equity...................................................... 2,999 13,286
</TABLE>

- ------------------------
(1) The results of operations of the Purchased Assets for the period from March
30, 1996 (the day after the date of acquisition) to June 30, 1996, are
included in the results of operation of the Parent for the six-month period
ended June 30, 1996. The Balance Sheet Data for the Parent as of June 30,
1996 include the balance sheet information for the Parent and the Purchased
Assets.

(2) The data shown in this column represents operating data of the Purchased
Assets from January 1 through March 29, 1996, the date the Purchased Assets
were acquired by the Company. The Purchased Assets represent the 26
restaurants acquired from the former Pietro's. The financial results for the
Purchased Assets represent the Pietro's Corp.'s Business Related to
Purchased Assets acquired by the Parent. On May 15, 1996 the Parent agreed
to sell seven of the restaurants purchased from Pietro's. The sale was
completed during the second quarter of 1996. The operating results of those
seven restaurants are included in the table until the date of sale. The
Company recognized no gain or loss on the sale and adjusted the goodwill
recorded in the acquisition of the Purchased Assets. The sales for the seven
restaurants sold totaled approximately $841,000 for the three-month period
ended March 29, 1996 and $1,533,000 for the six-month period ended June 30,
1996. Operating profit excluding overhead allocation totaled approximately
$31,000 for the three-month period ended March 29, 1996 and $9,000 for the
six-

9
<PAGE>
month period ended June 30, 1996. Loss after overhead allocation relating to
the seven restaurants totaled approximately $54,000 for the three-month
period ended March 29, 1996 and $133,000 for the six-month period ended June
30, 1996. See the Combined Financial Statements, Pietro's Corp.'s Business
Related to Purchased Assets.

(3) Presented on page 26 of this Prospectus is pro forma net loss as if the
Parent had acquired the Purchased Assets as of the beginning of the period
(January 1, 1995).

(4) In December 1994, the Parent effected a 19,000-for-one stock split of its
Common Stock. In May 1995, the Parent effected a .34896-for-one reverse
stock split of its Common Stock. The weighted average shares outstanding are
based on the pro forma weighted average shares outstanding.

(5) Restaurant Operating Data includes the financial results for restaurants
open for the entire comparable periods. The Westwood Village in Los Angeles,
Brea and restaurants comprising the Purchased Assets were opened during the
periods. The La Jolla -- Prospect restaurant was closed. Both openings and
closures were excluded due to noncomparability. With respect to the
Purchased Assets, the seven restaurants sold during the second quarter 1996
and the Woodstock, Oregon restaurant, were excluded due to noncomparability.

(6) Determined as total sales divided by the number of all restaurants open for
the full period. Restaurants open for the full periods presented for the
Parent totaled seven for the Parent, and none for the Purchased Assets.

(7) Determined as total sales divided by the number of all restaurants open for
the full period. Restaurants open for the full periods presented in the Pro
Forma Combined Data totaled seven for the Parent and 18 for the Purchased
Assets.

(8) Determined as total sales divided by total square feet for all restaurants
open for the full period. Restaurants open for the full periods presented
for the Parent totaled seven for the Parent and none for the Purchased
Assets, because the operations of the Purchased Assets are only included for
the period from March 30, 1996 to June 30, 1996.

(9) Determined as total sales divided by total square feet for all restaurants
open for the full period. Restaurants open for the full periods presented in
the Pro Forma Combined Data totaled seven for the Parent and 18 for the
Purchased Assets, because the pro forma data includes the operations of the
Parent and the Purchased Assets for the full period from January 1, 1996
through June 30, 1996.

(10) As adjusted to reflect the issuance and sale of the 1,800,000 shares of
Common Stock at the public offering price of $5.00 per share and 1,800,000
Redeemable Warrants at $0.25 per Redeemable Warrant, net of estimated
expenses of the offering, the repayment of certain indebtedness with such
proceeds, and the conversion of $3,000,000 in certain Notes Payable to
Related Parties and accrued interest of $75,000 thereon into 750,000 shares
of Common Stock and 4,500,000 Special Warrants (as hereinafter defined). The
as adjusted amounts do not reflect the issuance and sale of up to 270,000
shares of Common Stock and 270,000 Redeemable Warrants by the Company to
cover over-allotments, if any, or the exercise of the Representative's
Warrants. See "Use of Proceeds."

(11) Working capital includes certain Notes Payable to Related Parties resulting
from the Purchased Asset acquisition totaling $3,000,000 which are
convertible at the time of the Offering to 750,000 shares and 4,500,000
Special Warrants (as hereinafter defined). These securities are
collateralized by the stock of the Purchased Assets and have a stated
interest rate of ten percent per annum. See the Combined Financial
Statements and "Certain Transactions -- Pietro's Acquisition."

(12) The minority interest represents the 46.32% limited partners' share in the
equity and the accumulated results from operation for the Lahaina, Maui
restaurant, not owned directly by the Parent.

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RISK FACTORS

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION. IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THE PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS BEFORE MAKING AN INVESTMENT.

LIMITED OPERATING HISTORY. The Company was founded in 1991 to assume the
management of five BJ's Chicago Pizzeria restaurants and opened its first new
BJ's restaurant in 1992. Of the seven restaurants developed by the Company, as
opposed to pre-existing restaurants for which the Company assumed management,
one was opened in 1992, one in 1993, three in 1994, and two in 1996. The Company
has also only recently acquired an additional 26 restaurants, 19 of which the
Company has retained. Development efforts for the retained restaurants have yet
to begin. Accordingly, the Company has a limited operating history and there can
be no assurance that its restaurants, or the Company as a whole, will be
profitable in the future. See "Business."

PAST OPERATING LOSSES -- NET WORKING CAPITAL DEFICIT. As of June 30, 1996,
the Company had a $5.2 million working capital deficit, although $3.0 million of
this deficit represents certain convertible notes which will automatically
convert into Common Stock and Special Warrants (as hereinafter defined) upon the
closing date of the Offering. See "Certain Transactions -- Pietro's
Acquisition." The Company sustained net losses of $550,000 and $1,606,000 for
the years ended December 31, 1994 and 1995, respectively, and a net loss of
$1,075,000 for the six-month period ended June 30, 1996. See generally
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." In addition, the Pietro's Corp.'s Business Related to Purchased
Assets sustained net losses of $833,000 and $451,000 for the years ended
December 26, 1994 and December 25, 1995, respectively, and a net loss of
$166,000 for the three-month period ended March 29, 1996, the date of
acquisition by the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The Company will continue to
sustain losses unless it can successfully increase revenues and reduce food and
administrative costs in accordance with management's business strategy.

IMPACT UPON FUTURE NET INCOME OR LOSS OF THE COMPANY BY CURRENT ACCOUNTING
OF DEBT FINANCING COST. In order to finance the Pietro's Acquisition, the
Company sold certain Convertible Notes (as hereinafter defined) totaling in the
aggregate $3,000,000, which Convertible Notes convert into Shares and warrants
upon the close of this Offering. In connection with this financing, which
financing was obtained through the Representative, the Company paid the
Representative 13% of the total $3,000,000 investment, or $390,000. See "Certain
Transactions -- Pietro's Acquisition." The $390,000 debt financing cost is
currently being amortized over twelve months; however, upon conversion of the
Convertible Notes simultaneously with the closing of this Offering, the
unamortized debt financing cost totaling $292,500 as of June 30, 1996 is
currently anticipated to be expensed in the third quarter of 1996 and will
significantly impact the net income or loss of the Company.

LACK OF DIVERSIFICATION. The Company currently intends to operate pizzeria
restaurants and brew-pubs only. As a result, changes in consumer preferences,
including changes in consumer preferences away from restaurants of the type
operated by the Company, may have a disproportionate and materially adverse
impact on the Company's business, operating results and prospects.

IMMEDIATE SUBSTANTIAL DILUTION. The initial public offering price per Share
will exceed the net tangible book value per share of the Common Stock.
Accordingly, the purchasers of the Shares will experience immediate substantial
dilution of $3.89 per share or 77.8% of their investment based upon the pro
forma net tangible book value of the Company at June 30, 1996. In addition, the
purchasers of the Securities offered hereby will bear a disproportionate part of
the financial risk associated with the Company's business while effective
control will remain with the existing shareholders and Management. See
"Dilution."

RECENTLY FORMED REPRESENTATIVE MAY BE UNABLE TO COMPLETE OFFERING OR MAKE A
MARKET. The Representative was formed in March 1995, has acted as the managing
underwriter for four public offerings and has acted as a member of an
underwriting syndicate on three occasions. Nonetheless,

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due to the Representative's limited history, there can be no assurance that the
Offering will be completed or, if completed, that an active trading market for
the Common Stock will develop. The Representative is not affiliated with the
Company or any controlling person of the Company. See "Underwriting."

NEED FOR ADDITIONAL FINANCING. Although the Company expects that the net
proceeds of this Offering will be sufficient to fund the Company's cash
requirements for the conversion of the Northwest Restaurants and operation of
its existing restaurants for at least 18 months following the completion of this
Offering, this estimate is based on numerous assumptions regarding the Company's
operations, including certain assumptions as to the Company's revenues, net
income and other factors, and there is no assurance that such assumptions will
prove to be accurate or that unbudgeted costs will not be incurred. Future
events, including the problems, delays, additional expenses and difficulties
frequently encountered in the expansion and conversion of facilities, as well as
changes in economic, regulatory or competitive conditions, may lead to cost
increases that could make the net proceeds of this Offering insufficient to fund
the Company's operations in which case the Company would require additional
financing. There can be no assurance that the Company will be able to obtain
such additional financing, or that such additional financing will be available
on terms acceptable to the Company and at the times required by the Company.
Failure to obtain such financing may adversely impact the growth, development or
general operations of the Company. If, on the other hand, such financing can be
obtained, it may result in additional leverage or dilution of existing
shareholders. See "Management's Discussion and Analysis of Financial Condition
and Results of Operation -- Liquidity and Capital Resources."

UNCERTAIN ABILITY TO MANAGE GROWTH AND CONVERSIONS. A significant element
of the Company's business plan is to expand through acquisitions and
conversions. For example, the Company has recently acquired 26 restaurants
located throughout Washington and Oregon under a plan of reorganization, 19 of
which the Company retained and currently plans to convert into BJ's restaurants.
In addition, the Company only recently opened its Westwood Village (Los Angeles)
and Brea, California restaurants. An additional restaurant is being developed in
Boulder, Colorado. The Company's ability to successfully convert recently
acquired restaurants and to expand will depend on a number of factors, including
the selection and availability of suitable locations, the hiring and training of
sufficiently skilled management and other personnel, the availability of
adequate financing, distributors and suppliers, the obtaining of necessary
governmental permits and authorizations, and contracting with appropriate
development and construction firms, some of which are beyond the control of the
Company. There is no assurance that the Company will be able to successfully
convert recently acquired restaurants or to open any new restaurants and/or
brew-pubs, or that any new restaurants and/or brew-pubs will be opened at
budgeted costs or in a timely manner, or that such restaurants can be operated
profitably.

LIMITATIONS AND VULNERABILITY AS A RESULT OF GEOGRAPHIC CONCENTRATION OF
MANAGEMENT'S EXPERIENCE. Until recently, Management's experience was limited to
operating the restaurants in Southern California and one restaurant in Lahaina,
Maui. Because the Company's Management has limited operating experience outside
of Southern California, there is no assurance that the Company will be
successful in other geographic areas. For example, the Company's experience with
construction and development outside the Southern California area is limited,
which may increase associated risks of development and construction as the
Company expands outside this area. Expansion to other geographic areas may
require substantially more funds for advertising and marketing since the Company
will not initially have name recognition or word of mouth advertising available
to it in areas outside of Southern California. The centralization of the
Company's management in Southern California may be a problem in terms of its
current and future expansion to new geographic areas, because the Company lacks
experience with local distributors, suppliers and consumer factors and other
issues as a result of the distance between the Company's main headquarters and
its restaurant sites. These factors could impede the growth of the Company.

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GEOGRAPHIC CONCENTRATION OF COMPANY'S OPERATIONS The Company's operations
are concentrated in Southern California, Lahaina, Maui, Oregon and Washington.
Adverse economic conditions in any of these areas could adversely impact the
Company.

RESTAURANT INDUSTRY COMPETITION. The restaurant industry is intensely
competitive with respect to price, service quality, location, ambiance and food
quality, both within the casual dining field and in general. As a result, the
rate of failure for restaurants is very high, and the business of owning and
operating restaurants involves greater risks than for businesses generally.
There are many competitors of the Company in the casual dining segment that have
substantially greater financial and other resources than the Company and may be
better established in those markets where the Company has opened or intends to
open restaurants. There is no assurance that the Company will be able to compete
successfully with its competitors.

SPECIAL BREWERY BUSINESS CONSIDERATIONS. A key element of the Company's
business plan involves the development and/or acquisition of brew-pub-themed
restaurants which will brew beer on site or offer beer produced in a centralized
micro-brewery or offer a variety of micro-brew beers produced by others that
have limited availability. To the extent that the Company brews its own beer,
its business will be highly dependent upon the suppliers of various raw
ingredients and other materials, delivery service and the Company's ability to
retain or replace its expert brewmaster to oversee the Company's brewing
operations. In addition, to the extent that the Company sells beer produced by
its facility to others, the Company will require independent distributors, the
loss of which could adversely impact the Company. Further, brewery operations
are subject to specific hazards, including contamination of brews by
microorganisms and risks of equipment failure. Although Management has procured
insurance to cover such risks, there can be no assurance that such insurance
coverage will be adequate or will continue to be available on price or other
terms satisfactory to the Company.

UNCERTAINTY WITH RESPECT TO GROWTH OF THE MICRO-BREWING INDUSTRY. The sale
and consumption of micro-brewed beer has increased over the past several years.
There can be no assurance that the demand for micro-brewed beer will continue to
grow at the present rate or at all, or that circumstances could develop to cause
the demand for micro-brewed beer to diminish. To meet the demand for micro-
brewed beer, new breweries are being developed. If the demand for micro-brewed
beer does not keep up with increases in supply, the Company's limited brewery
operations will face heightened competition and may not be able to sell
sufficient quantities of its products to achieve profitability.

SIGNIFICANT IMPACT OF BEER AND LIQUOR REGULATIONS. Currently, the sale of
beer and wine accounts for approximately ten percent of total revenue at the
Southern California restaurants. In light of the Company's current focus upon
the development and/or acquisition of brew-pub-themed restaurants, Management
believes that the sale of beer and other alcoholic beverages will constitute a
greater percentage of sales in the future. The Company is required to operate in
compliance with federal licensing requirements imposed by the Bureau of Alcohol,
Tobacco and Firearms of the United States Department of Treasury, as well as the
licensing requirements of states and municipalities where its restaurants are or
will be located. Failure to comply with federal, state or local regulations
could cause the Company's licenses to be revoked and force it to cease the
brewing and/or sale of alcoholic beverages at its restaurants. Additionally,
state liquor laws may prevent or impede the expansion of the Company's
restaurants into certain markets. The liquor laws of certain states prevent the
Company from selling at wholesale the beer brewed at its restaurants. Any
difficulties, delays or failures in obtaining such licenses, permits or
approvals could delay or prevent the opening of a restaurant in a particular
area.

BEER EXCISE TAX. The federal government currently imposes an excise tax of
$7.00 per barrel on each barrel of beer produced for domestic consumption, up to
60,000 barrels per year. Individual states also impose excise taxes on alcoholic
beverages in varying amounts. In the future the excise tax rate could be
increased by either the federal or state governments, or both. Future increases
in excise taxes on alcoholic beverages could adversely affect the Company.

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DEPENDENCE UPON CONSUMER TRENDS. The Company's restaurants are, by their
nature, dependent upon consumer trends with respect to the public's tastes,
eating habits (including increased awareness of nutrition), public perception
toward alcohol consumption and discretionary spending priorities, all of which
can shift rapidly. In general, such trends are significantly affected by many
factors, including the national, regional or local economy, changes in area
demographics, public perception and attitudes, increases in regional
competition, food, liquor and labor costs, traffic patterns, weather, natural
disasters and the availability and relative cost of automobile fuel. Any
negative change in any of the above factors could negatively affect the Company
and its operations.

DEPENDENCE ON KEY PERSONNEL. As of the date of the Prospectus there are
three members of senior Management of the Company: Paul Motenko, who serves as
Chairman of the Board, Chief Executive Officer, Vice President and Secretary of
the Company; Jeremiah J. Hennessy, who serves as President, Chief Operating
Officer and Director of the Company; and Laura Parisi who serves as Chief
Financial Officer and Assistant Secretary of the Company. The Company currently
has employment agreements only with Mr. Motenko and Mr. Hennessy. See
"Management -- Employment Agreements." The Company's success depends to a
significant extent on the performance and continued service of its senior
management and certain key employees. Competition for employees with such
specialized training is intense and there can be no assurance that the Company
will be successful in retaining such personnel. In addition, there can be no
assurance that employees will not leave the Company or compete against the
Company. See "Management." The Company does not currently have any key person
life insurance but has applied for $1,000,000 in key person life insurance for
each of Mr. Motenko and Mr. Hennessy. If the services of any members of
Management become unavailable for any reason, it could affect the Company's
business and prospects adversely.

RISKS ASSOCIATED WITH LEASED PROPERTIES. The Company's 28 restaurants are
all on leased premises. Certain of these leases expire in the near term and
there is no automatic renewal or option to renew. See "Business -- Property and
Leases." No assurance can be given that leases can be renewed, or, if renewed,
rents will not increase substantially, either of which could adversely affect
the Company. Other leases are subject to renewal at fair market value, which
could involve substantial rent increases. In addition, there is a potential
eminent domain proceeding against one of the Company's restaurants in Oregon
which, if completed, could require the Company to close the restaurant and lose
its potential revenues and investment therein.

PIETRO'S ACQUISITION OUT OF BANKRUPTCY. The Company recently acquired 26
restaurants pursuant to a plan of reorganization filed by Pietro's with the U.S.
Bankruptcy Court. The Company has sold 7 of the 26 restaurants. The Company
currently plans to retain the remaining 19 restaurants. Pietro's was unable to
operate its restaurants on a profitable basis, and there is no assurance that
the Company will be able to operate these restaurants on a profitable basis in
the future. See "Certain Transactions -- Sale of Restaurants."

INCREASES IN FOOD COSTS. The Company's gross margins are highly sensitive
to changes in food costs, which sensitivity requires Management to be able to
anticipate and react to such changes. Various factors beyond the Company's
control, including adverse weather, labor strikes and delays in any of the
restaurants' frequent deliveries, may negatively affect food costs, quality and
availability. While in the past, Management has been able to anticipate and
react to increasing food costs through, among other things, purchasing
practices, menu changes and price adjustments, there can be no assurance that it
will be able to do so in the future.

INCREASE IN MINIMUM WAGE. On August 20, 1996, President Clinton signed
legislation which will increase the federal minimum wage from $4.25 an hour to
$4.75 effective October 1, 1996 and again to $5.15 effective September 1, 1997.
In addition, California faces an initiative on the November ballot that proposes
another two-step increase making the state minimum wage $5.75 an hour by early
1998. A substantial majority of employees working in restaurants operated by the
Company receive salaries equal to the federal minimum wage and an increase in
the minimum wage is expected to increase the operating expenses of the Company.

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POTENTIAL UNINSURED LOSSES. The Company has comprehensive insurance,
including general liability, fire and extended coverage, which the Company
considers adequate. However, there are certain types of losses which may be
uninsurable or not economically insurable. Such hazards may include earthquake,
hurricane and flood losses. While the Company currently maintains limited
earthquake coverage, it may not be economically feasible to do so in the future.
If such a loss should occur, the Company would, to the extent that it is not
covered for such loss by insurance, suffer a loss of the capital invested in, as
well as anticipated profits and/or cash flow from, such damaged or destroyed
properties. Punitive damage awards are generally not covered by insurance; thus,
any awards of punitive damages as to which the Company may be liable could
adversely affect the ability of the Company to continue to conduct its business,
to expand its operations or to develop additional restaurants. There is no
assurance that any insurance coverage maintained by the Company will be
adequate, that it can continue to obtain and maintain such insurance at all or
that the premium costs will not rise to an extent that they adversely affect the
Company or the Company's ability to economically obtain or maintain such
insurance. See "Business -- Insurance."

POTENTIAL "DRAM SHOP" LIABILITY. Restaurants in most states, including
those in which the Company operates, are subject to "dram shop" laws, rules and
regulations, which impose liability on licensed alcoholic beverage servers for
injuries or damages caused by their negligent service of alcoholic beverages to
a visibly intoxicated person or to a minor, if such service is the proximate
cause of the injury or damage and such injury or damage is reasonably
foreseeable. While the Company has limited amounts of liquor liability insurance
and intends to maintain liquor liability insurance as part of its comprehensive
general liability insurance which it believes should be adequate to protect
against such liability, there is no assurance that it will not be subject to a
judgment in excess of such insurance coverage or that it will be able to obtain
or continue to maintain such insurance coverage at reasonable costs, or at all.
The imposition of a judgment substantially in excess of the Company's current
insurance coverage would have a materially adverse effect on the Company and its
operations. The failure or inability of the Company to maintain or increase
insurance coverage could materially and adversely affect the Company and its
operations. In addition, punitive damage awards are generally not covered by
such insurance. Thus, any awards of punitive damages as to which the Company may
be liable could adversely affect the ability of the Company to continue to
conduct its business, to expand its operations or to develop additional
restaurants.

TRADEMARK AND SERVICEMARK RISKS. The Company has not had a challenge to its
use of the "BJ's" servicemark as of this time. However, to date, the Company has
used the servicemark only in Southern California and Lahaina, Maui and will only
recently be attempting to use such servicemark in Washington and Oregon. In
addition, the Company has not secured clear rights to the use of the "BJ's"
servicemark or any other name, servicemark or trademark used in the Company's
business operations. Since there are other restaurants using the "BJ's" name
throughout the United States there can be no assurance that the Company will
ever be able to secure any such proprietary rights or that the Company may not
be subject to claims with respect to the Company's use of the "BJ's" name. See
"Business -- Trademarks and Copyrights."

EFFECTS OF COMPLIANCE WITH GOVERNMENT REGULATION. The Company is subject to
various federal, state and local laws, rules and regulations affecting its
businesses and operations. Each of the Company's restaurants is and shall be
subject to licensing regulation and reporting requirements by numerous
governmental authorities which may include alcoholic beverage control, building,
land use, environmental protection, health and safety and fire agencies in the
state or municipality in which the restaurant is located. Difficulties in
obtaining or failures to obtain the necessary licenses or approvals could delay
or prevent the development or operation of a given restaurant or limit, as with
the inability to obtain a liquor or restaurant license, its products and
services available at a given restaurant. Any problems which the Company may
encounter in renewing such licenses in one jurisdiction may adversely affect its
licensing status on a federal, state or municipal level in other relevant
jurisdictions. See "-- Significant Impact of Beer and Liquor Regulation."

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HIGHER COSTS ASSOCIATED WITH POTENTIAL HEALTH CARE REFORM. The Company
currently pays full and in some cases a portion of health insurance coverage for
corporate, managerial and certain non-managerial restaurant personnel. Many
proposals being discussed at the state and federal level for universal or
broadened health care coverage could impose costly requirements to provide
additional coverage, which could adversely impact the Company. At the present
time it is unclear what, if any, reforms in health care coverage will be adopted
at the federal or state level.

POTENTIAL IMPACT OF RECENT TAX LAW DEVELOPMENTS. In June 1995 the Internal
Revenue Service announced a new initiative aimed at improving tip reporting in
the restaurant industry, known as the Tip Reporting Alternative Commitment
("TRAC"). TRAC is a voluntary agreement between a restaurant and the IRS under
which the restaurant agrees to educate employees about tip reporting and assume
responsibility for tracking employees' charge-card tips. In return, a restaurant
that signs and complies with a TRAC receives assurance that the IRS will not
bill the restaurant for Federal Insurance Contributions Act ("FICA") taxes on
previously unreported tips unless the IRS has first determined that individual
employees owe FICA taxes. While entering a TRAC may minimize potential exposure
for back FICA taxes on unreported tips, it will increase expenses for training
and recordkeeping, as well as result in a likely increase in FICA payroll taxes
due to an increase in the amount of tips reported, offset by an income tax
credit equal to the full amount of FICA payroll taxes paid to the extent of the
Company's federal income tax liability. Management of the Company has not made a
determination of whether or not to apply to enter into a TRAC.

LIMITED CONTROL AND INFLUENCE ON THE COMPANY BY NEW INVESTORS. Upon the
consummation of this Offering, the officers and directors of the Company will,
in the aggregate, beneficially own approximately 24.9% of the Common Stock
(11.4% assuming exercise in full of the Redeemable Warrants, the Selling
Security Holders' Redeemable Warrants, the Underwriters' overallotment options,
including exercise of the Redeemable Warrants included therein, the
Representative's Warrant and all other outstanding warrants and options). As a
result, it is anticipated that these individuals will be in a position to
materially influence, if not control, the outcome of all matters requiring
shareholder or board approval, including the election of directors. See
"Management," "Principal Shareholders" and "Description of Securities -- Common
Stock." Such influence and control is likely to continue for the foreseeable
future and significantly diminishes control and influence which future
shareholders may have on the Company.

POSSIBLE ADVERSE IMPACT OF FUTURE SALES OF RESTRICTED SHARES ON MARKET
PRICE. All outstanding shares prior to this Offering are restricted securities
under Rule 144 under the Securities Act of 1933. However, of these restricted
securities, the 1,766,864 shares held by the Selling Security Holders may be
sold at any time in the over the counter market and an additional 2,772,014
shares may be eligible for resale in the near future under Rule 144. 1,529,332
of such 2,772,014 shares include shares held by officers and directors who, with
the exception of Mr. Grumman and Mr. Schneider, have agreed not to sell their
shares for one year after the date hereof without the written consent of the
Representative. 211,618 shares owned by Mr. Grumman are subject to lock-up;
however, Mr. Grumman will, subject to certain conditions, be permitted to sell
7,500 shares of Common Stock per month during the one year lock-up period. See
"Underwriting." In general, under Rule 144, a person (or persons whose shares
are aggregated) holding restricted securities who has satisfied a two-year
holding period may, commencing 90 days after the date hereof, under certain
circumstances, sell within any three-month period that number of shares which
does not exceed the greater of 1% of the then outstanding shares of Common Stock
or the average weekly reported trading volume during the four calendar weeks
prior to filing a Rule 144 notice. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a person
who has satisfied a three-year holding period and who is not, and has not been
for the preceding three months, an affiliate of the Company. The Securities and
Exchange Commission (the "Commission") has proposed to shorten the two year and
three year holding periods of Rule 144 to one year and two years, respectively.
If such holding periods are shortened, the holders of restricted securities
could accelerate the date that they could sell their shares. Future sales under
Rule 144 or by the Selling Security Holders including sales of the Selling

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Security Holders' Redeemable Warrants (and the shares issuable upon exercise of
the Selling Security Holders' Redeemable Warrants) may have an adverse effect on
the market price of the shares of Common Stock or Redeemable Warrants should a
public market develop for such Securities.

NO DIVIDENDS. It is the current policy of the Company that it will retain
earnings, if any, for expansion of its operations, remodeling or conversion of
existing restaurants and other corporate purposes and it will not pay any cash
dividends in respect of the Common Stock in the foreseeable future. See
"Dividend Policy."

ABSENCE OF PUBLIC MARKET. Prior to this Offering, there has been no public
market for the Common Stock or the Redeemable Warrants. The Common Stock and
Redeemable Warrants have been approved for listing on the Nasdaq Small-Cap
Market. There is no assurance that a regular public market for the Common Stock
or Redeemable Warrants will develop as a result of this Offering or, if a
regular public market does develop, that it will continue. In the absence of
such a market, investors may be unable to readily liquidate their investment in
the Common Stock or Redeemable Warrants.

NO ASSURANCE OF CONTINUED NASDAQ INCLUSION. In order to qualify for
continued listing on Nasdaq, a company, among other things, must have $2,000,000
in total assets, $1,000,000 in capital and surplus and a minimum bid price of
$1.00 per share. If the Company is unable to satisfy the maintenance
requirements for quotation on Nasdaq, of which there can be no assurance, it is
anticipated that the Securities would be quoted in the over-the-counter market
National Quotation Bureau ("NQB") "pink sheets" or on the NASD OTC Electronic
Bulletin Board. As a result, an investor may find it more difficult to dispose
of, or obtain accurate quotations as to the market price of the Securities which
may materially adversely affect the liquidity of the market of the Securities.

POSSIBLE ADVERSE IMPACT OF PENNY STOCK REGULATION. If the Securities are
delisted from Nasdaq, they might be subject to the low-priced security or
so-called "penny stock" rules that impose additional sales practice requirements
on broker-dealers who sell such securities. For any transaction involving a
penny stock the rules require, among other things, the delivery, prior to the
transaction, of a disclosure schedule required by the Commission relating to the
penny stock market. The broker-dealer also must disclose the commissions payable
to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information for the penny stocks held in the customer's
account.

Although the Company believes that the Securities are not a penny stock due
to their continued listing on Nasdaq, in the event the Securities subsequently
become characterized as a penny stock, the market liquidity for the Securities
could be severely affected. In such an event, the regulations relating to penny
stocks could limit the ability of broker-dealers to sell the Securities and,
thus, the ability of purchasers in this offering to sell their Securities in the
secondary market.

LACK OF CORRELATION BETWEEN OFFERING PRICE AND VALUE OF SHARES OR
COMPANY. The initial public offering price of the Shares and Redeemable
Warrants will be determined by negotiation between the Company and the
Representative, as representative of the Underwriters, and does not necessarily
bear any relationship to the Company's book value, assets, past operating
results, financial condition or any other established criteria of value. There
is no assurance that the Common Stock or Redeemable Warrants will trade at
market prices in excess of the initial public offering price as prices for the
Common Stock or Redeemable Warrants in any public market which may develop will
be determined in the marketplace and may be influenced by many factors,
including the depth and liquidity of the market for the Common Stock or
Redeemable Warrants, investor perception of the Company and general economic and
market conditions. See "Underwriting" for a discussion of the factors considered
in determining the initial public offering price.

17
<PAGE>
REPRESENTATIVE'S POTENTIAL INFLUENCE ON THE MARKET. Almost all of the
Selling Security Holders are clients of the Representative and are obligated to
sell their respective Securities through the Representative. It is also
anticipated that a significant number of the Securities being offered hereby
will be sold to clients of the Representative. Although the Representative has
advised the Company that it currently intends to make a market in the Securities
following this Offering, it has no legal obligation, contractual or otherwise,
to do so. The Representative, if it becomes a market maker, could be a
significant influence in the market for the Securities, if one develops. The
prices and the liquidity of the Securities may be significantly affected by the
degree, if any, of the Representative's participation in such market. There is
no assurance that any market activities of the Representative, if commenced,
will be continued.

POSSIBLE ADVERSE IMPACT OF SELLING SECURITY HOLDERS' SHARES AND REDEEMABLE
WARRANTS ON MARKET PRICE. As part of the Registration Statement of which this
Prospectus is a part, the Company is registering 1,766,864 shares of Common
Stock, 10,014,584 Selling Security Holders' Redeemable Warrants owned by the
Selling Security Holders, and 10,014,584 shares of Common Stock issuable upon
exercise of such Selling Security Holders' Redeemable Warrants (collectively
referred to herein as the "Selling Security Holders' Securities"). See "Resale
of Outstanding Securities." Concurrently with this Offering, the Selling
Security Holders or their respective transferees, may sell the Selling Security
Holders' Securities. The sale of the Selling Security Holders' Securities may be
effected from time to time in transactions (which may include block transactions
by or for the account of Selling Security Holders) in the over-the-counter
market or negotiated transactions, through the writing of options on the Selling
Security Holders' Securities, through a combination of such methods of sale or
otherwise. Sales of Selling Security Holders' Shares or the shares issuable upon
exercise of the Selling Security Holders' Redeemable Warrants may depress the
price of the Common Stock in any market that may develop for the Common Stock
and sales of the Selling Security Holders' Redeemable Warrants may depress the
price of the Redeemable Warrants in any market that may develop for the
Redeemable Warrants.

CURRENT PROSPECTUS AND STATE REGISTRATION TO EXERCISE WARRANTS. The
Redeemable Warrants and the Selling Security Holders' Redeemable Warrants are
not exercisable unless, at the time of the exercise, the Company has a current
prospectus covering the shares of Common Stock issuable upon exercise of the
Redeemable Warrants and the Selling Security Holders' Redeemable Warrants and
such shares have been registered, qualified or deemed to be exempt under the
securities or "blue sky" laws of the jurisdiction of residence of the exercising
holder of the Redeemable Warrants. In addition, in the event that any holder of
the Redeemable Warrants attempts to exercise any Redeemable Warrants at any time
after nine months from the date of this Prospectus, the Company may be required
to file a post-effective amendment and deliver a current prospectus before the
Redeemable Warrants may be exercised. Although the Company has undertaken to use
its best efforts to have all the shares of Common Stock issuable upon exercise
of the Redeemable Warrants registered or qualified on or before the exercise
date and to maintain a current prospectus relating thereto until the expiration
of the Redeemable Warrants, there is no assurance that it will be able to do so.
The value of the Redeemable Warrants may be greatly reduced if a current
prospectus covering the Common Stock issuable upon the exercise of the
Redeemable Warrants is not kept effective or if such Common Stock is not
qualified or exempt from qualification in the jurisdictions in which the holders
of the Redeemable Warrants then reside.

The Redeemable Warrants will be separately tradeable immediately upon
issuance and may be purchased separately from the Shares. Although the
Securities will not knowingly be sold to purchasers in jurisdictions in which
the Securities are not registered or otherwise qualified for sale, investors may
purchase the Redeemable Warrants in the secondary market or may move to
jurisdictions in which the shares underlying the Redeemable Warrants are not
registered or qualified during the period that the Redeemable Warrants are
exercisable. In such event, the Company would be unable to issue shares to those
persons desiring to exercise their Redeemable Warrants unless and until the
shares could be qualified for sale in jurisdictions in which such purchasers
reside, or an exemption from such qualification exists in such jurisdictions,
and holders of the Redeemable Warrants would

18
<PAGE>
have no choice but to attempt to sell the Redeemable Warrants in a jurisdiction
where such sale is permissible or allow them to expire unexercised. See
"Description of Securities -- Redeemable Warrants."

