U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended October 25, 1998.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934. For the transition period from _________ to __________.
Commission File Number
0-18369
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BOSTON RESTAURANT ASSOCIATES, INC.
----------------------------------
(Name of Small Business Issuer as Specified in its Charter)
Delaware 61-1162263
-------- ----------
(State or Other I.R.S. Employer
Jurisdiction of Identification
Incorporation or No.)
Organization)
999 Broadway
Saugus - Massachusetts
----------------------
(Address of Principal
Executive Offices)
(781) 231-7575 01906
(Issuer's Telephone Number (Zip Code)
Including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes x No
--- ---
As of November 30, 1998, there were 7,024,170 shares of the issuer's Common
Stock, par value $.01 per share, outstanding.
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of October 25, 1998 and
April 26, 1998 .......................................................... 3
Condensed Consolidated Statements of Operations for the thirteen weeks
and twenty-six weeks ended October 25, 1998 and October 26, 1997 ......... 4
Condensed Consolidated Statements of Cash Flows for the thirteen
weeks and twenty-six weeks ended October 25, 1998 and October 26, 1997 ... 5
Notes to Condensed Consolidated Financial Statements ..................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................... 8
PART II - OTHER INFORMATION ....................................................... 14
SIGNATURES .............................................................. 15
</TABLE>
2
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
OCT 25 APRIL 26
1998 1998
------------- ------------
<S> <C> <C>
ASSETS
Current:
Cash and cash equivalents $1,696,273 $1,788,361
Accounts receivable $44,587 $46,958
Inventories $218,860 $212,071
Prepaid expenses and other $76,554 $49,152
----------- -----------
Total current assets $2,036,274 $2,096,542
Net property and equipment $3,391,081 $3,345,273
Other assets $1,338,637 $1,323,160
----------- -----------
Total assets $6,765,992 $6,764,975
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $340,261 $314,124
Accrued liabilities $404,924 $490,525
Current maturities:
Notes payable-stockholder $4,596 $4,495
Long-term debt $200,000 $200,000
Obligations under capital leases $79,919 $74,206
----------- -----------
Total current liabilities $1,029,700 $1,083,350
Long-term obligations:
Notes payable-stockholder, less current maturities $119,373 $121,336
Long-term debt, less current maturities $325,000 $425,000
Obligations under capital leases, less current
maturities $318,150 $361,548
Subordinated debentures $1,500,000 $1,500,000
Deferred rent $101,984 $85,662
----------- -----------
Total liabilities $3,394,207 $3,576,896
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, 25,000,000
shares authorized, 7,024,170 and $70,242 $70,220
7,021,970 shares issued
Additional paid in capital $10,879,520 $10,846,333
Accumulated deficit ($7,577,977) ($7,728,474)
----------- -----------
Total stockholders' equity $3,371,785 $3,188,079
Total liabilities and stockholders' equity $6,765,992 $6,764,975
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
October 25 October 26 October 25 October 26
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $3,105,983 $2,989,820 $6,062,683 $5,835,705
---------- ---------- ---------- ----------
Cost of food, beverages and liquor $658,681 $602,586 $1,256,352 $1,177,093
Payroll $862,496 $887,985 $1,732,527 $1,723,533
Other operating expenses $892,861 $923,413 $1,784,806 $1,756,296
General and administrative $411,028 $331,863 $741,356 $705,102
Depreciation and amortization $143,444 $121,289 $277,779 $223,667
---------- ---------- ---------- ----------
Total costs and expenses $2,968,510 $2,867,136 $5,792,820 $5,585,691
---------- ---------- ---------- ----------
Operating income $137,473 $122,684 $269,863 $250,014
Other income ($1,474) ($1,594) ($2,441) ($2,521)
Interest income ($22,342) ($5,902) ($38,611) ($15,001)
Interest expense $75,796 $77,503 $160,419 $149,027
---------- ---------- ---------- ----------
Net Income $85,493 $52,677 $150,496 $118,509
========== ========== ========== ==========
Income per share-basic $0.01 $0.01 $0.02 $0.02
========== ========== ========== ==========
Income per share-diluted $0.01 $0.01 $0.02 $0.02
========== ========== ========== ==========
Weighted average number of
common shares outstanding-basic 7,024,170 5,015,693 7,023,807 5,015,693
========== ========== ========== ==========
Weighted average number of
dilutive common shares outstanding 7,110,057 5,322,555 7,306,385 5,242,554
========== ========== ========== ==========
</TABLE>
See accompanying notes.
