10-K 1 b46242wge10vk.txt THE WESTWOOD GROUP, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 0-1590 THE WESTWOOD GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-1983910 (state or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 190 V.F.W. Parkway Revere, MA 02151 (Address of principal executive offices, including zip code) 781-284-2600 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Title of Class Common Stock-$.01 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment of this Form 10-K. [X] Indicate by check mark whether the registrant is an accelerated filed (as defined in Rule 12b-24 of the Act). Yes [ ] No [X] The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 17, 2002 was:

(1) Reflects the price of shares of Common Stock, par value $0.01 per share, traded on June 17, 2002, which is the last date the stock was traded prior to the end of the most recently completed second fiscal quarter. The registrant's Common Stock was removed from quotation through the NASDAQ system on July 29, 1988. There is no established trading market for the Company's Common Stock. (2) Excludes shares held by Executive Officers and Directors of the registrant, without admitting that any such Executive Officer or Director is an affiliate of the registrant. The number of shares outstanding of each of the registrant's classes of common stock, as of March 31, 2003 was as follows: Common Stock, $.01 par value: 351,210 Class B Common Stock, $.01 par value: 912,015 ii THE WESTWOOD GROUP, INC. ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 10-K

iii FORWARD-LOOKING STATEMENTS The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. Certain statements contained throughout this Annual Report constitute "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those contemplated or projected, forecasted, estimated or budgeted in or expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; industry trends, changes in business strategy or development plans; availability and quality of management; and availability, terms and deployment of capital. References to "we," "us," "our," the "Company," "Westwood" or the "Westwood Group" refer to The Westwood Group, Inc., and in some cases, its subsidiaries, as well as all predecessor entities. Our principal executive offices are located at 190 V.F.W. Parkway, Revere, Massachusetts, 02151, and our telephone number is (781) 284-2600. PART I ITEM 1. BUSINESS (a) General The Westwood Group, Inc. was incorporated in Delaware in 1984 as the successor to racing and restaurant operations which commenced in 1935 and 1968, respectively. The Company operates Wonderland Greyhound Park ("Wonderland" or "Wonderland Park"), a pari-mutuel greyhound racing facility located in Revere, Massachusetts. Until July 1997, the Company also operated a pari-mutuel harness racing facility located in Foxboro, Massachusetts. (See Item 3, "Legal Proceedings"). (b) Business Segments The Company operates solely in the pari-mutuel greyhound racing industry. (c) Description of Business The Company's wholly-owned subsidiary, Wonderland Greyhound Park, Inc., operates a greyhound racetrack, located in the City of Revere, Massachusetts. Revere adjoins the City of Boston. Wonderland Park is approximately five miles north of downtown Boston and is served directly by major transportation routes and the Massachusetts Bay Transportation Authority rail line. The racetrack is approximately two miles from Boston's Logan International Airport. In addition to the racetrack, the Company maintains and operates two (2) full service restaurants, a sports bar and other concession facilities at the racetrack to serve patrons of Wonderland Park. The racetrack facility can accommodate 10,000 patrons. The average attendance per day in 2002 was approximately 801 persons. The total attendance for the year was approximately 260,000 persons. The complex encompasses a total of approximately thirty-five (35) acres, including paved and lighted parking which has capacity for approximately 2,300 cars. Wonderland was originally opened in 1935 and has operated continuously from the same location since that time. Wonderland is authorized to conduct up to 520 live matinee and evening performances during any calendar year. In addition to conducting 324 live racing performances during 2002, Wonderland provided its patrons with simulcast wagering from 52 various greyhound, thoroughbred and harness tracks throughout the country. Wonderland also broadcasts its simulcast signal to 90 locations throughout the country. The Company is continuing its efforts to penetrate new markets into which it can broadcast its signal and to develop new ways to provide quality racing entertainment to its on-track patrons. See "Government Regulation" below for a discussion of simulcast legislation. 1 The Company's annual revenues are mainly derived from the commissions that it receives from wagers made by patrons during its racing performances and from admission and concession charges at such performances. Wagers at Wonderland are placed under the pari-mutuel wagering system, pursuant to which the winning bettors in each race divide the total amount bet on the race in proportion to the sums they wagered individually, after deducting certain percentages governed by state law including amounts which are reserved for The Commonwealth of Massachusetts, the owners of the winning greyhounds and the racetrack. The pari-mutuel commission is regulated by the state regulatory commission in the jurisdiction of the individual race track. In addition, the net pari-mutuel commission varies based upon the type of wager. Finally, the Company generates commission revenue from other tracks for all amounts wagered on its product at their facilities. These commissions vary based upon contractual arrangements. The average gross pari-mutuel commission on live racing at Wonderland was approximately 24% of each $1.00 wagered on track during 2002, 2001 and 2000. Out of this amount, approximately 6% is distributed to kennel operators as purses paid, 5% is paid to The Commonwealth of Massachusetts in the form of pari-mutuel tax and 0.5% each is deposited into the Greyhound Adoption Trust Fund and Promotional Trust Fund. The Commissioners of The Commonwealth of Massachusetts State Racing Commission, as individuals, are the trustees and Wonderland is the beneficiary of the Greyhound Capital Improvements and Promotional Trust Funds which have been established in accordance with Massachusetts law and are dedicated to reimbursement of capital improvements and promotional expenses. During July 1997, the Company's harness racing subsidiary, Foxboro Park, Inc., was evicted from the Foxboro Raceway. (See Item 3, "Legal Proceedings"). As such, its operating results are reflected as discontinued operations. In February 1998, the Company executed an Assignment for the Benefit of Creditors for Foxboro Park, Inc., Foxboro Harness, Inc. and Foxboro Thoroughbred, Inc. The assignment was executed to provide a mechanism for the liquidation of its assets and the distribution of proceeds to its creditors. (d) Competition and Marketing The Company is trying to adapt and survive in a dramatically changing environment, one in which the Company and the racing industry nationally have experienced significant declines in on-site attendance and dollars wagered. The Company continues to be negatively impacted by a strong Massachusetts state lottery, two (2) Indian Casinos in Connecticut and slot machines at the Lincoln, Rhode Island greyhound track. The casinos and track are in close proximity to the Massachusetts border and therefore rely upon their ability to attract Massachusetts patrons. Furthermore, Wonderland is at a competitive disadvantage when compared with other New England greyhound racetracks in that the simulcast legislation only permits Wonderland to offer a very limited amount of simulcasting from thoroughbred racetracks due to its proximity to the Suffolk Downs thoroughbred racetrack. In August 2000, animal rights activists were able to obtain the necessary number of signatures in order to place a binding initiative petition to ban all wagering on greyhound racing within Massachusetts effective June 1, 2001 on the November 2000 Massachusetts ballot. If the initiative had passed, it would have prohibited both live and simulcast wagering at The Westwood Group's Wonderland racetrack facility, thus, in all likelihood, shutting down its principal business. The campaign to defeat the ballot initiative was conducted jointly with the dogtrack in Raynham, Massachusetts through a Ballot Question Committee established in accordance with the campaign finance laws of Massachusetts. Richard P. Dalton, The Westwood Group's President and Chief Executive Officer, served as the chairman of the committee. This initiative was narrowly defeated in the November 7, 2000 election. Despite the defeat of the initiative, the animal rights activists remain active in their attempts to cause the Wonderland racetrack to be permanently closed. Moreover, the advertising campaign directed at banning greyhound racing has negatively affected the image of greyhound racing. 2 (e) Government Regulation Wonderland operates under an annual license granted after application to, and public hearings by, the Massachusetts State Racing Commission. Wonderland received its first license in 1935 and has had its license renewed annually since that date. The Racing Commission has certain regulatory powers with respect to the dates and the number of performances granted to its licensees and various other aspects of racetrack operations. In addition, the Massachusetts State Racing Commission licenses certain key officials employed by Wonderland. The failure to receive or retain the annual racing license would have a material adverse effect on our business. Alcoholic beverage control regulations require Wonderland to apply to a state and local authority for a license or permit to sell alcoholic beverages on the premises. The licenses must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of the restaurants and bars, 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 failure to receive or retain, or a delay in obtaining, a liquor license could adversely affect the Company's ability to operate the restaurant facilities. The Company has not encountered any material problems relating to alcoholic beverage licenses to date. Various federal and state labor laws govern the Company's relationship with its employees, including such matters as minimum wage requirements, overtime and other working conditions. Significant additional government-imposed increases in minimum wages, paid leaves of absence, mandated health benefits or increased tax payment requirements in respect to employees who receive gratuities could have a material adverse effect on the Company's results of operations. During 2001, the Company and the owners of other area racetracks worked to enact legislation which would permit the Company and the other greyhound track to continue to provide simulcast broadcasting of thoroughbred racing on a much more frequent basis, as well as providing for a decrease in the pari-mutuel taxes paid to the Commonwealth and that the funds available from the pari-mutuel tax decrease be made available for increases in purses and the Greyhound Capital Improvement and Promotional Trust Funds as well as the establishment of a Greyhound Adoption Fund and the implementation of an off-track betting system. On November 17, 2001, the "Act Providing for Improvements to the Horse and Greyhound Racing Industry in the Commonwealth and the Regulation Thereof" was signed into law by the then acting governor of Massachusetts. Under this statute, the Company and the other area racetracks are permitted to continue to provide simulcast broadcasting of thoroughbred racing to their patrons until December 2005. The new legislation also provides that the Company is required to pay premiums for the right to simulcast out-of-state thoroughbred and harness racing ranging from 3% to 7% for the benefit of the purse accounts at the Commonwealth's two commercial horse racetracks. In addition to the extension and expansion of simulcast broadcasting, this statute provides for a "purse pool," which will be funded by taxes, fees and assessments with a minimum of $400,000 being credited to the purse accounts of each racetrack with any remaining portion being apportioned among the racetracks pursuant to a formula to be devised by the State Racing Commission. All unclaimed simulcast wagers collected at each racetrack are to be deposited with the Massachusetts State Racing Commission for payment to the purse accounts of the individual racetracks responsible for such unclaimed wagers. During 2001, the Company received a one-time grant of $300,035 from the Commonwealth for the purpose of funding capital improvements and repairs to its facility and equipment. Finally, the statute authorizes account wagering at each of the individual racetracks and establishes a nine member special commission to study the feasibility of an off-track betting program in Massachusetts. Despite the enactment of this legislation and the potential for increase in cash flow from such legislation, management does not believe that this legislation in its current state has or will materially benefit the Company's overall racing operations. Management has worked diligently over the past decade in attempting to convince the governors and the Massachusetts state legislature of the need to allow the Commonwealth's commercial racetracks to offer their patrons expanded gaming opportunities. While various legislation was introduced, including for the upcoming legislative session, the Massachusetts state legislature took no action on gaming in the years 2000, 2001, and 2002. On October 3, 2002, the then acting Governor of Massachusetts issued an executive order establishing an exploratory 3 commission to study and report on the potential impact, both positive and negative, of the potential expansion of legalized gaming in Massachusetts. This commission held public hearings in four locations throughout the Commonwealth and reported its findings to the Governor on December 31, 2002. The work of this commission was divided among four subcommittees. Each subcommittee was assigned to focus exclusively on the potential regulatory, economic development, fiscal or social and cultural impact of the expansion of gaming, respectively. The report describes the findings of each subcommittee with respect to each area to which it was assigned. This commission's report did not recommend that the Governor and/or the state legislature enact legislation that would expand gaming, but instead focuses on the various ways that the expansion of legalized gaming could possibly impact, both negatively and positively, the Commonwealth and its citizens. Management is unable to predict what, if any, impact this report will have on the overall prospects for the enactment of legislation in Massachusetts to expand legalized gaming. There is no assurance that the release of this report will prompt or thwart the introduction or enactment of such legislation. This is not the first time a commission of this type had been formed. Over the past decade, when similar commissions have proposed the introduction of gaming legislation, numerous bills have been introduced, but legislation has never been enacted despite being supported of by the then Governor of The Commonwealth of Massachusetts and certain state legislators. Moreover, there is no assurance that newly elected Governor Romney or the state legislature will adopt the findings of this commission. According to published newspaper accounts, Governor Romney has directed his Chief of Commerce and Labor, Robert Pozen, to conduct an independent analysis of the possible expansion of gaming, which is not anticipated to be completed until some time in the spring of 2003. In addition, according to such newspaper accounts, Governor Romney is considering introducing legislation to allow video slot machines at two to four unspecified sites in the Commonwealth with five-year licenses to be auctioned to the highest bidders. In a recent hearing of the Government Regulations Committee of the Massachusetts House of Representatives, Mr. Pozen, on behalf of the Romney administration, stated that 7,200 slot machines at three unspecified sites could raise as much as $300 million annually in additional state tax revenues. At this same hearing, a number of other of gaming-related proposals were discussed. According to published newspaper accounts, on April 15, 2003, the House of Representatives will debate two gaming bills related to permitting slot machines at the Commonwealth's four racetracks and authorizing slot machines and full-scale casinos. According to newspaper accounts, the Government Regulations Committee has recommended that both gaming bills be defeated. If Governor Romney and/or the state legislature determines to introduce or enact legislation in 2003 to expand gaming, the process to enact gaming legislation could take a number of months, and it is impossible to predict the nature of any such legislation and whether the Westwood Group would in fact benefit from such legislation if ultimately enacted. (f) Employees At March 31, 2003, the Company employed approximately 350 persons. ITEM 2. DESCRIPTION OF PROPERTY The racetrack facilities, which are located in Revere, Massachusetts, include a one-quarter mile oval sand track, a physical plant consisting of a climate controlled grandstand and clubhouse and a two-story administrative center. Wonderland Greyhound Park is mortgaged to secure the indebtedness owed under a term loan to the Boston Federal Savings Bank. (See Item 7, "Liquidity and Capital Resources," and Note 3 of Notes to Consolidated Financial Statements). The executive offices are owned by the Company and are located at Wonderland Greyhound Park in Revere, Massachusetts. ITEM 3. LEGAL PROCEEDINGS The Company is involved in various legal proceedings that arise in the ordinary course of its business. 4 In 1996, litigation ensued between Foxboro Realty Associates, LLC, et al. and the Company, its subsidiary Foxboro Park, Inc., et al. in Norfolk Superior Court in Massachusetts, over Foxboro Park's right to occupy Foxboro Raceway. The Court issued an execution pursuant to which Foxboro Park was evicted from the racetrack on July 31, 1997. The parties appealed to the Massachusetts Appeals Court on January 27, 1998. On July 8, 1998, Foxboro Route 1 Limited Partnership, et al., filed a civil action in Suffolk Superior Court in Massachusetts against The Westwood Group, Inc., Wonderland Greyhound Park, Inc., et al., seeking payment for use and occupancy of Foxboro Raceway, and other damages, from 1992 through July 1997. On January 30, 2001, the above-mentioned cases were settled without monetary damages to either party. In January 2001, the Company lost at arbitration a claim brought against it by a former totalisator vendor. The judgment amount was $468,000. This amount has been recorded in "Other income (expense), net" as of the fourth quarter of 2000 and fully accrued in current liabilities. As of December 31, 2001, the judgment amount, plus accrued interest thereon, totaled $538,000. The arbitrator's decision was appealed to the United States Federal District Court in Massachusetts and overturned. The former vendor appealed the District Court decision to the United States Federal Circuit Court of Appeals, which upheld the arbitrator's original decision. The case was returned to the United States Federal District Court where a judgment was entered. The parties have negotiated a settlement agreement which provides for an aggregate payment in the amount of $603,534 to be paid by the Company in weekly installments ranging from $1,374 to $2,000, with the remaining balance due and payable on April 1, 2003. The Company paid remaining balance on September 3, 2002 in connection with entering into its new credit facility with Boston Federal Savings Bank (See Item 7 under the caption "Liquidity and Capital Resources" for a description of the credit facility) with Boston Federal Savings Bank. On March 18, 2003, the Company received an Administrative Complaint and Ex Parte Motion for a Temporary Order to Cease and Desist from the Secretary of the Commonwealth, Securities Division of The Commonwealth of Massachusetts, one day prior to the date of the special meeting of the stockholders to approve a proposed reverse stock split, which, if approved, would have resulted in the Company changing its status from a public company to a private company (See Item 7 under the caption "Liquidity and Capital Resources" for a description of the proposed reverse stock split). The Administrative Complaint, which was prompted by the receipt by the Massachusetts Securities Division of an anonymous letter from a Company stockholder, claims that the Westwood Group failed to disclose certain information to the stockholders in the Company's Proxy Statement, which the Division alleges to be "material." The stockholders' meeting scheduled for March 19, 2003, in order to approve the proposed going private transaction, was adjourned in order to permit the Company to address this matter. On April 8, 2003, the Company filed an answer in response to the Administrative Complaint denying each of the allegations set forth in the Administrative Complaint. A hearing to address the Ex Parte Motion for a Temporary Order to Cease and Desist has been scheduled for the end of April 2003. On April 1, 2003, a class action complaint was filed by a stockholder of the Company, Joseph I. Messina, against the Westwood Group and the Company's Board of Directors in the Court of Chancery in the State of Delaware seeking to enjoin the proposed reverse stock split on the basis that is not fair to the stockholders and that the proxy statement omits information that Mr. Messina alleges to be "material". The Company disputes all of the allegations set out in the Complaint and will take appropriate action to address this Complaint. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of 2002, there were no matters submitted to a vote of the securities holders, through the solicitation of proxies or otherwise. 5 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) Market Price There is no established trading market for the Company's Common Stock or the Company's Class B Common Stock. The Company's Common Stock is traded on the pink sheets. The following table sets forth for the periods indicated the high and low sales prices. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Fiscal year ended December 31, 2002, the sales prices per share of Common Stock are as follows:

Fiscal year ended December 31, 2001, sales prices per share of Common Stock are as follows:

During the first quarter of 2003 through March 17, 2003, our common stock traded at prices ranging from a low sales price of $3.10 to a high sales price of $8.00. (b) Approximate Number of Record Holders of Common Stock and Class B Common Stock

(c) Dividend History No dividends were declared by the Company on its Common Stock during 2002, 2001, or 2000. The Company has not paid a cash dividend on its Class B Common Stock to date. The Company does not intend to pay cash dividends on either Common Stock or Class B Common Stock in the immediate future. 6 (d) Securities Authorized for Issuance Under Equity Compensation Plans This table provides certain information as of December 31, 2002, with respect to our equity compensation plans:

(1) Options for 92,500 shares of the Company's Common Stock were granted pursuant to individual compensation agreements, which are described under Item 11 under the caption "Stock Option Agreement." A former director of the Westwood Group has the right to receive an estimated 21,073 shares of the Company's Common Stock (See Item 13). ITEM 6. SELECTED FINANCIAL DATA The following data insofar as it relates to the three fiscal years ended December 31, 2000 through December 31, 2002 has been derived from the Consolidated Financial Statements appearing herein, including the Consolidated Balance Sheets as of December 31, 2002 and 2001 and the related Consolidated Statements of Operations for each of the three years in the period ended December 31, 2002. The data insofar as it relates to the Consolidated Balance Sheets as of December 31, 2000, 1999 and 1998 and the Consolidated Statement of Operations for the fiscal years ended December 31, 1999 and 1998 have been derived from our historical financial statements of those periods.