ADVERSE EFFECT TO HOLDERS OF REDEEMABLE WARRANTS AS A RESULT OF POSSIBLE
REDEMPTION OF SUCH WARRANTS. The Redeemable Warrants are subject to redemption
by the Company, at any time, commencing one year after the date of this
Prospectus, at a price of $.25 per Redeemable Warrant if the average closing bid
price for the Common Stock equals or exceeds 140 percent of the initial public
offering price per share for any 20 trading days within a period of 30
consecutive trading days ending on the fifth trading day prior to the date of
the notice of redemption. If, prior to exercise, the Company provides holders of
the Redeemable Warrants with the 30-day notice of redemption and during such
notice period, the Redeemable Warrants are not exercised, the holders thereof
would lose their right to exercise their respective Redeemable Warrants and the
benefit of the difference between the market price of the underlying Common
Stock as of such date and the exercise price of such Redeemable Warrants, as
well as any possible future price appreciation in the Common Stock. Upon the
receipt of a notice of redemption of the Redeemable Warrants, the holders
thereof would be required to: (i) exercise the Redeemable Warrants and pay the
exercise price at a time when it may be disadvantageous for them to do so; (ii)
sell the Redeemable Warrants at the market price, if any, when they might
otherwise wish to hold the Redeemable Warrants; or (iii) accept the redemption
price, which is likely to be substantially less than the market value of the
Redeemable Warrants at the time of redemption. Notwithstanding the above,
4,700,000 of such Redeemable Warrants ("Special Warrants") are not redeemable
until sold by the current holders or their affiliates. See "Description of
Securities -- Redeemable Warrants" and "Underwriting."

POSSIBLE ADVERSE IMPACT ON POTENTIAL BIDS TO ACQUIRE SHARES DUE TO ISSUANCE
OF PREFERRED OR COMMON STOCK. The Board of Directors of the Company has
authority to issue up to 5,000,000 shares of preferred stock of the Company (the
"Preferred Stock") and to fix the rights, preferences, privileges and
restrictions of such shares without any further vote or action by the
shareholders. In addition, the Company has authorized 60,000,000 shares of
Common Stock. Only 6,408,321 shares of Common Stock will be outstanding
immediately after the completion of this Offering, assuming no exercise of the
Underwriters' over-allotment options and assuming that the Representative's
Warrants and all other stock options and warrants then to be outstanding are not
exercised. An additional 13,134,584 shares of Common Stock are reserved for
issuance pursuant to the Underwriters' over-allotment options, Redeemable
Warrants, the Selling Security Holders' Redeemable Warrants, the
Representative's Warrants, and options that may be granted under the 1996 Stock
Option Plan. Thus, an additional 40,457,095 shares of Common Stock remain
available for issuance at the discretion of the Board of Directors. The
potential issuance of authorized and unissued Preferred Stock or Common Stock of
the Company may result in special rights and privileges, including voting
rights, to individuals designated by the Company and have the effect of
delaying, deferring or preventing a change in control of the Company. As a
result, such potential issuance may adversely affect the marketability and
potential market price of the shares, as well as the voting and other rights of
the holders of the Common Stock. The Company currently has no plans to issue
shares of Preferred Stock or additional shares of Common Stock. See "Description
of Securities -- Common Stock."

POSSIBLE DILUTIVE EVENT AS A RESULT OF LACK OF PREEMPTIVE RIGHTS. The
holders of Common Stock do not have any subscription, redemption or conversion
rights, nor do they have any preemptive or other rights to acquire or subscribe
for additional, unissued or treasury shares. Accordingly, if the Company were to
elect to sell additional shares of Common Stock, or securities convertible into
or exercisable to purchase shares of Common Stock, following this Offering,
persons acquiring Common Stock in this Offering would have no right to purchase
additional shares, and as a result, their percentage equity interest in the
Company would be diluted. See "Description of Securities -- Common Stock."

19
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Securities offered
hereby at the initial public offering price of $5.00 per share and $0.25 per
warrant, after deducting underwriting discounts and other estimated expenses of
the Offering, are estimated to be approximately $7,504,660 ($8,750,359 if the
Underwriters' over-allotment options are exercised in full). The Company intends
to apply such proceeds for the general purposes set forth below:

<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE
APPLICATION OF NET PROCEEDS DOLLAR AMOUNT OF NET PROCEEDS
- ------------------------------------------------------------ ------------- ----------------------
<S> <C> <C>
Conversion of 19 Northwest Restaurants (1).................. $4,500,000 60.0%
Repayment of Debt (2)....................................... 730,000 9.7%
Development of Boulder, Colorado Restaurant (3)............. 800,000 10.7%
Working Capital............................................. 1,474,660 19.6%
------------- -----
Total..................................................... $7,504,660 100.0%
------------- -----
------------- -----
</TABLE>

- ------------------------
(1) Depending on which of the three BJ's concepts a particular restaurant is
converted to, conversion expenditures are estimated to range from $100,000
for a BJ'S PIZZA restaurant to as high as $500,000 for a full BJ'S PIZZA,
GRILL & BREWERY restaurant.

(2) To repay: (i) $526,000 of the $3,270,000 outstanding note payable to Roman
Systems, which note matures on April 1, 2004 and bears interest at a rate of
7%. See "Certain Transactions -- Acquisition of Restaurants and Intellectual
Property," (ii) a $100,000 note due and payable to Ms. Katherine Anderson, a
limited partner of BJ's Lahaina, L.P., the California limited partnership
which operates the Company's Lahaina, Maui restaurant, which note matures on
September 5, 1996 and bears interest at a rate of 19%, (iii) a $79,000 note
due on demand and payable to Paul Motenko, which note bears interest at a
rate of 6% and (iv) a $25,000 note due and payable to Harold Motenko, which
note matures on March 22, 1998 and bears interest at a rate of 12%. See
"Certain Transactions -- Certain Other Transactions and Conflicts of
Interest."

(3) Represents estimated costs of improvements and equipment purchases for the
Boulder, Colorado restaurant not currently expected to be financed through
loans or other financing, as well as amounts expected to be applied toward,
among other things, advertising, preopening expenses (including hiring and
training of personnel) and related expenses in connection with the Boulder,
Colorado site.

The foregoing represents the Company's best estimate of its use of the net
proceeds of this Offering based upon its present plans, the state of its
business operations and current conditions in the restaurant industry. The
Company reserves the right to change the use of the net proceeds if
unanticipated developments in the Company's business, business opportunities, or
changes in economic, regulatory or competitive conditions make shifts in the
allocation of net proceeds necessary or desirable. The net proceeds from the
exercise of the Representative's Warrants, if any, will be added to the general
funds of the Company and used for working capital and other general corporate
purposes. Amounts received by the Company upon exercise of the Underwriters'
over-allotment options, if any, will be used for working capital and other
general corporate purposes. Pending any uses, the Company will invest the net
proceeds from this Offering in short-term, interest-bearing securities or
accounts.

The Company will not receive any proceeds from the sale of the Selling
Security Holders' Securities, although it will receive the exercise price of the
Selling Security Holders' Redeemable Warrants when and if they are exercised.

DIVIDEND POLICY

The Company has not paid any dividends since its inception. Currently, the
Company does not have any funds available for the payment of dividends. In any
case, it is the current policy of the Company that it will retain earnings, if
any, for expansion of its operations, remodeling of existing restaurants and
other general corporate purposes and that it will not pay any cash dividends in
respect of the shares in the foreseeable future. Should the Company decide to
pay dividends in the future such payments would be at the discretion of the
Board of Directors.

20
<PAGE>
DILUTION

As of June 30, 1996, the Company had a pro forma net tangible deficit book
value of $9,144, or approximately $0.00 per share of Common Stock. The pro forma
net tangible book value assumed the conversion of $3,000,000 of debt pursuant to
the Note Purchase Agreements (as hereinafter defined) by and between the Company
and ASSI, Inc. and the Company and Norton Herrick upon the consummation of this
Offering. (See "Certain Transactions -- Pietro's and Other Proposed
Acquisitions") This pro forma net tangible book value per share of Common Stock
is equal to the net tangible assets of the Company (total assets less total
liabilities and intangible assets), divided by the number of shares of Common
Stock outstanding. After giving effect to the issuance of the 1,800,000 Shares
of Common Stock offered hereby (without giving any effect to the net proceeds
from the sale of the Shares and Redeemable Warrants subject to the Underwriters'
over-allotment options) at an offering price of $5.00 per share, and after
deduction of estimated offering expenses and the Underwriters' discount, the pro
forma net tangible book value of the Company at June 30, 1996 would have been
$7,109,200 or approximately $1.11 per share of Common Stock, representing an
immediate dilution (i.e., the difference between the purchase price per Share
and the pro forma net tangible book value per share after the Offering) to new
investors of $3.89 or 77.8% per share and an immediate increase in net tangible
book value of $1.11 per share to existing shareholders, as illustrated by the
following table:

<TABLE>
<S> <C> <C>
Initial public offering price per share of Common Stock..... $5.00
Pro forma net tangible deficit book value per share after
conversion of debt into Common Stock at June 30, 1996.... $0.00
Increase per share of Common Stock attributable to new
investors................................................ 1.11
-----
Pro forma net tangible book value per share of Common Stock
after the Offering......................................... 1.11
-----
Dilution per share of Common Stock to new investors......... $3.89
-----
-----
</TABLE>

If the net proceeds of $395,460 from the sale of the Redeemable Warrants
(after deducting the underwriting discounts and the Representative's
nonaccountable expense allowance, but attributing no other costs of this
Offering to the Redeemable Warrants) had been attributed to the net tangible
book value of the shares of Common Stock after this Offering, the pro forma net
tangible book value after this Offering would increase by approximately $.06 per
share of Common Stock and decrease the dilution to new public investors by
approximately $.06 per share of Common Stock.

In the event that the Underwriters exercise their over-allotment options in
full, the pro forma net tangible book value of the Company after this Offering
(after deducting the Underwriters' discount and the Representative's
nonaccountable expense allowance, but attributing no other costs of this
Offering to the over-allotment options) would be approximately $8,750,359
(including the net proceeds of $395,460 from the sale of the Redeemable
Warrants) or $1.31 per share of Common Stock, which would result in immediate
dilution in net tangible book value to the public investors of approximately
$3.69 per share of Common Stock.

The following table sets forth the number of shares of Common Stock owned by
the current shareholders of the Company, the number of shares of Common Stock to
be purchased from the

21
<PAGE>
Company by the purchasers of the shares of Common Stock offered hereby and the
respective aggregate consideration paid or to be paid to the Company and the
average price per share of Common Stock.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Current shareholders (1).................................... 4,608,321 71.9% $ 9,229,154 50.6% $2.00
New investors (2)........................................... 1,800,000 28.1% $ 9,000,000 49.4% $5.00
--------- ------- ------------ -------
Total..................................................... 6,408,321 100.0% $ 18,229,154 100.0%
--------- ------- ------------ -------
--------- ------- ------------ -------
</TABLE>

- ------------------------
(1) Includes outstanding Common Stock at June 30, 1996 of 3,788,878 shares, plus
the issuance of Woodbridge Holdings, Inc.'s 69,443 shares and the assumed
conversion of the debt to Common Stock for ASSI, Inc. and Norton Herrick to
750,000 shares upon the closing of this Offering. See "Certain
Transactions."

(2) Does not include the issuance and sale of 1,800,000 Redeemable Warrants, or
up to 270,000 additional Shares of Common Stock and 270,000 Redeemable
Warrants issuable by the Company upon the exercise of the Underwriters'
over-allotment options, which upon full exercise of the respective
securities would increase the total shares of Common Stock purchased by new
investors by 2,340,000 (26.7%) and the total consideration paid to the
Company by new investors to $10,867,500 (54.1%).

22
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1996, as adjusted to give effect to the conversion of $3,000,000 of debt to
Common Stock and warrants (see "Certain Transactions -- Pietro's Acquisition")
and to the issuance and sale of the 1,800,000 Shares of Common Stock and the
1,800,000 Redeemable Warrants offered hereby by the Company at an Offering price
of $5.00 per share and $0.25 per warrant, after the deduction of the estimated
expenses of the Offering, and the application of the net proceeds thereof as set
forth in "Use of Proceeds." The information set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and the related notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------
COMPANY ADJUSTMENTS AS ADJUSTED
-------- ------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt, including current
portion and capital leases............. $ 1,353 $ 1,353
(3,000)(2)
Notes payable to related parties........ 6,793 (730)(1) 3,063
-------- -----------
Total debt.......................... 8,146 4,416
Minority interest....................... 254 254
Equity:
Preferred stock, no par value,
5,000,000 shares authorized; none
issued and outstanding............... -- --
Common stock, no par value, 60,000,000
shares authorized; 4,608,321 shares 69(2)
issued, and pro forma 6,408,321 2,775(2)
shares to be outstanding (3)......... 5,568 7,109(4) 15,521
Capital surplus:
Warrants: 10,014,584 warrants issued; 6(2)
and pro forma 11,814,584 warrants to 225(2)
be outstanding....................... 330 395(4) 956
Accumulated deficit................... (2,899) (293)(2) (3,192)
-------- -----------
Total equity........................ 2,999 13,285
-------- -----------
Total capitalization.............. $ 11,398 $ 17,955
-------- -----------
-------- -----------
</TABLE>

- --------------------------
(1) The Company will use a portion of the net proceeds to pay (i) $526,000 of
the $3,270,000 note payable to Roman Systems, Inc., (ii) a $100,000 note
payable to Ms. Katherine Anderson, (iii) a $79,000 note payable to Paul
Motenko and (iv) a $25,000 note payable to Harold Motenko.

(2) Conversion of $3,000,000 debt and related accrued interest thereon under
certain Convertible Notes to 750,000 shares of Common Stock and 4,500,000
warrants. See "Certain Transactions -- Pietro's Acquisition." The expensing
of the unamortized debt issue cost of $292,500 and the related impact on
accumulated deficit is anticipated to be charged to operations in the third
quarter of 1996 upon the closing of this Offering.

(3) Excludes (i) 1,800,000 shares of Common Stock issuable by the Company upon
the full exercise of the Redeemable Warrants offered hereby, (ii) 270,000
shares of Common Stock and 270,000 Redeemable Warrants issuable by the
Company upon the full exercise of the Underwriters' over-allotment options,
(iii) 180,000 shares of Common Stock issuable by the Company upon the full
exercise of the Representative's Warrant, (iv) 10,014,584 shares of Common
Stock issuable by the Company upon the full exercise of the Selling Security
Holders' Redeemable Warrants and (v) 600,000 shares reserved for issuance
under the Company's proposed 1996 Stock Option Plan. See "Underwriting."

(4) The net proceeds of this Offering which include 1,800,000 Shares of Common
Stock and the issuance and sale of the 1,800,000 Redeemable Warrants offered
hereby.

In December 1994 and May 1995, the Company effected a 19,000-for-one stock
split and a .34896-for-one reverse stock split of its Common Stock,
respectively. Unless the context otherwise requires, all share and per-share
data in this Prospectus have been revised to reflect these stock splits.

23
<PAGE>
SELECTED COMBINED AND CONSOLIDATED FINANCIAL DATA

The selected financial data presented below for, and as of the year ended
December 31, 1995 and the end of, each of the years in the two-year period ended
December 31, 1995, are derived from the combined (1994) and consolidated (1995)
financial statements of the Company and the financial statements of the Pietro's
Corp. Business Related to Purchased Assets ("Purchased Assets"), which financial
statements have been audited by Coopers & Lybrand L.L.P., independent
accountants. The financial statements as of December 31, 1995, and for each of
the years in the two-year period ended December 31, 1995, and the reports
thereon, are included elsewhere in this Prospectus. The consolidated financial
data for the six-month periods ended June 30, 1995 and June 30, 1996, are
derived from unaudited consolidated financial statements of the Company. The
combined financial data for the Purchased Assets on page 25 hereof for the
three-month periods ended March 27, 1995 and March 29, 1996, are derived from
the unaudited combined financial statements of the Purchased Assets. The
consolidated financial data for the Company for the six-month period ended June
30, 1996 includes the results of operations of the Purchased Assets for the
period from March 30, 1996 through June 30, 1996. All of the unaudited financial
statement data referred to above, in the opinion of the Company's management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations. The operating results for the six-month periods ended June 30, 1995
and 1996 are not necessarily indicative of the operating results for the full
year. The selected combined and consolidated financial data should be read in
conjunction with the Company and the Purchased Assets Combined and Consolidated
Financial Statements and related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus. See Note 1 of Notes to Combined and Consolidated Financial
Statements.

CHICAGO PIZZA & BREWERY, INC. (THE "PARENT")

<TABLE>
<CAPTION>
SIX-MONTH
YEAR ENDED DECEMBER PERIODS ENDED
31, JUNE 30,
-------------------- --------------------
1994 1995 1995 1996
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (1)
Revenues...................................................................... $ 6,453 $ 6,586 $ 3,207 $ 8,308
Cost of sales................................................................. 1,638 1,848 894 2,614
--------- --------- --------- ---------
Gross profit.................................................................. 4,815 4,738 2,313 5,694
--------- --------- --------- ---------
Costs and expenses:
Labor....................................................................... 2,706 2,647 1,269 3,088
Occupancy................................................................... 654 654 314 696
Operating expenses.......................................................... 1,331 1,250 650 1,388
General & administrative.................................................... 474 879 330 833
Depreciation & amortization................................................. 173 359 182 377
--------- --------- --------- ---------
Total costs and expenses................................................ 5,338 5,789 2,745 6,382
--------- --------- --------- ---------
Loss from operations.......................................................... (523) (1,051) (432) (688)
Other income (expense):
Interest expense, net....................................................... (119) (472) (381) (386)
Other....................................................................... (34) (104) 0 7
--------- --------- --------- ---------
Total other expense..................................................... (153) (576) (381) (379)
--------- --------- --------- ---------
Loss before minority interest and taxes....................................... (676) (1,627) (813) (1,067)
Minority interest in partnerships............................................. 132 27 17 (1)
--------- --------- --------- ---------
Loss before taxes....................................................... (544) (1,600) (796) (1,068)
Income tax expense............................................................ (6) (6) (2) (7)
--------- --------- --------- ---------
Net loss................................................................ $ (550) $ (1,606) $ (798) $ (1,075)
--------- --------- --------- ---------
--------- --------- --------- ---------

BALANCE SHEET DATA (END OF PERIOD): (1)
Working capital (deficit)..................................................... $ 22 $ (5,206)
Intangible assets, net........................................................ 5,558 5,790
Total assets.................................................................. 9,943 14,890
Total long-term debt (including current portion).............................. 4,127 8,146
Minority interest (2)......................................................... 253 254
Shareholders' equity.......................................................... 4,023 2,999
</TABLE>

24
<PAGE>
PURCHASED ASSETS (3)
<TABLE>
<CAPTION>
THREE-MONTH
YEAR ENDED DECEMBER YEAR ENDED DECEMBER PERIOD ENDED
26, 1994 25, 1995 MARCH 27, 1995
------------------- ------------------- -----------------------
(IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (4)
Revenues................................. $ 14,609 $ 14,634 $ 3,671
Cost of sales............................ 4,403 4,277 1,121
-------- -------- -------
Gross profit............................. 10,206 10,357 2,550
-------- -------- -------
Costs and expenses:
Labor.................................. 4,755 4,836 1,201
Occupancy.............................. 1,402 1,434 350
Operating expenses..................... 2,276 2,361 644
General & administrative............... 1,944 1,596 403
Depreciation & amortization............ 662 581 140
-------- -------- -------
Total costs and expenses........... 11,039 10,808 2,738
-------- -------- -------
Net loss........................... $ (833) $ (451) $ (188)
-------- -------- -------
-------- -------- -------

BALANCE SHEET DATA (END OF PERIOD): (4)
Working capital (deficit)................ $ (247)
Total assets............................. 1,541
Equity................................... 1,091

<CAPTION>
THREE-MONTH
PERIOD ENDED
MARCH 29, 1996
-----------------------

<S> <C>
STATEMENT OF OPERATIONS DATA: (4)
Revenues................................. $ 3,780
Cost of sales............................ 1,188
-------
Gross profit............................. 2,592
-------
Costs and expenses:
Labor.................................. 1,290
Occupancy.............................. 352
Operating expenses..................... 620
General & administrative............... 382
Depreciation & amortization............ 114
-------
Total costs and expenses........... 2,758
-------
Net loss........................... $ (166)
-------
-------
BALANCE SHEET DATA (END OF PERIOD): (4)
Working capital (deficit)................ $ (105)
Total assets............................. 1,463
Equity................................... 1,125
</TABLE>

- ------------------------
(1) Statement of Operations Data for the Parent includes the operating results
for the combined (1994) and consolidated (1995) information for the Parent
and the combined information for the Purchased Assets from March 30, 1996
through June 30, 1996. The Balance Sheet Data includes the consolidated
balance sheet information for the Parent and the combined balance sheet
information for the Purchased Assets as of June 30, 1996. The 1994
information for the Parent is presented on a combined basis due to common
ownership and control. The Parent acquired the Purchased Assets on March 29,
1996.

(2) The minority interest represents the 46.32% limited partners' share in
equity and the accumulated results from operations for the Lahaina, Maui
restaurant, not owned directly by the Parent.

(3) The Purchased Assets represent the 26 restaurants acquired (the "Pietro's
Acquisition") from the former Pietro's Corp., a Washington corporation
("Pietro's"). The financial results for the Purchased Assets represent the
Pietro's Corp.'s Business Related to Purchased Assets acquired by the
Parent. On May 15, 1996 the Parent agreed to sell seven of the restaurants
purchased from Pietro's. The sale was completed during the second quarter of
1996. The operating results of those seven restaurants are included in the
table. The Company recognized no gain or loss on the sale and adjusted the
goodwill recorded in the acquisition of the Purchased Assets. The sales for
the seven restaurants which the Company sold totaled approximately
$3,492,000 and $3,683,000 for the years ended December 25, 1995 and December
26, 1994, respectively. Operating profit excluding overhead allocation for
the seven restaurants totaled approximately $268,000 and $313,000 for the
years ended December 25, 1995 and December 26, 1994, respectively. Loss
after overhead allocation relating to the seven restaurants totaled
approximately $327,000 and $454,000 for the years ended December 25, 1995
and December 26, 1994, respectively. See the Combined Financial Statements,
Pietro's Corp.'s Business Related to Purchased Assets. The sales for the
seven restaurants sold totaled approximately $841,000 and $940,000 for the
three-month periods ended March 31, 1996 and 1995, respectively. Operating
profit excluding overhead allocation totaled approximately $31,000 and
$95,000 for the three-month periods ended March 31, 1996 and 1995,
respectively. Loss after overhead allocation relating to the seven
restaurants totaled approximately $54,000 and $42,000 for the three-month
periods ended March 31, 1996 and 1995, respectively. See the Combined
Financial Statements, Pietro's Corp.'s Business Related to Purchased Assets.

(4) Statement of Operations and Balance Sheet Data for the Purchased Assets
include the combined information for the Purchased Assets as of the dates
and for each of the periods presented.

25
<PAGE>
PRO FORMA COMBINED FINANCIAL DATA FOR THE COMPANY

The following unaudited pro forma combined financial information reflects
the acquisition of the Purchased Assets by the Company. The pro forma statement
of operations for the six-month period ended June 30, 1996 and the year ended
December 31, 1995 assumes the transaction occurred January 1, 1995.

The historical financial information of the Company for the six-month period
ended June 30, 1996 and the year ended December 31, 1995 has been derived from
the consolidated and combined financial statements included elsewhere in this
Prospectus. The pro forma financial information should be read in conjunction
with the accompanying notes thereto and with the financial statements of the
Company and the Purchased Assets included elsewhere in this Prospectus. The pro
forma combined financial information does not purport to be indicative of
operating results which would have been achieved had the acquisition of the
Purchased Assets occurred as of the dates indicated and should not be construed
as representative of future operating results. In the opinion of Management, all
adjustments have been made to reflect the effects of the acquisition.

PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
HISTORICAL PRO FORMA PRO FORMA SIX-MONTH PRO FORMA SIX-MONTH
YEAR ENDED ADJUSTMENTS YEAR ENDED PERIOD ENDED ADJUSTMENTS PERIOD ENDED
DECEMBER 31, PURCHASED DECEMBER 31, JUNE 30, PURCHASED JUNE 30,
1995 ASSETS (1) 1995 (5) 1996 ASSETS (2) 1996 (5)
------------ --------------- ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues............................ $ 6,586 $14,634 $21,220 $ 8,308 $ 3,780 $12,088
Cost of sales....................... 1,848 4,277 6,125 2,614 1,188 3,802
------------ --------------- ------------ ------------ ------- ------------
Gross profit...................... 4,738 10,357 15,095 5,694 2,592 8,286
Costs and expenses:
Labor............................. 2,647 4,836 7,483 3,088 1,290 4,378
Occupancy......................... 654 1,434 2,088 696 352 1,048
Operating expenses................ 1,250 2,361 3,611 1,388 620 2,008
General & administrative.......... 879 1,596(4) 2,475 833 382(4) 1,215
Depreciation & amortization....... 359 581 940 377 114 491
------------ --------------- ------------ ------------ ------- ------------
Total costs and expenses........ 5,789 10,808 16,597 6,382 2,758 9,140
Loss from operations................ (1,051) (451) (1,502) (688) (166) (854)
Minority interest in partnership.... 27 0 27 (1) 0 (1)
Other income (expense):.............
Interest expense, net............. (472) 0 (472) (386) 0 (386)
Other............................. (104) 0 (104) 7 0 7
------------ --------------- ------------ ------------ ------- ------------
Loss before taxes................. (1,600) (451) (2,051) (1,068) (166) (1,234)
Provision for taxes (3)............. (6) 0 (6) (7) 0 (7)
------------ --------------- ------------ ------------ ------- ------------
Net loss........................ $(1,606) $ (451) $(2,057) $(1,075) $ (166) $(1,241)
------------ --------------- ------------ ------------ ------- ------------
------------ --------------- ------------ ------------ ------- ------------
</TABLE>

- ------------------------
(1) To adjust operating results for the year ended December 31, 1995 to include
Pietro's Corp.'s business related to the Purchased Assets described further
elsewhere in this Prospectus.

(2) Reflects the results of the operations of the Purchased Assets for the
three-month period from January 1 to March 29, 1996.

(3) No income tax benefit has been provided for the results of the operations of
the Company and the Purchased Assets as it is more likely than not that the
deferred tax assets originated in the net operating losses will not be
realized.

(4) Reflects overhead allocation from Pietro's Corp.

(5) On May 15, 1996 the Parent agreed to sell seven of the restaurants purchased
from Pietro's Corp. The Company recognized no gain or loss on the sale of
these restaurants and adjusted the goodwill related to the acquisition of
the Purchased Assets. The sales for the seven restaurants sold totaled
approximately $3,492,000 and $1,533,000 for the year ended December 31, 1995
and the six-month period ended June 30, 1996, respectively. Operating profit
before allocation of overhead for the locations to be sold total $268,000
and $9,000 for the year ended December 31, 1995 and the six-month period
ended June 30, 1996, respectively. Losses after allocation of overhead for
the locations to be sold totaled $327,000 and $133,000 for the year ended
December 31, 1995 and the six-month period ended June 30, 1996,
respectively.

26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company's financial condition
and results of operations, for the years ended December 31, 1994 and 1995 and
the six-month periods ended June 30, 1995 and 1996 concern the Company including
the assets of CPNI as of March 30, 1996. The Company including the assets of
CPNI as of March 30, 1996, is referred to as the "Parent." This discussion and
analysis should be read in conjunction with the Parent's combined financial
statements and related notes thereto included elsewhere in this Prospectus.

GENERAL
Chicago Pizza & Brewery, Inc. (the "Company") was formed in 1991 by Mr.
Jeremiah Hennessy and Mr. Paul Motenko (the "Owners") to operate and manage five
existing restaurants that operated as BJ's Chicago Pizzeria restaurants (now all
operated as BJ'S PIZZA & GRILL restaurants) in Southern California. These five
restaurants were owned by Roman Systems, Inc. ("Roman Systems"). The Company
began managing these five restaurants in 1991 pursuant to a Management Agreement
(the "Management Agreement") with Roman Systems. Pursuant to the Management
Agreement, the Company had the right to open, operate and manage BJ's
restaurants. In 1992, the Owners formed CPA-BG, Inc. ("CPA-BG") and opened two
restaurants with CPA-BG as the general partner of BJ's Belmont Shore, L.P. and
BJ's La Jolla, L.P. in 1992 and 1993, respectively. In 1994, the Company opened
BJ's restaurants in Huntington Beach and Seal Beach, California. Additionally in
1994, the Company, through a limited partnership interest in BJ's Lahaina, L.P.,
opened a BJ's restaurant in Lahaina, Maui. The general partners of BJ's Lahaina,
L.P. were CPA010, Inc. ("CPA010"), owned by Messrs. Motenko and Hennessy, and
Blue Max, Inc. ("Blue Max"). In addition to its limited partnership interest,
the Company managed the Lahaina, Maui restaurant.

Effective January 1, 1995, pursuant to the Asset Purchase Agreement between
the Company and Roman Systems (the "Asset Purchase Agreement"), the Company
purchased three of the existing BJ's restaurants operated and managed under the
Management Agreement (Balboa in Newport Beach, La Jolla Village and Laguna
Beach, California) and terminated the Management Agreement. As part of the Asset
Purchase Agreement, the Company assumed responsibility for closing the other two
Roman Systems BJ's restaurants in Santa Ana and San Juan Capistrano, California
and assumed certain liabilities related thereto. The Santa Ana and San Juan
Capistrano, California restaurants were closed in 1995.

Effective January 1, 1995, the Company purchased the limited partnership
interests of BJ's Belmont Shore, L.P. and BJ's La Jolla, L.P. The general
partnership interests of CPA-BG were transferred to the Company for no
consideration prior to the acquisition of the limited partnership interests. The
stock of the corporate general partners of BJ's Lahaina, L.P., CPA010 and Blue
Max, was also transferred to the Company for no consideration. Additionally, in
1995 the Company closed the BJ's restaurant located on Prospect Street in La
Jolla, California ("La Jolla -- Prospect"). As of December 31, 1995, the Company
owned seven BJ's restaurants, all in Southern California and a 53.68% interest
in the BJ's restaurant in Lahaina, Maui. The Company subsequently opened BJ's
restaurants in Westwood Village in Los Angeles, California in March 1996, and
Brea, California in April 1996.

On March 29, 1996, the Company acquired 26 restaurants located in Oregon and
Washington by providing the funding for Pietro's Plan of Reorganization, dated
February 29, 1996, as modified (the "Debtor's Plan") and thereby acquired all of
the stock in the reorganized entity known as Chicago Pizza Northwest, Inc. The
Debtor's Plan was confirmed by an order of the Bankruptcy Court on March 18,
1996 and the Company funded the Debtor's Plan on March 29, 1996. The Company's
consolidated balance sheet as of June 30, 1996 includes CPNI and the Statement
of Operations for the six-month period ended June 30, 1996 includes the results
of CPNI for the period March 30, 1996 through June 30, 1996.

27
<PAGE>
As a result of these transactions the Company owned the following
restaurants during 1995 and 1996, except for the Lahaina, Maui restaurant in
which the Company owned an interest:

<TABLE>
<CAPTION>
LOCATION ACQUIRED FROM DATE ACQUIRED
- ----------------------------------------------------------- ----------------------------- ----------------------
<S> <C> <C>
Seal Beach, California..................................... N.A. (3) February 22, 1994
Lahaina, Maui.............................................. N.A. (3) June 22, 1994
Huntington Beach, California............................... N.A. (3) August 30, 1994
Balboa in Newport Beach, California........................ Roman Systems January 1, 1995
Laguna Beach, California................................... Roman Systems January 1, 1995
La Jolla Village, La Jolla, California..................... Roman Systems January 1, 1995
Belmont Shore, California.................................. BJ's Belmont Shore, L.P. January 1, 1995
La Jolla -- Prospect, California (1)....................... BJ's La Jolla, L.P. January 1, 1995
Westwood Village in Los Angeles, California................ N.A. (3) March 15, 1996
Brea, California........................................... N.A. (3) March 29, 1996
Milwaukie, Oregon.......................................... Pietro's Corp. March 29, 1996
Salem, Oregon.............................................. Pietro's Corp. March 29, 1996
Eugene, Oregon............................................. Pietro's Corp. March 29, 1996
Portland, Oregon........................................... Pietro's Corp. March 29, 1996
Eugene, Oregon............................................. Pietro's Corp. March 29, 1996
Salem, Oregon.............................................. Pietro's Corp. March 29, 1996
Gresham, Oregon............................................ Pietro's Corp. March 29, 1996
Eugene, Oregon............................................. Pietro's Corp. March 29, 1996
Woodstock, Oregon.......................................... Pietro's Corp. March 29, 1996
Jantzen Beach, Oregon...................................... Pietro's Corp. March 29, 1996
Portland, Oregon........................................... Pietro's Corp. March 29, 1996
Portland, Oregon........................................... Pietro's Corp. March 29, 1996
Portland, Oregon........................................... Pietro's Corp. March 29, 1996
Hood River, Oregon......................................... Pietro's Corp. March 29, 1996
The Dalles, Oregon......................................... Pietro's Corp. March 29, 1996
Aloha, Oregon.............................................. Pietro's Corp. March 29, 1996
North Bend, Oregon......................................... Pietro's Corp. March 29, 1996
McMinnville, Oregon........................................ Pietro's Corp. March 29, 1996
Redmond, Oregon (2)........................................ Pietro's Corp. March 29, 1996
Albany, Oregon (2)......................................... Pietro's Corp. March 29, 1996
Madras, Oregon (2)......................................... Pietro's Corp. March 29, 1996
Bend, Oregon (2)........................................... Pietro's Corp. March 29, 1996
Richland, Washington (2)................................... Pietro's Corp. March 29, 1996
Kennewick, Washington (2).................................. Pietro's Corp. March 29, 1996
Longview, Washington....................................... Pietro's Corp. March 29, 1996
Yakima, Washington (2)..................................... Pietro's Corp. March 29, 1996
</TABLE>

- ------------------------
(1) Closed June 1995.