4
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
Oct 25 Oct 26
1998 1997
<S> <C> <C>
Cash flows provided by operating activities $386,524 $309,014
------------ ------------
Cash flows from investing activities:
Capital expenditures ($339,065) ($505,282)
------------ ------------
Cash flows used for investing activities ($339,065) ($505,282)
------------ ------------
Cash flows from financing activities:
Repayments of long-term debt ($100,000) ($100,002)
Repayments of capital lease obligations ($37,685) ($14,851)
Repayments of stockholder loans ($1,862) ($2,102)
Proceeds from subordinated debentures $0 $218,750
------------ ------------
Cash flows provided by (used for) financing
activities ($139,547) $101,795
------------ ------------
Increase (decrease) in cash and cash equivalents ($92,088) ($94,473)
Cash and cash equivalents at beginning of period $1,788,361 $726,054
------------- ------------
Cash and cash equivalents at end of period $1,696,273 $631,581
============= ============
</TABLE>
See accompanying notes.
5
<PAGE>
BOSTON RESTAURANT ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 25, 1998
(unaudited)
NATURE OF BUSINESS AND BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the thirteen-week period and twenty-six week period ended October
25, 1998 are not necessarily indicative of the results that may be expected for
the year ending April 25, 1999. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-KSB for the year ended April 26, 1998. The
balance sheet at April 26, 1998 has been derived from the audited financial
statements at that date.
The accompanying statements of operations and cash flows for the fiscal 1999
period reflect the consolidated operations and cash flows of one casual dining
Italian restaurant and nine Pizzeria Regina restaurants for the entire period
and one additional Pizzeria Regina restaurant for part of the period. The
accompanying statements of operations and cash flows for the fiscal 1998 period
reflect the consolidated operations and cash flows of two casual dining Italian
restaurants and six Pizzeria Regina restaurants for the entire period and four
Pizzeria Regina restaurants for part of the period.
NET INCOME PER SHARE
The Company follows Statement of financial Accounting Standards No. 128,
"Earnings per Share". The following is a reconciliation of the denominator
(number of shares) used in the computation of earnings per share. The numerator
(net income) is the same for the basic and diluted computations.
6
<PAGE>
<TABLE>
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
-------------------- ----------------------
October 25 October 26 October 25 October 26
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic 7,024,170 5,015,693 7,023,807 5,015,693
Shares
Effect of
Dilutive
Securities:
Options 85,887 306,862 282,578 226,861
------ ------- ------- -------
Diluted
Shares 7,110,057 5,322,555 7,306,385 5,242,554
========= ========= ========= =========
</TABLE>
The following table summarizes securities that were outstanding as of October
25, 1998 and October 26, 1997, but not included in the calculation of net income
per share because such securities are anti-dilutive:
<TABLE>
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
-------------------- ----------------------
October 25 October 26 October 25 October 26
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Options 368,346 47,000 90,000 57,000
Warrants 2,843,000 2,693,000 2,843,000 2,693,000
Convertible
Debentures 1,200,000 1,070,000 1,200,000 1,070,000
</TABLE>
7
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Overview
In the thirteen weeks ending October 25, 1998, the Company recorded net income
of $85,493 compared to $52,677 for the quarter ending October 26, 1997. The
Company's profit in the current fiscal quarter is substantially attributable to
the income generated by the Company's Pizzeria Regina restaurant business.