7 Other income (expense), net (2) (31) (21) (693) 3 525 ----------- ----------- ----------- ----------- ----------- Income (loss) before income taxes (1,135) 1,122 (756) (1,705) 892 Provision for income taxes 62 46 93 91 83 ----------- ----------- ----------- ----------- ----------- Income (loss) from continuing operations before operations of discontinued harness racing subsidiary (1,197) 1,076 (849) (1,796) 809 Gain from operations of discontinued harness racing subsidiary (net of income taxes of $20,400 in 1998) -- 351 353 -- 1,001 ----------- ----------- ----------- ----------- ----------- Net income (loss) ($ 1,197) $ 1,427 ($ 496) ($ 1,796) $ 1,810 =========== =========== =========== =========== =========== Basic per share data: Income (loss) from continuing operations ($ 0.95) $ 0.85 ($ 0.67) ($ 1.42) $ 0.63 Income from discontinued operations -- 0.28 0.28 -- 0.81 ----------- ----------- ----------- ----------- ----------- Net income (loss) ($ 0.95) $ 1.13 ($ 0.39) ($ 1.42) $ 1.44 =========== =========== =========== =========== =========== Weighted average common shares outstanding 1,263,225 1,263,225 1,263,225 1,263,225 1,261,252 =========== =========== =========== =========== =========== Diluted per share data: Income (loss) from continuing operations ($ 0.95) $ 0.85 ($ 0.67) ($ 1.42) $ 0.63 Income from discontinued operations -- 0.28 0.28 -- 0.78 ----------- ----------- ----------- ----------- ----------- Net income (loss) ($ 0.95) $ 1.13 ($ 0.39) ($ 1.42) $ 1.41 =========== =========== =========== =========== =========== Diluted weighted average common shares outstanding 1,263,225 1,263,225 1,263,225 1,263,225 1,281,243 =========== =========== =========== =========== ===========

8 (1) Long-term debt at December 31, 2002, 2001, 2000, 1999 and 1998 excludes $96, $324, $295, $273 and $351, respectively, of long-term debt reclassified as current obligations (see Note 3 of Consolidated Financial Statements). (2) The table above reflects the Company's accounting for its investment in Back Bay Restaurant Group, Inc. ("BBRG") under the equity method. Other income (expense), net contains income of approximately $157,000 and $525,000 from the Company's investment in BBRG for 1999 and 1998, respectively. (3) Interest expense is net of interest income of $7, $7, $25, $10 and $45 for the years ended December 31, 2002, 2001, 2000, 1999, and 1998, respectively. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with "Selected Financial Data" and our financial statements and related notes appearing elsewhere in this annual report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under "Results of Operations" and elsewhere in this annual report. General Wonderland currently conducts live racing seven (7) nights per week, April through September, and six (6) nights per week throughout the rest of the year. Wonderland also offers simulcast wagering afternoons and evenings throughout the year. The table below illustrates certain key statistics for Wonderland for each of the past three (3) years:

Wonderland has been granted a license to conduct up to 520 racing performances during 2003. Results of Operations During 2001, the Company and the owners of other area racetracks worked to enact legislation which would permit the Company and the other greyhound track to continue to provide simulcast broadcasting of thoroughbred racing on a more frequent basis, as well as providing for a decrease in the pari-mutuel taxes paid to the Commonwealth and that the funds available from the pari-mutuel tax decrease be made available for increases in purses and the Greyhound Capital Improvement and Promotional Trust Funds as well as the establishment of a Greyhound Adoption Fund and the implementation of an off-track betting system. On November 17, 2001, the "Act Providing for Improvements to the Horse and Greyhound Racing Industry in the Commonwealth and the Regulation Thereof" was signed into law by the acting governor of Massachusetts. Under this statute, the Company and the other area racetracks are permitted to continue to provide simulcast 9 broadcasting of thoroughbred racing to their patrons until December 2005. This legislation also provides that the Company is to pay premiums for the right to simulcast interstate thoroughbred and harness racing ranging from 3% to 7% for the benefit of the purse accounts at the Commonwealth's two commercial horse racetracks. In addition, to the extension and expansion of simulcast broadcasting, this statute provides for a "purse pool," which will be funded by taxes, fees and assessments with a minimum of $400,000 being credited to the purse accounts of each racetrack with any remaining portion being apportioned among the racetracks pursuant to a formula to be devised by the State Racing Commission. All unclaimed simulcast wagers collected at each racetrack are to be deposited with the Massachusetts State Racing Commission for payment to the purse account of the individual racetracks responsible for such unclaimed wagers. The Westwood Group also received a one-time grant of $300,035 during 2001 from the Commonwealth for the purpose of funding capital improvements and repairs to its facility and equipment. Finally, the statute authorizes account wagering at each of the individual racetracks and establishes a nine member special commission to study the feasibility of an off-track betting program in Massachusetts. Despite the enactment of this legislation and the initial potential for an increase in cash flow from such legislation, management does not believe that this legislation has materially benefited the Company's overall racing operations since November 2001. The Company is still experiencing a decline in total attendance and live-on track handle caused by a variety of factors, including a general decline in the pari-mutuel racing industry, the negative effect of the ballot initiative on greyhound racing's image, and strong competition for the wagered dollar from the Massachusetts State Lottery and from the introduction of casino gambling and slot machines in neighboring states. (See Item 1D, "Competition and Marketing"). Management has worked diligently over the past decade in attempting to convince the Governors and the Massachusetts state legislature of the need to allow the Commonwealth's commercial racetracks to offer their patrons expanded gaming opportunities. While various legislation was introduced, including for the upcoming legislative session, the Massachusetts state legislature took no action on gaming in the years 2000, 2001, and 2002. On October 3, 2002, the then acting Governor of Massachusetts issued an executive order establishing an exploratory commission to study and report on the potential impact, both positive and negative, of the potential expansion of legalized gaming in Massachusetts. This commission held public hearings in four locations throughout the Commonwealth and reported its findings to the Governor on December 31, 2002. This commission's report did not recommend that the Governor and/or the state legislature enact legislation that would expand gaming, but instead focuses on the various ways that the expansion of legalized gaming could possibly impact, both negatively and positively, the Commonwealth and its citizens. According to published newspaper accounts, Governor Romney has directed his Chief of Commerce and Labor, Robert Pozen, to conduct an independent analysis of the possible expansion of gaming, which is not anticipated to be completed until some time in the spring of 2003. In addition, according to such newspaper accounts Governor Romney is considering introducing legislation to allow video slot machines at two to four unspecified sites in the Commonwealth with five-year licenses to be auctioned to the highest bidders. In a recent hearing of the Government Regulations Committee of the Massachusetts House of Representatives, Mr. Pozen, on behalf of the Romney administration, stated that 7,200 slot machines at three unspecified sites could raise as much as $300 million annually in additional state tax revenues. At this same hearing, a number of other of gaming-related proposals were discussed. According to published newspaper accounts, on April 15, 2003, the House of Representatives will debate two gaming bills related to permitting slot machines at the Commonwealth's four racetracks and authorizing slot machines and full-scale casinos. According to newspaper accounts, the Government Regulations Committee has recommended that both gaming bills be defeated. If Governor Romney and/or the state legislature determines to introduce or enact legislation in 2003 to expand gaming, the process to enact gaming legislation could take a number of months, and it is impossible to predict the nature of any such legislation and whether the Westwood Group would in fact benefit from such legislation if ultimately enacted. Operating Revenue for year ended December 31, 2002 compared to year ended December 31, 2001 Total operating revenue including pari-mutuel commissions declined by 7% or approximately $ 1.2 million to $15.8 million in 2002 as compared to $17.0 million in 2001. Total handle decreased by 8% in 2002 to $95 million as compared to $103 million in 2001. Live-on track handle decreased by $4 million or 20% in 2002 to $16.0 million 10 as compared to $20.0 million in 2001, while live-simulcast handle decreased by $4 million or 11% in 2002 to $30 million compared to $34.0 million in 2001. Guest-simulcast handle remained unchanged from 2001 to 2002. Wonderland had nine fewer live racing performances in 2002 for a total of 324 live performances as compared to 333 live performances in 2001, with a 10% decrease in attendance between 2002 and 2001. Concessions revenue increased 5% to $1.6 million in 2002 from $1.5 million in 2001. Concessions revenue consists of food, beverage, program sales, and advertising income. Other operating revenue declined by 29% to $1.4 million in 2002 from $2.0 million in 2001. Pari-mutuel commissions for the year ended December 31, 2002 included approximately $124,000 deposited into the Greyhound Capital Improvements Trust Fund, $80,000 into the Greyhound Adoption Fund, and $204,000 into the Greyhound Promotional Trust Fund. During same period of 2001, such amounts were $244,000, $0, and $246,000, respectively. These funds are maintained through remittance by Wonderland of a percentage of the handle that is retained by Wonderland after payment to bettors. Reimbursement is periodically approved by The Commonwealth of Massachusetts to the extent that the trust fund balance equals or exceeds the reimbursements for which the Company applied. Operating Revenue for year ended December 31, 2001 compared to year ended December 31, 2000 Total operating revenue including pari-mutuel commissions declined by 4% or approximately $ 700,000 in 2001 to $17.0 million as compared to $17.7 million in 2000. Total handle in 2001 was $103 million as compared to $113 million in 2000. Live-on track handle decreased by $3 million or 13% in 2001 to $20.0 million as compared to $23.0 million in 2000, while live-simulcast handle decreased by $6 million or 15% to $34.0 million. Guest-simulcast handle decreased by approximately $1.0 million or 2% in 2001 to $49.0 million as compared to $50.0 million in 2000. Wonderland had seventeen (17) fewer live racing performances in 2001 for a total of 333 live performances as compared to 350 live performances in 2000, with a 7% decrease in attendance between 2001 and 2000. Concessions revenue decreased slightly to $1.5 million in 2001 from $1.6 million in 2000. Concessions revenue consists of food, beverage, program sales, and advertising income. Other operating revenue remained essentially unchanged compared to 2000. Operating Expenses for the year ended December 31, 2002 compared to year ended December 31, 2001 Total operating expenses were $16.5 million and $16.4 million in 2002 and 2001, respectively. Purse expense declined by 7% because of the decline in on-track handle. Purse expense is determined by contractual agreement with the dog owners and statutory requirements of The Commonwealth of Massachusetts based upon on-track handle. During 2002, administrative and operating expenses increased by approximately $260,000 or 5% compared to the same period in 2001. This increase was mainly the result of costs related to our going private transaction. Operating Expenses for the year ended December 31, 2001 compared to year ended December 31, 2000 Total operating expenses were $16.4 million and $17.3 million in 2001 and 2000, respectively. Purse expense declined by 7% because of the decline in on-track handle. Purse expense is determined by contractual agreement with the dog owners and statutory requirements of The Commonwealth of Massachusetts based upon on-track handle. During 2001, administrative and operating expenses decreased by approximately $668,000 compared to the same period in 2000. When deduction is made for $881,000 of expenditures on the ballot initiative during 2000, baseline administrative and operating expenses show an increase of $213,000. This increase is primarily attributable to insurance and utility costs. (See Item 1E, "Government Regulation"). Depreciation and Amortization Depreciation and amortization increased in 2002 as compared to 2001 by approximately $106,000 and increased by approximately $12,000 in 2001 from 2000. The increase during 2002 was the result of extensive capital additions to the track facility. The Company continues to replace capital items as they become obsolete. 11 Interest Expense Interest expense during 2002 declined by approximately $140,000 as the result of lower average outstanding balances and advantageous refinancing of the Company's long term debt. During 2001, interest expense increased by approximately $54,000 as compared to 2000. The increase was the result of interest accrued on a litigation settlement with a totalisator vendor whose amount became known at the end of 2001. Other Income (Expense) During 2001, the Company realized $1,058,007 in income from a change in accounting estimate related to a long-term liability. In the event that the Company had not realized this $1,058,007, its income from continuing operations would have been $18,000 in 2001. In January 2001, the Company lost at arbitration a claim brought against it by a former totalisator vendor. The judgment amount was $468,000. This amount was recorded as "other expense" during the year ended December 31, 2000. Provision For Income Taxes The Company's provision for income taxes was less than the statutory federal tax rate of 34% during 2002, 2001, and 2000 primarily due to the utilization of available net operating loss carryforwards for which the related deferred tax asset has been fully reserved. The provision for taxes of $62,000 in 2002, $46,000 in 2001, and $94,000 in 2000 consists of state income taxes. Discontinued Operations Foxboro Park, Inc. ("Foxboro," which term as used herein includes its wholly-owned subsidiaries) conducted seasonal live harness racing generally two (2) evenings and two (2) matinees per week, while simulcasting afternoons and evenings through July 1997. (See Item 3, "Legal Proceedings;" and Note 4 of Notes to Consolidated Financial Statements). In 2001 and 2000, the Company recognized gains of $351,000 and $353,000 resulting from the reduction of liabilities related to discontinued operations. Liquidity and Capital Resources At December 31, 2002, the Company had a working capital deficit of approximately $376,000, and a stockholders' deficit of approximately $1.8 million. Historically, the Company's primary sources of capital to finance its businesses have been its cash flow from operations and credit facilities. The Company's capital needs are primarily for maintenance and enhancement of the racing facility at Wonderland, and for debt service requirements. The Company's cash and cash equivalents totaled approximately $114,000 at December 31, 2002, compared with $12,000 at December 31, 2001. The Company generated a cash deficit from operations of approximately $ 520,000 during 2002 as compared to a deficit of $143,000 during 2001. Non-cash items included in the Company's net loss in 2002 consist of depreciation and amortization expense of $642,000. Changes in working capital accounts including restricted cash, accounts payable and other accrued liabilities generated approximately $275,000 of cash in 2002. Net cash used in investing activities in 2002 of approximately $405,000 primarily represents additions to property, plant and equipment. On September 3, 2002, Wonderland Greyhound Park Realty, LLC, a subsidiary of the Company, entered into a $6,500,000 Loan, Reimbursement and Security Agreement with Boston Federal Savings Bank. This loan is collateralized by a mortgage on all real and personal property located at Wonderland Greyhound Park. A portion of the proceeds from this loan transaction was used to refinance the Company's then existing credit facility with Century Bank and Trust Company. The Company is the guarantor of the loan from Boston Federal Savings Bank. Financing activities in 2002 generated approximately $1.0 million of cash in the course of the refinancing of the Company's long-term debt. 12 The Company is currently undertaking a capital improvements program to improve its track and patron facilities. It is anticipated that these expenditures will be fully funded by the Capital Improvement Trust Fund and a grant program contained in the racing legislation enacted in November 2001. The Company received a short-term working capital advance from Charles F. Sarkis, Chairman of the Company, of $300,000 in March 2002. This funding accrued interest at a rate of 12% and was repaid with a portion of the proceeds received in connection with the loan transaction with Boston Federal Savings Bank. The Company believes that it will generate enough cash from operations to satisfy its anticipated obligations during 2003. On February 13, 2003, the Company filed a Definitive Proxy Statement and an accompanying Schedule 13E-3 with the Securities and Exchange Commission in order to effectuate a 1,500 for 1 reverse stock split of its capital stock. If the proposed reverse stock split had been approved by a majority of the voting power of the Company's stockholders, then holders of less than 1,500 shares immediately prior to such meeting would have been cashed out at a per share purchase price equal to $4.00, thereby reducing the number of its stockholders to under 300 and, consequently, allowing the Company to change its status from a public company to a private company. This would have relieved the Company of the administrative burden and cost and competitive disadvantages associated with filing reports and otherwise complying with the requirements of registration under the Federal securities laws and to permit small stockholders to receive liquidity for their shares without having to pay brokerage commissions. The proposed reverse stock split would have (i) caused the Westwood Groups to redeem shares held by approximately 400 holders of record of Common Stock, (ii) retained record holders who hold 1,500 or more shares of Common Stock or Class B Common Stock, (iii) reduced the number of shares, on a pro-rata basis, held by the holders of record who hold 1,500 or more shares of Common Stock or Class B Common Stock, and (iv) changed the percent of outstanding Common Stock held by the remaining stockholders to 100%. Assuming the completion of the proposed reverse stock split and change in its status from a public company to a private company, the Company would have promptly thereafter initiated a tender offer for additional shares of its capital stock in order to provide those stockholders who would not have received a cash payment in connection with the proposed reverse stock split the opportunity to tender one post-reverse stock split share in return for $6,000, which amount reflects the highest payment to be received by any stockholder as a result of the consummation of the proposed reverse stock split. The special meeting of the Company's stockholders scheduled for March 19, 2003 was adjourned so that the Company could address allegations raised by the Massachusetts Securities Division in an Administrative Complaint and a lawsuit brought by a stockholder in Delaware Chancery Court (See Item 3, "Legal Proceedings"). Accordingly, the proposed going private transaction was not consummated. Racing Subsidiary In order to meet the requirements for renewal of racing licenses in 2004, the Company's racing subsidiary must demonstrate that among other criteria, it is a financially stable entity, capable of disposing of its obligations on an annual basis. Although management is optimistic that it will be able to demonstrate sufficient financial stability in the application for a 2004 racing license, the Company cannot assure you that the Racing Commission will continue to grant a license to conduct racing on the schedule presently maintained at Wonderland. In the event that the Company is not successful in obtaining a year 2004 racing license, the adverse impact on the Company's financial results and position would be material. Impact of Inflation and Changing Prices Certain of the Company's operating expenses, such as wages and benefits, equipment repair and replacement, and inventory and marketing costs, increase with general inflation. In order for the Company to cope with inflation, it must, to the extent permitted by competition and patron acceptance, pass increased cost on by periodically increasing prices. The Company is limited in its ability to offset the effects of inflation by increasing its percentage of handle because this percentage is governed by statute. Critical Accounting Policies Our accounting policies are disclosed in the Notes to the Financial Statements in this annual report. The more critical of these policies are described in the following paragraphs below. 13 Revenue Recognition The Company's annual revenues are mainly derived from the net commission that it receives from wagers made by patrons during its live-on track racing performances, live and guest-simulcast racing performances and from admission and concession charges at such performances. Inter-track receivables and payables are dependent on the accuracy of an independent totalisator vendor. This vendor's system has been independently reviewed and deemed reliable. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates that could impact on the Company's results of operations include those relating to settlement of liabilities related to discontinued operations, contractual obligations and other accrued expenses. Actual results could differ from those estimates. Credit Facilities, Debt and Lease Payment Commitments During 2002, we repaid our outstanding debt with Century Bank and Trust Company with the proceeds we received from a term loan with Boston Federal Savings Bank. Under the Boston Federal Savings Bank term loan, we can borrow up to $6,500,000. As of December 31, 2002, we had borrowed a total $5,650,000 and $850,000 was available for future use. Of the available amount, $600,000 may be used for working capital purposes and $250,000 may be used to assist the Company for transaction costs to become a private company. Borrowings under the term loan bear interest at 6.5%. The term loan requires 34 monthly payments of principal and interest of $38,252. The final payment of $5,356,673 is due on September 1, 2005. Totalisator equipment rent (which is primarily based on the handle per performance) was approximately $335,000, $342,000 and $292,000 in 2002, 2001 and 2000, respectively. Future minimum lease payments are due at amounts calculated as a percentage of our total handle amounts. We are also liable for numerous operating leases for automobiles and other operating equipment. The future minimum lease commitments relating to these noncancelable operating leases as of December 31, 2002 are not material. New Accounting Standards In April 2002, the FASB issued Statement No. 145, "Rescission of Statements No. 4, 44 and 64, Amendment of SFAS Statement No. 13, and Technical Corrections." SFAS 145 requires that gains and losses from extinguishment of debt be classified as extraordinary items only if they meet the criteria in Accounting Principles Board Opinion No. 30. Applying the provisions of Opinion No. 30 will distinguish transactions that are unusual and infrequent and meet the criteria for classification as an extraordinary item. SFAS No. 145 is effective beginning January 1, 2003. Management does not believe the adoption of SFAS No. 145 will have a significant impact on the consolidated financial statements. On July 30, 2002, the FASB issued Statement No. 146, "Accounting for the Costs Associated with Exit or Disposal Activities." This statement requires companies to recognize costs associated with exit or disposal activities only when liabilities for those costs are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 also requires companies to initially measure liabilities for exit and disposal activities at their fair values. SFAS No. 146 replaces Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)" and EITF No. 88-10, "Costs Associated with Lease Modification or Termination." The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes the adoption of this statement will not have a material impact on its operations. In December 2002, the Financial Accounting Standard Board ("FASB") issued SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition and Disclosure - an amendment of SFAS Statement No. 123" ("SFAS 148"). This statement amends SFAS 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 also requires that those effects be disclosed more prominently by specifying the form, content, and location of those disclosures. We have adopted the increased disclosure requirements of SFAS 148 for the fiscal year ended December 31, 2002. We will continue to use the intrinsic value method of accounting for stock-based employee compensation. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company has no material exposure to market risk that could affect its future results of operations and financial condition. Risks and uncertainties, including those not presently known to us or that we currently deem 14 immaterial, may impair our business. The Company does not use derivative products and does not have any material unhedged monetary assets. (See Item 7, "Liquidity and Capital Resources"). ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS CONSOLIDATED FINANCIAL STATEMENTS: Balance sheets Statements of operations Statements of changes in stockholders' deficiency and comprehensive income (loss) Statements of cash flows Notes to consolidated financial statements 15 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of The Westwood Group, Inc. and Subsidiaries Revere, Massachusetts: We have audited the accompanying consolidated balance sheets of The Westwood Group, Inc. and subsidiaries as of December 31, 2002 and 2001 and the related consolidated statements of operations, changes in stockholders' deficiency and comprehensive income (loss) and cash flows for each of the three years in the period ended December 31, 2002. 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance as to 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 The Westwood Group, Inc. and subsidiaries as of December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. /s/ BDO Seidman, LLP --------------------------------- Boston, Massachusetts March 26, 2003 (except for the matter discussed in Note 6 as to which the date is April 1, 2003) 16 THE WESTWOOD GROUP, INC. AND SUBSIDIARIES