(2) In May of 1996, the Company entered into an agreement to sell these
restaurants. The sale of these restaurants was completed during the second
quarter of 1996. See "Certain Transactions -- Sale of Restaurants."

(3) These restaurants were developed by the Company rather than purchased.

The above list does not include the Boulder, Colorado restaurant, which the
Company is currently developing and expects to open in Winter of 1996.

28
<PAGE>
The Parent's revenues are derived primarily from food and beverage sales at
its restaurants. The Parent's expenses consist primarily of food and beverage
costs, labor costs (consisting of wages and benefits), operating expenses
(consisting of marketing costs, repairs and maintenance, supplies, utilities and
other operating expenses), occupancy costs, general and administrative expenses
and depreciation and amortization expenses.

Certain preopening costs, including direct and incremental costs associated
with the opening of a new restaurant, are amortized over a period of one year
from the opening date of such restaurant. These costs include primarily those
incurred to train a new restaurant management team, food, beverage and supply
costs incurred to test all equipment and systems, and any rent or operating
expenses incurred prior to opening. As of June 30, 1996, approximately $309,000
of preopening costs had been incurred in connection with the opening of the
restaurants in Westwood Village in Los Angeles, California; Brea, California;
and Boulder, Colorado. Construction costs, including leasehold capital
improvements are amortized over the remaining useful life of the related asset,
or, for leasehold improvements, over the initial term, if less.

The Company's conversion of five of its restaurants from "BJ's Chicago
Pizzerias" to BJ'S PIZZA & GRILL restaurants resulted in above-normal food and
labor costs in late 1995, and the first quarter of 1996 -- results which are
similar to that normally experienced in the opening of a new restaurant.
Management believes that the conversions were a significant contributing factor
to substantial comparable store sales increases experienced by the affected
restaurants during the first quarter of 1996. The Parent utilizes a calendar
year-end for financial reporting purposes.

RESULTS OF OPERATIONS

SIX-MONTH PERIOD ENDED JUNE 30, 1996 COMPARED TO SIX-MONTH PERIOD ENDED JUNE
30, 1995

REVENUES. Total revenues for the six-month period ended June 30, 1996
increased to $8,308,000, from $3,207,000 for the comparable period in 1995, an
increase of $5,101,000 or 159.1%. The Northwest Restaurants, acquired on March
29, 1996, accounted for $3,557,000 of revenues from the date of acquisition
through June 30, 1996. Excluding the Northwest Restaurants, total revenues for
the six-month period ended June 30, 1996 increased to $4,751,000 from
$3,207,000, an increase of $1,544,000 for the comparable period in 1995. The
increase was achieved despite the La Jolla -- Prospect restaurant being closed
during 1996. Approximately $1,130,000 of the increase was due to the opening of
the Westwood Village, Los Angeles, California and Brea, California restaurants
in March and April, 1996, respectively. Revenues for the seven stores open the
entire comparable period increased from $3,035,000 to $3,621,000 or 19.3%.
Management primarily attributes the increase in revenues in these stores to the
following factors, in order of their significance: (i) the introduction of the
new BJ's menu and concept, (ii) the winter storms experienced during the first
quarter of 1995 which resulted in reduced customers during that period, and
(iii) the refurbishment of the La Jolla Village restaurant in November, 1995.

COST OF SALES. Cost of food, beverages and paper for the restaurants
increased to $2,614,000 for the six months ended June 30, 1996 from $894,000 for
the comparable period in 1995, an increase of $1,720,000 or 192.4%. As a
percentage of revenues, cost of sales increased to 31.5% for the period ended
June 30, 1996 from 27.9% for the comparable period in 1995. The Northwest
Restaurants, acquired on March 29, 1996, accounted for $1,150,000 of cost of
sales from the date of acquisition through June 30, 1996. Excluding the
Northwest Restaurants, cost of sales for the six-month period ended June 30,
1996 increased to $1,464,000 from $894,000 for the comparable period in 1995, an
increase of 63.8%. Excluding the Northwest Restaurants, as a percentage of
revenues, cost of sales increased to 30.8% for the six-month period ended June
30, 1996 from 27.9% for the comparable period in 1995. Management believes that
food cost as a percentage of sales increased primarily due to costs incurred, as
anticipated, during the testing and initial implementation phase of the menu
expansion and special promotional pricing of certain of the new menu items
through May, 1996. While the Company will continue to test and implement new
menu items, Management anticipates that the

29
<PAGE>
impact of the menu testing and implementation upon cost of sales as a percentage
of revenue will decline. However, a portion of the increased food cost
percentage is associated with higher relative costs of certain of the new menu
items, which will have an ongoing impact on cost of sales.

LABOR. Labor costs for the restaurants increased to $3,088,000 for the
six-month period ended June 30, 1996 from $1,269,000 for the comparable period
in 1995, an increase of $1,819,000 or 143.3%. The Northwest Restaurants,
acquired on March 29, 1996, accounted for $1,199,000 of labor costs from the
date of acquisition through June 30, 1996. Excluding the Northwest Restaurants,
labor costs for the six-month period ended June 30, 1996 increased to $1,889,000
from $1,269,000 for the comparable period in 1995, an increase of 48.9%.
Excluding the Northwest Restaurants, as a percentage of revenues, labor costs
increased to 39.8% for the six-month period ended June 30, 1996 from 39.6% for
the comparable period in 1995. This increase resulted from the implementation of
the new menu and expanded concepts which required the re-training of every
employee in the restaurants. In addition, the Company temporarily increased the
number of staff members per shift in both the kitchen and dining room in order
to maintain a high level of service during the transition period. As of June
1996, labor costs have been reduced to levels which Management believes are more
representative of ongoing staffing requirements. The above-described increase in
labor cost as a percentage of sales was partially offset due to the increased
revenues for the six-month period ended June 30, 1996 relative to the comparable
period in 1995.

OCCUPANCY. Occupancy costs increased to $696,000 for the six-month period
ended June 30, 1996 from $314,000 for the comparable period in 1995, an increase
of $382,000 or 121.7%. The Northwest Restaurants, acquired on March 29, 1996,
accounted for $350,000 of occupancy costs from the date of acquisition through
June 30, 1996. Excluding the Northwest Restaurants, occupancy costs for the
six-month period ended June 30, 1996 increased to $346,000 from $314,000 for the
comparable period in 1995, an increase of 10.2%. The $32,000 increase was due to
the opening of the Westwood, Los Angeles, California and Brea, California
restaurants in March and April, 1996, respectively, offset partially by the
discontinuation of the La Jolla -- Prospect restaurant in June 1995. Excluding
the Northwest Restaurants, as a percentage of revenues, occupancy costs
decreased to 7.3% for the six-month period ended June 30, 1996 from 9.8% for the
comparable period in 1995. This decrease was due to increased revenues.

OPERATING EXPENSES. Operating expenses increased to $1,388,000 for the
six-month period ended June 30, 1996 from $650,000 for the comparable period in
1995, an increase of $738,000 or 113.5%. The Northwest Restaurants, acquired on
March 29, 1996, accounted for $576,000 of operating expenses from the date of
acquisition through June 30, 1996. Excluding the Northwest Restaurants,
operating expenses for the six-month period ended June 30, 1996 increased to
$812,000 from $650,000 for the comparable period in 1995. The $162,000 or 24.9%
increase resulted primarily from the opening of the Westwood, Los Angeles,
California and Brea, California restaurants in March and April, 1996,
respectively. Excluding the Northwest Restaurants, as a percentage of revenue,
operating expenses decreased to 17.1% for the six-month period ended June 30,
1996 from 20.3% for the comparable period in 1995, primarily due to increased
revenue. Operating expenses include restaurant-level operating costs, the major
components of which include marketing, repairs and maintenance, supplies,
utilities and the amortization of pre-opening expenses.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $833,000 for the six-month period ended June 30, 1996 from $330,000
for the comparable period in 1995, a $503,000 or 152.4% increase. The Northwest
Restaurants, acquired on March 29, 1996, accounted for $365,000 of general and
administrative expenses from the date of acquisition through June 30, 1996,
including an $83,000 reserve for severance pay due to the elimination of
duplicate overhead expenses. Excluding the Northwest Restaurants, general and
administrative expenses for the six-month period ended June 30, 1996 increased
to $468,000 from $330,000 for the comparable period in 1995. Excluding the
Northwest Restaurants, as a percentage of revenue, general and administrative
expenses decreased to 9.8% for the six-month period through June 30, 1996 from

30
<PAGE>
10.3% for the comparable period in 1995. The decrease resulted from increased
revenues, offset partially by additional administrative expenses related to the
increased company size in preparation for substantial growth and the Offering,
including the hiring of several key employees.

With the opening of the Westwood Village and Brea restaurants in California
which management believes will increase revenues, and the elimination of
duplicate overhead between the Southern California and Northwest locations,
which management believes will decrease general and administrative expenses,
management anticipates that general and administrative expenses as a percentage
of sales will continue to decrease. This is a forward-looking statement, and
there can be no assurance that total revenues will increase, or that general and
administrative expenses will decrease, since each of these items are subject to
a number of risk factors, as described herein. See "Risk Factors."

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$377,000 for the six-month period ended June 30, 1996 from $182,000 for the
comparable period in 1995, an increase of $195,000 or 107.1%. The Northwest
Restaurants, acquired on March 29, 1996, accounted for $124,000 of depreciation
and amortization from the date of acquisition through June 30, 1996. Excluding
the Northwest Restaurants, depreciation and amortization for the six-month
period ended June 30, 1996 increased to $253,000 from $182,000 for the
comparable period in 1995. The increase was primarily due to the depreciation
related to the remodeling of the La Jolla Village restaurant in November 1995
and the opening of the Westwood Village, Los Angeles, California and Brea,
California restaurants in March and April, 1996, respectively.

INTEREST EXPENSE. Interest expense increased to $386,000 for the six-month
period ended June 30, 1996 from $381,000 for the comparable period in 1995, an
increase of $5,000 or 1.3%. During 1995 the Company issued 222,462 shares of
stock as additional interest valued at $.75 per share in conjunction with a
January 1995 debt private placement. For accounting purposes the value of these
shares was treated as interest expense. The debt was fully paid during 1995.
During 1996, the Company incurred $3,000,000 in convertible debt accruing
interest at 10% per annum. In addition, the costs associated with obtaining this
debt financing are being charged to interest expense over the period from March
1996 through February 1997. During the six-month period ended June 30, 1996
$97,500 of these costs were charged to interest expense.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

REVENUES. Revenues for the year ended December 31, 1995 increased to
$6,586,000, from $6,453,000 for the comparable period in 1994, an increase of
$133,000 or 2.1%. The increase resulted from the opening of the Seal Beach,
California, Lahaina, Maui and Huntington Beach, California restaurants in
February, June and August, 1994, respectively, and was partially offset by the
closure of the Santa Ana, San Juan Capistrano and La Jolla -- Prospect,
California restaurants in 1995. The operations of the Santa Ana and San Juan
Capistrano restaurants were reserved as of January 1, 1995 as part of the
purchase price of the Roman Systems acquisition. Revenues for the year ended
December 31, 1994 include revenues derived from these three restaurants closed
in 1995.

Sales at the four restaurants (Balboa in Newport Beach, La Jolla Village,
Laguna Beach and Belmont Shore, California) open during the entire period
decreased to $3,415,000 in 1995 from $3,553,000 in 1994, a decrease of 3.9%.
This decrease was due to the following factors in order of their significance:

(i) The harsh winter of 1995 depressed sales, particularly at the beach
restaurants (Laguna Beach and Balboa in Newport Beach, California). Sales at
these restaurants decreased 4.3% from 1994 to 1995.

(ii) Several competitive restaurants opened in the Fall of 1994 in the
area surrounding the La Jolla Village restaurant, impacting its 1995 sales
prior to the remodeling in November 1995. Sales at La Jolla Village during
1995 prior to and during the remodeling decreased 16.7% from the comparable
period in 1994. A portion of this decrease was due to the closure of La
Jolla Village for

31
<PAGE>
two weeks during the remodeling. Sales during December 1995, immediately
subsequent to the remodeling of the restaurant and introduction of the new
menu, increased 37.5% from December 1994.

COST OF SALES. Cost of food, beverages and paper increased to $1,848,000
for the year ended December 31, 1995, from $1,638,000 for the comparable period
in 1994, an increase of $210,000 or 12.8%. As a percentage of revenues, cost of
sales increased to 28.1% for the fiscal year ended December 31, 1995, from 25.4%
for the comparable period in 1994. Management believes that this increase is
primarily due to the new menu development and implementation during the latter
part of 1995. Additionally, extraordinarily high produce costs resulting from
flooding in California during the winter of 1995 contributed to the increase.

LABOR. Labor costs for the restaurants decreased to $2,647,000 for the year
ended December 31, 1995, from $2,706,000 for the comparable period in 1994 a
decrease of $59,000 or 2.2%. As a percentage of revenues, labor costs decreased
to 40.2% for the year ended December 31, 1995, from 41.9% for the comparable
period in 1994. This decrease resulted from the closure of the Santa Ana, San
Juan Capistrano and La Jolla -- Prospect, California restaurants in 1995. The
cost of closing the restaurants as well as the loss from operations for Santa
Ana and San Juan Capistrano restaurants were reserved as part of the purchase
price for the Roman Systems acquisition. In 1994, these restaurants were
included in results from operations. In addition to the reduction of the
Company's labor force due to the Company's discontinuation of these restaurants,
such restaurants had relatively low sales volumes which resulted in higher labor
costs as a percentage of sales.

OCCUPANCY. Occupancy costs remained constant at $654,000 for the year ended
December 31, 1995 and the comparable period in 1994 due to the following
offsetting factors: (i) an increase in occupancy due to a full year of
operations for the Seal Beach and Huntington Beach, California restaurants, as
well as the Lahaina, Maui restaurant and (ii) a decrease in occupancy due to the
closure of the Santa Ana and San Juan Capistrano, California restaurants as
discussed above as well as the Company's closure of the La Jolla -- Prospect,
California restaurant in 1995. As a percentage of revenues, occupancy costs
decreased to 9.9% for the year ended December 31, 1995, from 10.1% for the
comparable period in 1994.

OPERATING EXPENSES. Operating expenses decreased to $1,250,000 for the year
ended December 31, 1995, from $1,331,000 for the comparable period in 1994, a
decrease of $81,000 or 6.1%. As a percentage of revenues, operating expenses
decreased to 19.0% for the fiscal year ended December 31,1995, from 20.6% for
the comparable period in 1994. Management believes that the decrease was
primarily attributable to the closure of the Santa Ana and San Juan Capistrano,
California restaurants as discussed above, the closure of the La Jolla --
Prospect, California restaurant in mid-1995 and preopening costs of $112,000
incurred during 1994 relating to the Lahaina, Maui, and Seal Beach and
Huntington Beach, California restaurants. Operating expenses include restaurant-
level operating costs, the major components of which are marketing, repairs and
maintenance, supplies and utilities.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
to $879,000 for the fiscal year ended December 31, 1995, from $474,000 for the
comparable period in 1994, an increase of $405,000 or 85.4%. As a percentage of
revenues, general and administrative expenses increased to 13.3% for the year
ended December 31, 1995, from 7.3% in 1994. The increase resulted from
administrative expenses related to the increased company size in preparation for
substantial growth and the IPO, including the hiring of several key employees.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased to $359,000 for the year ended December 31, 1995, from $173,000 for
the comparable period in 1994, an increase of $186,000. The increase resulted
from the amortization of goodwill resulting from the January 1, 1995 acquisition
of Roman Systems, BJ's Belmont Shore, L.P., and BJ's La Jolla, L.P.

INTEREST EXPENSE. Interest expense increased to $472,000 for the year ended
December 31, 1995 from $119,000 in 1994. The $353,000 increase resulted from
interest debt incurred for the Roman Systems acquisition. See the Consolidated
Financial Statements and "Certain Transactions -- Private Placements."

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<PAGE>
MINORITY INTEREST. The combined net loss related to restaurants owned by
limited partnerships decreased to $27,000 for the year ended December 31, 1995,
from $132,000 in 1994, due to the acquisition of BJ's Belmont, L.P. and BJ's La
Jolla, L.P., eliminating the minority interest. Additionally, the net loss in
BJ's Lahaina, L.P. decreased to $35,000 for the year ended 1995, from $141,000
in 1994.

LIQUIDITY AND CAPITAL RESOURCES

The Company historically has operated without working capital, but it does
not have significant inventory or trade receivables and customarily receives
several weeks of credit in purchasing food and supplies. The Company's working
capital deficit is primarily due to its operating losses, acquisition costs and
restaurant development costs. Net cash used in operating activities for the year
ended December 31, 1994 and the year ended December 31, 1995, and the six-month
period ended June 30, 1996 were approximately $257,000, $973,000 and $221,000,
respectively.

To date the Company has primarily financed its operations, acquisitions,
development and expansion from private placements completed in January, March
and September 1995, and convertible notes issued in March 1996 (See "Certain
Transactions"). These funds have been used primarily for acquiring and/or
developing the Roman Systems restaurants, the Brea restaurant, the Northwest
Restaurants, menu and restaurant development costs, restaurant refurbishment,
and working capital. Capital expenditures for the year ended December 31, 1994
and December 31, 1995 and the six-month period ended June 30, 1996 were
approximately $997,000, $5,132,000 and $4,917,000, respectively.

In connection with the development of the Huntington Beach restaurant in
1994, the Company issued a demand note payable to a related party in the amount
of $350,000 with interest accruing at a rate of 6%. This demand note is
collateralized by the Huntington Beach restaurant and equipment. $150,000 of
this demand note was repaid in the second quarter of 1996. An additional
$100,000 of this demand note was repaid in July 1996.

In connection with the 1995 Roman Systems acquisition, the Company, in
addition to a $550,000 cash down payment and assumption of certain liabilities,
issued a note in favor of the sellers in the amount of $3,700,000, which note
accrues interest at a rate of 7% per annum and matures on April 1, 2004. This
note is payable in monthly principal and interest installments of $38,195. Under
this note the Company is also required to make additional payments of $25,000
per month toward the total outstanding principal until an aggregate of $875,000
in additional principal payments under the note have been made. The Company
intends to use $526,000 of proceeds derived from this Offering to pay the
remaining portion of this $875,000 principal obligation. See "Use of Proceeds."
This note is collateralized by the restaurants in Balboa in Newport Beach, La
Jolla Village and Laguna Beach, California.

In connection with the 1996 Brea acquisition, the Company issued a note in
favor of the seller in the amount of $228,000 and assumed a bank note payable in
the amount of $751,000, collateralized by a $200,000 certificate of deposit
maturing March 1, 1998. During April 1996 the $228,000 note was repaid. The
$751,000 is payable in monthly principal installments of $12,513 plus interest
accrued at the bank's reference rate plus 2% and matures March 1, 2001.

In connection with the Pietro's Acquisition, the Company funded the Debtor's
Plan of Reorganization in the amount of $2,350,000 and assumed notes payable to
federal and state taxing authorities in the aggregate amount of $506,000. The
Company is required to pay these notes in the following principal installments:
(i) $32,670 per quarter from July 1, 1996 until April 1, 1997, (ii) $20,071 per
quarter from July 1, 1997 until June 30, 2001, and (iii) varying payments
totaling $34,122 from October 1, 2001 until April 1, 2002. In addition, the
Company is required to make interest payments at the rate of 8.25%.

Also in connection with the Pietro's Acquisition, the Company sold an
aggregate of $3,000,000 in Convertible Notes. Upon the closing of this Offering,
the entire principal and interest of the Convertible Notes convert into Shares
and Warrants. See "Certain Transactions -- Pietro's and Other Proposed
Acquisitions."

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<PAGE>
With respect to the leases for the La Jolla -- Prospect, California and the
Richland, Washington restaurants, which restaurants were closed and sold by the
Company, respectively, the Company remains liable in the event of default by the
current lessees. Contingent liability for the full remaining term of the leases
is estimated at $716,000 and $466,000 for the La Jolla -- Prospect and Richland
locations, respectively. The Company may also be liable for additional expenses,
such as, insurance, real estate taxes, utilities and maintenance and repairs.
Management currently has no reason to believe that such expenses, if incurred,
will be significant.

With respect to the La Jolla -- Prospect property, the tenant has paid all
rents for a year and Management currently has no reason to believe that the
tenant will not continue to pay rent as due in the future.

With respect to the Richland, Washington site, Abby's Inc. ("Abby's"), an
affiliate of A-II, L.L.C., an Arizona LLC, which is the purchaser (the
"Purchaser") of the site has agreed to guarantee payment under the lease. Both
Abby's and the Purchaser have agreed to indemnify the Company with respect to
such related liabilities. Finally, in the event of a default, the landlord of
the Richland site has agreed to exhaust all remedies against the Purchaser and
Abby's prior to pursuing any remedies against the Company. Management currently
has no reason to believe that the Purchaser and/or Abby's is not capable of
performing under the lease.

During 1995 and early 1996 the Company developed and implemented its
extended menu, restaurant concept change and brewery concept for the BJ'S PIZZA,
GRILL & BREWERY and BJ'S PIZZA & GRILL restaurants. Expenditures for the new
menu items included food development costs, menu development costs, menu design
and printing, management and staff training and new kitchen equipment to
facilitate new menu items. Expenditures for the BJ'S PIZZA, GRILL & BREWERY and
BJ'S PIZZA & GRILL restaurant concepts included new interior design, logo
design, signage design and uniform design. Expenditures for the brewery concept
included the hiring of a director of brewing operations, beer menu development
costs and brewery design. Management believes it has completed the menu
development and restaurant concept development phase of its business plan and
that the costs associated with many of these changes are non-recurring.

Management believes the Company can be profitable through increased sales
relating to its extended menu, reduced costs associated with Company produced
beer and vendor volume purchasing associated with the recent Northwest
Restaurant acquisition, its recent restaurant openings in Westwood Village, Los
Angeles and Brea, California, the future opening of the restaurant in Boulder,
Colorado, the reduction of overhead through consolidation of the general and
administrative expenses of the Company's Southern California operations and its
Northwest operations and the conversion and refurbishment of the Northwest
Restaurants.

The Company currently intends to utilize capital primarily for the
conversion and refurbishment of restaurants in the Northwest, development of the
restaurant in Boulder, Colorado, repayment of certain debts and for working
capital purposes. Management currently anticipates a total of $5,300,000 in
additional capital expenditure requirements, including approximately $4,500,000
for the Northwest Restaurant conversions and $800,000 for the Boulder, Colorado
restaurant development. Management believes the proceeds from this Offering will
be sufficient for the Company to meet its business plan over the next 18 months.
There can be no assurance that future events, including problems, delays,
additional expenses and difficulties encountered in expansion and conversion of
restaurants, will not require additional financing, or that such financing will
be available if necessary. See "Risk Factors -- Need for Additional Financing."

IMPACT OF INFLATION

Impact of inflation on food, labor and occupancy costs can significantly
affect the Parent's operations. Many of the Parent's employees are paid hourly
rates related to the federal minimum wage, which has been increased numerous
times and remains subject to increase. Management believes that food costs,
which increased in the first quarter due to the expanded menu, will stabilize
and efficiencies may be obtained in purchasing and brew-pub operations.

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<PAGE>
SEASONALITY AND ADVERSE WEATHER

The Parent's results of operations have historically been impacted by
seasonality, which directly impacts tourism at the Parent's coastal locations.
Further, Management believes that adverse weather impacted the 1995 first
quarter operating results, causing a significant decrease in the Parent's
revenues. For those locations open during the entire years 1994 and 1995 (Balboa
in Newport Beach and La Jolla Village, Laguna and Belmont Shore, California),
the sales for the first quarter of 1995 decreased by approximately $87,000 or
10.5%, compared with the same period in 1994. Management believes that improved
weather conditions during the first half of 1996 partially contributed to the
increase in sales of 22.1% for the first half of 1996, compared with the same
period in 1995 for the same four restaurants.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

RECENTLY ISSUED ACCOUNTING STANDARDS. In March 1995, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("SFAS No. 121"). SFAS No. 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used, and for long-lived assets and
certain identifiable intangibles to be disposed of. The Company is required to
adopt the provisions of SFAS No. 121 for 1996, and currently believes that upon
its adoption there should be no impact on the Company's result of operations.

In November 1995, the FASB also issued SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 establishes new
accounting standards for the measurement and recognition of stock-based awards.
SFAS No. 123 permits entities to continue to use the traditional accounting for
stock-based awards prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees" however, under this option, the Company will be required to
disclose the pro forma effect of stock-based awards on net income and earnings
per share as if SFAS No. 123 had been adopted. SFAS No. 123 is effective for
1996. The Company intends to continue to use the provisions of APB Opinion No.
25 in accounting for stock-based awards. As such, SFAS No. 123 will have no
impact on the Company's results of operations.

Other recently issued standards of the FASB are not expected to affect the
Company as conditions to which those standards apply are absent.

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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

The following discussion and analysis of Pietro Corp.'s Business Related to
Purchased Assets' combined financial condition and results of operations for the
three months ended March 29, 1996 and March 27, 1995, and the fiscal years ended
December 25, 1995 and December 26, 1994 should be read in conjunction with the
Purchased Assets' combined financial statements and related notes thereto
included elsewhere in this Prospectus. After March 29, 1996, the financial
condition and results of operations of the Purchased Assets are included in the
consolidated financial data of the Company.

GENERAL

Pietro's Corp., a Washington State corporation ("Debtor" or "Pietro's")
filed a petition for reorganization in the United States Bankruptcy Court for
the Western District of Washington at Seattle under Chapter 11 of title 11 of
the United States Code on September 26, 1995 (the "Petition Date"). The Company
provided the funding for the "Debtor's Plan of Reorganization, Dated February
29, 1996" as modified (the "Plan") and thereby acquired all of the stock in the
reorganized entity known as Chicago Pizza Northwest, Inc. ("CPNI"), a Washington
corporation and defined in the Plan as the "Reorganized Debtor." The Plan was
confirmed by an order of the Bankruptcy Court entered on March 18, 1996.

During the course of the bankruptcy case, the Debtor disposed of some
assets, rejected certain store leases, satisfied certain liabilities and
substantially reduced its operations. For example, although as of the Petition
Date the Debtor consisted of 46 stores and a distribution center, the
Reorganized Debtor consisted of only 26 stores. To the extent the store closings
resulted in claims against the Debtor, such claims became general unsecured
claims against the Debtor only and will be satisfied pursuant to the terms of
the Plan. The Plan also specifies the treatment for the claims of secured
creditors, unsecured creditors, and creditors holding claims relating to the
administration and operation of the Debtor's business and the bankruptcy case.
Except for certain causes of action and other assets which are specified in the
Plan, all of the remaining property of the Debtor's bankruptcy estate vests in
CPNI as Reorganized Debtor. The assets vest in CPNI free and clear of all of the
Debtor's pre-confirmation liabilities except that CPNI is liable to pay the
Debtor's ordinary course post-petition operation expenses outstanding on the
Effective Date (hereinafter defined) and to fund approximately $506,000 in Plan
payments relating to the Debtor's pre-petition tax liability.

The Plan provided that the Company invest $2,850,000 to fund the Plan. The
aggregate funding amount consists of approximately $2,350,000 which was
deposited into a "Reorganization Fund" and of $456,000 and $50,000 to be paid
over six years and one year, respectively, with respect to certain prepetition
priority tax debts of Debtor. The Reorganization Fund will be used to pay the
Debtor's administrative (post-petition), priority and lease cure claims in full
and the balance will be distributed to the Debtor's unsecured creditors on a pro
rata basis. Holders of common stock of the Debtor will receive nothing.

Through the deposit of funds and assumption of tax liabilities, the Company
funded the Plan as described above on March 29, 1996 (the "Effective Date"). On
the Effective Date, the outstanding common stock of the Debtor was cancelled and
common stock in CPNI as the Reorganized Debtor, and a wholly-owned subsidiary of
the Company, was issued.

The financial statements of the Pietro's Corp.'s Business Related to the
Purchased Assets includes 26 pizza restaurants located throughout the States of
Oregon and Washington. Pietro's owned and operated these and other restaurants.
The combined financial statements include the accounts of the Purchased Assets,
including allocations of overhead from Pietro's, for accounting, legal,
information processing, administrative, financing and marketing services. Such
allocation is computed based on the net sales related to the Purchased Assets as
a percentage of the Company's total restaurant net sales. Management believes
such allocation is reasonable as each individual restaurant will incur a

36
<PAGE>
portion of cost relative to its sales volume. The Purchased Assets, as a
combined entity, have no separate legal status. All significant inter-company
transactions and balances have been eliminated in combination.

On May 15, 1996, CPNI agreed to sell seven of the restaurants purchased from
Pietro's Corp. for approximately $1,000,000. The sales transactions were
completed during the second quarter of 1996. The operating results of those
seven restaurants are also included in the Selected Combined Financial and
Restaurant Data.

CPNI's revenues are derived exclusively from food and beverage sales at its
26 restaurants. The expenses consist primarily of food and beverage costs, labor
costs, operating costs (consisting of marketing costs, repairs and maintenance,
supplies, utilities and other operating expenses) occupancy costs, general and
administrative expenses and depreciation and amortization expenses related to
the acquired operation. There were no pre-opening costs incurred in the periods
presented for CPNI.

CPNI's balance sheet and related statistical data have been presented as
Pietro Corp.'s Business Related to Purchased Assets as defined in its Combined
Financial Statements included in this Prospectus.

Several important factors to consider in evaluating the results of
operations of CPNI are (i) 1995 and 1994 restaurant operations reflect the
Pietro's concept, (ii) Management intends to use a portion of the proceeds from
this Offering to convert each restaurant acquired from what Management believes
is an outdated Pietro's concept to a BJ'S PIZZA, GRILL & BREWERY, a BJ'S PIZZA &
GRILL or a BJ'S PIZZA restaurant over the next 18 months, (iii) Management
believes that conversion of the current BJ's restaurants to one of the three
BJ's concepts may increase sales based on higher present sales volumes and (iv)
the Company has already sold 7 of the 26 restaurants acquired under the Plan.

The sales for the seven restaurants sold totaled approximately $3,492,000
and $3,683,000 for the years ended December 25, 1995 and December 26, 1994,
respectively. Operating profit excluding overhead allocation totaled
approximately $268,000 and $313,000 for the years ended December 25, 1995 and
December 26, 1994, respectively. Loss after overhead allocation relating to the
seven restaurants totaled approximately $327,000 and $454,000 for the years
ended December 25, 1995 and December 26, 1994, respectively.

RESULTS OF OPERATIONS

THREE-MONTH PERIOD ENDED MARCH 27, 1996 COMPARED TO THREE-MONTH PERIOD ENDED
MARCH 29, 1995

REVENUES. Revenues for the three months ended March 29, 1996 increased to
$3,780,000 from $3,671,000 for the comparable period of 1995, an increase of
$109,000 or 3.0%. This increase is primarily due to the opening of the
Woodstock, Oregon restaurant in June 1995.

COSTS OF SALES. Cost of food, beverages and paper supplies (cost of sales)
increased to $1,188,000 for the three months ended March 31, 1996, from
$1,121,000 for the comparable period in 1995, an increase of $67,000 or 6.0%. As
a percentage of revenues, cost of sales increased to 31.4% for the period ended
March 29, 1996, from 30.5% for the comparable period in 1995. This increase is
due to conversion to a third-party distributor from an internal distribution
system in which the operating expenses were treated as part of corporate
overhead.

LABOR. Restaurant labor and benefits expense increased to $1,290,000 for
the three-month period ended March 27, 1996, from $1,201,000 for the comparable
period to 1995, an increase of $89,000 or 7.4%. As a percentage of revenues,
restaurant labor and benefits increased to 34.1%, for the period ended March 29,
1996, from 32.7% for the comparable period in 1995. This increase is principally
due to the labor required to convert from a central commissary to dough
preparation in stores and labor costs associated with the Woodstock, Oregon
restaurant opened in June 1995.

OCCUPANCY. Occupancy costs remained relatively constant for the three-month
period ended March 31, 1996, as compared to the same period for the prior year
1995, at approximately $350,000.

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<PAGE>
OPERATING EXPENSES. Operating expenses, including marketing and
advertising, decreased to $620,000 for the three-month period ended March 29,
1996, from $644,000 for the comparable period in 1995, a decrease of $24,000 or
3.7%. Management believes this decrease is principally due to a change in
marketing strategy that relies less on coupon distribution, which was reduced
significantly over the prior period. As a percentage of revenues, operating
expenses decreased to 16.4%, for the period ended March 29, 1996, from 17.5% for
the comparable period in 1995.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
decreased to $114,000 for the three-month period ended March 27, 1996, from
$140,000 for the comparable period in 1995. The $26,000 or 18.6% decrease
resulted from certain assets which became fully depreciated.

YEAR ENDED DECEMBER 25, 1995 COMPARED TO YEAR ENDED DECEMBER 26, 1994

REVENUES. Revenues for the year ended December 25, 1995 increased to
$14,634,000 from $14,609,000 for the comparable period of 1994, an increase of
$25,000 or 0.2%. An increase of $183,000 resulted from the opening of the
Woodstock, Oregon delivery only restaurant, in June 1995, partially offset by a
decrease in comparable store sales due to an increase in the amount of discount
coupons redeemed.

COST OF SALES. Cost of food, beverages and paper supplies (cost of sales)
for the restaurants decreased to $4,277,000 for the year ended December 25,
1995, from $4,403,000 for the comparable period in 1994, a decrease of $126,000
or 2.9%. As a percentage of revenues, cost of sales decreased to 29.2% for the
fiscal year ended December 25, 1995, from 30.1% for the comparable period in
1994. Management believes that price increases on the salad bar and pan pizza
partially offset by an increase in discount coupon redemption was mainly
responsible for this percentage decrease.