Thirteen Weeks Ended October 25, 1998 as Compared to Thirteen Weeks ended
October 26, 1997
Sales. Net sales in the current period were $3,106,000 compared to net sales in
the prior year's period of $2,990,000. The increase in net sales in the fiscal
1999 period, as compared to the fiscal 1998 period, was attributable to the
opening of the new Richmond, Virginia Pizzeria Regina food court kiosk in
November of 1997; the opening of the new Oviedo, Florida Pizzeria Regina food
court kiosk in March of 1998; and the opening of the new Auburn, Massachusetts
Pizzeria Regina food court kiosk in May of 1998. This was partially offset by
the closure of the self-service in-line Pizzeria Regina at the Burlington Mall
in October of 1997, the closure of the two Brookline Pizzeria Regina restaurants
in May and October of 1997 at the completion of their leases, due to the
inability to renegotiate market value leases at these locations, and the closure
of the Bel Canto Restaurant. Comparable sales for the restaurants open
throughout both fiscal 1999 and 1998 periods increased by approximately 7.2%.
Net sales at the Company's Pizzeria Regina restaurants increased to $2,360,000
in the current period from $2,067,000 in the prior year's period.
Net sales at the Company's full service casual dining restaurants, Polcari's
North End and Bel Canto's, decreased to $742,000 in the current period from
$918,000 in the prior year's period. The decrease was primarily attributable to
closure of the Bel Canto restaurant in December 1997, which was partially offset
by increased sales of approximately $57,000 at the Polcari's North End
restaurant.
Costs and Expenses
Cost of Food and Beverages. Cost of food and beverages as a percentage of net
sales was 21% in the fiscal 1999 period as compared to 20% in the fiscal 1998
period. The cost of food and beverages as a percentage of net sales at the
Pizzeria Regina restaurants was 18% and 16% in the fiscal 1999 and 1998 periods,
respectively. The cost of food and beverages as a percentage of net sales
increased at the Pizzeria Regina restaurants, principally due to higher cheese
costs and increased sales of gourmet pizzas, which have a higher selling price
and higher food cost than traditional pizzas.
8
<PAGE>
The cost of food and beverages as a percentage of net sales at the Company's
full service casual dining restaurants was 31% and 29% in the fiscal 1999 and
1998 periods, respectively. The increase in cost as a percentage of net sales
was due to the closure of the Bel Canto restaurant, which had lower food and
beverage costs.
Payroll Expenses. Payroll expenses were $862,000 (28 % of net sales) in the
current period compared to payroll expenses in the prior year's period of
$888,000 (30% of net sales).
Payroll expenses at the Pizzeria Regina restaurants increased to $599,000 (25%
of sales) in the current period from $557,000 (27% of net sales) in the prior
year's period. The increase in payroll expenses at the Pizzeria Regina
restaurants was primarily attributable to the opening of the three new Pizzeria
Regina food court kiosks, which was partially offset by a decrease in payroll
expenses associated with the closure of two Pizzeria Regina restaurants.
Payroll expenses at the Company's full service casual dining restaurants
decreased to $213,000 (29% of net sales) in the current period from $291,000
(32% of net sales) in the prior year's period, reflecting the closure of the Bel
Canto restaurant. Payroll expenses at the Company's Commissary were $51,000 for
the fiscal 1999 period as compared to $40,000 in the fiscal 1998 period. This
increase is primarily due to the reclassification of the purchasing director's
salary to the Commissary's payroll expense.
Other Operating Expenses, Exclusive of Payroll. Other operating expenses
exclusive of payroll in the current period were $893,000 (29% of net sales),
compared to $923,000 (31% of net sales) in the prior year's period. The decrease
in other operating expenses in the current period was primarily attributable to
the closure of two Pizzeria Regina restaurants and the closure of the Bel Canto
restaurant, partially offset by the opening of the three new Pizzeria Regina
food court kiosks and costs associated with future expansion.
Other operating expenses from the Pizzeria Regina restaurants increased to
$676,000 (29% of net sales) in the current period from $632,000 (31% of net
sales) in the prior year's period. This increase is primarily attributable to
the addition of three new Pizzeria Regina food court kiosks, partially offset by
the closure of the self-service in-line Pizzeria Regina restaurant at the
Burlington Mall and the closure of the Brookline Pizzeria Regina restaurant.