See accompanying notes to consolidated financial statements. 17 THE WESTWOOD GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements. 18 THE WESTWOOD GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

See accompanying notes to consolidated financial statements. 19 THE WESTWOOD GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY AND COMPREHENSIVE INCOME (LOSS) Years ended December 31, 2002, 2001 and 2000

See accompanying notes to consolidated financial statements. 20 THE WESTWOOD GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 13)

See accompanying notes to consolidated financial statements. 21 THE WESTWOOD GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of The Westwood Group, Inc. and subsidiaries (the Business "Company") operates in one business segment through its pari-mutuel racing subsidiary. Wonderland Greyhound Park ("Wonderland" or "Wonderland Park") is a pari-mutuel greyhound racing facility located in Revere, Massachusetts. The Company also operated Foxboro Park, a pari-mutuel harness racing facility located in Foxboro, Massachusetts through the date of eviction in July, 1997. The Company's Foxboro harness racing operations were discontinued during 1997. The Wonderland facility includes a one-quarter mile sand track, a physical plant consisting of a climate controlled grandstand and clubhouse and a two-story administrative center. The Company maintains and operates two full service restaurants, a sports bar and other concession facilities at the racetrack. The racetrack facility can accommodate 10,000 patrons. The average attendance per performance in 2002 was approximately 801 persons. The complex encompasses a total of approximately 35 acres, including paved and lighted parking providing capacity for approximately 2,300 cars. Wonderland provides its patrons with a variety of entertainment options including live racing and full card simulcast wagering. In 2002, the Company filed a Proxy Statement in order to change from public company status to private company status (see Note 10). Principles of The consolidated financial statements include the Consolidation accounts of The Westwood Group, Inc. and its wholly-owned subsidiaries. All material intercompany transactions have been eliminated in consolidation. Cash and Cash Cash investments with maturities of three months or less Equivalents at the time of their purchase are classified as cash equivalents. Restricted Cash Restricted cash includes approximately $125,000 and $345,000 at December 31, 2002 and 2001, respectively, related to funds dedicated to payment of the Company's liability for outstanding pari-mutuel tickets. Unclaimed winnings from pari-mutuel wagering are held by Wonderland until they become payable to the Commonwealth by the operation of unclaimed property statutes. Restricted cash includes approximately $126,000 at December 31, 2002 which is required to be used for the purposes of the going private transaction. Restricted cash also includes approximately $125,000 at December 31, 2002 held as collateral for the Company's letter of credit which secures the Company's racing bond. Escrowed Cash Escrowed cash is related to the operations of Wonderland and includes amounts held by The Commonwealth of Massachusetts in trust funds (for capital improvements and advertising/promotion). Wonderland funds these costs and requests reimbursement from the trust funds. Wonderland is reimbursed upon approval by the Commonwealth. 22 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property, Plant Property, plant and equipment are stated at cost and are and Equipment depreciated using the straight-line method over the following estimated useful lives:

Gains or losses are recognized upon the disposal of property, plant and equipment, and the related accumulated depreciation and amortization are adjusted accordingly. Losses are also recognized on buildings and improvements in the event of a permanent impairment to their value, as determined by Statement of Financial Accounting Standards ("SFAS") No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Impairment charges are recorded whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets are written down to fair value. The Company believes that no such impairment exists at December 31, 2002. SFAS No. 144 supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." In prior years the Company applied the provisions of SFAS 121 to evaluate impairment. Maintenance, repairs and betterments that do not enhance the value of or increase the life of the assets are charged to operations as incurred. Depreciation and amortization expense (excluding amortization of deferred charges) of approximately $592,000, $500,000 and $487,000 was recorded for the years ended December 31, 2002, 2001 and 2000, respectively. Deferred Deferred financing costs are being amortized on a Financing straight line basis over the term of the related debt Costs (34 months). Amortization expense for the years ended December 31, 2002, 2001 and 2000 was approximately $49,000, $36,000 and $36,000, respectively. Concentration Financial instruments which potentially subject the of Credit Risk Company to credit risk consist of cash equivalents and accounts receivable. The Company's policy is to limit the amount of credit exposure to any one financial institution and place investments with financial institutions evaluated as being creditworthy. Concentration of credit risk, with respect to accounts receivable, is limited due to the Company's credit evaluation process. The Company does not require collateral from its customers. The Company's accounts receivable balance is comprised principally of amounts due from other race tracks. Historically, the Company has not incurred any significant credit related losses. 23 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue The Company's annual revenues are mainly derived from Recognition the net commission that it receives from wagers made by patrons during its live-on track racing performances, live and guest simulcast racing performances and from admission and concession charges at such performances. Inter-track receivables and payables are dependent on the accuracy of an independent totalisator vendor. This vendor's system has been independently reviewed and deemed reliable. Stock-Based The Company follows SFAS No. 123, "Accounting for Compensation Stock-Based Compensation". SFAS No. 123 allows the Company to account for its stock-based compensation plans based upon either a fair value method or the intrinsic value method. The Company has elected to follow the intrinsic value method of accounting for stock-based compensations plans prescribed under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". Under SFAS No. 123, the Company is required to disclose the effects of applying the fair value method on the net income or loss. In December 2002, the Financial Accounting Standard Board ("FASB") issued SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition and Disclosure - an amendment of SFAS Statement No. 123" ("SFAS 148"). This statement amends SFAS 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 also requires that those effects be disclosed more prominently by specifying the form, content, and location of those disclosures. We have adopted the increased disclosure requirements of SFAS 148 for the fiscal year ended December 31, 2002. We will continue to use the intrinsic value method of accounting for stock-based employee compensation. The additional disclosures required by SFAS are as follows:

24 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Income (Loss) Basic net income (loss) per share is computed using the Per Common weighted average number of common shares outstanding Share during the period. Diluted net income (loss) per share is computed using the weighted average number of common shares and potentially dilutive common shares, consisting of stock options with an exercise price below the average market price of common shares. In 2001, the Company had net income, however, stock options were excluded from the computation of diluted shares because their exercise prices were above the average market price of the common shares. The Company's stock options did not have a dilutive effect in 2002 or 2000 since the Company incurred a net loss. Income Taxes The Company uses the liability method of accounting for income taxes. Under this method, deferred income taxes are provided based on the estimated future tax effects of differences between financial statement carrying amounts and the tax basis of existing assets and liabilities. The Company's policy is to record a valuation allowance against deferred tax assets unless it is more likely than not that such assets will be realized in future periods. The Company considers estimated future taxable income or loss and other available evidence when assessing the need for its deferred tax asset valuation allowance. Use of The preparation of financial statements in conformity Estimates with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Advertising The Company expenses advertising costs as incurred. Advertising expense was approximately $216,000, $181,000 and $128,000 for the years ended December 31, 2002, 2001 and 2000, respectively. Reclassifications Certain previously reported amounts have been reclassified in order to conform to the 2002 presentation. New Accounting In April 2002, the FASB issued Statement No. 145, Pronouncements "Rescission of Statements No. 4, 44 and 64, Amendment of SFAS Statement No. 13, and Technical Corrections." SFAS 145 requires that gains and losses from extinguishment of debt be classified as extraordinary items only if they meet the criteria in Accounting Principles Board Opinion No. 30. Applying the provisions of Opinion No. 30 will distinguish transactions that are unusual and infrequent and meet the criteria for classification as an extraordinary item. SFAS No. 145 is effective beginning January 1, 2003. Management does not believe the adoption of SFAS No. 145 will have a significant impact on the consolidated financial statements. On July 30, 2002, the FASB issued Statement No. 146, "Accounting for the Costs Associated with Exit or Disposal Activities." This statement requires companies to recognize costs associated with exit or disposal activities only when liabilities for those costs are incurred rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 also requires companies to initially measure liabilities for exit and disposal activities at their fair values. SFAS No. 146 replaces Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)" and EITF No. 88-10, "Costs Associated with Lease Modification or Termination." The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes the adoption of this statement will not have a material impact on its operations. 25 2. ACCOUNTS Accounts payable and accrued liabilities as of December PAYABLE AND 31, 2002 and 2001 consisted of the following: ACCRUED LIABILITIES

3. LONG-TERM DEBT Long-term debt consists of the following:

At December 31, 2002, the Company had drawn down a total of $5,650,000 from the Boston Federal Savings Bank loan and $850,000 was available for use. Of the available amount, $600,000 may be used for working capital purposes and $250,000 may be used to assist the Company for transaction costs to become a private company. The Loan, Reimbursement, and Security Agreement, dated as of September 3, 2002, by and between Wonderland Greyhound Park Realty, LLC and Boston Federal Savings Bank, contains certain restrictive covenants including the maintenance of certain financial ratios and debt coverage requirements. As of December 31, 2002, the Company was in compliance with these covenants. The proceeds from the Boston Federal Savings Bank loan were used to repay off the Century Bank term loan. 26 3. LONG-TERM DEBT (Continued) Maturities of long-term debt as of December 31, 2002 are as follows:

4. DISCONTINUED In 1996, litigation ensued between Foxboro Realty OPERATIONS Associates, LLC, et al. and the Company, its subsidiary Foxboro Park, Inc., et al., over Foxboro's right to occupy Foxboro Raceway. The Court issued an execution pursuant to which Foxboro was evicted from the racetrack on July 31, 1997. As a result the Company discontinued its harness racing operations. In the fourth quarter of 2001 and 2000, the Company recognized a gain of $351,000 and $353,420, respectively, resulting from the reduction of liabilities related to discontinued operations. As of December 31, 2002 and 2001, there were no remaining liabilities related to discontinued operations. 5. OTHER LONG-TERM Other long-term liabilities include approximately LIABILITIES $417,216 and $469,000 at December 31, 2002 and 2001, respectively, of fees owed to a law firm primarily related to litigation in prior years. Such outstanding amounts are currently payable at $1,000 per week. Current maturities of $52,000 are included in accounts payable and accrued liabilities. Also included in other long-term liabilities at December 31, 2001 is approximately $274,000 for a settlement of liability to a former totalisator vendor which was fully paid during 2002. The remaining balance in other long-term liabilities consists of deferred compensation and deferred pension payable of $96,524 and $452,659 for 2002, respectively, and $103,999 and $257,146 for 2001, respectively, and the long-term portion of capital lease payments (see Note 6). 6. COMMITMENTS AND CONTINGENCIES Racing License In order to meet the requirements for renewal of racing licenses, Wonderland must demonstrate, on an annual basis, that it is a financially viable entity, capable of disposing of its obligations on a timely basis. The racing license has been granted for the 2003 calendar year. Although management is optimistic that it will be able to demonstrate financial stability in their applications for a year 2004 racing license, there can be no assurance that the Racing Commission will continue to grant licenses to conduct racing on the schedules presently maintained at Wonderland. In the event that the Company is not successful in obtaining a year 2004 racing license, the adverse impact on the Company would be material. 27 6. COMMITMENTS AND CONTINGENCIES (Continued) Lease Commitment Totalisator equipment rent (which is primarily based on the handle per performance) was approximately $335,000, $342,000 and $292,000 in 2002, 2001 and 2000, respectively. Future minimum payments are due at amounts calculated as a percentage of the Company's total handle amounts. The Company is also liable for numerous operating leases for automobiles and other equipment. The future minimum lease commitments relating to noncancelable operating leases as of December 31, 2002 are immaterial. In 2002, 2001 and 2000, the Company entered into capital leases for various operating equipment items. As of December 31, 2002, future minimum lease payments under capital leases were as follows:

The current portion of lease payments has been recorded in accounts payable and other accrued liabilities, while the long-term portion of capital lease payments has been recorded in other long-term liabilities. Litigation The Company is subject to various legal proceedings that arise in the ordinary course of its business. In 1996, litigation ensued between Foxboro Realty Associates, LLC, et al. and the Company, its subsidiary Foxboro Park, Inc., et al. in Norfolk Superior Court in Massachusetts, over Foxboro Park's right to occupy Foxboro Raceway. The Court issued an execution pursuant to which Foxboro Park was evicted from the racetrack on July 31, 1997. The parties appealed to the Massachusetts Appeals Court on January 27, 1998. On July 8, 1998, Foxboro Route 1 Limited Partnership, et al., filed a civil action in Suffolk Superior Court in Massachusetts against The Westwood Group, Inc., Wonderland Greyhound Park, Inc., et al., seeking payment for use and occupancy of Foxboro Raceway, and other damages, from 1992 through July 1997. On January 30, 2001, the above-mentioned cases were settled without monetary damages to either party. 28 6. COMMITMENTS AND In January 2001, the Company lost at arbitration a claim CONTINGENCIES brought against it by a former totalisator vendor. The (Continued) judgment amount was $468,000. This amount has been recorded as "other income (expense), net" during the year ended December 31, 2000. The related liability was fully accrued in current liabilities. As of December 31, 2001, the judgment amount, plus accrued interest thereon, totaled approximately $538,000. The arbitrator's decision was appealed to the United States Federal District Court in Massachusetts and overturned. The former vendor appealed the District Court decision to the United States Federal Circuit Court of Appeals, which upheld the arbitrator's original decision. The case was returned to the United States Federal District Court where a judgment was entered. The parties negotiated a settlement agreement which provided for an aggregate payment in the amount of $603,534. The liability was fully paid as of December 31, 2002. On March 18, 2003, the Company received an Administrative Complaint and Ex Parte Motion for a Temporary Order to Cease and Desist from the Secretary of the Commonwealth, Securities Division of The Commonwealth of Massachusetts, one day prior to the date of the special meeting of the stockholders to approve a proposed reverse stock split, which, if approved, would have resulted in the Company changing its status from a public company to a private company. The Administrative Complaint, which was prompted by the receipt by the Massachusetts Securities Division of an anonymous letter from a Company stockholder, claims that the Westwood Group failed to disclose certain information to the stockholders in the Company's Proxy Statement, which the Division alleges to be "material". The stockholders' meeting scheduled for March 19, 2003 to vote to approve the proposed going private transaction was adjourned in order to permit the Company to address this matter. On April 8, 2003, the Company filed an answer in response to the Administrative Complaint denying each of the allegations set forth in the Administrative Complaint. A hearing to address the Ex Parte Motion for a Temporary Order to Cease and Desist has been scheduled at the end of April 2003. On April 1, 2003, a class action complaint was filed by a stockholder of the Company, Joseph I. Messina, against the Westwood Group and the Company's Board of Directors in the Court of Chancery in the State of Delaware seeking to enjoin the proposed reverse stock split on the basis that is not fair to the stockholders and that the proxy statement omits information that Mr. Messina alleges to be "material". The Company disputes all of the allegations set forth in the Complaint and will take appropriate action to address this Complaint. 7. COMMON STOCK, The Company has two classes of common stock. The holders STOCK OPTIONS of Common Stock are entitled to one vote for each share AND GRANT PLANS of Common Stock, while the holders of Class B Common Stock are entitled to ten votes for each share of Class B Common Stock. All other powers, preferences and rights are identical for the Common Stock and the Class B Common Stock. In October 1995, the Board of Directors approved and ratified the granting of non-qualified stock options. These options were granted to the Directors of the Company to purchase shares of common stock at an option price equal to the fair market value of the Company's common stock at the date the options were granted. The stock options vested over five years and have a life of ten years. The Company's stock options activity is summarized as follows:

29 7. COMMON STOCK, The Company's total stock options outstanding of 92,500 STOCK OPTIONS at December 31, 2002 expire as follows: 50,000 in AND GRANT PLANS October 2005, and 42,500 in November 2007. (Continued) All stock options were fully vested as of December 31, 2000. As a result there is no proforma expense for the years ended December 31, 2002 and 2001. The assumptions used and the weighted average information for the year ended December 31, 2000 include a risk-free rate of 7.5%; an expected dividend yield of 2.5%; an expected life of 10 years; and an expected volatility factor of 45%. The weighted average fair value of options granted was $5.18 per share and the weighted average exercise price of options granted was $3.00 per share. Additionally, the weighted average remaining contractual life of options outstanding at December 31, 2000 was 3 years. The effect of applying SFAS No. 123 for the year ended December 31, 2000 would have been an increase to net loss of approximately $43,000. (See Note 1 for further information.) 8. INCOME TAXES The Company's provision for income taxes for the years ended December 31, 2002, 2001 and 2000 represents state income taxes. The Company's effective tax rates differ from amounts computed by applying the statutory federal income tax rate to income (loss) from continuing operations before income taxes, as follows:

30 8. INCOME TAXES The tax effects of the significant temporary differences (Continued) which comprise the deferred tax assets and liabilities are as follows (in thousands):

The Company has operating loss carryforwards amounting to $7.1 million which begin expiring in December of 2008. The Company has fully reserved for all net deferred tax assets as future realization of these assets is not presently determinable. 9. PENSION PLANS The Company contributed $90,868, $93,033 and $44,247 in AND RETIREMENT 2002, 2001 and 2000, respectively, to three BENEFITS multi-employer pension plans for employees covered by collective bargaining agreements. These plans are not administered by the Company and contributions are determined in accordance with the provisions of negotiated labor contracts. The Company maintains a defined benefit retirement plan for certain other union employees and one for non-union employees. The plan provides a benefit of a flat dollar amount, determined by the collective bargaining agreement with the union. Company contributions to this plan totaled $64,262, $104,962 and $123,170 in 2002, 2001 and 2000, respectively. Benefits under the plan are provided by a group annuity contract purchased from an insurance carrier. The expense for this plan includes amortization of the cost of providing plan benefits for past service over a period of approximately 14 years. The Company's funding policy is to contribute amounts annually to the Plan, subject to the Internal Revenue Service and ERISA minimum required and maximum allowable funding limitations. The following table sets forth the plan's funded status at December 31, 2002 and 2001:

31 9. PENSION PLANS Net periodic pension cost included the following AND RETIREMENT components: BENEFITS (Continued)

Assumptions used in accounting for the above pension information included a discount rate of 6.75% for the year ended December 31, 2002, and 7.25% for the years ended December 31, 2001 and 2000, and an expected long-term rate of return of 8.5% for all years presented. The following tables set forth pension obligations and plan assets as of December 31, 2002 and 2001:

The Company amended the defined benefit plan in connection with the renewal of a collective bargaining agreement. The amendment provides that as of January 31, 1998, benefit accruals under the plan will be frozen for those active employees who accrued benefits under the plan before January 31, 1998. The amendment further provides that on and after January 31, 1998, employees hired by Wonderland will no longer be eligible to join the plan. The Company will make contributions on behalf of these employees at a fixed rate to the union 401(k) plan based upon hours worked. These contributions commenced in 1998. 32 9. PENSION PLANS During 1997, the Company established separate 401(k) AND RETIREMENT plans for union and nonunion employees, respectively. BENEFITS The plans are administered by an insurance company. The (Continued) Company made contributions on behalf of certain union employees based upon a fixed rate and performances worked. The total of these contributions was approximately $69,000, $71,000 and $71,000, for the years ended December 31, 2002, 2001 and 2000, respectively. The Company also has employment contracts with certain retired employees which provide for the payment of retirement benefits, the cost of which has been accrued during their active employment. Total expense for all retirement plans of the Company for the years ended December 31, 2002, 2001 and 2000 was approximately $224,000, $269,000 and $278,000, respectively. 10. TRANSACTIONS On September 24, 1999, the Company entered into a Stock WITH OFFICERS, Purchase Agreement with Charles F. Sarkis, pursuant to EMPLOYEES which Mr. Sarkis purchased 450,518 shares of common AND RELATED stock of Back Bay Restaurant Group. PARTIES Upon the sale of Back Bay Restaurant Group common stock to Charles F. Sarkis, the Company received a promissory note in the amount of $2,703,108. The note bears interest of 9.5%. $500,927 was paid on November 4, 1999, $500,000 was paid on December 16, 1999, $351,554 was paid on January 31, 2000, $338,000 was paid on December 1, 2000, and $350,000 was paid August 17, 2001. The remaining outstanding principal and accrued interest were to be paid in two installments due on December 16, 2002 and December 16, 2003. In 2002, the note was amended, and the December 16, 2002 payment was deferred until June 20, 2003. The balance outstanding under the note was $932,328 and $910,004 at December 31, 2002 and 2001, respectively. The Company received a short-term working capital advance from Charles F. Sarkis, an officer of the Company, of $300,000 in March 2002. This funding accrued interest at the rate of 12% and was repaid in connection with the loan transaction with Boston Federal Savings Bank. At December 31, 2002 and 2001, there were loans outstanding to officers/ stockholders including interest, of $1,137,572 and $1,316,532. The loans were restructured in 1999 to be payable over five years and bear interest at 8.0% per annum. Notes receivable and related interest, in the amounts of $932,328 and $86,608 at December 31, 2002 and $178,350 and $910,004 at December 31, 2001 are due from Charles Sarkis. Notes receivable including related interest in the amount of $118,636 and $228,178 is due from Richard P. Dalton, the Company's President and Chief Executive Officer at December 31, 2002 and 2001, respectively. The Dalton note was originally recorded as a note receivable at December 31, 1998. The accrued bonus due to Mr. Sarkis of $54,341 at December 31, 2002 will be used to repay the outstanding balance on the $86,608 note receivable balance as it becomes due. The current portion of these bonus amounts are classified in accounts payable and other accrued liabilities at December 31, 2002. 33 10. TRANSACTIONS In August 2000, animal rights activists were able to WITH OFFICERS, obtain the necessary number of signatures in order to EMPLOYEES AND place on the November 2000 State ballot a binding RELATED PARTIES initiative petition to ban all wagering on dog racing (Continued) within Massachusetts effective June 1, 2001. The Company expended approximately $881,000 on the campaign to defeat the ballot initiative through December 31, 2000. The campaign to defeat the ballot initiative was conducted jointly with the dog track in Raynham, Massachusetts through a Ballot Question Committee established in accordance with the campaign finance laws of Massachusetts. The Company's President and Chief Executive Officer, Richard P. Dalton, served as the chairman of this Ballot Question Committee. These funds were used primarily for the acquisition of media time and the development and implementation of a media campaign to promote the industry point of view. On August 16, 2000, the Company entered into a Settlement Agreement and Mutual Release with a stockholder of more than 5% of the Company's Common Stock who agreed to cancel certain stock options in the Company held by him, sell his shares of common stock in the Company to a third party and release the Company and Charles Sarkis from certain claims in consideration for $140,755 and the payment of his legal expenses. This amount has been recorded in "Other income (expense), net" in the accompanying statement of operations. On February 13, 2003, the Company filed a Definitive Proxy Statement and an accompanying Schedule 13E-3 with the Securities and Exchange Commission in order to effectuate a 1,500 for 1 reverse stock split of its capital stock. If the proposed reverse stock split had been approved by a majority of the voting power of the Company's stockholders, then holders of less than 1,500 shares immediately prior to such meeting would have been cashed out at a per share purchase price equal to $4.00, thereby reducing the number of its stockholders to under 300 and, consequently, allowing the Company to change its status from a public company to a private company. This would have relieved the Company of the administrative burden and cost and competitive disadvantages associated with filing reports and otherwise complying with the requirements of registration under the Federal securities laws and to permit small stockholders to receive liquidity for their shares without having to pay brokerage commissions. The proposed reverse stock split would have (i) caused the Westwood Group to redeem shares held by approximately 400 holders of record of Common Stock, (ii) retained record holders who hold 1,500 or more shares of Common Stock or Class B Common Stock, (iii) reduced the number of shares, on a pro-rata basis, held by the holders of record who hold 1,500 or more shares of Common Stock or Class B Common Stock, and (iv) changed the percent of outstanding Common Stock held by the remaining stock- holders to 100%. Assuming the completion of the proposed reverse stock split and change in its status from a public company to a private company, the Company would have promptly thereafter initiated a tender offer for additional shares of its capital stock in order to provide those stockholders who would not have received a cash payment in connection with the proposed reverse stock split the opportunity to tender one post-reverse stock split share in return for $6,000, which amount reflects the highest payment to be received by any stockholder as a result of the consummation of the proposed reverse stock split. The special meeting of the Company's stockholders scheduled for March 19, 2003 to approve the proposed reverse stock split was adjourned so that the Company could address allegations raised by the Massachusetts Securities Division in an Administrative Complaint and a lawsuit brought by a stockholder in Delaware Chancery Court. Accordingly, the proposed going private transaction was not consummated. 34 11. CHANGE IN In the fourth quarter of 2001, the Company recognized ACCOUNTING $1,058,000 of non-operating income as the result of ESTIMATE a change in accounting estimate on a prior year's long-term liability. 12. SELECTED The following table sets forth selected quarterly QUARTERLY financial data for 2002 and 2001 (in thousands, except FINANCIAL DATA per share amounts): (UNAUDITED)

13. SUPPLEMENTAL Cash paid during the years ended: DISCLOSURES OF CASH FLOW INFORMATION

The Company recorded capital lease obligations of $8,171, $31,257 and $27,831 in 2002, 2001 and 2000, respectively. 35 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT DIRECTORS Our directors and executive officers as of March 31, 2003 are as follows:

CHARLES F. SARKIS has served as Chairman of the Board of Directors since 1978. He was Chief Executive Officer of the Company from 1978 to 1992 and President from 1984 to 1992. He has been Chairman of the Board, President and Chief Executive Officer of Back Bay Restaurant Group, Inc. (a restaurant holding company), formerly a wholly-owned subsidiary of the Company, for more than six (6) years. He also has been Chief Executive Officer of Sarkis Management Corporation (restaurant management) for more than six (6) years. RICHARD P. DALTON has served as President and Chief Executive Officer of the Company since 1993. He served as Executive Vice President of the Company from 1988 to 1992 and Chief Operating Officer from 1989 until 1992. He was Vice President from 1984 until 1987; Chief Financial Officer from 1988 to 1989; Treasurer from 1974 to 1989; Assistant Secretary since 1984; and General Manager from 1981 to 1983. PAUL J. DIMARE has been President of DiMare Homestead, Inc. (agricultural processing and packaging) and DiMare Management Corp. (agricultural management and marketing) for over six (6) years. He also is a director of First National Bank of Homestead, Florida. All of the directors and executive officers are citizens of the United States. There are no arrangements or understandings between any of the directors or executive officers of the Company and any other person pursuant to which such director or executive officer was or will be selected as a director or officer of the Company. Each of the executive officers of the Company holds office at the pleasure of the Board of Directors. Each of the three directors, Messrs. Sarkis, Dalton and DiMare, have been named as defendants together with the Company in a class action law suit filed by a stockholder of the Westwood Group in order to enjoin the Company from completing a proposed reverse stock split for the purpose of taking the Company private (See Item 3 under "Legal Proceedings" and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" for additional information regarding the proposed reverse stock split and the class action law suit). Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors and persons owning more than 10% of the outstanding stock of the Company to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% holders of stock of the Company are required by the Securities and Exchange Commission to furnish the Company with copies of all Section 16(a) forms they file. Based solely on the copies of such forms furnished to the Company with respect to its most recent fiscal year, it appears that each director, officer and 10% beneficial owner of Common Stock of the Company complied with Section 16(a) of the Securities Exchange Act of 1934. 36 ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table The following table shows the cash and other remuneration paid or accrued, in respect of services rendered to the Company and its wholly-owned subsidiaries for the three (3) years ended December 31, 2002, to each of the Company's executive officers whose aggregate remuneration exceeded $100,000.

Compensation Committee Interlocks and Insider Participation During the year ended December 31, 2002, Messrs. Charles F. Sarkis and Richard P. Dalton served as executive officers of the Company and as members of the Board of Directors of the Company, which performs the functions of Compensation Committee. Remuneration of Directors The Company pays to each non-employee Director $2,000 per Board meeting attended with an additional fee of $1,000 for each Audit and Compensation Committee meeting attended. Compensation Plan The Company has adopted an executive compensation plan. The compensation plan is designed to provide an environment and opportunity for key executives to be rewarded for individual achievement as well as for attaining overall corporate goals. The compensation plan includes provisions for a base salary, annual incentive and long term incentives. Base salary is determined annually and is based upon the level and amount of responsibility in the context of comparable companies. Additional annual incentives are to be distributed to key executives from a bonus pool. A performance bonus equal to 10% of income before tax will be allocated to the key executives at the discretion of the Compensation Committee and Board of Directors. Additionally, a discretionary bonus of up to 5% of income before income taxes will be available to reward an employee's individual performance. Based on the Company's cash flow condition, no bonuses were granted during the 2002 fiscal year. Finally, long term incentives will consist of stock options granted to key executives at the discretion of the Compensation Committee and Board of Directors. In addition, a special transaction bonus is available in the event the Chairman initiates and/or negotiates an extraordinary transaction to enhance shareholder value, including a merger, sale, acquisition or joint venture. The transaction bonus is equal to 2% of the value of any such transaction. 37 Stock Option Agreement During 1997, the Company issued to those certain executives, Directors and former Directors non-qualified stock options to purchase an aggregate of 42,500 shares of the Company's common stock at an exercise price of $3.00 per share. During 1995, the Company awarded those certain executives, Directors and former Directors of the Company, non-qualified stock options to purchase an aggregate of 50,000 shares of the Company's Common Stock. Audit Committee The Board of Directors of the Company performs the functions of an Audit Committee. Year-end Option Values The table below shows year-end option values the total number of unexercised options held at December 31, 2002. There are no unexercised in-the-money options at the fiscal year-end. (1) No options were exercised in the year-ended December 31, 2002.