LABOR. Labor for the year ended December 25, 1995 increased to $4,836,000
from $4,755,000 for the comparable period in 1994, an increase of $81,000 or
1.7%. As a percentage of revenue, labor increased to 33%, from 32.5% for the
comparable period in 1994, due primarily to the opening of a restaurant in
Woodstock, Oregon in 1995. As a percentage of revenue the Woodstock, Oregon
restaurant's labor cost was 38.6% in 1995, 5.5 percentage points higher than the
Purchased Assets average of 33.1%. This increase was due to training costs
incurred after the opening of the restaurant.

OCCUPANCY. Occupancy costs increased to $1,434,000 for the year ended
December 31, 1995, from $1,402,000 in the comparable period in 1994. The $32,000
or 2.3% increase resulted from scheduled lease increases and the addition of the
Woodstock, Oregon restaurant.

OPERATING EXPENSES. Operating expenses, increased to $2,361,000 for the
year ended December 25, 1995, from $2,276,000 for the comparable period in 1994.
The $85,000 or 3.7% increase was due primarily to increased marketing costs
relating to coupon distribution and the opening of the Woodstock, Oregon
restaurant in June 1995. As a percentage of revenues, operating expenses
increased to 16.1%, from 15.6% for the comparable period in 1994.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
decreased to $581,000 for the year ended December 25, 1995, from $662,000 for
the comparable period in 1994. The $81,000 or 12.2% decrease resulted from
certain assets which became fully depreciated.

38
<PAGE>
THE COMPANY

HISTORY AND BACKGROUND

Chicago Pizza & Brewery, Inc. (the "Company") was formed in 1991 by Mr.
Jeremiah Hennessy and Mr. Paul Motenko (the "Owners") to operate and manage five
existing restaurants that operated as BJ's Chicago Pizzeria restaurants (now all
operated as BJ'S PIZZA & GRILL restaurants) in Southern California. These five
restaurants were owned by Roman Systems, Inc. ("Roman Systems"). The Company
began managing these five restaurants in 1991 pursuant to a Management Agreement
(the "Management Agreement") with Roman Systems. Pursuant to the Management
Agreement, the Company had the right to open, operate and manage BJ's
restaurants. In 1992, the Owners formed CPA-BG, Inc. ("CPA-BG") and opened two
restaurants with CPA-BG as the general partner of BJ's Belmont Shore, L.P. and
BJ's La Jolla, L.P. in 1992 and 1993, respectively. In 1994, the Company opened
BJ's restaurants in Huntington Beach and Seal Beach, California. Additionally in
1994, the Company, through a limited partnership interest in BJ's Lahaina, L.P.,
opened a BJ's restaurant in Lahaina, Maui. The general partners of BJ's Lahaina,
L.P. were CPA010, Inc. ("CPA010"), owned by Messrs. Motenko and Hennessy, and
Blue Max, Inc. ("Blue Max"). In addition to its limited partnership interest,
the Company managed the Lahaina, Maui restaurant.

Effective January 1, 1995, pursuant to the Asset Purchase Agreement between
the Company and Roman Systems (the "Asset Purchase Agreement"), the Company
purchased three of the existing BJ's restaurants operated and managed under the
Management Agreement (Balboa in Newport Beach, La Jolla Village, and Laguna
Beach, California) and terminated the Management Agreement. As part of the Asset
Purchase Agreement, the Company assumed responsibility for closing the other two
Roman Systems BJ's restaurants in Santa Ana and San Juan Capistrano, California
and assumed certain liabilities related thereto. The Santa Ana and San Juan
Capistrano, California restaurants were closed in 1995.

On March 29, 1996, the Company acquired 26 restaurants located in Oregon and
Washington by providing the funding for Pietro's Plan of Reorganization, dated
February 29, 1996, as modified (the "Debtor's Plan") and thereby acquired all of
the stock in the reorganized entity known as Chicago Pizza Northwest, Inc. The
Debtor's Plan was confirmed by an order of the Bankruptcy Court on March 18,
1996 and the Company funded the Debtor's Plan on March 29, 1996. In May, 1996
the Company agreed to sell seven of the 26 restaurants acquired from Pietro's.
The sale was completed during the second quarter of 1996.

As a result of these transactions the Company owns eight restaurants in
Southern California and an interest in one restaurant in Lahaina, Maui, all
operated as BJ's restaurants, and 19 restaurants in

39
<PAGE>
Oregon and Washington, which restaurants will continue to operate under the
"Pietro's" name awaiting conversion to either the BJ'S PIZZA, GRILL & BREWERY,
BJ'S PIZZA & GRILL or BJ'S PIZZA concept.

<TABLE>
<CAPTION>
DATE CURRENTLY OPERATES PLANNED TO OPERATE
ACQUIRED AS (5) AS (5)
--------- ------------------ ------------------
<S> <C> <C> <C>
CALIFORNIA (1)
Balboa in Newport Beach................. 1/95 Grill Grill
La Jolla Village........................ 1/95 Grill Grill
Laguna Beach............................ 1/95 Grill Grill
Belmont Shore........................... 1/95 Grill Grill
Seal Beach.............................. 2/94 (6) Grill Grill
Huntington Beach........................ 8/94 (6) Grill Grill
Westwood Village, Los Angeles........... 3/96 (6) Grill Grill
Brea.................................... 3/96 (6) Brewery Brewery
HAWAII
Lahaina, Maui........................... 6/94 (6) Grill Grill
OREGON (2)
Hood River.............................. 3/96 Pietro's Brewery
Gresham................................. 3/96 Pietro's Brewery
Eugene I (3)............................ 3/96 Pietro's Brewery
Milwaukie............................... 3/96 Pietro's Brewery
Salem I................................. 3/96 Pietro's Grill
Jantzen Beach (4)....................... 3/96 Pietro's Grill
The Dalles.............................. 3/96 Pietro's Grill
Eugene II............................... 3/96 Pietro's Grill
Eugene III.............................. 3/96 Pietro's Grill
Salem II................................ 3/96 Pietro's Pizza
Portland (Stark)........................ 3/96 Pietro's Grill
Portland (Lloyd Center)................. 3/96 Pietro's Pizza
Portland (Burnside)..................... 3/96 Pietro's Pizza
Portland (Lombard)...................... 3/96 Pietro's Pizza
Aloha................................... 3/96 Pietro's Pizza
North Bend.............................. 3/96 Pietro's Pizza
McMinnville............................. 3/96 Pietro's Pizza
Woodstock............................... 3/96 Pietro's Pizza
WASHINGTON (2)
Longview................................ 3/96 Pietro's Grill
</TABLE>

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

(1) Does not include the La Jolla -- Prospect restaurant which was closed in
1995. Also does not include the Roman Systems restaurants located in Santa
Ana and San Juan Capistrano, California, which restaurants were closed in
1995.

(2) Does not include restaurants which were purchased in March 1996 and which
the Company sold during the second quarter of 1996. (Oregon -- Bend, Albany,
Redmond and Madras; Washington -- Richland, Kennewick and Yakima). See
"Certain Transactions -- Sale of Restaurants."

(3) May require an extension of lease from landlord in order to justify the
expense of conversion to a BJ'S PIZZA, GRILL & BREWERY. In the event an
extension is not granted, the Company will convert the site to a BJ'S PIZZA
& GRILL.

(4) May be taken by government under power of eminent domain.

(5) "Grill" means the BJ'S PIZZA & GRILL concept. "Brewery" means the BJ'S
PIZZA, GRILL & BREWERY concept. "Pizza" means the BJ'S PIZZA concept. See
"Business -- Business and Strategy."

(6) Developed by the Company.

The above list does not include the Boulder, Colorado restaurant which the
Company is currently developing and expects to open in the Winter of 1996.

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<PAGE>
BUSINESS

BUSINESS AND STRATEGY

- BJ'S PIZZA & GRILL is designed to provide a casual, dining experience with
table service featuring a menu of pizza, pasta, sandwiches, salads and
desserts. Currently, the Company operates seven of its California
Restaurants and the Lahaina, Maui restaurant as, and plans to convert
seven of its Northwest Restaurants into, the BJ'S PIZZA & GRILL concept.

The Company was formed in 1991 to assume the management of five "BJ's
Chicago Pizzeria" restaurants and to develop additional BJ's restaurants.
Between 1992 and 1995, the Company developed five additional restaurants,
purchased three of those original five restaurants that it managed and
discontinued one of those that it had developed. As a result of these
transactions, at the end of 1995 the Company owned restaurants in California
located in La Jolla Village, Laguna Beach, Belmont Shore, Seal Beach, Huntington
Beach, and Balboa in Newport Beach, as well as a 53.68% interest in a restaurant
in Lahaina, Maui.

The Company has embarked on a campaign to broaden its customer base by: i)
surrounding its core pizza product with a more expansive menu including
appetizers, grilled sandwiches, specialty salads and pastas, ii) adding
hand-crafted, micro-brewed beers through on-site micro-breweries in certain
locations and the sale of internally-produced beer through other Company
restaurants and

41
<PAGE>
iii) differentiating the BJ's identity and expanding merchandising opportunities
through a comprehensive new logo and identity program, new uniforms a new
interior design concept and redesigned signage.

During late 1995 and early 1996, the Company converted the restaurants in
Balboa in Newport Beach, La Jolla Village, Laguna Beach, Belmont Shore, Seal
Beach and Huntington Beach, California to the BJ'S PIZZA & GRILL concept and
opened a new BJ'S PIZZA & GRILL restaurant in Westwood Village in Los Angeles,
California. Management believes that customer frequency and sales volumes at the
converted restaurants have been significantly enhanced in the comparable period
of 1995 to 1996, primarily due to the conversion to this expanded concept. The
four California Restaurants open for the entire first half of 1994, 1995 and
1996 (Balboa in Newport Beach, California, La Jolla Village, Laguna Beach and
Belmont Shore, California) had a decrease of sales of 8.3% in the first half of
1995 compared to 1994. Management believes this was primarily due to rains and
flooding in the first half of 1995. However, with the introduction of the new
menu and the refurbishment of the La Jolla Village restaurant at year end 1995,
same store sales in these four restaurants increased 22.1% from the first half
of 1996 compared to the first half of 1995. Same store sales volumes at the
seven restaurants operating during the entire first half of 1995 and 1996 were
up 19.3% in 1996 over the prior year. The La Jolla Village restaurant, which had
the most significant physical upgrade, experienced sales increases of 45.7% in
the comparable periods.

The first BJ'S PIZZA GRILL & BREWERY opened in Brea, California in April
1996. This 10,000-square-foot restaurant features elaborate brick walls and
archways, high molded tin ceilings, warm lighting and industrial railings. The
on-premises brewing equipment includes a 30-barrel, copper-clad kettle,
60-barrel, stainless steel fermentation tanks, kegging equipment, and a
40,000-pound-capacity corrugated metal grain silo located at the front entrance
to the restaurant. Management believes the brewery capacity is sufficient to
supply beer for all of the Company's existing Southern California restaurants.
Management believes the relatively low production cost and high premium pricing
associated with micro-brewed beer can significantly improve margins.

The March, 1996 multi-unit Pietro's Acquisition was a key step in the
strategy to quickly develop a market presence for the thick crust, Chicago style
pizza and micro-brewery concept. Management believes that the Company will
significantly benefit from the Pietro's Acquisition as 19 restaurants in the
Northwest market will provide the Company with an immediate and significant
presence in that market area, without the more cumbersome and time-consuming
licensing and permitting issues which would be involved in the development of
individual restaurants. These 19 restaurants will continue to operate under the
"Pietro's" name awaiting conversion to either BJ'S PIZZA, GRILL & BREWERY, BJ'S
PIZZA & GRILL or BJ'S PIZZA concept. Management believes that it can
significantly capitalize on the Pietro's Acquisition based upon the following
factors:

1. ESTABLISHED CUSTOMER BASE. Each of the restaurants purchased already
has a customer base which Management feels can be expanded with the
renovation and introduction of the BJ's menu and concept.

2. REDUCTION OR ELIMINATION OF DISCOUNTING. Pietro's relied heavily on
discounting to maintain its share of the pizza market. Discounts were as
high as 25% of total sales. BJ's does very little discounting, relying
instead on the quality of its product and service to compete in the
marketplace. As Pietro's restaurants are converted to BJ's restaurants,
Management intends to reduce or eliminate the use of discounting, which
Management believes will have a positive effect on gross profit margins.

3. POSITIVE IMPACT UPON MARKETING COSTS AS A RESULT OF REDUCED
DISCOUNTING. Due to its widespread use of discount coupons, Pietro's
marketing costs, consisting mainly of printing and

42
<PAGE>
distribution, have been extremely high. Marketing costs averaged
approximately 6.7% of sales. BJ's marketing costs average under 2% of sales.
Management believes that the anticipated reduction in discounting upon
conversion of the units to BJ's restaurants will also significantly reduce
marketing costs.

4. CAPITALIZATION UPON INCREASED PURCHASING VOLUMES. Management will
attempt, and believes that it can achieve, significant cost reductions from
capitalizing on the increased purchasing volumes resulting from the
operation of the 19 additional restaurants.

5. ELIMINATION OF DUPLICATE OVERHEAD. Management is in the process of
eliminating duplicate overhead in accounting, finance, purchasing and
executive management. Management believes that such reductions will reduce
overhead in total and as a percentage of sales. This is a forward looking
statement, and there can be no assurance that total overhead expenses will
decrease for the reasons described herein. See "Risk Factors."

6. ECONOMIC BENEFITS OF INTERNALLY PRODUCED BEER. The installation of
micro-breweries in several of the converted Pietro's restaurants should
provide the economic benefits of internally produced beer, not only to those
restaurants but to other converted restaurants as well. Management intends
to distribute the beer produced at BJ's micro-breweries, subject to local
regulations, to as many of the other converted restaurants as possible.

7. INCREASED SALES THROUGH RENOVATION AND CONVERSION. Annual sales at
BJ's seven Southern California and one Lahaina, Maui unit open during 1995
averaged $323 per square foot while sales at the Pietro's restaurants
acquired by the Company averaged $114 per square foot. Management believes
that through renovation and conversion of the acquired restaurants to BJ's
restaurants, the sales volumes could increase to be more consistent with the
volumes of the other BJ's restaurants.

The Company's current objectives after the closing of this Offering are to
remodel and refurbish those restaurants acquired from Pietro's to one of the
three "BJ's" concepts over the next 12 to 18 months. The Company has designated
approximately $4.5 million of the net proceeds of this Offering for use in
refurbishment and redesign of these restaurants. The Company also plans to
acquire and develop additional "BJ's" restaurants in order to expand operations
to other cities and towns consistent with the Company's location strategy and
market niche. In this regard, the Company has executed a lease for an
approximately 5,500-square-foot facility in the Pearl Street Mall, a popular,
high-traffic pedestrian promenade in Boulder, Colorado. The Company expects to
open this BJ'S PIZZA, GRILL & BREWERY in Winter of 1996. No assurance can be
given that the Company's objectives can be achieved or that sufficient capital
will be available to finance the Company's business plan. See "Risk Factors."

The BJ's menu has been developed on a foundation of excellence. BJ's core
product, its deep-dish, Chicago-style pizza, has been highly acclaimed since it
was originally developed in 1978. This unique version of Chicago-style pizza is
unusually light, with a crispy, flavorful crust. Management believes BJ's
lighter crust helps give it a broader appeal than some other versions of
deep-dish pizza. The pizza is topped with high-quality meats, fresh vegetables
and whole-milk mozzarella cheese. BJ's pizza consistently has been awarded "best
pizza" honors by restaurant critics and public opinion polls in Orange County,
California. In addition, BJ's recently won the award for "best pizza on Maui" in
a poll conducted by the Maui News.

Management's objective in developing BJ's expanded menu was to ensure that
all items on the menu maintained and enhanced BJ's reputation for quality. BJ's
pasta sauces, soups and salad dressings are made fresh in each restaurant.
Sandwiches are made from freshly grilled chicken and turkey roasted in BJ's
ovens. BJ's developed a dessert several years ago which has become another
signature item. The "Pizookie" is a freshly baked-to-order cookie, served hot
out of the oven in a deep-

43
<PAGE>
dish pizza pan, topped with gourmet vanilla bean ice cream. Since its
introduction in 1992, the Pizookie has become extremely popular and brings
people back to BJ's for a whole meal or just for the dessert itself.

Many of BJ's food portions have been increased in conjunction with the new
menu, creating a real value orientation. Because of the relatively low food cost
associated with pizza, BJ's highest volume item, Management believes it will
still be able to maintain favorable gross profit margins while providing a value
to the consumer. When the new menu items were first developed in late 1995 and
early 1996, they were introduced at promotional prices. Management believes this
artificially low pricing contributed to the higher food cost percentage incurred
during that time period. Prices on most of the new items were increased
effective May 1996. While the menu is still very value-oriented, the new pricing
is more consistent with Management's gross profit margin objectives.

BJ's restaurants provide a constantly evolving selection of domestic,
imported and micro-brewed beers. In addition, subject to local regulations and
the capacity of the restaurants, BJ's restaurants will feature a selection of
beers brewed at one or more of BJ's micro-breweries. Management believes that
this will provide two major benefits:

1. The quality and freshness of the BJ's brewed beers will be under the
constant supervision of the Company's Director of Brewing Operations. This
should have a positive impact on both the actual quality and the perceived
quality of the beer.

2. Management believes that the production costs of the internally
brewed beer will be significantly less than purchased beer. The relatively
low production costs and premium pricing often associated with micro-brewed
beers should have a significant, positive impact on gross profit margins.

MARKETING

To date, the majority of marketing has been accomplished through
community-based promotions and customer referrals. Management's philosophy has
been to "spend its marketing dollars on the plate," or use funds that would
typically be allocated to marketing to provide a better product and value to its
existing guests. Management believes this will result in increased frequency of
visits and greater customer referrals. During the roll-out of the new menu,
however, the Company has utilized more media advertising than usual in order to
gain increased awareness of the significant changes on the menu and in the
restaurants. BJ's expenditures on advertising and marketing are typically 1% to
1.5% of sales.

BJ's is very much involved in the local community and charitable causes,
providing food and resources for many worthwhile events. Management feels very
strongly about its commitment to helping others, and this philosophy has
benefited the Company in its relations with its surrounding communities.

The Company distributes very few coupons and does not try to compete with
other pizza chains that rely on heavy discounting. This philosophy has enabled
BJ's to maintain its quality image and its gross profit margins through a period
of "price wars" which have plagued the pizza industry.

Pietro's had traditionally marketed itself through the widespread use of
discount coupons. Expenditures for advertising were approximately 6.7% of sales
and discounted items accounted for 25.7% of sales. The resulting reductions in
margins forced Pietro's management to reduce the quality of its product in order
to maintain a reasonable food cost. Management believes that these pizza "price
wars" ultimately resulted in reduced value perceptions among Pietro's clientele,
and Pietro's lacked the financial resources to strategically overcome this
obstacle. Through the refurbishment of the Northwest Restaurants, and the
introduction of BJ's quality food and service, Management believes that
discounting will be reduced or eliminated, and expenditures on marketing should
fall to a range more typical for a BJ's operation. This could have a substantial
positive impact on the Company's profitability.

44
<PAGE>
OPERATIONS

The Company's policy is to staff the restaurants with enthusiastic people,
who can be an integral part of BJ's fun, casual atmosphere. Prior experience in
the industry, is only one of the qualities Management looks for in its
employees. Enthusiasm, motivation and the ability to interact well with the
Company's clientele are the most important qualities for BJ's management and
staff.

Both management and staff undergo thorough formal training prior to assuming
their positions at the restaurants. Management has designated certain managers,
servers and cooks as "trainers," who are responsible for properly training and
monitoring all new employees. In addition, the Company's Director of Operations,
Director of Food and Beverage, and Director of Service supervise the training
functions in their particular areas.

A typical BJ's restaurant is staffed with a general manager, two assistant
managers, between 15 and 25 servers and drivers, 7 to 10 cooks and 5 to 10
support staff. The staffing levels at BJ'S PIZZA, GRILL & BREWERY in Brea,
California are much more substantial, with a general manager, three assistant
managers, a kitchen manager, 65 servers and drivers, 23 cooks, 23 support staff,
and 15 bar staff.

Staffing at Pietro's typically consisted of a general manager, two to three
assistant or shift managers, five drivers and 10 to 15 service/kitchen
personnel. Management believes that as the Pietro's restaurants are converted
into BJ's restaurants, they will be staffed in a manner similar to the current
BJ's restaurants. Staffing levels at each restaurant will be dependent upon the
variation of the BJ's concept to which that particular restaurant is converted.

The Company purchases its food product from several key suppliers. A
majority of food and operating supplies for the California restaurants is
purchased from Jacmar Sales, with which the Company has had a long-term,
valuable relationship. A majority of food and operating supplies for the
Northwest Restaurants is purchased from McDonald Wholesale Company. Product
specifications are very strict, because the Company insists on using fresh,
high-quality ingredients.

Pietro's formerly operated a commissary and distribution center which, as
its number of units was reduced, became an economic and operational burden. In
January 1996, Pietro's discontinued the commissary and distribution center and
contracted with an outside distributor to provide and distribute product to its
restaurants and, as a result, direct food costs have increased. The reduction in
overhead, however, has effectively offset this increase.

As the Pietro's restaurants are converted into BJ's restaurants, the Company
hopes to capitalize on the reduced costs usually associated with higher
purchasing volumes.

COMPETITION

The restaurant industry is highly competitive. A great number of restaurants
and other food and beverage service operations compete both directly and
indirectly with the Company in many areas including: food quality and service,
the price-value relationship, beer quality and selection, and atmosphere, among
other factors. Many competitors who use concepts similar to that of the Company
are well-established, and often have substantially greater resources.

Because the restaurant industry can be significantly affected by changes in
consumer tastes, national, regional or local economic conditions, demographic
trends, traffic patterns, weather and the type and number of competing
restaurants, any changes in these factors could adversely affect the Company. In
addition, factors such as inflation and increased food, liquor, labor and other
employee compensation costs could also adversely affect the Company. The Company
believes, however, that its ability to offer high-quality food at moderate
prices with superior service in a distinctive dining environment, will be the
key to overcoming these obstacles.

GOVERNMENT REGULATIONS

The Company is subject to various federal, state and local laws, rules and
regulations that affect its business. Each of the Company's restaurants is
subject to licensing and regulation by a number of

45
<PAGE>
governmental authorities, which may include alcoholic beverage control,
building, land use, health, safety and fire agencies in the state or
municipality in which the restaurant is located. Difficulties obtaining the
required licenses or approvals could delay or prevent the development of a new
restaurant in a particular area or could adversely affect the operation of an
existing restaurant. Similar difficulties, such as the inability to obtain a
liquor, restaurant license or a given restaurant's products and services could
also limit restaurant development and/or profitability. Management believes,
however, that the Company is in compliance in all material respects with all
relevant laws, rules, and regulations. Furthermore, the Company has never
experienced abnormal difficulties or delays in obtaining the required licenses
or approvals required to open a new restaurant or continue the operation of its
existing restaurants. Additionally, Management is not aware of any environmental
regulations that have had or that it believes will have a materially adverse
effect upon the operations of the Company.

Alcoholic beverage control regulations require each of the Company's
restaurants to apply to a federal and state authority and, in certain locations,
municipal authorities for a license and permit to sell alcoholic beverages on
the premises. Typically, licenses must be renewed annually and may be revoked or
suspended for cause by such authority at any time. Alcoholic beverage control
regulations relate to numerous aspects of the daily operations of the Company's
restaurants, including minimum age of patrons and employees, hours of operation,
advertising, wholesale purchasing, inventory control and handling, and storage
and dispensing of alcoholic beverages. The Company has not encountered any
material problems relating to alcoholic beverage licenses or permits to date and
does not expect to encounter any material problems going forward. The failure to
receive or retain, or a delay in obtaining, a liquor license in a particular
location could adversely affect the Company's ability to obtain such a license
elsewhere.

The Company is subject to "dram-shop" statutes in California and other
states in which it operates. Those statutes generally provide a person who has
been injured by an intoxicated person, the right to recover damages from an
establishment that has wrongfully served alcoholic beverages to such person. The
Company carries liquor liability coverage as part of its existing comprehensive
general liability insurance which it believes is consistent with coverage
carried by other entities in the restaurant industry and will protect the
Company from possible claims. Even though the Company carries liquor liability
insurance, a judgment against the Company under a dram-shop statute in excess of
the Company's liability coverage could have a materially adverse effect on the
Company. To date, the Company has never been the subject of a "dram-shop" claim.

Various federal and state labor laws, rules and regulations govern the
Company's relationship with its employees, including such matters as minimum
wage requirements, overtime and working conditions. Significant additional,
governmental mandates such as an increased minimum wage, an increase in paid
leaves of absence, extensions in health benefits or increased tax reporting and
payment requirements for employees who receive gratuities, could negatively
impact the Company's restaurants.

EMPLOYEES

As of September 30, 1996, the Company employed 398 employees at its eight
California Restaurants and one Hawaii restaurant. Additionally, 497 are employed
at the recently acquired restaurants in Washington and Oregon. The Company also
employs nine administrative and field supervisory personnel at its corporate
offices. Historically, the Company has experienced relatively little turnover of
key management employees. The Company believes that it maintains favorable
relations with its employees, and currently no unions or collective bargaining
arrangements exist.

INSURANCE

The Company maintains worker's compensation insurance and general liability
coverage which it believes will be adequate to protect the Company, its
business, its assets and its operations. There is no assurance that any
insurance coverage maintained by the Company will be adequate, that it can
continue to obtain and maintain such insurance at all or that the premium costs
will not rise to an

46
<PAGE>
extent that they adversely affect the Company or the Company's ability to
economically obtain or maintain such insurance. The Company does not currently
have any key person life insurance but has applied for $1,000,000 in key person
life insurance for each of Mr. Motenko and Mr. Hennessy.

TRADEMARKS AND COPYRIGHTS

The Company has not secured any rights in connection with its trademarks,
servicemarks or any other proprietary rights related to the use of the BJ'S
PIZZA, GRILL & BREWERY, BJ'S PIZZA & GRILL and BJ'S PIZZA names. There are other
restaurants using the BJ's name throughout the United States, thus, no assurance
can be given that the Company will be able to secure any such rights in the
future or that the use of the BJ's name may not be subject to claims by third
parties.

PROPERTY AND LEASES

The Company's corporate headquarters in California are located in a
2,219-square-foot leased facility in Mission Viejo, California. The initial term
of the lease expires on December 31, 1998. Chicago Pizza Northwest, Inc., the
Company's subsidiary in Washington has headquarters in a 5,337-square-foot
leased facility in Bothell, Washington. This lease expires on April 30, 1999 and
is currently being renegotiated.

All of the Company's 28 restaurants, and the Colorado restaurant to be
opened in the Winter of 1996, are on leased premises and are subject to varying
lease-specific arrangements. For example, some of the leases require a flat
rent, subject to regional cost-of-living increases, while others additionally
include a percentage of gross sales. In addition, certain of these leases expire
in the near future, and there is no automatic renewal or option to renew. No
assurance can be given that leases can be renewed, or, if renewed, that rents
will not increase substantially, both of which would adversely affect the
Company. Other leases are subject to renewal at fair market value, which could
involve substantial increases.

With respect to future restaurant sites, the Company believes the locations
of its restaurants are important to its long-term success and will devote
significant time and resources to analyzing prospective sites. The Company's
strategy is to open its restaurants in high-profile locations with strong
customer traffic during day, evening and weekend hours. The Company has
developed specific criteria for evaluating prospective sites, including
demographic information, visibility and traffic patterns. In connection with a
potential brew-pub joint venture the Company is consulting with ASSI, Inc., a
Nevada corporation with experience in the hospitality industry as well as direct
experience in real estate, construction and development in Las Vegas, Nevada.
See "Certain Transactions."

LEGAL PROCEEDINGS

Restaurants such as those operated by the Company are subject to a
continuous stream of litigation in the ordinary course of business, most of
which the Company expects to be covered by its general liability insurance.
Punitive damages awards, however, are not covered by general liability
insurance. To date, the Company has not paid punitive damages in respect of any
claims, but there can be no assurance that punitive damages will not be given
with respect to any of such claims or in any other actions which may arise in
any future action.

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<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the Company's
directors and/or executive officers.

<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------- --- ----------------------------------------------------------
<S> <C> <C>
Paul A. Motenko 41 Chairman of the Board, Chief Executive Officer, Vice
President and Secretary

Jeremiah J. Hennessy 37 President, Chief Operating Officer and Director

Laura Parisi 37 Chief Financial Officer, Assistant Secretary

Alexander M. Puchner 35 Director of Brewing Operations and Director

Barry J. Grumman 45 Director

Stanley B. Schneider (1) 60 Director

Stephen P. Monticelli (1) 41 Director

Steven F. Mayer (1) 36 Director
</TABLE>

- ------------------------
(1) Mr. Schneider was nominated by Messrs. Motenko and Hennessy. Mr. Monticelli
was nominated by ASSI, Inc. and Mr. Mayer was nominated by Mr. Herrick, both
pursuant to the Note Purchase Agreements. See "Certain Transactions --
Pietro's Acquisition."

The directors serve until the next annual meeting of shareholders and the
election and qualification of their successors. The officers are elected by the
directors and serve at the discretion of the Board of Directors. The Company has
agreed to grant to the Representative, effective upon the closing of this
Offering, the right to nominate from time to time one individual to be a
director of the Company or to have an individual selected by the Representative
attend all meetings of the Board of Directors of the Company as a non-voting
advisor. At this time the Representative has waived its right to nominate a
director. See "Underwriting."

PAUL A. MOTENKO has been the Chief Executive Officer, Chairman of the Board,
Vice President and Secretary of the Company since its inception in 1991. He is
also Chairman of the Board and Secretary of CPNI. He is a certified public
accountant and was a founding partner in the firm Motenko, Bachtelle & Hennessy
from 1980 to 1991. In this capacity, Mr. Motenko provided accounting and
consulting services to several restaurant companies, including BJ's Chicago
Pizzeria. From 1976 to 1980, Mr. Motenko was employed as an accountant and
consultant for several accounting firms, including Kenneth Leventhal and Company
and Peat, Marwick, Main. Mr. Motenko graduated with high honors from the
University of Illinois in 1976 with a Bachelor of Science in accounting.

JEREMIAH J. HENNESSY has been the President, Chief Operating Officer and a
Director of the Company since its inception in 1991. He is also Chief Executive
Officer and a Director of CPNI. Mr. Hennessy is a certified public accountant
and was a partner in the firm Motenko, Bachtelle & Hennessy from 1988 to 1991.
His public accounting practice involved extensive work for food service and
restaurant clientele. He served as a controller for a large Southern California
construction company and has extensive background in construction and
development. Mr. Hennessy has also worked in various aspects of the restaurant
industry for Marie Callendar's and Knott's Berry Farm. Mr. Hennessy graduated
Magna Cum Laude from National University in 1983 with a Bachelor of Science in
accounting.

LAURA PARISI has been the Chief Financial Officer and Assistant Secretary of
the Company, having served in such capacity since December 1995. She is also
Treasurer and a Director of CPNI. Previously, Ms. Parisi was Vice President of
Finance for Ruby's Diner, Inc. from 1994 to 1995, and before

48
<PAGE>
that served as Corporate Accounting Controller and in other senior-level
positions for Restaurant Enterprises Group, Inc. from 1985 to 1994. Ms. Parisi
received degrees in accounting and business administration from Illinois State
University in 1980. Ms. Parisi is a certified public accountant.

BARRY J. GRUMMAN has been the Senior Partner in the Law Offices of Grumman &
Rockett, a Los Angeles law firm specializing in civil litigation, since 1977.
Mr. Grumman is a principal of FM Records, Inc., a Los Angeles record company.
Mr. Grumman also has extensive experience as an investor in private companies
and has invested in companies which have gone public. Mr. Grumman was named a
Director of the Company in November 1994.

ALEXANDER M. PUCHNER is Director of Brewing Operations for the Company,
having been appointed to such position in January 1996. From 1994 to 1995, Mr.
Puchner served as brew master for Laguna Beach Brewing Co. and from 1993 to 1994
as brewmaster for the Huntington Beach Beer Co. from 1988 to 1993, Mr. Puchner
served as Product Manager for Aviva Sports/Mattel Inc. and Marketing Research
Manager for Mattel Inc. Mr. Puchner was awarded a silver medal in the American
pale ale category at the 1994 Great American Beer Festival. Mr. Puchner has also
earned over 40 awards as a homebrewer, including in the 1991 and 1992 National
Homebrew Competition. Mr. Puchner received a Bachelor of Arts from Cornell
University in 1983 and a Master of Business Administration degree from the
University of Chicago in June 1986.

STANLEY B. SCHNEIDER is a certified public accountant and founding member
and the managing partner of Gursey, Schneider & Co., an independent public
accounting firm founded in 1964 that specializes in general accounting services,
litigation support, audits, tax consulting and compliance as well as business
management and management advisory services. Mr. Schneider serves as a director
of Perceptronics, Inc., a Woodland Hills based high-tech defense firm; American
Recreation Centers Co., the largest publicly-owned bowling center company in the
United States; Jerry's Famous Deli, Inc., a Los Angeles-based restaurant
company; Golden West Baseball Co., the corporate co-owner of the California
Angels; Golden West Broadcasters, Inc., a broadcast media holding company; The
Autry Museum of Western Heritage and P.A.T.H., an organization dedicated to
helping the homeless in Los Angeles. Mr. Schneider obtained a Bachelor of
Science in accounting from the University of California at Los Angeles in 1958.

STEPHEN P. MONTICELLI is the President of Mosaic Ventures, LLC, a venture
capital firm based in San Francisco and currently serves on the Board of
Directors of Meris Laboratories, Inc., a publicly-traded clinical laboratory
company listed on Nasdaq and of Vestro Natural Foods, Inc., a publicly-traded
natural foods company, also listed on Nasdaq. From 1991 to 1995, Mr. Monticelli
was a Managing Director of Baccharis Capital, Inc., a venture capital and buyout
firm located in Menlo Park, California. From 1987 to 1991, Mr. Monticelli was a
Principal in the private ventures group of The Fremont Group (formerly known as
Bechtel Investments, Inc.), a private family investment firm. Prior to 1987, he
was a management consultant with Marakon Associates and a certified public
accountant with Deloitte & Touche. He received a Bachelor of Science and a
Master of Business Administration degree from the Haas School of Business at the
University of California at Berkeley.