Other operating expenses at the Company's full service casual dining restaurants
decreased to $190,000 (26% of net sales) in the current period from $262,000
(29% of net sales) in the prior year's period. This decrease was primarily
attributable to the closure of the Bel Canto restaurant. Other operating
expenses also include commissary expenses, which decreased to $12,000 in the
current period, as compared to $16,000 in the prior year's period. In addition,
the Company realized franchising costs and future expansion costs of $16,000 in
the fiscal 1999 period as compared to $13,000 in the prior year's period.
General and Administrative Expenses. General and administrative expenses were
$411,000 (13% of net sales) in the current period, as compared to $332,000 (11%
of net sales) in the prior year's period. The increase in general and
administrative expenses was principally due, to real estate site selection
consulting expenses, pre-opening legal fees, and increased staff support.
9
<PAGE>
Depreciation and Amortization Expenses. Depreciation and amortization expense
was $143,000 (5% of net sales) in fiscal 1999 period, compared to $121,000 (4%
of net sales) in fiscal 1998 period. The increase in depreciation and
amortization expense was primarily attributable to the opening of the three new
Pizzeria Regina food court kiosks.
Interest Expense and Interest Income. Interest expense decreased to $76,000 in
the current period from $78,000 in the prior year's period. This decrease in
interest expense was associated with lower interest rates on the Company's
credit facility which was partially offset by the issuance of convertible
subordinated debentures.
Interest income increased to $22,000 in fiscal 1999 from $6,000 in fiscal 1998.
The increase in interest income was attributable to the proceeds from the March
1998 Rights Offering.
Twenty-six Weeks Ended October 25, 1998 as Compared to Twenty-six Weeks ended
October 26, 1997
Sales. Net sales in the current period were $6,063,000 compared to net sales in
the prior year's period of $5,836,000. The increase in net sales in the fiscal
1999 period as compared to fiscal 1998 period, was attributable to the opening
of the new Paramus, New Jersey Pizzeria Regina food court kiosk in August of
1997; the opening of the new Richmond, Virginia Pizzeria Regina food court kiosk
in November of 1997; the opening of the new Oviedo, Florida Pizzeria Regina food
court kiosk in March of 1998; and the opening of the new Auburn, Massachusetts
Pizzeria Regina food court kiosk in May of 1998. The increase in net sales were
partially offset by the closure of the self-service in-line Pizzeria Regina at
the Burlington Mall in October of 1997, the closure of the two Brookline
Pizzeria Regina restaurants in May and October of 1997 at the completion of
their leases, due to the inability to renegotiate a market value lease at those
locations, and the closure of the Bel Canto Restaurant. Comparable sales for the
restaurants open throughout both fiscal 1999 and 1998 periods increased
approximately 6.8%. Net sales at the Company's Pizzeria Regina restaurants
increased to $4,626,000 in the current period from $4,000,000 in the prior
year's period.
Net sales at the Company's full service casual dining restaurants, Polcari's
North End and Bel Canto's decreased to $1,429,000 in the current period from
$1,825,000 in the prior year's period. This decrease was primarily attributable
to the closure of the Bel Canto restaurant in December 1997, which was partially
offset by increased sales of approximately $90,000 at the Polcari's North End
restaurant.
Cost of Food and Beverages. Cost of food and beverages as a percentage of net
sales was 21% in the fiscal 1999 period as compared to 20% in the fiscal 1998
period.
The cost of food and beverages as a percentage of net sales at the Pizzeria
Regina restaurants was 18% and 16% in the fiscal 1999 and 1998 periods,
respectively. The cost of food and beverages as a percentage of net sales
increased at the Pizzeria Regina restaurants, principally due to higher cheese
costs and increased sales of gourmet pizzas, which have a higher selling price
and higher food costs than traditional pizzas.
10
<PAGE>
The cost of food and beverages as a percentage of net sales at the Company's
full service casual dining restaurants was 31% and 29% in the fiscal 1999 and
1998 periods respectively. The increase in cost of food and beverages as a
percentage of net sales was due to the closure of the Bel Canto restaurant,
which had lower food and beverage costs.
Payroll Expenses. Payroll expenses were $1,733,000 (29% of net sales) in the
current period compared to payroll expenses in the prior year's period of
$1,724,000 (30% of net sales).