(1) In-the-Money Options are those where the fair market value of the underlying securities exceeds the exercise price of the option. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Security Ownership of Certain Beneficial Owners of Common Stock The following table sets forth certain information, as of March 31, 2003, with respect to the beneficial ownership (1) of the Company's Common Stock by each Director, by all Directors and officers of the Company as a group and by persons known by the Company to own beneficially more than five percent (5%) of the outstanding Common Stock. Unless otherwise noted, such stockholders have full voting and investment power with respect to the shares listed as beneficially owned by them.

38 Charles F. Sarkis 831,866 (4) 70.75% Back Bay Restaurant Group, Inc. 284 Newbury Street Boston, MA 02116 --------- ----- All Directors and Officers as a group (three (3) persons) 987,516(5) 81.22% ========== ====== Holders of more than 5%, not included above: Paul F. Evans 26,122(6) 7.44% Joseph J. O'Donnell 22,669(7) 6.45% A. Paul Sarkis 49,139(8) 12.29%

(1) As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table a person is deemed to have "beneficial ownership" of any security that such person has the right to acquire within 60 days. (2) Includes shares held by Sarkis Management Corporation, which is wholly-owned by Mr. Sarkis. Mr. Sarkis disclaims beneficial ownership of these shares. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In May 1994, the Westwood Group purchased all restaurant and concession operations at Wonderland from Back Bay Restaurant Group, Inc. for a sales price of $770,000. Included in the term note of $970,000 were additional amounts owed to Back Bay Restaurant Group for costs incurred under a Cross Indemnification Agreement amounting to $200,000 and interest expense of approximately $58,000 for the years ended December 31, 1999 and 1998. On September 24, 1999, the Westwood Group entered into a stock repurchase agreement with Back Bay Restaurant Group, Inc., pursuant to which Back Bay Restaurant Group repurchased 222,933 shares of its common stock from the Westwood Group in exchange for the cancellation of this promissory note. Concurrently with entering into the stock purchase agreement with Back Bay Restaurant Group, the Westwood Group entered into a stock purchase agreement with Charles F. Sarkis, pursuant to which Mr. Sarkis purchased 450,518 shares of common stock of Back Bay Restaurant Group, Inc. in return for a promissory note in the amount of $2,703,108. This note bears interest of 9.5%. $500,927 was paid on November 4, 1999, $500,000 was paid on December 16, 1999, $351,554 was paid on January 31, 2000, $338,000 was paid on December 1, 2000, and $350,000 was paid on August 17, 2001. In consideration of Mr. Sarkis' prepayment of $62,000 due under this promissory note on March 22, 2002 and his $300,000 working capital loan to the Westwood Group made in March 40 2002 (which was repaid in connection with the Westwood Group's refinancing in September 2002), the Westwood Group agreed to defer payment in the amount of $466,164 due from Mr. Saris on December 31, 2002 until June 30, 2003. The aggregate balance due under this promissory note as of March 31, 2003 was $954,167. As of March 31, 2003, there are additional loans outstanding to officers/stockholders in the aggregate amount of $157,729. Notes receivable and related interest, in the amount of $67,872 is due from Charles Sarkis and $89,857 is due from Richard P. Dalton. These loans are payable over five years and bear interest at 8.0% per annum. In October 1999, the Westwood Group received a letter of credit for working capital purposes from the Anglo Irish Bank securitized by Mr. Charles Sarkis' property located on Boylston Street in Boston, Massachusetts. Subsequently, Mr. Sarkis refinanced the Boylston Street property and loaned the Westwood Group $500,000, which amount was designated to be used for the 1998 and 1999 outstanding pari-mutuel tickets due to The Commonwealth of Massachusetts. In addition, under the terms of the loan agreement between the Westwood Group and Mr. Sarkis, the Westwood Group offset the first payment due from Mr. Sarkis under the promissory note issued on September 24, 1999 against this $500,000 loan. Prior to 1995, the Westwood Group engaged a firm to assist management in the planning and execution of a financial and operational reorganization of the Westwood Group. As compensation for its services, the Westwood Group agreed to a success fee, in addition to the basic fee, to grant options to acquire common stock totaling 6% of the total of the Westwood Group's capital stock at $3 per share. The success fee also stipulated that Michael S. Fawcett, a principal of that firm who was a director of the Westwood Group at the time would be required to return options to purchase 25,000 shares of the Westwood Group's common stock if the success fee option is exercised. The Westwood Group has not granted the success fee option to date. PART IV ITEM 14. CONTROLS AND PROCEDURES Within the ninety-day period prior to the filing date of this report, the Company conducted an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer (its principal executive officer and principal financial officer) regarding the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Rule 13a-14 of the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon evaluation, the Chief Executive Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company, including its consolidated subsidiaries, required to be included in our periodic SEC filings is made known to them by other within those entities. There were no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of the Company carried out its evaluation. ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements Included under Item 8 in Part II of this report: Reports of Independent Certified Public Accountants Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Changes in Stockholders' Deficiency Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (2) Financial Statement Schedules All financial statement schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto. 41 (3) Exhibits 3.1 Certificate of Incorporation of the Company. (1) 3.2 Amendment, dated May 15, 1987, to the Certificate of Incorporation of the Company. (3) 3.21 Amendment, dated November 2, 1995, to the Certificate of Incorporation of the Company. (7) 3.3 Bylaws of the Company. (1) 4.1 Indenture, dated as of August 15, 1987, between the Company and State Street Bank and Trust Company, as trustee, relating to the Company's Subordinated Notes. (2). 4.2 Supplemental Indenture, dated as of March 16, 1988, between the Company and State Street Bank and Trust company, as trustee. (3) 10.1 Totalisator Service Agreement, dated August 30, 1991, in connection with an exclusive service contract, together with an amendment and extension agreement dated April 2, 1992. (4) 10.2 Contract dated November 20, 1992, in connection with services to be provided to the Company by an entity of which a former Director of the Company is a principal, together with an amendment by letter agreement, dated February 2, 1993. (4) 10.3 Collective Bargaining Agreement between the Company and United Food and Commercial Workers' Union, Local 1445 AFL-CIO, CLC, dated June 1, 1993. (5) 10.4 Collective Bargaining Agreement between the Company and Local 25-Teamsters, effective January 1, 1993. (5) 10.5 Settlement of Litigation Agreement, dated October 12, 1994, between Foxboro Park, Inc. and the trustee of the Creditor Trust and Settlement Agreement, in connection with the restructuring of the Creditor Trust and Settlement Agreement with related promissory notes, dated July 7, 1994. (6) 10.6 Collective Bargaining Agreement between Wonderland Greyhound Park, Inc. and Local 22 - Laborers' International Union, dated July 1, 1993. (6) 10.7 Collective Bargaining Agreement Extension between RFSC, Inc. and Local 26 - Hotel and Restaurant Workers, effective January 1, 1994. (6) 10.8 Settlement Agreement between Wonderland Greyhound Park, Inc. and Local 254 Service Employees International Union, dated September 19, 1994, in connection with a successor collective bargaining agreement. (6) 10.9 Amendment to Term Note between certain subsidiaries of the Company and BBRG, dated March 17, 1995. (6) 10.10 Assignment for the Benefit of Creditors and Sharing Agreement (Foxboro Harness). (8) 10.11 Assignment for the Benefit of Creditors and Sharing Agreement (Foxboro Thoroughbred). (8) 10.12 Assignment for the Benefit of Creditors and Sharing Agreement (Foxboro Park). (8) 10.13 Form of Executive Non-Qualified Stock Option Agreement. (8) 10.14 Form of Employee Non-Qualified Stock Option Agreement. (8) 42 10.15 Third Amendment to Term Note between certain subsidiaries of the Company and BBRG, dated January 5, 1998. (8) 10.16 Voting and Shares Exchange Agreement, dated as of March 31, 1999. (9) 10.17 Stock Purchase Agreement, dated as of September 24, 1999, between the Company and Charles Sarkis. (10) 10.18 Stock Repurchase Agreement dated as of September 24, 1999, between the Company and BBRG. (10) 10.19 Term Loan Agreement between Wonderland Greyhound Park, Inc. and Century Bank and Trust Company, dated June 30, 1998. (11) 10.20 Loan Reimbursement and Security Agreement between Wonderland Greyhound Park, LLC and Boston Federal Savings Bank, dated September 3, 2002. (12) 21.1 Subsidiaries of the Company (filed herewith). 23.1 Consent of Independent Certified Public Accountants (filed herewith). 99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). --------------------- (1) Filed with the Company's Annual Report on Form 10-K for 1984 and incorporated herein by reference. (2) Filed with the Company's Registration Statement on Form S-2 No. 33-15344 filed on June 25, 1987 and incorporated herein by reference. (3) Filed with the Company's Annual Report on Form 10-K for 1987 and incorporated herein by reference. (4) Filed with the Company's Annual Report on Form 10-K for 1992 and incorporated herein by reference. (5) Filed with the Company's Annual Report on Form 10-K for 1993 and incorporated herein by reference. (6) Filed with the Company's Annual Report on Form 10-K for 1994 and incorporated herein by reference. (7) Filed with the Company's Annual Report on Form 10-K for 1995 and incorporated herein by reference. (8) Filed with the Company's Annual Report on Form 10-K for 1997 and incorporated herein by reference. (9) Filed with the Company's Annual Report on Form 10-K for 1998 and incorporated herein by reference. (10) Filed as an exhibit with Form 8-K, as filed by the Company on October 12, 1999 and incorporated herein by reference. (11) Filed with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference. (12) Filed with the Company's Amended Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2002 and incorporated by reference. (b) REPORTS ON 8-K. None. 43 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE WESTWOOD GROUP, INC. Date: April 15, 2003 /s/ Richard P. Dalton ------------------------------ Richard P. Dalton President, Chief Executive Officer and Director (Principal Executive Officer and Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: April 15, 2003 /s/ Charles F. Sarkis ------------------------------ Charles F. Sarkis Chairman of the Board Date: April 15, 2003 /s/ Richard P. Dalton ------------------------------ Richard P. Dalton President, Chief Executive Officer and Director Date: ------------------------------ Paul J. DiMare Director CERTIFICATION I, Richard P. Dalton, certify that: 1. I have reviewed this annual report on Form 10-K of The Westwood Group, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 15, 2003 /s/ Richard P. Dalton ------------------------------------- Richard P. Dalton President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)

WESTWOOD GROUP INC 10-K