STEVEN F. MAYER is currently the president and managing director of Aries
Capital Group, L.L.C., a private investment firm. From April 1992 until June
1994, when he left to co-found Aries Capital Group, Mr. Mayer was an investment
banker with Apollo Advisors, L.P. ("Apollo") and Lion Advisors, L.P. ("Lion"),
affiliated private investment firms, Prior to that time, Mr. Mayer was a lawyer
with Sullivan & Cromwell specializing in mergers, acquisitions, divestitures,
leveraged buyouts and corporate finance. While at Apollo and Lion, Mr. Mayer was
responsible for equity and debt investments in a wide range of industries,
including the aluminum, apparel, automobile parts manufacturing, bedding, cable
television, cosmetics, environmental services, furniture distribution,
homebuilding, hotel, plastics, radio, real estate, retail and textile
industries. Mr. Mayer is a current or former member of the Boards of Directors
of Mednet, MPC Corporation, a publicly traded managed prescription care company,
Electropharmacology, Inc., a publicly traded medical device manufacturer, BDK
Holdings, Inc., a textile manufacturer, Roland International Corporation, a real
estate holding company and The

49
<PAGE>
Greater LA Fund, a non-profit investment group affiliated with Rebuild LA. In
addition, Mr. Mayer has served as the chairman or a member of numerous
creditors' committees. Mr. Mayer is a graduate of Princeton University and
Harvard Law School.

SIGNIFICANT EMPLOYEES

The following table sets forth certain information concerning certain
significant employees of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------- --- ------------------------------------------------------------
<S> <C> <C>
Robert B. DeLiema 47 Director of Marketing and Southern California Regional
Operations

Salvador A. Navarro 41 Director of Food and Beverage

Stephen White 42 Director of Operations
</TABLE>

ROBERT B. DELIEMA has been the Director of Marketing and Southern California
Regional Operations for the Company since February 1996. Previously, Mr. Deliema
owned and operated a graphic design, advertising and marketing firm from 1981 to
1996. From 1970-1981, Mr. DeLiema was a principal and Vice President of
Operations for Meyerhof's, a restaurant holding company, where Mr. DeLiema
concentrated on the Back Bay Rowing and Running Club restaurants. Mr. DeLiema
received a Bachelor of Arts in 1970 from the University of California at Santa
Barbara.

SALVADOR A. NAVARRO has served as the Director of Food and Beverage for the
Company since 1995. Previously, Mr. Navarro was Central Operations Manager for
Knott's Berry Farms in Buena Park, California and served as the Director of Food
and Beverages for Southwest Foods, Inc.'s Claim Jumper Restaurants from 1978 to
1994.

STEPHEN WHITE has been the Director of Operations of the Company since July
1994. Mr. White has been in the restaurant business his entire working life.
From 1992 until joining the Company, Mr. White was an independent consultant to
the restaurant industry. From 1980 to 1992, Mr. White was employed with
Southwest Foods, Inc.'s Claim Jumper Restaurants in Irvine, California as
Corporate General Manager and Vice President of Operations. At Claim Jumper, Mr.
White designed and implemented new menus, quality assurance procedures,
personnel training, purchasing and operations protocols.

COMPENSATION OF BOARD OF DIRECTORS

Directors previously have received no cash compensation for serving on the
Board of Directors. Beginning in August 1996, the Company will pay fees to its
non-employee directors for serving on the Board of Directors and for their
attendance at Board and committee meetings. The Company pays each non-employee
director an annual fee of $1,000, plus $750 per board meeting attended in
person, $400 per telephonic board meeting over 30 minutes, $200 per telephonic
board meeting under 30 minutes, $500 per committee meeting in person, $300 per
telephonic committee meeting over 30 minutes, and $100 per telephonic committee
meeting under 30 minutes.

50
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth information concerning compensation of the
Chief Executive Officer and each other executive officer who received annual
compensation in excess of $100,000 for the fiscal year ended December 31, 1995:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------
NAME AND -------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION (1) YEAR SALARY BONUS (SHARES) COMPENSATION
- ------------------------------------------------------------ ---- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Paul A. Motenko............................................. 1995 $101,289 $ 50,000(2) -0- $8,858(3)
Chief Executive Officer
Jeremiah J. Hennessy........................................ 1995 $101,289 $ 50,000(2) -0- $8,417(4)
Chief Operating Officer
</TABLE>

- ------------------------
(1) No other executive officer received salary and bonuses in excess of $100,000
in respect of the year ended December 31, 1995.

(2) Paid in respect of the acquisition from Roman Systems, Inc. See "Certain
Transactions -- Acquisition of Restaurants and Intellectual Property."

(3) The amount shown above is the estimated value of perquisites and other
personal benefits, including health insurance (approximately $7,757) and
life insurance (approximately $1,101).

(4) The amount shown above is the estimated value of perquisites and other
personal benefits, including health insurance (approximately $7,316), and
life insurance (approximately $1,101).

EMPLOYMENT AGREEMENTS

The terms summarized below are qualified in their entirety by the respective
employment agreements filed as exhibits to the registration statement of which
this Prospectus is a part.

The Company has entered into identical eight-year term employment agreements
with Paul Motenko and Jeremiah J. Hennessy (sometimes referred to herein as the
"Executives"), effective as of March 25, 1996. Pursuant to such agreements,
Messrs. Motenko and Hennessy are each to receive annual cash compensation of
$135,000, subject to escalation annually in accordance with the Consumer Price
Index (the "CPI"). In addition, Messrs. Motenko and Hennessy's employment
agreements entitle each of them to receive two annual bonuses based on the
Company's financial performance, one for attainment of specified earnings before
interest, amortization, depreciation and income taxes ("EBITDA"), and one for
attainment of specified pre-tax income.

The EBITDA bonus would entitle Messrs. Motenko and Hennessy each to receive
the following amounts if the following EBITDA amounts are attained for each
fiscal year during the term of their respective employment agreements:

<TABLE>
<CAPTION>
EBITDA CUMULATIVE CASH BONUS
---------- ---------------------
<S> <C>
$2,000,000 $ 25,000
$3,000,000 $ 35,000
$6,000,000 $ 80,000
$9,000,000 $150,000
</TABLE>

51
<PAGE>
The pre-tax income bonus would entitle each of Messrs. Motenko and Hennessy
to receive the following amounts if the following pre-tax income amounts (as
determined by the Company's independent public accountants in accordance with
GAAP) are attained for each fiscal year during the term of their respective
employment agreements, commencing with the fiscal year ending December 31, 1997:

<TABLE>
<CAPTION>
PRE-TAX
INCOME CUMULATIVE CASH BONUS
---------- ---------------------
<S> <C>
$2,000,000 $ 25,000
$4,000,000 $ 75,000
$8,000,000 $150,000
</TABLE>

The pre-tax income levels required to receive each bonus level for each
fiscal year following the 1997 fiscal year will be increased by 20% per year.

Pursuant to their respective employment agreements, Messrs. Motenko and
Hennessy are each entitled to certain other fringe benefits including use of a
Company automobile or automobile allowance, life insurance coverage, disability
insurance, family health insurance and the right to participate in the Company's
customary executive benefit plans. Messrs. Motenko and Hennessy's employment
agreements further provide that following the voluntary or involuntary
termination of their employment by the Company, each of them is entitled to two
demand registration rights with respect to the Common Stock held by or issuable
to him. Upon the occurrence of any Termination Event (as hereinafter defined),
the Company may terminate the employment agreements. If such termination occurs,
Mr. Motenko or Mr. Hennessy, as the case may be, will be entitled to receive all
amounts payable by the Company under his respective employment agreement to the
date of termination. If the Company terminates the employment agreement for a
reason other than the occurrence of a Termination Event or if Mr. Motenko or Mr.
Hennessy terminates the employment agreement because of a breach by the Company
of its obligations thereunder or for Good Reason (as hereinafter defined), Mr.
Motenko or Mr. Hennessy, as the case may be, will be entitled to receive any and
all payments and benefits which would have been due to him by the Company up to
and including March 24, 2004 or any extension thereof had he not been terminated
and any and all damages resulting therefrom.

"Termination Event" means any of the following: (i) the willful and
continued failure by the Executive to substantially perform his duties under the
Employment Agreement (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness) after demand for substantial
performance is delivered by the Company specifically identifying the manner in
which the Company believes the Executive has not substantially performed his
duties; (ii) the Executive being convicted of a crime constituting a felony;
(iii) the Executive intentionally committing acts or failing to act, either of
which involves willful malfeasance with the intent to maliciously harm the
business of the Company; (iv) the Executive's willful violation of the
confidentiality provisions under the Employment Agreement; or (v) death or
physical or mental disability which results in the inability of the Executive to
perform the required services for an aggregate of 180 calendar days during any
period of 12 consecutive months. No act, or failure to act, on the Executive's
part shall be considered "willful" unless intentionally done, or intentionally
omitted to be done, by him not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company. Notwithstanding
the foregoing, a Termination Event shall not have been deemed to have occurred
unless and until there shall have been delivered to the Executive a copy of a
resolution, duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice to the Executive and an opportunity for
him, together with his counsel, to be heard before the Board), finding that, in
the good faith opinion of the Board, the Executive conducted, or failed to
conduct, himself in a manner set forth above in clauses (i)-(iv), and specifying
the particulars thereof in detail.

For purposes of the Employment Agreement, "Good Reason" shall mean (i) any
removal of the Executive from, or any failure to re-elect the Executive to his
current office except in connection with termination of the Executive's
employment for disability; provided, however, that any removal of the Executive
from, or any failure to re-elect the Executive to his current office (except in
connection with

52
<PAGE>
termination of the Executive's employment for disability) shall not diminish or
reduce the obligations of the Company to the Executive under the employment
agreement; (ii) a reduction of ten percent (10%) or more in the Executive's then
current base salary; (iii) any failure by the Company to comply with any of its
obligations to the Executive under the employment agreement; (iv) for any reason
within 120 days following a Change of Control (as defined in the employment
agreement); or (v) the failure of the Company to obtain the assumption of the
employment agreement by any successor to the Company, as provided in the
employment agreement.

OPTIONS

There are currently no arrangements to issue options other than pursuant to
the Company's 1996 Stock Option Plan.

1996 STOCK OPTION PLAN

The Company has adopted a 1996 Stock Option Plan (the "1996 Plan"). The
following summary of the 1996 Plan is qualified in its entirety by the proposed
form of Stock Option Plan filed as an exhibit to the Registration Statement of
which this Prospectus is a part.

The 1996 Plan is designed to promote and advance the interests of the
Company and its stockholders by (1) enabling the Company to attract, retain and
reward managerial and other key employees and non-employee directors and (2)
strengthening the mutuality of interests between participants in the 1996 Plan
and the stockholders of the Company in its long-term growth, profitability and
financial success by offering stock options.

SUMMARY OF THE 1996 PLAN. The 1996 Plan empowers the Company to award or
grant from time to time until May 31, 2006, to officers, directors, outside
consultants and employees of the Company and its subsidiaries, Incentive and
Non-Qualified Stock Options ("Options") authorized by the Stock Option Committee
of the Board of Directors (the "Committee"), which will administer the 1996
Plan.

ADMINISTRATION. The 1996 Plan will be administered by the Committee. The
1996 Plan provides that the Committee must consist of at least two directors of
the Company who are "disinterested directors" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Committee has the sole authority to construe and interpret the 1996 Plan, to
make rules and procedures relating to the implementation of the 1996 Plan, to
select participants, to establish the terms and conditions of Options and to
grant Options, with broad authority to delegate its responsibilities to others,
except with respect to the selection for participation of, and the granting of
Options to, persons subject to Sections 16(a) and 16(b) of the Exchange Act.
Members of the Committee will not be eligible to receive discretionary Options
under the 1996 Plan. On or after August 15, 1996, the requirement that all
members of the Board of Directors or the Committee be "disinterested persons"
shall not apply. However, all members of the Committee must be "non-employee
directors" within the meaning of Rule 16b-3(b)(3)(i) promulgated by the
Securities and Exchange Commission.

ELIGIBILITY CONDITIONS. All employees (including officers) of the Company,
its subsidiaries, non-employee directors and outside consultants will be
eligible to receive Options under the 1996 Plan. Non-employee directors and
outside consultants are only eligible to receive Non-Qualified Stock Options
under the 1996 Plan. Except for Non-Qualified Stock Options granted to
non-employee directors, the selection of recipients of, and the nature and size
of, Options granted under the 1996 Plan will be wholly within the discretion of
the Committee. Subject to specific formula provisions relating to the grant of
options to non-employee directors and except with respect to the exercisability
of Incentive Stock Options and the total shares available for option grants
under the 1996 Plan, there is no limit on the number of shares of Common Stock
or type of option in respect of which Options may be granted to or exercised by
any person.

SHARES SUBJECT TO 1996 PLAN. The maximum number of shares of Common Stock
in respect of which Options may be granted under the 1996 Plan (the "Plan
Maximum") is 600,000. However, options for no more than 250,000 shares may be
issued to any optionee in any calendar year. For the

53
<PAGE>
purpose of computing the total number of shares of Common Stock available for
Options under the 1996 Plan, the above limitations shall be reduced by the
number of shares of Common Stock subject to issuance upon exercise or settlement
of Options previously granted, determined at the date of the grant of such
Options. However, if any Options previously granted are forfeited, terminated,
settled in cash or exchanged for other Options or expire unexercised, the shares
of Common Stock previously subject to such Options shall again be available for
further grants under the 1996 Plan. The shares of Common Stock which may be
issued to participants in the 1996 Plan upon exercise of an Option may be either
authorized and unissued Common Stock or issued Common Stock reacquired by the
Company. No fractional shares may be issued under the 1996 Plan.

The maximum numbers of shares of Common Stock issuable upon the exercise of
Options granted under the 1996 Plan are subject to appropriate equitable
adjustment in the event of a reorganization, stock split, stock dividend,
combination of shares, merger, consolidation or other recapitalization of the
Company.

TRANSFERABILITY. No Option granted under the 1996 Plan, and no right or
interest therein shall be assignable or transferable by a participant except by
will or the laws of descent and distribution.

TERM, AMENDMENT AND TERMINATION. The 1996 Plan will terminate on May 31,
2006, except with respect to Options then outstanding. The Board of Directors of
the Company may amend or terminate the 1996 Plan at any time, except that, (i)
to the extent restricted by Rule 16b-3 promulgated under the Exchange Act, as
amended and in effect from time to time (or any successor rule), the Board of
Directors may not, without approval of the stockholders of the Company, make any
amendment that would (1) increase the total number of shares available for
issuance (except as permitted by the 1996 Plan to reflect changes in capital
structure), (2) materially change the eligibility requirements, or (3)
materially increase the benefits accruing to participants under the 1996 Plan,
and (ii) prior to August 15, 1996, the provisions of the 1996 Plan governing the
award of options to Non-Employee Directors may not be amended more than once
every six months other than to comport with changes to the Code, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or the regulations
promulgated thereunder.

INCENTIVE STOCK OPTIONS. Options designated as Incentive Stock Options,
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), in an amount up to the Plan Maximum may be granted under
the 1996 Plan. The number of shares of Common Stock in respect of which
Incentive Stock Options are first exercisable by any participant in the 1996
Plan during any calendar year shall not have a fair market value (determined at
the date of grant) in excess of $100,000 (or such other limit as may be imposed
by the Code). To the extent the fair market value of the shares for which
options are designated as Incentive Stock Options that are first exercisable by
any optionee during any calendar year exceed $100,000, the excess amount shall
be treated as Non-Qualified Stock Options. Incentive Stock Options shall be
exercisable for such period or periods, not in excess of ten years after the
date of grant, as shall be determined by the Committee.

NON-QUALIFIED STOCK OPTIONS. Non-Qualified Stock Options may be granted for
such number of shares of Common Stock and will be exercisable for such period or
periods as the Committee shall determine.

OPTIONS TO NON-EMPLOYEE DIRECTORS. The 1996 Plan also provides for the
grant of Options to non-employee directors of the Company without any action on
the part of the Board or the Committee, only upon the terms and conditions set
forth in the 1996 Plan. Each non-employee director shall automatically receive
Non-Qualified Options to acquire 25,000 shares of Common Stock upon appointment,
and shall receive Options to acquire an additional 10,000 shares of Common Stock
for each additional year that the non-employee director continues to serve on
the Board of Directors. Each Option shall become exercisable as to 50% of the
shares of Common Stock subject to the Option on the first anniversary date of
the grant and 50% on the second anniversary date of the grant, and will expire
on the earlier of ten years from the date the Option was granted, upon
expiration of the 1996 Plan or three months after the optionee ceases to be a
director of the Company (one year if due to the

54
<PAGE>
director's death or disability). The exercise price of such Options shall be
equal to 100% of the fair market value of the Common Stock subject to the Option
on the date on which such Options are granted. Each Option shall be subject to
the other provisions of the 1996 Plan.

OPTION EXERCISE PRICES. The exercise price of any Option granted under the
1996 Plan shall be at least 85% of the fair market value of the Common Stock on
the date of grant, except that the exercise price of any Option granted to any
participant in the 1996 Plan who owns in excess of 10% of the outstanding voting
stock of the Company shall be 110% of the fair market value of the Common Stock
on the date of grant. The exercise price of any Incentive Stock Options shall be
at least 100% of the fair market value on the date of grant. Fair market value
per share of Common Stock shall be determined as the closing price per share on
the last trading day if the Common Stock is listed on an established stock
exchange, or as the average of the closing bid and asked prices per share if the
Common Stock is quoted by the Nasdaq National Market, or as the amount
determined in good faith by the Committee if the Common Stock is neither listed
for trading on an exchange or quoted by the Nasdaq National Market. Options
granted effective as of the closing date of this Offering will have an exercise
price equal to the initial public offering price per share.

EXERCISE OF OPTIONS. Each option shall become exercisable according to the
terms specified in the Option Agreement. No Option may be exercised, except as
provided below, unless the holder thereof remains in the continuous employ or
service of the Company. No Options shall be exercisable after the earlier of ten
years from grant or three months after employment or service as a director of
the Company or its subsidiary terminates (one year if such termination is due to
the participant's death or disability). Options shall be exercisable upon the
payment in full of the applicable option exercise price in cash or, if approved
by the Committee, by instruction to a broker directing the broker to sell the
Common Stock for which such Option is exercised and remit to the Company the
aggregate exercise price of the Option or, in the discretion of the Plan
Administrator, upon such terms as the Committee shall approve, in shares of the
Common Stock then owned by the optionee (at the fair market value thereof at
exercise date). The Plan Administrator also has discretion to extend or arrange
for the extension of credit to the optionee to finance the purchase of shares on
exercise.

GRANT OF OPTIONS. In addition to the Options for 25,000 shares of Common
Stock each granted to the Company's four non-employee directors, the Company has
granted Options to acquire a total of 453,500 shares of Common Stock to certain
employees, including executive officers of the Company, effective as of the
closing date of this Offering, at an exercise price equal to the initial public
offering price per share. The exercise price of such Options shall be equal to
100% of the fair market value of the Common Stock subject to the Option on the
date on which such Options are granted. No more than 250,000 shares may be
granted to any optionee under any option in any calendar year. Each Option shall
become exercisable according to the terms specified in the individual Option
Agreement.

The following executive officers and non-officer directors of the Company
will receive Incentive Stock Options for the following amounts of shares of
Common Stock:

<TABLE>
<CAPTION>
DOLLAR
NAME VALUE NUMBER OF SHARES
- ----------------------------------------------------------------------- ----------- -----------------
<S> <C> <C>
Laura Parisi........................................................... * 75,000
Alexander M. Puchner................................................... * 75,000
Non-officer directors as a group (4)................................... * 100,000
--------
Executive officers and directors as a group (8 persons)................ * 250,000
--------
--------
</TABLE>

- ------------------------
* Not yet determinable.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS

Pursuant to provisions of the California General Corporation Law, the
Articles of Incorporation of the Company, as amended, include a provision which
eliminates the personal liability of its directors to the Company and its
shareholders for monetary damage to the fullest extent permissible under
California law. This limitation has no effect on a director's liability (i) for
acts or omissions that

55
<PAGE>
involve intentional misconduct or a knowing and culpable violation of law, (ii)
for acts or omissions that a director believes to be contrary to the best
interests of the Company or its shareholders or that involve the absence of good
faith on the part of the director, (iii) for any transaction from which a
director derived an improper personal benefit, (iv) for acts or omissions that
show a reckless disregard for the director's duty to the Company or its
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing his or her duties, of a risk of
a serious injury to the Company or its shareholders, (v) for acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the Company or its shareholders, (vi) under
Section 310 of the California General Corporation Law (concerning contracts or
transactions between the Company and a director) or (vii) under Section 316 of
the California General Corporation Law (concerning directors' liability for
improper dividends, loans and guarantees). The provision does not eliminate or
limit the liability of an officer for any act or omission as an officer,
notwithstanding that the officer is also a director or that his actions, if
negligent or improper, have been ratified by the Board of Directors of the
Company. Further, the provision has no effect on claims arising under federal or
state securities or blue sky laws and does not affect the availability of
injunctions and other equitable remedies available to the Company's shareholders
for any violation of a director's fiduciary duty to the Company or its
shareholders.

The Company's Articles of Incorporation authorize the Company to indemnify
its officers, directors and other agents to the fullest extent permitted by
California law. The Company's Articles of Incorporation also authorize the
Company to indemnify its officers, directors and agents for breach of duty to
the corporation and its shareholders through bylaw provisions, agreements or
both, in excess of the indemnification otherwise provided under California law,
subject to certain limitations. The Company has entered into indemnification
agreements with its non-employee directors whereby the Company will indemnify
each such person (an "indemnitee") against certain claims arising out of certain
past, present or future acts, omissions or breaches of duty committed by an
indemnitee while serving in his employment capacity. Such indemnification does
not apply to acts or omissions which are knowingly fraudulent, deliberately
dishonest or arise from willful misconduct. Indemnification will only be
provided to the extent that the indemnitee has not already received payments in
respect of a claim from the Company or from an insurance company. Under certain
circumstances, such indemnification (including reimbursement of expenses
incurred) will be allowed for liability arising under the Securities Act.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.

The Company intends to purchase a directors' and officers' liability policy
insuring directors and officers of the Company effective upon the closing of
this Offering.

56
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of September 30, 1996 as to (a) each
director, (b) each executive officer identified in the Summary Compensation
Table, (c) all officers and directors of the Company as a group and (d) each
person who beneficially owns 5% or more of the outstanding shares of Common
Stock.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
---------------------------------------------------
PERCENT
OWNED PRIOR PERCENT
NUMBER TO THE OWNED AFTER
NAME AND ADDRESS (2) OF SHARES OFFERING (3) THE OFFERING (3)
- ---------------------------------------- ------------- ---------------- ----------------
<S> <C> <C> <C>
Paul Motenko............................ 658,857(4) 14.30% 10.28%
Jeremiah Hennessy....................... 658,857(4) 14.30% 10.28%
Louis Habash............................ 526,172(5) 11.42% 8.21%
ASSI, Inc............................... 500,000(6) 10.85% 7.80%
Norton Herrick.......................... 250,000 5.42% 3.90%
Barry Grumman........................... 250,876(7) 6.20% 3.90%
Laura Parisi............................ (80) 0% 0%
Alexander M. Puchner.................... (80) 0% 0%
Stanley B. Schneider.................... 25,000(8) 0.54% 0.39%
Stephen P. Monticelli................... (80) 0% 0%
Steven Mayer............................ (80) 0% 0%
All directors and executive officers as
a group (8 persons).................... 1,593,590 34.58% 24.87%
</TABLE>

- ------------------------
(1) The persons named in the table, to the Company's knowledge, have sole voting
and sole investment power with respect to all shares of Common Stock shown
as beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes hereunder. For
purposes of this table, information as to shares of Common Stock assumes
that the Underwriters' over-allotment options are not exercised and that the
Representative's Warrants are not exercised.

(2) The address of the aforementioned individuals is at the Company's principal
executive offices at 26131 Marguerite Parkway, Suite A, Mission Viejo,
California 92692.

(3) Shares of Common Stock which a person had the right to acquire within 60
days are deemed outstanding in calculating the percentage ownership of the
person, but not deemed outstanding as to any other person. The Percent Owned
Prior to the Offering is calculated based on 4,608,321 shares of Common
Stock outstanding as of the date hereof, which amount includes: (i) 500,000
shares of Common Stock to be issued to ASSI, Inc. and (ii) 250,000 shares of
Common Stock to be issued to Mr. Norton Herrick, all of which are to be
issued upon the completion of this Offering in connection with the financing
of the Pietro's Acquisition. See "Certain Transactions -- Pietro's
Acquisition." The Percent Owned After the Offering is calculated based upon
6,408,321 shares of Common Stock outstanding, assuming the issuance and sale
of all of the 1,800,000 Shares by the Company and no exercise of the
Underwriters' over-allotment options or the Representative's Warrants, and
does not include shares issuable upon exercise of any warrants issued by the
Company.

(4) Certain of the shares beneficially owned by Messrs. Motenko and Hennessy
have been pledged to the Sellers in the Roman Systems, Inc. acquisition. See
"Certain Transactions -- Acquisition of Restaurants and Intellectual
Property."

(5) Includes 26,172 shares held by Mr. Habash personally and 500,000 shares to
be issued to ASSI, Inc., a Nevada corporation controlled by Mr. Habash. (See
Footnote 3 above.)

57
<PAGE>
(6) ASSI, Inc. is controlled by Louis Habash, and its shares are also included
in Mr. Habash's beneficial ownership.

(7) Includes 10,000 shares of Common Stock which are held in a Professional
Corporation Money Purchase Plan of which Mr. Grumman is the beneficiary.
Does not include warrants to acquire up to 300,000 shares of Common Stock
issued to Mr. Grumman in May 1995 which are not currently exercisable but
are included in the Selling Security Holders' Redeemable Warrants. See
"Certain Transactions -- Private Placements."

(8) Does not include shares of Common Stock purchasable upon exercise of options
which will be granted to these individuals.

As a result of their share ownership and positions with the Company, Messrs.
Hennessy and Motenko may be deemed "parents" of the Company as defined pursuant
to the rules and regulations of the Securities and Exchange Commission. However,
in connection with the Pietro's Acquisition and certain consulting arrangements,
the Company has issued a significant percentage of shares and warrants which may
result in a change of control. See "Certain Transactions."

RESALE OF OUTSTANDING SECURITIES

This Prospectus relates to the sale by the Company of 1,800,000 shares of
Common Stock and 1,800,000 Redeemable Warrants for aggregate gross consideration
of $9,450,000 based on the Offering price of $5.00 per Share and $0.25 per
Redeemable Warrant. A separate Prospectus is being filed with the Registration
Statement of which this Prospectus is a part, which relates in part to the sale
by the Selling Security Holders of 1,766,864 shares of Common Stock, 10,014,584
Selling Security Holders' Redeemable Warrants, and 10,014,584 shares of Common
Stock issuable upon exercise of the Selling Security Holders' Redeemable
Warrants. None of the Selling Security Holders' Shares, Selling Security
Holders' Redeemable Warrants, or shares issuable upon exercise of the Selling
Security Holders' Redeemable Warrants are being underwritten by the
Underwriters.

The Company will not receive any of the proceeds of the sale of the Selling
Security Holder's Shares, Selling Security Holders' Redeemable Warrants or
shares issuable upon exercise of the Selling Security Holders' Redeemable
Warrants, although it will receive the exercise price of such Selling Security
Holders' Redeemable Warrants when and if they are exercised. Except for Messrs.
Grumman and Schneider, and as described in "Certain Transactions," none of the
Selling Security Holders had any position, office or material relationship with
the Company or its affiliates during the last three years. Of the Selling
Security Holders, Mr. Barry Grumman has been an independent director of the
Company since 1994 and Mr. Stanley Schneider has been an independent director of
the Company since August 1996.

Prior to this offering, the Selling Security Holders collectively held
1,766,864 shares of Common Stock of the Company and warrants to purchase
10,014,584 shares of Common Stock of the Company. Assuming the sale of all such
Selling Security Holders' Shares and Selling Security Holders' Redeemable
Warrants which the respective Selling Security Holders are registering pursuant
to the separate Prospectus referred to above, the Selling Security Holders will
own approximately 974,117 shares of Common Stock of the Company after the
completion of such offering.

58
<PAGE>
CERTAIN TRANSACTIONS

ACQUISITION OF RESTAURANTS AND INTELLECTUAL PROPERTY

"BJ's Chicago Pizzeria" restaurants, as the Company's restaurants were
originally known, were established in Southern California in 1978 by entities
controlled by Michael L. Phillips ("Phillips") and William A. Cunningham, Jr.
("Cunningham"). Phillips and Cunningham built the chain to five locations in
Southern California by 1991.

The Company was formed in October 1991 by Paul Motenko ("Motenko") and Jerry
Hennessy ("Hennessy") to assume the management of the five existing "BJ's
Chicago Pizzeria" restaurants. In addition, the Company obtained the right to
use the trademarks, servicemarks, recipes and other intellectual property ("BJ's
Intellectual Property") from the owners of the five restaurants for use in the
development of additional "BJ's Chicago Pizzeria" restaurants. This arrangement
was pursuant to a management agreement ("Management Agreement") which gave the
Cunningham and Phillips entities certain guaranteed payments and rights in newly
developed BJ's restaurants. From the date of the Management Agreement through
December 1994, the Company opened five additional restaurants, the first in July
1992 followed by one more in 1993 and three in 1994. As discussed in detail
below, in January 1995 the Management Agreement was terminated in connection
with the closing of the Company's acquisition of the BJ's Intellectual Property
and three of the restaurants managed by the Company for the prior owners (the
"Acquisition").

Pursuant to the terms of an Asset Purchase Agreement, dated as of November
7, 1994 (the "Acquisition Agreement"), Roman Systems, Inc., a California
corporation, Bristol Restaurants, a California general partnership, William A.
Cunningham, Jr. and Michael L. Phillips (collectively, "Sellers") transferred to
the Company the three BJ's Chicago Pizzeria Restaurants located in Balboa in
Newport Beach, California, La Jolla and Laguna Beach, California, and all of the
right, title and interest of the Sellers in trademarks, trademark registrations,
servicemarks, menus, recipes, trade secrets and other know-how or intangible
property utilized in the operation of the BJ's Chicago Pizzeria Restaurants that
Sellers may own (the "BJ's Intellectual Property"). Two other restaurants,
located in Santa Ana and San Juan Capistrano, California, owned by Sellers were
not transferred. The Santa Ana and San Juan, Capistrano restaurants were
operated by the Company until such restaurants were sold in 1995.

Pursuant to the terms of the Acquisition Agreement, the payment by the
Company for the Acquisition was scheduled to occur in three parts: (i) a
$550,000 payment was made to Sellers by the Company simultaneously with the
closing of the Acquisition; (ii) a payment to Sellers of $38,195 per month for
108 consecutive months starting April 30, 1995, for a total of $4,125,060; and
(iii) a total of $875,000 was payable by the Company to Sellers from 15% of
adjusted net proceeds of additional equity offerings of the Company, provided
that any amounts which were not paid from a percentage of offerings by July 11,
1995 were to be paid at the rate of $25,000 per month until the payments to
Sellers from 15% of adjusted net equity offering proceeds plus the monthly
$25,000 payments totaled the $875,000 owed by the Company to Sellers. In
addition to the aforementioned consideration for the Acquisition, simultaneously
with the closing of the Acquisition the Company also issued 500,000 shares of
Common Stock of the Company to each of Mr. Cunningham and Mr. Phillips, which as
a result of the May 1995 stock split are currently equivalent to 174,480 shares
of Common Stock of the Company outstanding to each of Mr. Phillips and Mr.
Cunningham. The Company also assumed certain liabilities of the Sellers,
including approximately $873,000 in loans, accrued salaries, certain accounts
payable, sales tax payable and accrued operating expenses of the purchased
restaurants.

In regard to the Acquisition, the Company has granted Phillips a limited
license to operate up to four pizzeria restaurants in areas outside of
California and Hawaii or other areas where they may compete with the Company's
restaurants. These restaurants operated by Phillips or his family may use the
intellectual property associated with the operation of BJ's Chicago Pizzeria
restaurants, except for the name "BJ's" or any name so similar as to confuse the
public. The Company has been granted a right of first refusal to purchase the
restaurants of Phillips or his family if they are sold. A similar license has
been given to Cunningham for up to two restaurants. Pursuant to the Acquisition,

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the Company is obligated to provide Phillips and Cunningham, and their
respective spouses, with health insurance, or reimburse them for the cost of
mutually satisfactory arrangements regarding health insurance coverage, until
they each turn 65 years of age.

The Company assumed responsibility for the operation and divestment costs of
restaurants excluded from the purchase (Santa Ana and San Juan Capistrano,
California). At the time of purchase, January 1, 1995, a reserve for restaurant
closure totaling $157,000 was established for the operating and divestment costs
incurred by the restaurants excluded from the sale.

In connection with the Acquisition, Motenko and Hennessy have pledged all of
their stock for the benefit of Sellers. In the event of default, Sellers have
the right and ability to vote all of the stock so pledged by Motenko and
Hennessy. In addition, in event of a default, Sellers have the right to
foreclose upon and cause to be sold for their benefit half of the stock of
Motenko and Hennessy so pledged. An event of default will occur if, on four
occasions in any one calendar year, the Company shall fail to make a scheduled
payment due to Sellers which failure remains uncured for 30 days after the
Company's receipt of written notice of the failure until such time as Sellers
have received the $875,000 payment noted above. After such time, a default shall
be considered to have occurred under the Note if the Company shall fail to make
a scheduled payment under the Note which remains uncured for six months after
the debt is received after written notice of such failure. All payments have
been timely. The pledge shall remain in force and effect until the earlier of
the date upon which all amounts owed to Sellers in respect to the Acquisition
have been fully paid or both of the following have occurred: (i) the Company has
made the $875,000 payment to Sellers as specified above, and (ii) the Company
has registered its stock pursuant to the Securities Exchange Act of 1934 and its
Common Stock is listed or reported by a national/regional securities exchange or
market quotation system.

In addition, each of the three restaurants obtained by the Company pursuant
to the Acquisition have been pledged to Sellers to secure the payments owed to
Sellers.