Payroll expenses at the Pizzeria Regina restaurants increased to $1,204,000 (26%
of sales) in the current period from $1,071,000 (27% of net sales) in the prior
year's period. The increase in payroll expenses at the Pizzeria Regina
restaurants was primarily attributable to the opening of the four new Pizzeria
Regina food court kiosks, which was partially offset by a decrease in payroll
expenses associated with the closure of three Pizzeria Regina restaurants.
Payroll expenses at the Company's full service casual dining restaurant
decreased to $430,000 (30% of net sales) in the current period from $586,000
(32% of net sales) in the prior year's period, reflecting the closure of the Bel
Canto restaurant. Payroll expenses at the Company's Commissary were $99,000 for
the fiscal 1999 period as compared to $66,000 in the fiscal 1998 period. The
increase is primarily due to the reclassification of the purchasing director's
salary to the Commissary's payroll expense.
Other Operating Expenses. Other operating expenses in the current period were
$1,785,000 (29% of net sales), compared to $1,756,000 (30% of net sales) in the
prior year's period. The increase in other operating expenses in the current
period was primarily attributable to the opening of the four new Pizzeria Regina
food kiosks, partially offset by the closure of three Pizzeria Regina
restaurants and the closure of the Bel Canto restaurant.
Other operating expenses from the Pizzeria restaurants increased to $1,353,000
(29% of net sales) in the current period from $1,187,000 (30% of net sales) in
the prior year's period. The increase is primarily attributable to the addition
of four new Pizzeria Regina food kiosks, partially offset by the closure of the
self-service in-line Pizzeria Regina restaurant at the Burlington Mall and the
closure of two Brookline Pizzeria Regina restaurants.
Other operating expenses at the Company's full service casual dining restaurants
decreased to $373,000 (26% of net sales) in the current period from $521,000
(29% of net sales) in the prior year's period. This decrease was primarily
attributable to the closure of the Bel Canto restaurant. Other operating
expenses also include commissary expenses, which decreased to $26,000 in the
current period, as compared to $31,000 in the prior year's period. In addition
the Company realized franchising costs and future expansion costs of $33,000 in
the fiscal 1999 period as compared to $18,000 in the prior years period.
General and Administrative Expenses. General and administrative expenses were
$741,000 (12% of net sales) in the current period, as compared to $705,000 (12%
of net sales) in the prior year's period. The increase in general and
administrative expenses was due, principally, to an increase in support staff,
legal costs, and real estate site selection consulting expenses.
11
<PAGE>
Depreciation and Amortization Expenses. Depreciation and amortization expense
was $278,000 (5% of net sales) in fiscal 1999 period, compared to $224,000 (4%
of net sales) in fiscal 1998 period. The increase in depreciation and
amortization expense was primarily attributable to the opening of the four new
Pizzeria Regina food court kiosks.
Interest Expense and Interest Income. Interest Expense increased to $160,000 in
the current period as compared to interest expense in the prior year's period of
$149,000. This increase in interest expense was associated with borrowings under
the Company's new credit facility and the issuance of convertible subordinated
debentures. Interest income increased to $39,000 in fiscal 1999 from $15,000 in
fiscal 1998. The increase in interest income was attributable to the proceeds
from the March 1998 rights offering.
Liquidity and Capital Resources.
At October 25, 1998, the Company had net working capital of approximately
$1,007,000 and cash and cash equivalents of approximately $1,696,000.
During the twenty-six weeks ended October 25, 1998, the company had a decrease
in cash and cash equivalents of $92,000 reflecting net cash provided by
operating activities of $387,000, net cash used for investing activities of
$339,000 and net cash used for financing activities of $140,000. Net cash
provided by operating activities included an increase in accounts payable of
$26,000, an increase in deferred rent of $16,000, and a decrease in accounts
receivable of $2,000, partially offset by an increase in prepaid expenses of
$27,000, an increase in inventories of $7,000, and a reduction in accrued
expenses of $86,000. Investing activities consumed costs associated with the
opening of the new Auburn, MA Pizzeria Regina location and renovations of the
executive office in Saugus, MA. Net cash used for financing activities reflects
$140,000 to repay long-term debt, lease obligations and stockholder loans.