As of June 30, 1996 the principal amount outstanding under the Acquisition
Agreement is $3,270,000. After the completion of this Offering and the
application of proceeds as set forth in "Use of Proceeds," the outstanding
principal amount under the Acquisition Agreement will be $2,744,000.

ACQUISITION AND SALE OF LIMITED PARTNERSHIP INTERESTS

The Company owned and/or operated restaurants in addition to those purchased
under the Acquisition Agreement through the acquisition and sale of limited
partnership interests. Restaurants in Belmont Shore and La Jolla -- Prospect
were both owned by limited partnerships, BJ's Belmont Shore, L.P. and BJ's La
Jolla, L.P., respectively. The general partner of each of these partnerships was
CPA-BG, Inc., a wholly-owned subsidiary of the Company that was transferred to
the Company for no consideration by Motenko and Hennessy prior to the closing of
the acquisition of the partnership interests.

Prior to the acquisition of the partnership interests, the sole limited
partner of BJ's Belmont Shore, L.P. was Barry Grumman ("Grumman"). The sole
limited partner of BJ's La Jolla, L.P. was BJ's La Jolla, Ltd., a limited
partnership of which Grumman was the sole general partner. In addition, pursuant
to an agreement dated November 14, 1994, Grumman and BJ's La Jolla, Ltd. agreed
to transfer all of their right, title and interest in BJ's Belmont Shore, L.P.
and BJ's La Jolla, L.P., respectively, for an aggregate of 226,824 shares of
Common Stock in the Company, which shares are valued at $.75 per share or
$170,118. The aggregate amount of liabilities assumed in the acquisition of the
limited partnership interests totaled $277,000, including $70,000 in acquisition
costs and $207,000 in assumed liabilities. $55,000 of the latter assumed
liabilities included capitalized equipment leases, sales tax payable and accrued
operating expenses of the purchased restaurants. Following the acquisition of
the partnership interests, both BJ's Belmont Shore, L.P. and BJ's La Jolla, L.P.
were terminated, and CPA-BG, Inc. was merged into the Company.

The BJ's in Lahaina, Maui will continue to be owned by BJ's Lahaina, L.P., a
limited partnership. The two general partners of BJ's Lahaina, L.P. were CPA010,
Inc. and Blue Max, Inc. Blue Max, Inc. was wholly-owned by CPA010, Inc., which
was formerly owned by Motenko and Hennessy. Motenko

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and Hennessy transferred their ownership of such corporation to the Company for
nominal consideration prior to the closing of the acquisition of the partnership
interests. CPA010, Inc. has recently been merged into the Company. As a result,
the Company is currently the managing general partner of BJ's Lahaina, L.P. and
owns an approximately 54% interest in the partnership. The Company purchased the
54% interest for approximately $114,000, which interest consists of a 40%
general partnership interest and an approximately 14% limited partnership
interest.

CONSULTING AGREEMENT

On November 1, 1994 the Company entered into an agreement with Woodbridge
Holdings, Inc. ("WHI"), a consulting firm in Newport Beach, California. The
agreement was for services related to selection of professional advisers and
general corporate development. WHI was to assist the Company in the selection of
legal counsel and accountants, in designing public relations materials and
printed materials, in formulating a description of the Company's business plan,
in designing a stock compensation plan and negotiating for printing services.
The contract expired on May 1, 1995 and was not renewed. Actual services
provided by WHI were limited to logo printing design, printing arrangements and
selection of professionals. For its services in that period, WHI received
$60,000, from which WHI was required to pay for printing expenses. In addition,
for services rendered during that period, WHI received 69,792 shares of Common
Stock which were earned and issuable on May 1, 1995 and the right to receive an
additional 69,443 shares of Common Stock ("Additional Shares") issuable after
completion of an initial public offering, such as this Offering, by the Company.
The value attributed to the 69,792 shares earned and issuable to WHI as of May
1, 1995 is $0.75 per share or $52,344 and the value currently attributed to the
69,443 shares to be issued is $6.00 or $416,658. On October 7, 1996, on the
assumption that this Offering would close, the Company issued WHI the Additional
Shares. WHI has the right to have its shares registered by the Company at WHI's
cost.

PRIVATE PLACEMENTS

In January 1995, the Company raised $850,000 through a private placement of
17 Units at $50,000 per Unit, consisting of (i) a Series A Promissory Note in
the principal amount of $50,000 and due December 31, 1995 and (ii) 13,086 shares
of Common Stock. The Series A Promissory Notes bear interest, payable quarterly,
at a rate of 10% until June 30, 1995 and 13.5% thereafter. The proceeds of the
January 1995 private placement were used to close the Acquisition and for
working capital. The Series A Promissory Notes were repaid in the third quarter
of 1995 with proceeds from the September 1995 placement described below. The
shares issued in this placement are being registered concurrently with this
Offering and are included as Selling Security Holder Shares which may be sold by
the holders or respective transferees commencing on the date of this Prospectus.

In March 1995, the Company raised $400,000 through a private placement of
four Units at $100,000 per Unit, consisting of (i) a $98,000 promissory note
bearing interest at a rate of 10% per annum (the "Promissory Notes") with
interest and principal due upon the earlier of completion of an initial public
offering of the Company's Common Stock, or 18 months from the date of issuance
and (ii) warrants to purchase 34,896 shares of Common Stock at a price of $2.87
per share. The proceeds of the private placement were used for working capital.
The Promissory Notes were repaid in the third quarter of 1995 with proceeds from
the September 1995 private placement described below. Upon effectiveness of the
Registration Statement of which this Prospectus is a part, the warrants issued
in this placement convert into a like number of Redeemable Warrants which are
being registered concurrently with this Offering as Selling Security Holders'
Redeemable Warrants. The Selling Security Holders' Redeemable Warrants and all
of the shares issuable upon exercise of such Selling Security Holders'
Redeemable Warrants may be sold by the holders or respective transferees
commencing on the date of this Prospectus.

In May 1995, the Company issued warrants to purchase up to 300,000 shares of
Common Stock at a price of $5.00 per share to each of Barry Grumman, a director
of the Company, and Lexington Ventures, Inc. The warrants were issued to each of
Mr. Grumman and Lexington Ventures, Inc. at a price of $0.07 per warrant or a
total price to each of $21,000. Mr. Grumman's liability for payment of the
warrants was extinguished in consideration for past services as a director of
the Company which had not been previously compensated. Upon effectiveness of the
Registration Statement of which this

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Prospectus is a part, the warrants issued in this placement convert into a like
number of Redeemable Warrants which are being registered concurrently with this
Offering as Selling Security Holders' Redeemable Warrants. With the exception of
Mr. Grumman, the Selling Security Holders' Redeemable Warrants and all of the
shares issuable upon exercise of such Selling Security Holders' Redeemable
Warrants may be sold by the holders or respective transferees commencing on the
date of this Prospectus. Mr. Grumman has agreed not to directly or indirectly
sell, loan, pledge, assign, transfer, encumber, distribute, grant or otherwise
dispose of his warrants for a period of one year from the date hereof without
the written consent of the Representative.

In September 1995, the Company completed an offering of $6,100,000 in Units,
each consisting of 25,000 shares of Common Stock at a price of $3.85 per share
and 75,000 warrants at a price of $0.05 per warrant. Half of the shares issued
in this placement are being registered concurrently with this Offering and are
included in the Selling Security Holders' Shares. Upon effectiveness of the
Registration Statement of which this Prospectus is a part, all of the warrants
issued in this placement convert into a like number of Redeemable Warrants which
are also being registered concurrently with this Offering and are included in
the Selling Security Holders' Redeemable Warrants. As a result, half of the
shares, the Selling Security Holders' Redeemable Warrants and all of the shares
issuable upon exercise of such Selling Security Holders' Redeemable Warrants may
be sold by the holders or respective transferees commencing on the date of this
Prospectus. Thereafter, each holder of outstanding Common Stock purchased in
this private offering shall have the right to include the remaining one-half of
such Common Stock in certain registration statements filed by the Company so
long as the securities in question are not saleable under Rule 144 of the
Securities Act. Any sales of Common Stock pursuant to such registration
statement(s) shall be effected through the underwriter, if any, and the holders
thereof shall compensate the underwriter in accordance with its customary
compensation practices.

In March 1996, there was a private placement of convertible debt to ASSI,
Inc. and Norton Herrick. See "-- Pietro's Acquisition."

Almost all of the Selling Security Holders are clients of the Representative
and are obligated to sell their respective Securities through the
Representative.

CERTAIN OTHER TRANSACTIONS AND CONFLICTS OF INTEREST

Paul Motenko and Jeremiah Hennessy advanced $204,028 to the Company in the
form of deferred salary ($125,000) and direct loans ($79,028). Messrs. Motenko
and Hennessy agreed to defer repayment of the loans without interest until all
of the Company's Series A Promissory Notes (the "Notes") issued in connection
with the January 1995 private placement were repaid. The direct loans to Messrs.
Motenko and Hennessy have not been paid; however, the Notes and deferred
salaries were repaid in 1995.

Pursuant to the terms of the Acquisition, Messrs. Motenko and Hennessy
pledged their ownership interest in the Company to Sellers. As a result, a
conflict of interest may exist between Messrs. Motenko and Hennessy and the
Company with respect to the determination of which obligations will be paid out
of the proceeds of this Offering or the Company's operating cash flow and when
such payments will be made. The Company also had notes payable to Sydney Feldman
in the amount of $40,000, which note accrued interest at a rate of 12%. This
note was repaid in 1995.

In addition, the Company currently has the following debt outstanding with
related parties: (i) a $100,000 note due and payable to Ms. Katherine Anderson,
a limited partner of BJ's Lahaina, L.P., the California limited partnership
which operates the Company's Lahaina, Maui restaurant, which note matures on
September 5, 1996 and bears interest at a rate of 19%, (ii) a $79,000 note due
on demand and payable to Paul Motenko, which note bears interest at a rate of 6%
and is referenced above in connection with certain advances by Mr. Motenko and
Mr. Hennessy and (iii) a $28,000 note due and payable to Harold Motenko, which
note matures on March 22, 1998 and bears interest at a rate of 12%. The Company
plans to pay the foregoing debt with proceeds from the sale of the Securities
offered hereby. See "Use of Proceeds."

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Finally, in May 1995 the Company issued warrants to purchase up to 300,000
shares of Common Stock. The shares issuable upon exercise of the warrants are
currently valued at $21,000. Mr. Grumman's liability for payment of the warrants
was extinguished in consideration for past services as a director of the Company
which were not previously compensated.

Management believes that the transactions with the officers and/or
shareholders of the Company and their affiliates were made in terms no less
favorable than would have occurred with unaffiliated third parties. The Company
has adopted a policy not to engage in transactions with officers, directors,
principal shareholders or affiliates of any of them unless such actions have
been approved by a majority of the disinterested directors and are upon terms no
less favorable to the Company than could be obtained from an unaffiliated third
party in an arms length transaction.

PIETRO'S ACQUISITION

In order to finance the Pietro's Acquisition, on February 20, 1996, the
Company sold to ASSI, Inc. and to Mr. Norton Herrick for $2,000,000 and
$1,000,000, respectively, certain convertible notes (the "Convertible Notes")
pursuant to certain note purchase agreements (the "Note Purchase Agreements")
with substantially similar terms. Under the Note Purchase Agreements, the
Company issued to each of ASSI, Inc. and to Mr. Herrick, Convertible Notes in
the principal amounts of $2,000,000 and $1,000,000, respectively, which
Convertible Notes, plus accrued interest thereon, both convert simultaneously
with the closing of this Offering. The Convertible Note, plus accrued interest
thereon, issued to ASSI, Inc. converts into 500,000 shares of Common Stock and
into Special Warrants to purchase 3,000,000 shares of Common Stock. See
"Description of Securities -- Redeemable Warrants." The Convertible Note, plus
accrued interest thereon, issued to Mr. Herrick converts into 250,000 shares of
Common Stock and into Special Warrants to purchase 1,500,000 shares of Common
Stock. The 4,700,000 Redeemable Warrants into which the 4,700,000 Special
Warrants convert upon sale of the Special Warrants by the current holders or
their affiliates are included in the Selling Security Holders' Redeemable
Warrants. In addition, in connection with the above financing, the Company
agreed subject to the terms of the Note Purchase Agreements, to use its best
reasonable efforts to cause one individual designated by each of ASSI, Inc. and
Mr. Norton Herrick to be elected to the Board of Directors of the Company or to
have such selected individuals attend all meetings of the Board of Directors as
non-voting advisors. ASSI, Inc's nominee to the Board of Directors of the
Company was Mr. Stephen Monticelli. Mr. Herrick's nominee to the Board of
Directors was Mr. Steven Mayer. See "Principal Shareholders."

In connection with the aforementioned financing of the Pietro's Acquisition,
which was obtained through the Representative, the Company paid the
Representative 13% of the total $3,000,000 investment, or $390,000.

In connection with the Pietro's Acquisition, the Company has also assumed
liability to Edward Peabody and Christopher Wheeler in the amount of $25,000 in
exchange for which Messrs. Peabody and Wheeler agreed to release the Company and
its subsidiary, Chicago Pizza Northwest, Inc., for any and all other finder's
fees related to the Pietro's Acquisition.

On February 20, 1996, the Company entered into a consulting agreement with
ASSI, Inc. regarding the Pietro's Acquisition (the "Pietro's Consulting
Agreement"). Under this Agreement, ASSI, Inc. agrees to advise the Company in
connection with the reconstruction, expansion, marketing and strategic
development of the restaurants acquired from Pietro's. In consideration for such
services, the Company shall pay to ASSI, Inc. an annual fee equal to 5% of Net
Profits (as hereinafter defined) of the restaurants acquired under the plan of
reorganization and retained by the Company. As additional consideration for the
consulting services, the Company has issued to ASSI, Inc. an additional
aggregate of 100,000 Special Warrants to purchase shares of common stock of the
Company. These Special Warrants convert into Redeemable Warrants upon their sale
by the current holders or their affiliates and such Redeemable Warrants are also
included in the Selling Security Holders' Redeemable Warrants. See "Description
of Securities -- Redeemable Warrants." The Pietro's Consulting Agreement
terminates on December 31, 2000.

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For purposes of the Vegas Consulting Agreements (as hereinafter defined) and
the Pietro's Consulting Agreement, "Net Profits" shall mean net profits of the
respective operations as determined under generally accepted accounting
principles ("GAAP") before payment of the Annual Fee, less income, franchise and
like taxes. In addition, GAAP is to be applied as if the acquired operations
were owned in a stand-alone, separate legal entity and without regard to: (i)
parent company overhead which is not directly attributable to the acquired
operations and (ii) any amortization of goodwill related to the acquisition of
the respective acquired operations.

OTHER CONSULTING ARRANGEMENTS

On February 20, 1996, the Company entered into a consulting agreement with
ASSI, Inc. (the "Vegas Consulting Agreement") pursuant to which ASSI, Inc.
agrees to advise the Company with site selection and marketing and development
strategy for penetrating the Las Vegas, Nevada market. In consideration for such
services, the Company shall pay to ASSI, Inc. an annual fee (the "Annual Fee")
equal to 10% of Net Profits (as hereinafter defined) of the acquired Las Vegas
restaurants. As additional consideration for the consulting services, the
Company has issued to ASSI, Inc. an aggregate of 100,000 Special Warrants. The
Vegas Consulting Agreement terminates on December 31, 2000. These Special
Warrants convert into Redeemable Warrants upon their sale by the current holders
or their affiliates and such Redeemable Warrants are included in the Selling
Security Holders' Redeemable Warrants. See "Description of Securities --
Redeemable Warrants."

In summary, under the Pietro's Consulting Agreement, ASSI, Inc. will be
entitled to a total consideration of 5% of Net Profits of the Pietro's
Restaurants acquired and retained by the Company plus 100,000 Special Warrants
to purchase shares of Common Stock of the Company. Under the Vegas Consulting
Agreement ASSI, Inc. will be entitled to a total consideration of 10% of Net
Profits of restaurants acquired in Las Vegas plus 100,000 Special Warrants to
purchase shares of Common Stock of the Company. Finally, pursuant to the
financing of the Pietro's Acquisition, ASSI, Inc. will be entitled to 500,000
shares of Common Stock of the Company and 3,000,000 Special Warrants to purchase
shares of Common Stock of the Company. See "-- Pietro's Acquisition." All of the
Special Warrants to which ASSI, Inc. is entitled convert into Redeemable
Warrants upon their sale by the current holders or their affiliates and such
Redeemable Warrants are included in the Selling Security Holders' Redeemable
Warrants.

SALE OF RESTAURANTS

The Company and CPNI entered into an Asset Purchase Agreement (the "Abby's
Purchase Agreement") dated May 15, 1996 with A-II L.L.C. ("A-II") and Abby's,
Inc., pursuant to which CPNI agreed to sell to A-II substantially all of the
assets and liabilities of seven of the restaurants acquired from Pietro's. All
of the sales transactions were completed during the second quarter of 1996. The
restaurants sold were located in Richland, Kennewick and Yakima, Washington, and
in Albany, Madras, Redmond, and Bend, Oregon. Under the terms of the Abby's
Purchase Agreement, Abby's agreed to pay total consideration of $1,000,000, to
be adjusted for certain deposits, liabilities assumed and inventory levels. The
Abby's Purchase Agreement further provided that $400,000 of the consideration
was to be paid on May 31, 1996, concurrent with the closing of the sale of the
Bend and Albany restaurants, with the remainder payable on July 1, 1996. The
sale of the Albany and Bend restaurants was consummated on May 31, 1996, and the
$400,000 of consideration, plus an aggregate of $150,000 as an earnest money
deposit for purchase of the balance of the seven restaurants was paid. $100,000
of the $150,000 earnest money deposit was paid directly to CPNI as of that date
and the remaining $50,000 was held in a trust account. Under the Abby's Purchase
Agreement, the Company and CPNI also agreed to not become affiliated with any
pizza-style restaurant or any restaurant with a menu substantially similar to
those restaurants operated by CPNI in any of the cities of Yakima, Kennewick,
and Richland, Washington, or Albany, Madras, Redmond and Bend, Oregon, for a
period of three years from the date of the Abby's Purchase Agreement. Finally,
under the Abby's Purchase Agreement, the Company has granted A-II the right to
use trademarks associated with Pietro's for a period of four months in the case
of the Albany restaurant and a period of one year in the case of the other six
restaurants sold by the Company.

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DESCRIPTION OF SECURITIES

The Company's authorized capital stock consists of 60,000,000 shares of
Common Stock, no par value, and 5,000,000 shares of Preferred Stock, no par
value. As of the date hereof, there were 4,608,321 shares of Common Stock
outstanding, held by 104 persons or entities, and no shares of Preferred Stock
outstanding.

COMMON STOCK

The holders of outstanding Common Stock are entitled to receive dividends
out of assets legally available therefor at such times and in such amounts as
the Board of Directors may from time to time determine. The Company has no
present intention of paying dividends on its Common Stock. See "Dividend
Policy." Upon liquidation, dissolution or winding up of the Company, and subject
to the priority of any outstanding Preferred Stock, the assets legally available
for distribution to shareholders are distributable ratably among the holders of
the Common Stock at the time outstanding.

No holder of shares of Common Stock has a preemptive right to subscribe to
future issuances of securities by the Company. Accordingly, all investors in
this Offering will suffer dilution of their percentage interest in the Company
upon future sales of Common Stock or securities convertible into Common Stock.

Holders of Common Stock are entitled to cast one vote for each share held of
record on all matters presented to shareholders, other than with respect to the
election of directors, for which cumulative voting is currently required under
certain circumstances by applicable provisions of California law. Under
cumulative voting, each shareholder may give any one candidate whose name is
placed in nomination prior to the commencement of voting a number of votes equal
to the number of directors to be elected, multiplied by the number of votes to
which the shareholder's shares are normally entitled, or distribute such number
of votes among as many candidates as the shareholder sees fit. The effect of
cumulative voting is that the holders of a majority of the outstanding shares of
Common Stock may not be able to elect all of the Company's directors. The Common
Stock will be, when issued pursuant to the terms of this Prospectus, fully paid
and nonassessable.

PREFERRED STOCK

The Company is authorized to issue 5,000,000 shares of Preferred Stock. The
Company's Board of Directors is authorized to issue the Preferred Stock in one
or more series and, with respect to each series, to determine the preferences
and rights and the qualifications, limitations or restrictions thereof,
including the dividends rights, conversion rights, voting rights, redemption
rights and terms, liquidation preferences, sinking fund provisions, the number
of shares constituting the series and the designation of such series. The Board
of Directors could, without shareholder approval, issue Preferred Stock with
voting and other rights that could adversely affect the voting rights of the
holders of Common Stock and could have certain anti-takeover effects.

REDEEMABLE WARRANTS

The following is a brief summary of certain provisions of the Redeemable
Warrants, but such summary does not purport to be complete and is qualified in
all respects by reference to the actual text of the warrant agreement (the
"Warrant Agreement") between the Company, The Boston Group, L.P., as warrant
solicitation agent and U.S. Stock Transfer Corporation (the "Warrant Agent), as
warrant agent. A copy of the Warrant Agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. See "Additional
Information."

Each Redeemable Warrant entitles the holder thereof to purchase, at any time
during the 54-month period commencing one year after the date of this
Prospectus, one share of Common Stock at a price of 110% of the initial public
offering price per share, subject to adjustment in accordance with the
anti-dilution and other provisions referred to below.

The Redeemable Warrants are subject to redemption by the Company, at any
time, commencing one year after the date of this Prospectus, at a price of $.25
per Redeemable Warrant if the average

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closing bid price of the Common Stock equals or exceeds 140% of the initial
public offering price per share for any 20 trading days within a period of 30
consecutive trading days ending on the fifth trading day prior to the date of
notice of redemption. Redemption of the Redeemable Warrants can be made only
after 30 days notice, during which period the holders of the Redeemable Warrants
may exercise the Redeemable Warrants. If the Redeemable Warrants are redeemed,
the holders thereof may lose the benefit of the difference between the market
price of the underlying Common Stock as of such date and the exercise price of
such Redeemable Warrants, as well as any possible future price appreciation in
the Common Stock. Notwithstanding the above, the Special Warrants described
below are not redeemable until sold by the current holder or their affiliates.

The exercise price and the terms of the Redeemable Warrants bear no relation
to any objective criteria of value and should in no event be regarded as an
indication of any future market price of the Securities offered hereby.

The exercise price and the number of shares of Common Stock purchasable upon
the exercise of the Redeemable Warrants are subject to adjustment upon the
occurrence of certain events, including stock dividends, stock splits,
combinations or reclassification on or of the Common Stock and issuances of
shares of Common Stock for a consideration less than the exercise price of the
Redeemable Warrants. Additionally, an adjustment would be made in the case of a
reclassification or exchange of Common Stock, consolidation or merger of the
Company with or into another corporation or sale of all or substantially all of
the assets of the Company in order to enable holders of Redeemable Warrants to
acquire the kind and number of shares of stock or other securities or property
receivable in such event by a holder of the number of shares that might
otherwise have been purchased upon the exercise of the Redeemable Warrant. No
adjustments will be made unless such adjustment would require an increase or
decrease of at least $.10 or more in such exercise price. No adjustment to the
exercise price of the shares subject to the Redeemable Warrants will be made for
dividends (other than stock dividends), if any, paid on the Common Stock.

The Redeemable Warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date at the offices of the Warrant
Agent, with the exercise form on the reverse side of the certificate completed
and executed as indicated, accompanied by full payment of the exercise price (by
certified check payable to the Company) to the Warrant Agent for the number of
Redeemable Warrants being exercised. The holders of Redeemable Warrants do not
have the rights or privileges of holders of Common Stock.

No Redeemable Warrant will be exercisable unless at the time of exercise the
Company has filed a current prospectus with the Commission covering the shares
of Common Stock issuable upon exercise of such Redeemable Warrant and such
shares have been registered or qualified or deemed to be exempt under the
securities laws of the jurisdiction of residence of the holder of such
Redeemable Warrant. The Company will use its best efforts to have all such
shares so registered or qualified on or before the exercise date and to maintain
a current prospectus relating thereto until the expiration of the Redeemable
Warrants, subject to the terms of the Warrant Agreement. While it is the
Company's intention to do so, there is no assurance that it will be able to do
so. This Prospectus covers the shares initially issuable upon exercise of the
Redeemable Warrants.

No fractional shares will be issued upon exercise of the Redeemable
Warrants. However, if a warrantholder exercises all Redeemable Warrants then
owned of record by him, the Company will pay to such warrantholder, in lieu of
the issuance of any fractional share which is otherwise issuable, an amount in
cash based on the market value of the Common Stock on the last trading day prior
to the exercise date.

The Selling Security Holders' Redeemable Warrants include 4,700,000 Special
Warrants, which convert into Redeemable Warrants upon sale by the current
holders or their affiliates. By definition, these Special Warrants are governed
by the same terms as the Redeemable Warrants offered hereby with the exception
that subject to certain conditions, the Special Warrants are not subject to any
rights which the Company may have to call the Redeemable Warrants offered hereby
for redemption

66
<PAGE>
and these Special Warrants provide for certain additional demand and piggy-back
registration rights so long as owned by their current owners or affiliates, but
when sold by said owners convert into Redeemable Warrants. See "Certain
Transactions -- Pietro's Acquisition."

TRANSFER AGENT AND REDEEMABLE WARRANTS AGENT

U.S. Stock Transfer Corporation, Glendale, California is the transfer agent
and registrar for the shares of Common Stock and warrant agent for the
Redeemable Warrants.

SHARES ELIGIBLE FOR FUTURE SALE

All outstanding shares prior to this Offering are restricted securities
under Rule 144 under the Securities Act. However, of these restricted securities
the 1,766,864 shares held by the Selling Security Holders may be sold at any
time in the over the counter market and an additional 2,772,014 shares may be
eligible for resale in the near future under Rule 144. However, 1,529,332 of
such 2,772,014 shares include shares held by officers and directors who, with
the exception of Mr. Grumman and Mr. Schneider, have agreed not to sell their
shares for one year after the date hereof without the written consent of the
Representative. 211,618 shares owned by Mr. Grumman are subject to lock-up;
however Mr. Grumman will, subject to certain conditions, be permitted to sell
7,500 Shares of Common Stock per month during the one year lock-up period. See
"Underwriting." In general, under Rule 144, a person (or persons whose shares
are aggregated) holding restricted securities who has satisfied a two-year
holding period may, commencing 90 days after the date hereof, under certain
circumstances, sell within any three-month period that number of shares which
does not exceed the greater of 1% of the then outstanding shares of Common Stock
or the average weekly reported trading volume during the four calendar weeks
prior to such sale. Rule 144 also permits, under certain circumstances, the sale
of shares without any quantity limitation by a person who has satisfied a
three-year holding period and who is not, and has not been for the preceding
three months, an affiliate of the Company. The Commission has proposed to
shorten the two year and three year holding periods of Rule 144 to one year and
two years, respectively. If such holding periods are shortened, the holders of
restricted securities could accelerate the date that they could sell such
securities. Future sales under Rule 144 or by the Selling Security Holders
(including sales of the Selling Security Holders' Redeemable Warrants and the
shares issuable upon exercise of the Selling Security Holders' Redeemable
Warrants) may have an adverse effect on the market price of the shares of Common
Stock or Redeemable Warrants should a public market develop for such Securities.

67
<PAGE>
UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
(the form of which has been filed as an exhibit to the registration statement of
which this Prospectus is a part), the Underwriters named below (the
"Underwriters"), represented by The Boston Group, L.P. (the "Representative"),
have severally agreed to purchase from the Company, as applicable, the
respective number of Shares and the respective number of Redeemable Warrants set
forth opposite their names in the table below. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent, and that the Underwriters will be obligated, as set forth
in the Underwriting Agreement, to purchase all of the 1,800,000 Shares and
1,800,000 Redeemable Warrants being offered hereby, excluding Shares and
Redeemable Warrants covered by the over-allotment options granted to the
Underwriters, if any are purchased.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
UNDERWRITER SHARES REDEEMABLE WARRANTS
- ---------------------------------------------------------- ----------- --------------------
<S> <C> <C>
The Boston Group, L.P..................................... 1,206,000 1,206,000
EVEREN Securities, Inc.................................... 90,000 90,000
Hampshire Securities Corporation.......................... 72,000 72,000
Pennsylvania Merchant Group Ltd........................... 72,000 72,000
Van Kasper & Company...................................... 72,000 72,000
Gilford Securities Corporation............................ 36,000 36,000
Hill, Thompson, Magid & Co., Inc.......................... 36,000 36,000
Joseph Stevens & Company, L.P............................. 36,000 36,000
Laidlaw Equities, Inc..................................... 36,000 36,000
Madison Securities, Inc................................... 36,000 36,000
M.H. Meyerson & Co., Inc.................................. 36,000 36,000
Nutmeg Securities, Ltd.................................... 36,000 36,000
LT Lawrence & Company, Inc................................ 36,000 36,000
----------- ----------
Total................................................... 1,800,000 1,800,000
----------- ----------
----------- ----------
</TABLE>

Through the Representative, the Underwriters have advised the Company that
the Underwriters propose to offer the Shares and the Redeemable Warrants to the
public initially at the public offering prices set forth on the cover page of
this Prospectus and may offer the Shares to selected dealers at such prices less
a concession of not more than $.27 per Share. No concession shall be granted to
selected dealers with respect to the Redeemable Warrants. The Underwriters may
allow, and such dealers may reallow, a concession of not more than $.10 per
Share on sales to certain other dealers. After this Offering, the public
offering prices and concessions and reallowances to dealers may be changed by
the Underwriters.

The Company has granted the Underwriters an option, exercisable within 45
days after the date of this Prospectus, to purchase up to an aggregate of an
additional 270,000 Shares and 270,000 Redeemable Warrants from the Company, at
the same price per Share and per Redeemable Warrant being paid by the
Underwriters for the other Shares and Redeemable Warrants offered hereby. To the
extent that the Underwriters exercise such option, each of the Underwriters will
have, subject to certain conditions, a firm commitment, as set forth in the
Underwriting Agreement, to purchase approximately the same percentage of the
additional Shares and Redeemable Warrants that the number of Shares and
Redeemable Warrants to be purchased by it shown in the above table bears to
1,800,000 and the Company will be obligated, pursuant to the option, to sell
such Shares and Redeemable Warrants to the Underwriters.

The Company has agreed to grant to the Representative, effective upon the
closing of this Offering, the right to nominate from time to time one individual
to be a director of the Company or to have an individual selected by the
Representative attend all meetings of the Board of Directors of the Company as a
non-voting advisor. The Company has agreed to indemnify and hold harmless such

68
<PAGE>
director or advisor to the maximum extent permitted by law in connection with
such individual's service as a director or advisor. At this time, however, the
Representative has waived his right to nominate a director.

The Company has agreed to pay to the Representative a non-accountable
expense allowance equal to 3% of the gross proceeds from the sale of all Shares
and Redeemable Warrants offered hereby, including Shares and Redeemable Warrants
sold to cover over-allotments, if any. The Company has agreed to sell to the
Representative for an aggregate of $100 the Representative's Warrants to
purchase up to 180,000 shares of Common Stock at an exercise price of 120% of
the initial public offering price per share of Common Stock. The
Representative's Warrants may not be transferred for one year, except to
officers or partners of the Representative, and are exercisable during the
four-year period commencing one year from the date of this Prospectus. The
Representative's Warrants grant to the holder(s) thereof piggy-back and demand
registration rights for a period of seven years and five years, respectively,
after the date of this Prospectus with respect to the Representative's Warrants
and the securities issuable upon exercise of the Representative's Warrants. The
demand registration rights require the Company to prepare and file two
registration statements covering the sale of the Representative's Warrants and
the securities issuable upon exercise of the Representative's Warrants, one of
which is to be prepared at the expense of the Company.

With the exception of the securities purchased by Mr. Schneider in the
September 1995 private placement and 39,258 shares owned by Mr. Grumman, all of
the Company's officers and directors have agreed not to directly or indirectly
offer, offer to sell, sell, grant an option to purchase or sell, transfer,
assign, pledge, hypothecate or otherwise encumber any shares of Common Stock
owned by them for a period of one year from the date of this Prospectus without
the prior written consent of the Representative. Notwithstanding the foregoing,
in addition to the aforementioned 39,258 shares owned by Mr. Grumman, Mr.
Grumman will be permitted to sell 7,500 shares of Common Stock per month during
the one year lock-up period provided that Mr. Grumman sells all such shares of
Common Stock through the Representative at prevailing market prices or in block
transactions at negotiated prices, with usual and customary discounts,
concessions or commissions.

The Company has agreed, in connection with the exercise of Redeemable
Warrants pursuant to solicitation by the Representative (commencing one year
from the date of this Prospectus), to pay to the Representative a fee of 5% of
the Redeemable Warrant exercise price for each Redeemable Warrant exercised,
provided, however, that the Representative will not be entitled to receive such
compensation in any Redeemable Warrant exercise transactions in which (i) the
market price of the Common Stock of the Company at the time of exercise is lower
than the exercise price of the Redeemable Warrants; (ii) the Redeemable Warrants
are held in any discretionary account; (iii) disclosure of compensation
arrangements is not made, in addition to the disclosure provided in this
Prospectus, in documents provided to holders of the Redeemable Warrants at the
time of exercise; (iv) the exercise of the Redeemable Warrants is unsolicited;
(v) the Company has already called the Redeemable Warrants for redemption; and
(vi) the solicitation of exercise of the Redeemable Warrants was in violation of
Rule 10b-6 promulgated under the Securities Exchange Act of 1934, as amended. In
addition, unless granted an exemption by the Commission from Rule 10b-6, the
Representative will be prohibited from engaging in any market-making activities
or solicited brokerage activities with regard to the Company's securities during
the period prescribed by Rule 10b-6 before the solicitation of the exercise of
any Redeemable Warrant until the later of (i) the termination of such
solicitation activity or (ii) the termination by waiver or otherwise of any
right the Representative may have to receive a fee for the exercise of the
Redeemable Warrants following such solicitations. The Company has agreed not to
solicit warrant exercises other than through the Representative.

The Representative has informed the Company that no sales to any accounts
over which it exercises discretionary authority will be made in this Offering.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.

69
<PAGE>
Prior to this Offering, there has not been an established public market for
the Common Stock or Redeemable Warrants. The initial public offering price of
the Shares and Redeemable Warrants offered hereby and the exercise price and
other terms of the Representative's Warrants have been determined by
negotiations between the Company and the Representative. The major factors
considered in determining the public offering price of the Shares and the
Redeemable Warrants were the prevailing market conditions, the market prices
relative to earnings, cash flow and assets for publicly traded common stocks of
comparable companies, the sales and earnings of the Company and comparable
companies in recent periods, the Company's earning potential, the experience of
its management and the position of the Company in the industry.

For certain transactions between the Company and the Representative, see
"Certain Transactions -- Pietro's and Other Proposed Acquisitions."

LEGAL MATTERS

The validity of the issuance of the Common Stock and Redeemable Warrants
offered hereby will be passed upon for the Company by Jeffer, Mangels, Butler &
Marmaro LLP, Los Angeles, California. Certain legal matters will be passed upon
for the Underwriters by Kaye, Scholer, Fierman, Hays & Handler, LLP, Los
Angeles, California.

EXPERTS

The consolidated balance sheet of Chicago Pizza & Brewery, Inc. as of
December 31, 1995, the combined statements of operations, shareholders' equity
and cash flows for the year ended December 31, 1994 and the consolidated
statements of operations, shareholders' equity and cash flows for the year ended
December 31, 1995, included in this Prospectus and Registration Statement, have
been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

The combined balance sheet of Pietro's Corp.'s Business Related to Purchased
Assets as of December 25, 1995 and the combined statements of operations, equity
and cash flows for the year ended December 26, 1994 and the year ended December
25, 1995, included in this Prospectus and Registration Statement, have been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a registration statement under the Securities
Act with respect to the Shares and Redeemable Warrants. This Prospectus omits
certain information contained in said registration statement as permitted by the
rules and regulations of the Commission. For further information with respect to
the Company and the Common Stock and Redeemable Warrants, reference is made to
such registration statement, including the exhibits thereto. Statements
contained herein concerning the contents of any contract or any other document
are not necessarily complete, and in each instance, reference is made to such
contract or other document filed with the Commission as an exhibit to the
registration statement, or otherwise, each such statement being qualified in all
respects by such reference. The registration statement, including exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at the Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and at the New York Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

70
<PAGE>
CHICAGO PIZZA & BREWERY, INC.

INDEX TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS

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

PAGE
----
Report Of Independent Accountants......................................... F-2
Consolidated Balance Sheets As Of December 31, 1995, June 30, 1996
(Unaudited) And June 30, 1996 (Unaudited Pro Forma)...................... F-3
Combined Statement Of Operations For The Year Ended December 31, 1994 And
Consolidated Statements Of Operations For The Year Ended December 31,
1995 And For The Six-Month Periods Ended June 30, 1995 (Unaudited) And
1996 (Unaudited)......................................................... F-4
Combined Statement Of Shareholders' Equity For The Year Ended December 31,
1994 And Consolidated Statements Of Shareholders' Equity For The Year
Ended December 31, 1995 And For The Six-Month Period Ended June 30, 1996
(Unaudited).............................................................. F-5
Combined Statement Of Cash Flows For The Year Ended December 31, 1994 And
Consolidated Statements Of Cash Flows For The Year Ended December 31,
1995 And For The Six-Month Periods Ended June 30, 1995 (Unaudited) And
1996 (Unaudited)......................................................... F-6
Notes To Combined And Consolidated Financial Statements................... F-7

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

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

To the Investors and Shareholders
Chicago Pizza & Brewery, Inc.

We have audited the accompanying consolidated balance sheet of Chicago Pizza
& Brewery, Inc., as identified in Note 1 of the Notes To Combined And
Consolidated Financial Statements (referred to as the "Company"), as of December
31, 1995, and the related combined and consolidated statements of operations,
shareholders' equity, and cash flows for the years ended December 31, 1994 and
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Chicago Pizza &
Brewery, Inc. as of December 31, 1995, and the combined and consolidated results
of their operations and their cash flows for the years ended December 31, 1994
and 1995, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Los Angeles, California
June 14, 1996

F-2
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
CONSOLIDATED BALANCE SHEETS

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

ASSETS:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------ JUNE 30, JUNE 30,
1996 1996
----------- -----------
(UNAUDITED) (UNAUDITED
PRO FORMA)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents........................................... $ 1,791,769 $ 994,979 $ 994,979
Restricted cash..................................................... 200,000
Accounts receivable................................................. 11,100 101,124 101,124
Inventory........................................................... 62,525 215,542 215,542
Prepaids and other current assets................................... 285,432 1,170,027 877,527
------------ ----------- -----------
Total current assets............................................ 2,350,826 2,481,672 2,189,172
Property and equipment, net........................................... 1,870,531 5,507,150 5,507,150
Other assets.......................................................... 163,608 548,781 548,781
Restricted cash....................................................... 562,116 562,116
Intangible assets, net................................................ 5,558,244 5,790,349 5,790,349
------------ ----------- -----------
Total assets.................................................... $ 9,943,209 $14,890,068 $14,597,568
------------ ----------- -----------
------------ ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable.................................................... $ 446,597 $ 1,530,434 $ 1,530,434
Accrued expenses.................................................... 900,326 1,769,969 1,694,969
Notes payable to related parties.................................... 967,474 4,066,409 1,066,409
Notes payable, current.............................................. 268,235 268,235
Current portion of obligations under capital lease.................. 14,655 53,047 53,047
------------ ----------- -----------
Total current liabilities....................................... 2,329,052 7,688,094 4,613,094
Notes payable to related parties...................................... 3,122,761 2,726,938 2,726,938
Obligations under capital lease....................................... 22,239 113,707 113,707
Notes payable......................................................... 918,332 918,332
Minority interest in partnerships..................................... 252,541 253,984 253,984
Other liabilities..................................................... 193,167 190,308 190,308
------------ ----------- -----------
Total liabilities............................................... 5,919,760 11,891,363 8,816,363
------------ ----------- -----------
Commitments (Note 8)
Shareholders' equity:
Preferred stock, 5,000,000 shares authorized, none issued or
outstanding
Common stock, no par value, 20,000,000 and 60,000,000 shares
authorized as of December 31, 1995 and June 30, 1996, respectively,
3,788,878 shares issued and outstanding as of December 31, 1995 and
June 30, 1996 and 4,608,321 shares (unaudited pro forma) as of June
30, 1996........................................................... 5,568,467 5,568,467 8,412,842
Capital surplus..................................................... 278,750 328,750 559,375
Accumulated deficit................................................. (1,823,768) (2,898,512) (3,191,012)
------------ ----------- -----------
Total shareholders' equity...................................... 4,023,449 2,998,705 5,781,205
------------ ----------- -----------
Total liabilities and shareholders' equity...................... $ 9,943,209 $14,890,068 $14,597,568
------------ ----------- -----------
------------ ----------- -----------
</TABLE>

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

F-3
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS

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

<TABLE>
<CAPTION>
FOR THE YEARS ENDED SIX-MONTH PERIODS ENDED
DECEMBER 31, JUNE 30,
----------------------- -----------------------
1994 1995 1995 1996
---------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.............................................................. $6,452,582 $ 6,586,195 $3,207,366 $ 8,308,054
Cost of sales......................................................... 1,638,068 1,848,282 894,209 2,614,190
---------- ----------- ---------- -----------
Gross profit.................................................... 4,814,514 4,737,913 2,313,157 5,693,864
---------- ----------- ---------- -----------
Costs and expenses:
Labor and benefits.................................................. 2,706,463 2,647,089 1,269,058 3,088,130
Occupancy........................................................... 653,804 654,138 313,649 695,716
Operating expenses.................................................. 1,330,750 1,249,418 650,313 1,387,751
General and administrative.......................................... 473,699 878,681 330,753 832,926
Depreciation and amortization....................................... 173,449 359,282 181,516 377,243
---------- ----------- ---------- -----------
Total cost and expenses......................................... 5,338,165 5,788,608 2,745,289 6,381,766
---------- ----------- ---------- -----------
Loss from operations............................................ (523,651) (1,050,695) (432,132) (687,902)
Other income (expense):
Interest expense, net............................................... (118,841) (471,653) (381,167) (385,659)
Other............................................................... (33,741) (104,000) 7,342
---------- ----------- ---------- -----------
Total other expense............................................. (152,582) (575,653) (381,167) (378,317)
---------- ----------- ---------- -----------
Loss before minority interest and taxes......................... (676,233) (1,626,348) (813,299) (1,066,219)
Minority interest in partnerships..................................... 132,165 26,828 17,405 (1,444)
---------- ----------- ---------- -----------
Loss before taxes............................................... (544,068) (1,599,520) (795,894) (1,067,663)
Income tax expense.................................................... (6,400) (6,400) (2,400) (7,081)
---------- ----------- ---------- -----------
Net loss........................................................ $ (550,468) $(1,605,920) $ (798,294) $(1,074,744)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
Net loss per common share........................................... $ (0.55) $ (0.32) $ (0.28)
----------- ---------- -----------
----------- ---------- -----------
Weighted average of common shares outstanding....................... 2,935,819 2,502,547 3,788,878
----------- ---------- -----------
----------- ---------- -----------
</TABLE>

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

F-4
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

<TABLE>
<CAPTION>
CHICAGO PIZZA &
BREWERY, INC. COMMON ROMAN SYSTEMS
STOCK COMMON STOCK PARTNER'S
--------------------- CAPITAL ----------------- CAPITAL ACCUMULATED
SHARES AMOUNT SURPLUS SHARES AMOUNT (DEFICIT) DEFICIT TOTAL
--------- ---------- -------- ------- -------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993.............. 1,395,840 20,000 $ 10,000 $ 392,112 $ (462,793) $ (60,681)
Partner distributions................. (186,531) (186,531)
Net loss.............................. (166,726) (383,742) (550,468)
Common stock issued for purchase of
Limited Partnerships................. 226,824 $ 170,118 170,118
--------- ---------- -------- ------- -------- --------- ----------- -----------
Balance, December 31, 1994.............. 1,622,664 170,118 20,000 10,000 38,855 (846,535) (627,562)
Adjustment to consolidate previously
combined entities.................... (20,000) (10,000) (38,855) 628,687 579,832
Common stock issued for consulting
services............................. 69,792 52,344 52,344
Common stock issued for the purchase
of Roman Systems..................... 348,960 261,720 261,720
Common stock issued for private
placement offerings (net of issuance
costs of $953,812)................... 1,747,462 5,084,285 5,084,285
Warrants issued for financing......... $ 42,000 42,000
Warrants issued for private placement
offerings............................ 236,750 236,750
Net loss.............................. (1,605,920) (1,605,920)
--------- ---------- -------- ------- -------- --------- ----------- -----------
Balance, December 31, 1995.............. 3,788,878 5,568,467 278,750 (1,823,768) 4,023,449
Net loss (unaudited).................. (1,074,744) (1,074,744)
Warrants issued for consulting........ 50,000 50,000
--------- ---------- -------- ------- -------- --------- ----------- -----------
Balance, June 30, 1996 (unaudited)...... 3,788,878 $5,568,467 $328,750 $(2,898,512) $ 2,998,705
--------- ---------- -------- ------- -------- --------- ----------- -----------
--------- ---------- -------- ------- -------- --------- ----------- -----------
</TABLE>

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

F-5
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

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

<TABLE>
<CAPTION>
FOR THE YEARS ENDED SIX-MONTH PERIODS ENDED
DECEMBER 31, JUNE 30,
------------------------ ------------------------
1994 1995 1995 1996
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss.................................................. $ (550,468) $(1,605,920) $ (798,294) $(1,074,744)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization........................... 173,449 359,282 181,516 377,243
Minority interest in partnership........................ (132,165) (26,828) (17,405) 1,444
Noncash interest expense on private placement offering
notes.................................................. 166,847 166,847
Noncash payment of Director fees........................ 21,000
Noncash interest and consulting expense on private
placement offerings warrants........................... 8,000 8,000 50,000
Changes in assets and liabilities:
Accounts receivable................................... (15,913) 4,850 (5,494) (2,756)
Inventory............................................. (20,218) 4,313 2,850 27,932
Prepaids and other current assets..................... 41,140 (227,381) (23,140) (724,096)
Other assets.......................................... (556,054) 142,238 (33,481) (220,416)
Accounts payable...................................... 264,005 (31,713) (174,305) 856,057
Accrued expenses...................................... 539,251 212,040 (18,056) 311,581
Other liabilities..................................... 103,770 176,520
----------- ----------- ----------- -----------
Net cash used in operating activities............... (256,973) (973,272) (607,192) (221,235)
----------- ----------- ----------- -----------
Cash flows provided by (used in) investing activities:
Acquisition of Roman Systems and limited partnership
interests................................................ (4,421,142) (4,421,142)
Acquisition of Chicago Pizza Northwest.................... (2,591,208)
Acquisition of Brea, California micro-brewery leasehold
interest................................................. (930,400)
Purchases of equipment.................................... (1,000,944) (710,532) (496,333) (1,367,060)
Capitalized leases........................................ (145,249)
Receivable from related party............................. 4,372
Proceeds from Abby's sale, net of expenses................ 950,000
----------- ----------- ----------- -----------
Net cash used in investing activities............... (996,572) (5,131,674) (4,917,475) (4,083,917)
----------- ----------- ----------- -----------
Cash flows provided by (used in) financing activities:
Borrowings on related party debt.......................... 1,127,672 4,988,113 3,746,113 3,100,000
Borrowing on short-term debt.............................. 227,912
Borrowing on long-term debt............................... 750,771
Payments on related party debt............................ (135,918) (2,096,587) (495,149) (396,888)
Payments on debt.......................................... (303,293)
Increase in capital lease obligations..................... 145,249
Transfer to restricted cash............................... (200,000)
Capital lease payments.................................... (13,392) (11,888) (6,072) (15,389)
Financing costs for private placement offering............ (953,812)
Proceeds from stock issuance.............................. 5,871,250 2,133,445
Proceeds from warrants.................................... 249,750 123,688
Contributions from partners............................... 386,000
Distributions to partners................................. (82,991)
Debt issued for private placement offerings............... 1,250,000
----------- ----------- ----------- -----------
Net cash provided by financing activities........... 1,281,371 7,846,826 6,752,025 3,508,362
----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents........................................ 27,826 1,741,880 1,227,358 (796,790)
Cash and cash equivalents, beginning of period.............. 22,063 49,889 49,889 1,791,769
----------- ----------- ----------- -----------
Cash and cash equivalents, end of period.................... $ 49,889 $ 1,791,769 $ 1,277,247 $ 994,979
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>

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

F-6
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS

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

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION:

Chicago Pizza & Brewery, Inc. (the "Company") was formed in 1991 by Mr.
Jeremiah Hennessy and Mr. Paul Motenko (the "Owners") to operate and manage five
existing "BJ's Chicago Pizzeria" restaurants in Southern California owned by
Roman Systems, Inc. ("Roman Systems") under a Management Agreement (the
"Management Agreement") with Roman Systems. Pursuant to the Management
Agreement, the Company had the right and obligation to open, operate and manage
BJ's Chicago Pizzeria restaurants. In 1992, the Owners formed CPA-BG, Inc.
("CPA-BG") and opened two restaurants with CPA-BG as the general partner of BJ's
Belmont Shore, L.P. and BJ's La Jolla, L.P. in 1992 and 1993, respectively. In
1994, the Company opened two BJ's Chicago Pizzeria restaurants in Huntington
Beach and Seal Beach. Additionally, in 1994, the Company opened a restaurant in
Lahaina, Hawaii as a limited partner of BJ's Lahaina, L.P. The general partners
of BJ's Lahaina, L.P. were CPA010, Inc. ("CPA010"), which was formed by the
Owners, and Blue Max, Inc. ("Blue Max").

Effective January 1, 1995, pursuant to the Asset Purchase Agreement between
the Company and Roman Systems (the "Asset Purchase Agreement"), the Company
purchased the three existing BJ's Chicago Pizzeria restaurants operated and
managed under the Management Agreement and terminated the Management Agreement.
As part of the Asset Purchase Agreement, the Company assumed responsibility for
closing two of Roman Systems' existing BJ's Chicago Pizzeria restaurants in
Santa Ana and San Juan Capistrano, California and assumed the net liabilities
related thereto. These restaurants were closed in 1995.

Effective January 1, 1995, the Company purchased the limited partnership
interests of BJ's Belmont Shore, L.P. and BJ's La Jolla, L.P. The general
partnership interests of CPA-BG were transferred to the Company for no
consideration prior to the acquisition of the limited partnership interests. The
general partnership interests in BJ's Lahaina, L.P. were also transferred to the
Company for no consideration. Additionally, the Company closed a BJ's Chicago
Pizzeria restaurant in 1995. As of December 31, 1995, the Company owned seven
BJ's Chicago Pizzeria restaurants, all in coastal locations in Southern
California and Hawaii.

As a result, the accompanying combined financial statements as of and for
the year ended December 31, 1994 have been presented on a combined basis due to
common ownership and management and for historical comparison purposes. The
combination of companies was accounted for in a manner similar to a pooling of
interests. The combined financial statements for the year ended December 31,
1994 include the accounts of the Company, Roman Systems, CPA-BG, BJ's Belmont
Shore, L.P., BJ's La Jolla, L.P., BJ's Lahaina, L.P., CPA010, and Blue Max. The
accompanying financial statements of the Company as of and for the year ended
December 31, 1995 are presented on a consolidated basis, and include the
accounts of the Company and BJ's Lahaina, L.P. All significant intercompany
transactions and balances have been eliminated.

On March 29, 1996, the Company acquired 26 restaurants located in Oregon and
Washington by providing the funding for the Debtor's (Pietro's Corp.) Plan of
Reorganization, Dated February 29, 1996, as modified (the "Debtor's Plan") and
thereby acquired all the stock in the reorganized entity known as Chicago Pizza
Northwest, Inc. ("CPNI"). The Debtor's Plan was confirmed by an order of the
Bankruptcy Court on March 18, 1996 and the Company funded the Debtor's Plan on
March 29, 1996. The June 30, 1996 unaudited financial statements include the
results of the 26 restaurants from the date they were acquired. However the
results for seven of the restaurants, which were sold during the second quarter
of 1996, as described below, are only included through the date of their sale.

F-7
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
On May 15, 1996 the Company agreed to sell seven of the restaurants
purchased from Pietro's Corp. Two of the restaurants were sold on May 31, 1996,
two additional restaurants were sold on June 24, 1996 and three additional
restaurants were sold on June 26, 1996. The operating results for the seven
restaurants sold were included in the Company's consolidated operating results
for the period they were owned by the Company. No gain or loss was recognized on
the sale of the restaurants.

CASH AND CASH EQUIVALENTS:

Cash and cash equivalents consist of highly liquid investments with an
original maturity of three months or less when purchased. Cash and cash
equivalents are stated at cost, which approximates market value.

RESTRICTED CASH:

During 1995, in connection with the Westwood property lease, the Company
deposited $200,000 into a restricted cash account, which could not be eliminated
without the written consent of the lessor. The landlord consent was obtained in
1996 and the restriction was eliminated.

In 1996, as part of the acquisition of the Brea restaurant location, the
Company assumed an existing bank loan with the condition that a $200,000
certificate of deposit be restricted as collateral. Additionally, a $362,116
restricted certificate of deposit for Washington State Workers' Compensation
insurance was acquired in the Pietro's acquisition.

INVENTORY:

Inventory is stated at the lower of cost (first-in, first-out) or market and
is comprised primarily of food and beverages for the restaurant operations.

PROPERTY AND EQUIPMENT:

Property and equipment are recorded at cost. Renewals and betterments that
materially extend the life of an asset are capitalized while maintenance and
repair costs are charged to operations as incurred. When property and equipment
are sold or otherwise disposed of, the asset account and related accumulated
depreciation and amortization accounts are relieved, and any gain or loss is
included in operations.

Depreciation and amortization is computed using the straight-line method
over the estimated useful lives of the related assets or, for leasehold
improvements, over the term of the lease, if less. The following are the
estimated useful lives:

<TABLE>
<S> <C>
Furniture and fixtures....................................... 7 years
Equipment.................................................... 7-10 years
Leasehold improvements....................................... 7 to 25 years
</TABLE>

Smallwares are capitalized upon the opening of a new restaurant. All
subsequent purchases of smallwares are expensed as incurred.

LEASES:

F-8
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liabilities is recorded to effect constant rates over the terms of the leases.
Leases that do not meet the criteria for capitalization are classified as
operating leases and rentals are charged to expense as incurred.

PREPAIDS AND OTHER CURRENT ASSETS:

The Company capitalizes restaurant preopening costs which include the direct
and incremental costs associated with the opening of a new restaurant. These are
primarily costs incurred to develop new restaurant management teams, and the
food, beverage and supply costs incurred to perform testing of all equipment,
concept, systems and recipes. The capitalized costs are amortized on a
straight-line basis over a period of one year, beginning on the restaurant's
opening date. Preopening costs totaled $68,405 and $283,726 as of December 31,
1995 and June 30, 1996 (unaudited), respectively.

The costs related to a potential public offering are being deferred and will
be netted against offering proceeds, if successful. As of December 31, 1995 and
June 30, 1996 costs totaling $108,000 and $263,941, respectively, have been
deferred.

INTANGIBLE ASSETS:

Goodwill from the acquisition of the net assets of Roman Systems and the
acquisition of the limited partnership interests of BJ's Belmont Shore, L.P. and
BJ's La Jolla, L.P. as of January 1, 1995 as well as the acquisition of Pietro's
as of March 29, 1996 represents the excess of cost over fair value of net assets
acquired and is being amortized over 40 years using the straight-line method.
The cost of acquiring the trademark for BJ's Chicago Pizzeria from Roman Systems
is being amortized over 10 years.

During 1994, the Company obtained the lease rights to open a BJ's Chicago
Pizzeria restaurant in Lahaina. The original lessee of the property has a
sublease of the property to Blue Max. The Company purchased the stock of Blue
Max to acquire the sole assets of the Company, the liquor license for Lahaina.
The total amount paid was $100,000 which consisted of $25,000 for the liquor
license, $25,000 to obtain the lease and $50,000 for the covenant not to
compete. The lease right and the covenant not to compete are being amortized
over 8.5 years, using the straight-line method. The Company periodically
evaluates the carrying value of goodwill including the related amortization
periods. The Company determines whether there has been impairment by comparing
the anticipated undiscounted future operating income of the acquired restaurants
with the carrying value of the goodwill.

INCOME TAXES:

For the year ended December 31, 1994, the Company consisted of three "C"
corporations (Chicago Pizza & Brewery, CPA010 and Blue Max), two "S"
corporations (CPA-BG and Roman Systems), and three limited partnerships (BJ's
Lahaina, L.P., BJ's Belmont, L.P. and BJ's La Jolla, L.P.). The C corporations
are taxed on their taxable income by the state and federal governments. Under
the S corporation provisions, the companies do not pay federal corporate income
taxes on their taxable incomes. Instead, the shareholder is individually liable
for federal income taxes based on the individual company's taxable income. This
election is also valid for state income tax reporting. However, a provision for
state income taxes is required based on a 1.5% state tax rate on taxable income.
The limited partnerships are required to pay a District of Columbia
unincorporated business tax on its taxable income and a California minimum tax.
For the year ended December 31, 1995, the Company

F-9
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
operated on a consolidated basis as a "C" corporation (Chicago Pizza & Brewery).
BJ's Lahaina, L.P. operated as a limited partnership. In the first quarter of
1996, the Company acquired Chicago Pizza Northwest, Inc.

The Company utilizes Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred income taxes are recognized for the tax consequences in
future years of differences between the tax bases of assets and liabilities and
their financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which differences are expected
to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized. The
provision for income taxes represents the tax payable for the period and the
change during the period in deferred tax assets and liabilities.

MINORITY INTEREST:

For the combined and consolidated financial statements as of December 31,
1994, minority interest represents limited partners' interests totaling 46.32%
for BJ's Lahaina, L.P. and 50% for BJ's Belmont Shore, L.P. and BJ's La Jolla,
L.P.

For the consolidated financial statements as of December 31, 1995 and June
30, 1996, minority interest represents limited partners' interests totalling
46.32% for BJ's Lahaina, L.P.

USE OF ESTIMATES:

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions for the reporting period and as of the financial statement date.
These estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported amounts of revenues and expenses. Actual results could differ from
those estimates.

PER SHARE INFORMATION:

Per share information is based on the weighted average number of common
shares outstanding and the dilutive effect of common share equivalents, if any.

STOCK SPLIT:

In December 1994 and May 1995, the Board of Directors declared a
19,000-for-1 stock split and a .34896-for-1 reverse stock split, respectively,
of the Company's common stock. All references to the number of shares and per
share amounts have been adjusted to give retroactive effect to the stock splits
for all periods presented.

RECENTLY ISSUED ACCOUNTING STANDARDS:

In March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used, and for
long-lived assets and certain identifiable intangibles to be disposed of. The
Company is required to adopt the provisions of SFAS No. 121 for 1996, and the
Company believes that upon its adoption there should be no impact to results of
operations.

F-10
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In November 1995, the FASB also issued SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 establishes new
accounting standards for the measurement and recognition of stock-based awards.
SFAS No. 123 permits entities to continue to use the traditional accounting for
stock-based awards prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees" however, under this option, the Company will be required to
disclose the pro forma effect of stock-based awards on net income and earnings
per share as if SFAS No. 123 had been adopted. SFAS No. 123 is effective for
1996. The Company intends to use the provisions of APB Opinion No. 25 in
accounting for stock-based awards. As such, this standard will have no impact on
the Company's results of operations upon adoption.

Other recently issued standards of the FASB are not expected to affect the
Company as conditions to which those standards apply are absent.

INTERIM RESULTS (UNAUDITED):

The accompanying consolidated balance sheet as of June 30, 1996 and the
consolidated statements of operations and cash flows for the six month periods
ended June 30, 1996 and 1995, and the statement of equity for the six month
period ended June 30, 1996 are unaudited. In the opinion of management, these
statements have been prepared on the same basis as the audited consolidated
financial statements and include all adjustments, consisting of only normal
recurring adjustments necessary for the fair presentation of results of the
interim periods. The data disclosed in these notes to the consolidated financial
statements for those interim periods are also unaudited.

BUSINESS OPERATIONS

The Company has incurred net losses during its organization and acquisition
of restaurants. While many of these costs were created by the ramping-up of the
organization and restaurant concept development, including a more expansive
menu, food testing, and micro-brewery concepts, management believes that such
costs will be reduced in the future. Management's plans for a return to
profitability include increasing sales through a more expansive menu and
refurbishing of restaurants in the Northwest, increasing micro-brew beer sales,
reducing the cost of sales through vendor volume purchases, reducing general and
administrative costs by consolidation of the Company's existing corporate
structure and CPNI's corporate structure and reduction of interest expense
through use of a portion of the proceeds of the potential initial public
offering to pay off debt.

While there can be no assurance that management plans, if executed, will
return the Company to profitability, management believes their plans provide the
Company with a strong base to accomplish their goals.

2. CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to a
concentration of credit risk, as defined by SFAS No. 105 "Disclosure of
Information about Financial Instruments with Off-Balance Sheet Risk and
Concentrations of Credit Risk," principally consist of cash and cash
equivalents. The Company maintains its cash accounts at various California and
Hawaii banking institutions. At times, cash balances may be in excess of the
FDIC insurance limit. Cash equivalents represent tax-exempt money market funds.

F-11
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of:

<TABLE>
<CAPTION>
JUNE 30,
1996
DECEMBER 31, --------------
1995
-------------- (UNAUDITED)
<S> <C> <C>
Furniture and fixtures................................................ $ 96,349 $ 236,190
Equipment............................................................. 618,101 2,148,455
Leasehold improvements................................................ 1,421,939 3,570,074
-------------- --------------
2,136,389 5,954,719
Less, accumulated depreciation and amortization....................... (265,858) (510,955)
Construction in progress.............................................. -- 63,386
-------------- --------------
$ 1,870,531 $ 5,507,150
-------------- --------------
-------------- --------------
</TABLE>

4. INTANGIBLE ASSETS
Intangible assets consisted of the following as of:

<TABLE>
<CAPTION>
JUNE 30,
1996
DECEMBER 31, --------------
1995
-------------- (UNAUDITED)
<S> <C> <C>
Goodwill.............................................................. $ 5,555,128 $ 5,798,251
Trademark............................................................. 38,000 48,000
Covenant not to compete............................................... 50,000 50,000
Lease right for Lahaina lease......................................... 25,000 25,000
Liquor licenses....................................................... 45,000 65,000
-------------- --------------
5,713,128 5,986,251
Less, accumulated amortization........................................ 154,884 195,902
-------------- --------------
$ 5,558,244 $ 5,790,349
-------------- --------------
-------------- --------------
</TABLE>

5. ACCRUED EXPENSES
Accrued expenses consisted of the following as of:

<TABLE>
<CAPTION>
JUNE 30,
1996
DECEMBER 31, --------------
1995
------------- (UNAUDITED)
<S> <C> <C>
Accrued professional fees............................................. $ 216,151 $ 84,932
Accrued rent.......................................................... 215,271 274,551
Payroll related liabilities........................................... 116,854 670,815
Accrued interest...................................................... 33,308 180,256
Other................................................................. 318,742 559,415
------------- --------------
$ 900,326 $ 1,769,969
------------- --------------
------------- --------------
</TABLE>

F-12
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

6. DEBT

RELATED PARTY DEBT:

Related party short-term debt consisted of the following as of:

<TABLE>
<CAPTION>
JUNE 30,
1996
DECEMBER 31, ---------------
1995
------------- (UNAUDITED)
<S> <C> <C>
Note payable to related party, with interest rate of 6%, due on
demand, collateralized by the property and equipment of BJ's
Huntington Beach restaurant.......................................... $ 350,000 $ 200,000
Note payable to Paul Motenko, with interest rate of 6%, due on
demand............................................................... 74,686 78,527
Notes payable to related parties which are convertible as to principal
and accrued interest thereon (automatically at the closing of an
initial public offering) to 750,000 shares of common stock and
warrants to purchase 4,500,000 shares of Common Stock, with an
interest rate of 10%, collateralized by the stock of CPNI. The terms
of the warrants provide that, if the Company consummates an initial
public offering which includes warrants, then the warrants are
automatically converted into warrants included in an initial public
offering, exercisable at 110% of the price per share of Common Stock
in the initial public offering....................................... 3,000,000
Note payable to related party, with interest rate of 19%, due on
September 5, 1996.................................................... 100,000
------------- ---------------
Total related party short-term debt................................... $ 424,686 $ 3,378,527
------------- ---------------
------------- ---------------
</TABLE>

Related party long-term debt consisted of the following as of:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
-------------- JUNE 30,
1996
------------
(UNAUDITED)
<S> <C> <C>
Note payable to related party, with interest rate of 12%, maturing on
March 22, 1998....................................................... $ 31,021 $ 24,691
Note payable to Roman Systems, with interest rate of 7%, maturing
April 1, 2004, collateralized by the BJ's Laguna, BJ's La Jolla and
BJ's Balboa restaurants.............................................. 3,487,528 3,269,573
Note payable to Roman Systems, with interest rate of 2.25% plus the
bank's reference rate (8.5% at December 31, 1995 and 8.25% at June
30, 1996), due in monthly installments of $3,500, maturing June 1,
1999................................................................. 147,000 120,556
-------------- ------------
Total long-term related party debt.................................... 3,665,549 3,414,820
Less, current portion................................................. 542,788 687,882
-------------- ------------
$ 3,122,761 $ 2,726,938
-------------- ------------
-------------- ------------
</TABLE>

F-13
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

6. DEBT (CONTINUED)
Total interest incurred during the years ended December 31, 1994 and 1995,
and the six-month period ended June 30, 1996 was approximately $120,000,
$532,000 and $416,000 (unaudited), respectively. Future maturities of related
party debt for each of the five years subsequent to December 31, 1995 and
thereafter are as follows:

<TABLE>
<S> <C>
1996........................................................ $ 967,474
1997........................................................ 598,084
1998........................................................ 462,497
1999........................................................ 343,227
2000........................................................ 350,147
Thereafter.................................................. 1,368,806
----------
$4,090,235
----------
----------
</TABLE>

OTHER LONG-TERM DEBT:

Other long-term debt consisted of the following as of June 30, 1996
(Unaudited):

<TABLE>
<S> <C>
Note payable with interest rate of 2% plus the bank's
reference rate (8.25% at June 30, 1996), due in monthly
installments of $12,513, maturing March 1, 2001,
collateralized by $200,000 certificate of deposit maturing
March 1, 1998.............................................. $ 713,231

Notes payable for Pietro's outstanding tax claims as part of
the Debtor's Plan of Reorganization, due in quarterly
installments of $32,670 from July 1, 1996 through April 1,
1997 and $20,071 from July 1, 1997 through June 30, 2001
and varying payments totaling an aggregate of $34,122 from
October 1, 2001 until April 1, 2002. Interest accrues at
8.25%...................................................... 473,336
-----------
1,186,567
Less, current portion....................................... 268,235
-----------
$ 918,332
-----------
-----------
</TABLE>

7. CAPITAL LEASES
The Company leases point of sale and phone equipment under capital lease
arrangements. The equipment related to the capital leases has an original cost
of $53,318 and accumulated amortization

F-14
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

7. CAPITAL LEASES (CONTINUED)
of $7,791 at December 31, 1995. The obligations under capital leases have
interest rates ranging from 6.9% to 13.9% and mature at various dates through
2000. Annual future minimum lease payments for the five years subsequent to
December 31, 1995 are as follows :

<TABLE>
<S> <C>
1996........................................................ $21,131
1997........................................................ 15,240
1998........................................................ 9,927
1999........................................................ 4,347
2000........................................................ 1,764
-------
Total minimum payments.................................. 52,409
Less, amount representing interest.......................... 15,515
-------
Obligations under capital leases........................ 36,894
Less, current portion....................................... 14,655
-------
Long-term portion....................................... $22,239
-------
-------
</TABLE>

8. COMMITMENTS
The Company leases its restaurant and office facilities under noncancelable
operating leases with terms ranging from approximately 7 to 25 years with
renewal options ranging from 5 to 15 years. Rent expense for the years ended
December 31, 1994 and 1995 and for the six-month period ended June 30, 1996 was
$609,531, $547,900 and $602,249 (unaudited), respectively.