The Pizzeria Regina food court kiosk opened at the Auburn Mall, Auburn, MA on
May 7, 1998. The Company entered into a lease for a food court kiosk in Holyoke,
MA to open in the first quarter of fiscal 2000. The Company anticipates that the
cost of opening this restaurant will be approximately $350,000. There can be no
assurance that the Company will open this restaurant on a timely basis or within
budget.
At October 25, 1998, the Company had current liabilities of $1,030,000,
including $340,000 of accounts payables, $405,000 of accrued liabilities and
current maturities of long term obligations in the amount of $285,000. At
October 25, 1998, the Company had long-term obligations, less current
maturities, in the amount of $2,365,000, including $325,000 due under its credit
facility with Haymarket Co-Operative Bank, $119,000 of loans payable to
stockholder, $318,000 due under the capital lease obligations, $1,500,000 of
convertible subordinated debentures, and $102,000 of deferred rent. Subsequent
to the close of the quarter, on November 23, 1998, the Company its credit
facility with Haymarket Bank and entered into a new Two Million ($2,000,000.00)
Dollar line of credit facility with BankBoston. To date, the Company has
accessed this line in the amount of $533,472.
12
<PAGE>
Risk Factors.
The Company believes that its existing resources, cash flow from operations,
borrowing under its credit facility, and the net proceeds from the March 1998
Rights Offering will be sufficient to allow it to meet its obligations over the
next twelve months. While there can be no assurance, the Company intends to fund
its current obligations and operating expenses through cash generated from
operations. The net proceeds of the March 1998 Rights Offering will be used for
repayment of indebtedness, to finance its expansion plans and for other working
capital requirements.
On November 6, 1998, The Nasdaq Stock Market, Inc. ("Nasdaq") advised the
Company that its Common Stock was not in compliance with one of the continuing
maintenance requirements for listing on the Nasdaq SmallCap Market.
Specifically, the Common Stock had failed to maintain a closing bid price of
greater than or equal to $1.00 for thirty consecutive trading days. Under
Nasdaq's procedures, the Company has a period of ninety calendar days in which
to come back into compliance with Nasdaq Marketplace Rule 4450(a)(5). In order
to comply, the closing bid price for a minimum of ten consecutive trading days
must be at a price greater than or equal to $1.00. The deadline for compliance
is February 16, 1999. If the price has not come back into compliance by that
date, the Company's stock is subject to delisting. The effects of delisting
include the limited release of the market prices of the Company's securities and
limited news coverage of the Company. Delisting may restrict investors' interest
in the Common Stock and may materially, adversely affect the trading market and
prices of the Common Stock and the Company's ability to issue additional
securities or to secure financing.
Year 2000 Systems
The Company has undertaken a review concerning the ability of its internal
information systems, including its internal accounting systems, to handle date
information and to function appropriately from and after January 1, 2000, and
does not believe that the total cost to address any changes required as a result
of the so-called "Year 2000 Problem" will be material. In addition, the Company
has evaluated the impact of possible Year 2000 problems encountered by its
suppliers and customers upon the Company and does not believe that any problems
would have material effect upon the Company. The Company has reviewed various
scenarios, including realistic worst case scenarios, and has concluded that it
is unlikely that there will be any material impact on the Company.
"Safe Harbor" Statement, Under the Private Securities Litigation Reform Act of
1995
Forward-looking statements in this report, including without limitation
statements relating to the adequacy of the Company's resources, and the timing
of the Company's expansion, are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that such forward-looking statements involve risks and uncertainties, including
without limitation: potential quarterly fluctuations in the Company's operating
results; seasonality of sales; competition; risks associated with expansion; the
Company's reliance on key employees; risks generally associated with the
restaurant industry; risks associated with geographic concentration of the
Company's restaurants; risks associated with serving alcoholic beverages; and
other risks and uncertainties indicated from time to time in the Company's
filings with the Securities and Exchange Commission.
13
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings.
No material litigation.