The Company has certain operating leases which contain fixed escalation
clauses. Rent expense for these leases has been calculated on a straight-line
basis over the term of the leases. A deferred credit in the amount of $207,605
has been established and included in accrued expenses at December 31, 1995 for
the difference between the amount charged to expense and the amount paid. The
deferred credit will be amortized over the life of the leases.

A number of the leases also provide for contingent rentals based on a
percentage of sales above a specified minimum. Total contingent rentals for the
years ended December 31, 1994 and 1995 and the six-month period ended June 30,
1996 were $50,902, $45,763 and $15,748 (unaudited), respectively.

The following are the future minimum rental payments under noncancelable
operating leases for each of the five years subsequent to December 31, 1995 and
June 30, 1996 and in total thereafter:

<TABLE>
<CAPTION>
JUNE 30,
1996
DECEMBER 31, --------------
1995
------------- (UNAUDITED)

<S> <C> <C>
1996........................................................ $ 628,030 $ 1,644,690
1997........................................................ 699,961 2,063,581
1998........................................................ 715,686 1,803,843
1999........................................................ 700,808 1,561,139
2000........................................................ 651,794 1,181,333
Thereafter.................................................. 1,731,876 6,621,480
------------- --------------
$ 5,128,155 $ 14,876,066
------------- --------------
------------- --------------
</TABLE>

F-15
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

8. COMMITMENTS (CONTINUED)
LEGAL PROCEEDINGS:

The Company is not a party to any pending legal proceedings which it
believes will have a material adverse effect on its consolidated financial
position or consolidated results of operations.

EMPLOYMENT AGREEMENTS:

Effective March 26, 1996, the Company entered into employment agreements
with Paul Motenko and Jeremiah J. Hennessy. The agreements provide for a minimum
annual salary of $135,000 subject to escalation annually in accordance with the
Consumer Price Index and certain benefits through 2004 and may be terminated by
either party. The agreements also contain provisions for additional cash
compensation based on earnings or income of the Company. The agreements contain
provisions which grant the employees the right to receive salary and benefits,
as individually defined, if such employee is terminated by the Company without
cause.

CONSULTING AGREEMENT:

In February 1996 the Company entered into a consulting agreement
("Consulting Agreement") with ASSI, Inc. pursuant to which ASSI, Inc. agrees to
advise the Company with site selection and marketing and development strategy
for penetrating the Las Vegas, Nevada market. In consideration for such
services, the Company shall pay ASSI, Inc. an annual fee equal to 10% of the Net
Profits, as defined, of the acquired Las Vegas, Nevada restaurants. As
additional consideration for consulting services, the Company issued to ASSI,
Inc. an aggregate of 100,000 warrants to purchase shares of common stock of the
Company at an exercise price of $3.85 per share. The Consulting Agreement
expires on December 31, 2000. The terms of the warrants provide that if the
Company consummates an initial public offering which includes warrants, then the
warrants are automatically converted into warrants included in the initial
public offering.

The Company also entered into a consulting agreement ("Pietro's Consulting
Agreement") with ASSI, Inc. regarding the Pietro's Corp. Acquisition (see Note
13). Under this agreement, ASSI, Inc. agrees to advise the Company in connection
with the reconstruction, expansion, marketing and strategic development of the
restaurants acquired from Pietro's Corp. In consideration for such services, the
Company shall pay to ASSI, Inc. an annual fee equal to 5% of Net Profits, as
defined, of the 26 restaurants acquired, 19 of which the Company currently plans
to retain. As additional consideration for the consulting services, the Company
issued to ASSI, Inc. an additional aggregate of 100,000 warrants to purchase
shares of common stock of the Company at an exercise price of $3.85 per share.
The Pietro's Consulting Agreement expires on December 31, 2000. The terms of the
warrants provide that if the Company consummates an initial public offering
which includes warrants, then the warrants are automatically converted into
warrants included in the initial public offering.

9. SHAREHOLDERS' EQUITY

PREFERRED STOCK:

The Company is authorized to issue 5,000,000 shares in one or more series of
preferred stock and to determine the rights, preferences, privileges and
restrictions to be granted to, or imposed upon, any such series, including the
voting rights, redemption provisions (including sinking fund provisions),
dividend rights, dividend rates, liquidation rates, liquidation preferences,
conversion rights and the description and number of shares constituting any
wholly unissued series of preferred stock. The Company's Board of Directors,
without further shareholder approval, can issue preferred stock with rights that
could adversely affect the rights of holders of the Company's common stock. The
issuance

F-16
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

9. SHAREHOLDERS' EQUITY (CONTINUED)
of shares of preferred stock under certain circumstances could have the effect
of delaying or preventing a change of control of the Company or other corporate
action. No shares of preferred stock were outstanding at December 31, 1995 and
June 30, 1996. The Company currently has no plans to issue shares of preferred
stock.

COMMON STOCK:

Shareholders' of the Company's outstanding common stock are entitled to
receive dividends if and when declared by the Board of Directors. Upon
liquidation, dissolution or winding up of the Company, and subject to the
priority of any outstanding preferred stock, the Company's assets legally
available for distribution to shareholders are to be distributable ratably among
the holders of the common stock at the time outstanding. Shareholders are
entitled to one vote for each share of common stock held of record. Pursuant to
the requirements of California law, shareholders are entitled to cumulate votes
in connection with the election of directors.

CAPITAL SURPLUS:

In May 1995, the Company issued warrants to purchase up to 300,000 shares of
common stock at a price of $5.00 per share to each of Barry Grumman, a director
of the Company, and Lexington Ventures, Inc. Each of Mr. Grumman and Lexington
Ventures, Inc. were issued their respective warrants at a price of $0.07 per
warrant or a total price to each of $21,000. Mr. Grumman's liability for payment
of the warrants was extinguished in exchange for past services to the Company as
a Director which had not been compensated. The terms of the warrants provide
that if the Company consummates an initial public offering which includes
warrants to purchase shares of Common Stock, then the warrants issued are
automatically converted into warrants included in the initial public offering.
The proceeds were used for working capital purposes. Proceeds from the valuation
or sale of warrants issued in conjunction with the private placement offerings
totaled $236,750.

PRIVATE PLACEMENTS:

In January 1995, the Company completed a private placement of 17 Units at
$50,000 per Unit, consisting of (i) a Series A Promissory Note in the principal
amount of $50,000 and due December 31, 1995 and (ii) 13,086 shares of common
stock. The net proceeds to the Company of $496,000 (net of issuance costs of
$104,000) were used to finance acquisitions. The Series A Promissory Notes
beared interest, payable quarterly, at a rate of 10% until June 30, 1995 and
13.5% thereafter. The Promissory Notes were repaid in the third quarter of 1995
with proceeds from the June 1995 placement described below.

In March 1995, the Company completed a private placement of 4 Units at
$100,000 per Unit, consisting of (i) a $98,000 promissory note bearing interest
at a rate of 10% per annum with interest and principal due upon the earlier of
completion of an initial public offering of the Company's common stock, or 18
months from the date of issuance and (ii) warrants (valued at a price of $.0573)
to purchase 34,896 shares of common stock at a price of $2.87 per share. The
terms of this private placement provide that if the Company consummates an
initial public offering which includes warrants to purchase shares of Common
Stock, then the warrants issued in this placement are automatically converted
into warrants included in the initial public offering. The net proceeds to the
Company of $400,000 were used for working capital. The promissory notes were
repaid in the third quarter of 1995 with proceeds from the June 1995 private
placement described below.

In September 1995, the Company completed a private placement of 61 Units at
$100,000 per Unit, consisting of (i) 25,000 shares of common stock at a price of
$3.85 per share and (ii) warrants to

F-17
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

9. SHAREHOLDERS' EQUITY (CONTINUED)
purchase 75,000 shares of common stock at an initial exercise price of $3.85 per
share for a price of $0.05 per warrant. The terms of this private placement
provide that if the Company consummates an initial public offering which
includes warrants to purchase shares of Common Stock, then the warrants issued
in this placement are automatically converted into warrants included in the
initial public offering. The net proceeds to the Company of $4,917,438 (net of
issuance costs of $953,812) were used (i) to pay a portion of the acquisition or
development expenses of the Northwest Restaurants, the Westwood Village, Los
Angeles, California restaurant and brew pub site, the Brea, California
restaurant and the Boulder Colorado restaurant totaling in the aggregate
$2,600,000, (ii) to repay debt related to previous offerings, which debt totaled
$1,400,000 and (iii) to remodel the La Jolla Village restaurant, which costs
totaled $225,000. The remaining $1,600,000 was utilized as working capital.

10. INCOME TAXES
The following table presents the current and deferred provision for federal
and state income taxes for the years ended December 31,:

<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Current:
Federal................................................... -- --
State..................................................... $6,400 $6,400
------ ------
6,400 6,400
Deferred:
Federal................................................... -- --
State..................................................... -- --
------ ------
$6,400 $6,400
------ ------
------ ------
</TABLE>

The temporary differences which give rise to deferred tax provision
(benefit) for the years ended December 31, consist of:

<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Property and equipment...................................... $ (26,320) $ (2,547)
Goodwill.................................................... 106,511 --
Accrued liabilities......................................... (109,155) (54,397)
Investment in partnerships.................................. (35,366) 14,962
Net operating losses........................................ (651,142) (134,741)
Other....................................................... (548) --
Change in valuation allowance............................... 716,020 176,723
--------- ---------
$ -- $ --
--------- ---------
--------- ---------
</TABLE>

F-18
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

10. INCOME TAXES (CONTINUED)
The provision (benefit) for income taxes differs from the amount that would
result from applying the federal statutory rate as follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED DECEMBER
31,
---------------
1995 1994
----- -----
<S> <C> <C>
Statutory regular federal income tax rate................... (34.0)% (34.0)%
State income taxes, net of federal benefit.................. -- 0.3
Change in valuation allowance............................... 33.8 27.5
Other....................................................... 0.3 6.6
----- -----
0.1% 0.4%
----- -----
----- -----
</TABLE>

The components of the deferred income tax asset and (liability) as of
December 31 are as follows:

<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Property and equipment...................................... $ 28,867 $ 2,547
Goodwill.................................................... (106,511) --
Accrued liabilities......................................... 163,552 54,397
Investment in partnerships.................................. 20,404 (14,962)
Net operating losses........................................ 785,883 134,741
Other....................................................... 548 --
--------- ---------
892,743 176,723
Valuation allowance......................................... (892,743) (176,723)
--------- ---------
Net deferred income taxes................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>

As of December 31, 1995, the Company had net operating loss carryforwards
for federal and state purposes of approximately $2,034,000 and $1,016,000,
respectively. The net operating loss carryforwards begin expiring in 2010 and
2000, respectively.

The utilization of net operating loss ("NOL") and credit carryforwards may
be limited under the provisions of Internal Revenue Code Section 382, NOL
carryforward limitations with respect to change in ownership, and Section 383,
limitation for credit carryforwards.

11. SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
FOR THE YEARS FOR THE SIX-MONTH
ENDED DECEMBER PERIODS ENDED
31, JUNE 30,
----------------- -----------------
1994 1995 1995 1996
------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash paid for:
Interest.................................................. $73,751 $379,676 $218,235 $269,279
Taxes..................................................... $ -- $ -- $ -- $ 7,081
</TABLE>

F-19
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

11. SUPPLEMENTAL CASH FLOW INFORMATION (CONTINUED)
Supplemental information on noncash investing and financing activities:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX-MONTH
DECEMBER 31, PERIODS ENDED JUNE 30,
---------------------- ----------------------
1994 1995 1995 1996
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Common stock issued for purchase of BJ's Belmont Shore, L.P.
and BJ's La Jolla, L.P..................................... $ 170,118
Equipment purchases under a capital lease................... $ 29,408 $ 20,968 $ 145,249
Common stock or warrants issued for consulting services..... $ 52,344 $ 50,000
Common stock issued for asset purchase of Roman Systems..... $ 261,720
Purchase of CPNI (assumed liabilities)...................... $ 1,411,595
</TABLE>

12. 1996 STOCK OPTION PLAN
The Company adopted the 1996 Stock Option Plan as of August 7, 1996 under
which options may be granted to purchase up to 600,000 shares of common stock.
The 1996 Stock Option Plan provides for the options issued to be either
incentive stock options or non-statutory stock options as defined under Section
422A of the Internal Revenue Code. The exercise price of the shares under the
option shall be equal to or exceed 100% of the fair market value of the shares
at the date of option grant. The 1996 Stock Option Plan expires on June 30, 2005
unless terminated earlier. The options generally vest over a three-year period.
As of June 30, 1996, no options had been issued under the 1996 Stock Option
Plan.

13. ACQUISITIONS AND TRANSFERS

ROMAN SYSTEMS:

Effective January 1, 1995, the Company purchased the net assets of Roman
Systems for $550,000 in cash, issued a note payable totaling $3,746,113, assumed
liabilities totaling $873,344 including loans, accrued salaries and certain
other expenses and paid $130,000 in acquisition costs. Additionally, 348,960
shares of common stock of the Company, valued at $261,720, were issued to the
sellers. The acquisition was accounted for as a purchase.

BELMONT SHORE, L.P. AND LA JOLLA, L.P.:

Effective January 1, 1995, the Company purchased the limited partnership
interests of BJ's Belmont Shore, L.P. and BJ's La Jolla, L.P. The general
partner interests of the above-mentioned Partnerships, held by CPA-BG, were
transferred to the Company for no consideration prior to the closing of the
acquisition of the limited partnership interests. An aggregate 226,824 shares of
common stock of the Company, valued at $170,118, were transferred to the sellers
for the right, title and interest in the limited partnerships in November 1994.
Additionally, the Company assumed liabilities of $207,068 and paid acquisition
costs of $70,000.

BJ'S LAHAINA, L.P.:

Effective January 1, 1995, the general partners of BJ's in Lahaina, L.P.,
CPA010 and Blue Max transferred their general partnership interests to the
Company for no consideration.

PIETRO'S CORP.:

On March 29, 1996, the Company acquired 26 restaurants located in Oregon and
Washington by providing the funding for the Debtor's Plan and thereby acquired
all the stock in the reorganized

F-20
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

13. ACQUISITIONS AND TRANSFERS (CONTINUED)
entity known as Chicago Pizza Northwest, Inc. The Debtor's Plan was confirmed by
an order of the Bankruptcy Court on March 18, 1996 and the Company funded the
Plan on March 29, 1996. The Company paid $2,350,000 to fund the Debtor's Plan
plus acquisition costs of $353,073. Additionally, the Company assumed a $506,006
liability for taxes plus interest which will be paid over six years.

BREA, CALIFORNIA:

On March 27, 1996, the Company completed the acquisition of a restaurant and
brew-pub site in Brea, California. The purchase price totaled $930,400 including
acquisition costs. The restaurant opened as BJ'S PIZZA, GRILL & BREWERY on April
1, 1996.

WESTWOOD, CALIFORNIA:

In 1995, the Company entered into a lease for its Westwood restaurant and
brew-pub location. The site was renovated and opened on March 15, 1996.

ABBY'S SALE:

On May 15, 1996, the Company agreed to sell seven newly acquired Chicago
Pizza Northwest, Inc. restaurants to Abby's Inc. Two of the restaurants were
sold on May 31, 1996 two more were sold on June 24, 1996, and three more were
sold on June 26, 1996. The remaining 19 restaurants will be converted into "BJ'S
PIZZA," "BJ'S PIZZA & GRILL" or "BJ'S PIZZA, GRILL & BREWERY" restaurants.

14. PRO FORMA DATA (UNAUDITED)
Under the terms of the $3,000,000 Convertible Notes (Note 6), conversion of
principal and accrued interest thereon to common stock is simultaneous with the
closing of an underwritten initial public offering of the Company's common stock
resulting in a price per share to the public of at least $5.00 per share. In
addition, the Company paid 13%, or $390,000, for related financing costs which
is recorded as an asset and amortized over the term of the Convertible Notes. As
of June 30, 1996 the unamortized balance totaled $292,500. Accordingly, the pro
forma information has been prepared so as to classify the aforementioned
$3,000,000 principal amount of Convertible Notes and $75,000 of accrued interest
thereon as common stock outstanding (750,000 additional shares outstanding) and
capital surplus, to give effect to the aforementioned expected closing of an
initial public offering of common stock and as a result the $292,500 remaining
unamortized amount of financing costs has been expensed and therefore increases
accumulated deficit.

15. SUBSEQUENT EVENTS
On June 28, 1996, the Company filed a Registration Statement on Form SB-2
relating to a proposed public offering of 1,500,000 shares of Common Stock and
1,500,000 redeemable warrants. The Company anticipates that, if successful, the
offering will be completed in the third quarter of 1996.

F-21
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

INDEX TO COMBINED FINANCIAL STATEMENTS

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

PAGE
----
Report of Independent Accountants......................................... F-23
Combined Balance Sheets As Of December 25, 1995 and March 29, 1996
(Unaudited).............................................................. F-24
Combined Statements Of Operations For The Years Ended December 26, 1994
And December 25, 1995 And For The Three-Month Periods Ended March 27,
1995 (Unaudited) And March 29, 1996 (Unaudited).......................... F-25
Combined Statements of Equity For The Years Ended December 26, 1994 And
December 25, 1995 And For The Three-Month Period Ended March 29, 1996
(Unaudited).............................................................. F-26
Combined Statements Of Cash Flows For The Years Ended December 26, 1994
And December 25, 1995 And For The Three-Month Periods Ended March 27,
1995 (Unaudited) And March 29, 1996 (Unaudited).......................... F-27
Notes To Combined Financial Statements.................................... F-28

F-22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

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

The Board of Directors
Pietro's Corp.

We have audited the accompanying combined balance sheet of Pietro's Corp.'s
Business Related to Purchased Assets as of December 25, 1995, and the related
combined statements of operations, equity and cash flows for the fiscal years
ended December 26, 1994 and December 25, 1995. These combined financial
statements are the responsibility of the management of Pietro's Corp. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Pietro's Corp.'s
Business Related to the Purchased Assets as of December 25, 1995, and the
results of their operations and their cash flows for the fiscal years ended
December 26, 1994 and December 25, 1995, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

Los Angeles, California
June 14, 1996

F-23
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

COMBINED BALANCE SHEETS

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

ASSETS:

<TABLE>
<CAPTION>
MARCH 29,
1996
-------------
DECEMBER 25, (UNAUDITED)
1995
-------------
<S> <C> <C>
Current assets:
Cash........................................................................... $ 34,625 $ 37,395
Inventory...................................................................... 152,009 169,584
Prepaids and other current assets.............................................. 16,780 25,680
------------- -------------
Total current assets......................................................... 203,414 232,659
Property, and equipment, net..................................................... 1,099,551 992,294
Other assets..................................................................... 238,321 238,321
------------- -------------
Total assets................................................................. $ 1,541,286 $ 1,463,274
------------- -------------
------------- -------------

LIABILITIES AND EQUITY:
Current liabilities:
Accrued expenses............................................................... $ 449,928 $ 337,936
------------- -------------
Total current liabilities.................................................... 449,928 337,936
Commitments (Note 5)
Equity........................................................................... 1,091,358 1,125,338
------------- -------------
Total liabilities and equity................................................. $ 1,541,286 $ 1,463,274
------------- -------------
------------- -------------
</TABLE>

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

F-24
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

COMBINED STATEMENTS OF OPERATIONS

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

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE-MONTH PERIOD ENDED
------------------------------------ ------------------------------
DECEMBER 26, 1994 DECEMBER 25, 1995 MARCH 27, 1995 MARCH 29, 1996
----------------- ----------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.................................. $ 14,609,395 $ 14,633,737 $ 3,670,609 $ 3,779,529
Cost of sales............................. 4,402,869 4,276,635 1,121,048 1,187,513
----------------- ----------------- -------------- --------------
Gross profit............................ 10,206,526 10,357,102 2,549,561 2,592,016
----------------- ----------------- -------------- --------------
Labor and benefits........................ 4,755,491 4,836,188 1,200,993 1,289,705
Occupancy................................. 1,401,658 1,433,616 350,382 351,508
Operating expenses........................ 2,276,493 2,360,887 644,112 620,065
Depreciation and amortization............. 661,828 581,490 139,807 114,291
Overhead allocation from Pietro's Corp.... 1,943,863 1,596,006 402,309 382,374
----------------- ----------------- -------------- --------------
Total expenses.......................... 11,039,333 10,808,187 2,737,603 2,757,943
----------------- ----------------- -------------- --------------
Net loss................................ $ (832,807) $ (451,085) $ (188,042) $ (165,927)
----------------- ----------------- -------------- --------------
----------------- ----------------- -------------- --------------
</TABLE>

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

F-25
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

COMBINED STATEMENTS OF EQUITY

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

<TABLE>
<S> <C>
Balance at December 20, 1993................................................... $2,055,835
Net loss....................................................................... (832,807)
Contributions from Pietro's Corp............................................... 303,560
----------
Balance at December 26, 1994................................................... 1,526,588
Net loss....................................................................... (451,085)
Contributions from Pietro's Corp............................................... 15,855
----------
Balance at December 25, 1995................................................... 1,091,358
Net loss (unaudited)........................................................... (165,927)
Contributions from Pietro's Corp. (unaudited).................................. 199,907
----------
Balance at March 29, 1996 (unaudited).......................................... $1,125,338
----------
----------
</TABLE>

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

F-26
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

COMBINED STATEMENTS OF CASH FLOWS

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

<TABLE>
<CAPTION>
FOR THE THREE-MONTH
FOR THE YEARS ENDED PERIODS ENDED
------------------------------------ ------------------------------
DECEMBER 26, 1994 DECEMBER 25, 1995 MARCH 27, 1995 MARCH 29, 1996
----------------- ----------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows provided by (used in) operating
activities:
Net loss................................ $ (832,807) $ (451,085) $ (188,042) $ (165,927)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization......... 661,828 581,490 139,807 114,291
Inventory............................. 1,694 (12,034) (23,428) (17,576)
Prepaids and other current assets..... (4,772) (546) (2,488) (8,900)
Other assets.......................... (69,000) (166,551) (41,638)
Accrued expenses...................... 14,726 108,206 27,052 (111,991)
----------------- ----------------- -------------- --------------
Net cash provided by (used in)
operating activities............... (228,331) 59,480 (88,737) (190,103)
----------------- ----------------- -------------- --------------
Cash flows used in investing activities:
Purchases of equipment.................. (74,629) (76,835) (6,115) (7,034)
----------------- ----------------- -------------- --------------
Net cash used in investing
activities......................... (74,629) (76,835) (6,115) (7,034)
----------------- ----------------- -------------- --------------
Cash flows provided by financing
activities:
Net contributions from parent........... 303,560 15,855 93,352 199,907
----------------- ----------------- -------------- --------------
Net cash provided by financing
activities......................... 303,560 15,855 93,352 199,907
----------------- ----------------- -------------- --------------
Net increase (decrease) in cash..... 600 (1,500) (1,500) 2,770
Cash, beginning of year................... 35,525 36,125 36,125 34,625
----------------- ----------------- -------------- --------------
Cash, end of year......................... $ 36,125 $ 34,625 $ 34,625 $ 37,395
----------------- ----------------- -------------- --------------
----------------- ----------------- -------------- --------------
</TABLE>

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

F-27
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS

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

1. GENERAL
The Pietro's Corp.'s Business Related to the Purchased Assets consists of 26
pizza restaurants located throughout the States of Oregon and Washington.
Pietro's Corp. (the "Company" or "Parent"), a Washington State corporation, owns
and operates these and other restaurants. Revenues are derived from sales of
food and beverages at the restaurants. The Company's Purchased Assets as of
December 31, 1995 consist of 26 restaurants located in the State of Oregon in
Albany, Aloha, Bend, Eugene (three restaurants), Gresham, Hood River, Madras,
McMinnville, Milwaukie, North Bend, Portland (six restaurants), Redmond, Salem
(two restaurants), The Dalles and Woodstock, and the State of Washington in
Kennewick, Longview, Richland and Yakima.

On September 26, 1995, the Company (hereafter also described as the
"Debtor") filed a petition for reorganization in the United States Bankruptcy
Court for the Western District of Washington at Seattle under Chapter 11 of
Title 11 of the United States Code.

Chicago Pizza & Brewery, Inc. ("CPB"), a California corporation, provided
the funding for the "Debtor's Plan of Reorganization, Dated February 29, 1996"
as modified (the "Plan") and thereby acquired all of the stock in the
reorganized entity known as Chicago Pizza Northwest, Inc. and defined in the
Plan as the "Reorganized Debtor." The Plan was confirmed by an order of the
Bankruptcy Court entered by the Court on March 18, 1996 and CPB funded the Plan
on March 29, 1996 (the "Effective Date").

The Plan provided that CPB invest $2,850,000 to fund the Plan. The aggregate
funding amount consists of approximately $2,350,000 in cash to be deposited
immediately into a so-called "Reorganization Fund" and $506,006 plus interest to
be paid over six years with respect to certain pre-petition priority tax debts
of Debtor. The Reorganization Fund will be used to pay the debtor's
administrative (post-petition), priority and lease cure claims in full, and the
balance will be distributed to the Debtor's unsecured creditors on a pro rata
basis. Holders of common stock of the Debtor will receive nothing.

CPB funded the Plan as described above on March 29, 1996. On the Effective
Date, the outstanding common stock of the debtor was cancelled and common stock
in the Reorganized Debtor, Chicago Pizza Northwest, Inc., a Washington
corporation and wholly-owned subsidiary of the CPB was issued.

Due to the transaction described above, the accompanying financial
statements for the three-month period ended March 29, 1996 are presented for the
period December 26, 1995 through March 29, 1996.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF COMBINATION:

The accompanying combined financial statements include the accounts of the
Purchased Assets, including allocations of overhead from the Parent, for
accounting, legal, information processing, administrative, financing and
marketing services. Such allocation is computed based on the net sales related
to the Purchased Assets (i.e., the 26 restaurants) as a percentage of the
Company's total restaurant net sales. Management believes such allocation is
reasonable as each individual restaurant will incur a portion of cost relative
to its sales volume. The Purchased Assets, as a combined entity, has no separate
legal status. All significant intercompany transactions and balances have been
eliminated in combination.

F-28
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FISCAL YEAR:

The Company utilized a 4-4-5 basis for the months included in its fiscal
year financial reports. The fiscal periods ended for the financial statements
included herein ended on December 20, 1993 (for Statement of Equity only),
December 26, 1994, December 25, 1995, March 27, 1995 and March 29, 1996.

INVENTORY:

Inventory consists of food products and supplies and are recorded at the
lower of cost (determined on a first-in, first-out basis) or market.

PROPERTY AND EQUIPMENT:

Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets as
follows:

<TABLE>
<S> <C>
Equipment....................................................... 5-10 years
Furniture and fixtures.......................................... 7 years
Automobiles..................................................... 3-5 years
</TABLE>

Leasehold improvements are amortized over the terms of the leases or their
estimated useful lives, if shorter.

When property and equipment are sold or otherwise disposed of, the asset
account and related accumulated depreciation and amortization account are
relieved, and any gain or loss is included in operations. Expenditures for
maintenance and repairs are charged against operations. Renewals and betterments
that materially extend the life of an asset are capitalized.

LEASES:

Leases that meet certain criteria are capitalized and included with property
and equipment. The resulting assets and liabilities are recorded at the lesser
of cost or amounts equal to the present value of the minimum lease payments at
the beginning of the lease term. Such assets are amortized evenly over the
related life of the lease or the useful lives of the assets. Interest expense
relating to these liabilities is recorded to effect constant rates over the
terms of the leases. Leases that do not meet such criteria are classified as
operating leases and rentals are charged to expense as incurred.

USE OF ESTIMATES:

The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions for the reporting period and as of the financial statement date.
These estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent liabilities and the reported amounts
of revenues and expenses. Actual results could differ from these estimates.

INCOME TAXES:

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). Under SFAS No. 109, deferred tax liabilities and assets are determined
based on the difference between the financial statement and tax bases of assets
and liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse.

F-29
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The results of operations of the Purchased Assets are included in the
Company's federal and state tax returns. No income tax benefit has been provided
in the accompanying combined financial statements as it is more likely than not
that the deferred tax assets originated in the net operating losses will not be
realized.

If the Purchased Assets had been profitable, or had available past or future
anticipated taxable income, for the years presented, an assumed effective rate
of 40% for provision or benefit of pretax income or loss would have been
reflected in these financial statements.

CONTRIBUTED CAPITAL:

All net charges from the Company for general and administrative expenses and
transfers of cash for cash management purposes are recorded as contributions
from the Company.

INTERIM RESULTS: (UNAUDITED)

The accompanying combined balance sheet as of March 29, 1996 and the
combined statements of operations and cash flows for the three-month periods
ended March 27, 1995 and March 29, 1996, and the combined statement of equity
for the three-month period ended March 29, 1996, are unaudited. In the opinion
of management, these combined statements have been prepared on the same basis as
the audited financial statements and include all adjustments, consisting of only
normal recurring adjustments, necessary for the fair presentation of results of
the interim periods. The data disclosed in these notes to the combined financial
statements for interim periods are also unaudited.

3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of:

<TABLE>
<CAPTION>
MARCH 29,
1996
DECEMBER 25, --------------
1995
--------------- (UNAUDITED)
<S> <C> <C>
Leasehold improvements...................................... $ 2,451,211 $ 2,451,211
Equipment................................................... 3,493,962 3,500,749
Furniture and fixtures...................................... 102,330 102,577
Automobiles................................................. 160,781 160,781
--------------- --------------
6,208,284 6,215,318
Less, accumulated depreciation and amortization........... (5,108,733) (5,223,024)
--------------- --------------
$ 1,099,551 $ 992,294
--------------- --------------
--------------- --------------
</TABLE>

4. ACCRUED EXPENSES
Accrued expenses consist of the following as of:

<TABLE>
<CAPTION>
MARCH 29,
1996
DECEMBER 25, ---------------
1995
--------------- (UNAUDITED)
<S> <C> <C>
Payroll related liabilities................................. $ 316,797 $ 276,572
Property taxes.............................................. 91,566 17,950
Other....................................................... 41,565 43,414
--------------- ---------------
$ 449,928 $ 337,936
--------------- ---------------
--------------- ---------------
</TABLE>

F-30
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

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

5. COMMITMENTS

LEASES:

The Company leases equipment under noncancelable capital lease agreements
that expire in 1997 and 1999.

The Company also is obligated under long-term real estate operating leases
that expire at various dates through December 31, 2009 with options ranging from
3 to 15 years. The leases generally provide that the Company shall pay the
property taxes, insurance and utilities. A number of leases also provide for
contingent rentals based on a percentage of sales above a specified minimum.
Total contingent rentals for the years ended December 26, 1994 and December 25,
1995 and the three-month period ended March 31, 1996 were $42,218, $25,118 and
$3,752 (unaudited), respectively.

Rental payments on operating real estate leases charged to expense for the
years ended December 26, 1994 and December 25, 1995 were approximately
$1,059,000 and $1,152,000, respectively.

At December 25, 1995, minimum annual rental commitments under noncancelable
leases are as follows:

<TABLE>
<S> <C>
1996........................................................ $1,129,563
1997........................................................ 1,105,404
1998........................................................ 840,060
1999........................................................ 709,775
2000........................................................ 526,182
Thereafter.................................................. 2,350,319
----------
Total minimum lease payments........................ $6,661,303
----------
----------
</TABLE>

6. SUBSEQUENT EVENT
On May 15, 1996, CPB entered into an agreement to sell seven of the
restaurants included as part of the Purchased Assets. As part of the agreement,
CPB agreed to sell on May 31, 1996 ("First closing date"), the restaurants
located in Albany and Bend, and on June 30, 1996 ("Second closing date"), the
restaurants located in Richland, Kennewick, Yakima, Madras and Redmond. The
purchase price is equal to $1,000,000 less certain liabilities and other costs
assumed by the Buyer, as defined. This amount will be paid $400,000 on the First
closing date and $600,000 on the Second closing date. As part of the agreement,
CPB entered into covenant not to compete within the "Restrictive Territory," as
defined, for a period of 3 years.

The sales for the seven restaurants sold totaled approximately $3,700,000
and $3,500,000 for the years ended December 26, 1994 and December 25, 1995,
respectively. Operating profit excluding overhead allocation totaled
approximately $313,000 and $270,000 for the years ended December 26, 1994 and
December 25, 1995, respectively. Loss after overhead allocation relating to the
seven restaurants totaled approximately $454,000 and $327,000 for the years
ended December 26, 1994 and December 25, 1995, respectively.

F-31
<PAGE>
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NO DEALER, SALES REPRESENTATIVE OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY THE COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
The Offering................................... 5
Risk Factors................................... 11
Use of Proceeds................................ 20
Dividend Policy................................ 20
Dilution....................................... 21
Capitalization................................. 23
Selected Combined and Consolidated Financial
Data.......................................... 24
Pro Forma Combined Financial Data for the
Company....................................... 26
Pro Forma Combined Statement of Operations..... 26
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 27
Pietro's Corp. Management's Discussion and
Analysis of Financial Condition and Results of
Operations.................................... 36
The Company.................................... 39
Business....................................... 41
Management..................................... 48
Principal Shareholders......................... 57
Resale of Outstanding Securities............... 58
Certain Transactions........................... 59
Description of Securities...................... 65
Shares Eligible for Future Sale................ 67
Underwriting................................... 68
Legal Matters.................................. 70
Experts........................................ 70
Additional Information......................... 70
Index to Combined and Consolidated Financial
Statements.................................... F-1
</TABLE>

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

UNTIL NOVEMBER 2, 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

1,800,000 SHARES
OF COMMON STOCK
AND
1,800,000 REDEEMABLE WARRANTS

[LOGO]

CHICAGO PIZZA & BREWERY, INC.

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

PROSPECTUS

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

THE BOSTON GROUP, L.P.

October 8, 1996

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