ITEM 2. Changes in Securities.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None.
ITEM 5. Other Information.
None
ITEM 6. Exhibits and Reports On Form 8-K.
(a) Exhibits.
(27) Financial Data Schedule
(b) Reports On Form 8-K.
None.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BOSTON RESTAURANT ASSOCIATES, INC.
Date: December 3, 1998 By: /s/ George R. Chapdelaine
--------------------------------
George R. Chapdelaine, President and
Chief Executive Officer
15
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 25, 1998 AND APRIL 26, 1998
(UNAUDITED) AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN
WEEKS ENDED OCTOBER 25, 1998 AND OCTOBER 26, 1997 (UNAUDITED) AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-25-1999
<PERIOD-START> JUL-27-1998
<PERIOD-END> OCT-25-1998
<EXCHANGE-RATE> 1.00
<CASH> 1,696,273
<SECURITIES> 0
<RECEIVABLES> 44,587
<ALLOWANCES> 0
<INVENTORY> 218,860
<CURRENT-ASSETS> 2,036,274
<PP&E> 5,740,825
<DEPRECIATION> 2,349,744
<TOTAL-ASSETS> 6,765,992
<CURRENT-LIABILITIES> 1,029,700
<BONDS> 0
0
0
<COMMON> 70,242
<OTHER-SE> 3,371,785
<TOTAL-LIABILITY-AND-EQUITY> 6,765,992
<SALES> 3,105,983
<TOTAL-REVENUES> 3,107,457
<CGS> 658,681
<TOTAL-COSTS> 2,968,510
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 75,796
<INCOME-PRETAX> 85,493
<INCOME-TAX> 0
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<DISCONTINUED> 0
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<NET-INCOME> 85,493
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 26, 1997 AND APRIL 27, 1998 (AUDITED)
AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED
OCTOBER 26, 1997 AND OCTOBER 27, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
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<S> <C>
<PERIOD-TYPE> 3-MOS
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<PERIOD-START> JUL-28-1997
<PERIOD-END> OCT-26-1997
<EXCHANGE-RATE> 1.00
<CASH> 631,581
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<ALLOWANCES> 0
<INVENTORY> 214,996
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<BONDS> 0
0
0
<COMMON> 50,157
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<SALES> 2,989,820
<TOTAL-REVENUES> 2,991,414
<CGS> 602,586
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<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 52,677
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 52,677
<EPS-PRIMARY> .01
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 25, 1998 AND APRIL 26, 1998
(UNAUDITED) AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
TWENTY-SIX WEEKS ENDED OCTOBER 25, 1998 AND OCTOBER 26, 1997 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000926295
<NAME> BOSTON RESTAURANT ASSOCIATES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
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<PERIOD-START> APR-27-1998
<PERIOD-END> OCT-25-1998
<EXCHANGE-RATE> 1.00
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<BONDS> 0
0
0
<COMMON> 70,242
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<TOTAL-LIABILITY-AND-EQUITY> 6,765,992
<SALES> 6,062,683
<TOTAL-REVENUES> 6,065,124
<CGS> 1,256,352
<TOTAL-COSTS> 5,792,820
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 160,419
<INCOME-PRETAX> 150,496
<INCOME-TAX> 0
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<DISCONTINUED> 0
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 26, 1997 AND APRIL 27, 1998 (AUDITED)
AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE TWENTY-SIX WEEKS
ENDED OCTOBER 26, 1997 AND OCTOBER 27, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000926295
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<CURRENCY> U.S. DOLLARS
<S> <C>
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<RECEIVABLES> 132,707
<ALLOWANCES> 0
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<PP&E> 4,511,373
<DEPRECIATION> 1,916,083
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<CURRENT-LIABILITIES> 1,273,829
<BONDS> 0
0
0
<COMMON> 50,157
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<TOTAL-LIABILITY-AND-EQUITY> 4,900,966
<SALES> 5,835,705
<TOTAL-REVENUES> 5,838,226
<CGS> 1,177,093
<TOTAL-COSTS> 5,585,691
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 149,027
<INCOME-PRETAX> 118,509
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-PRIMARY> .02
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