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 September 28, 1996

                                  OR

    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 0-14030

                              ARK RESTAURANTS CORP.
             (Exact name of Registrant as specified in its charter)

             New York                                   13-3156768
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)

             85 Fifth Avenue, New York, N.Y.                       10003
         (Address of Principal Executive Offices)                (Zip Code)

               Registrant's telephone number, including area code:

                                 (212) 206-8800

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

                                                         Name of Each Exchange
    Title of Each Class                                   on Which Registered
Common Stock, $.01 par value                                   NASDAQ/NMS

           Securities registered pursuant to Section 12(g) of the Act:

                                      None

      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 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 this Form 10-K or any  amendments  to
this Form 10-K. [ X ].

      The  aggregate  market  value  at  December  19,  1996  of  shares  of the
Registrant's  Common  Stock,  $.01 par value  (based upon the closing  price per
share of such stock on the Nasdaq National Market) held by non-affiliates of the
Registrant  was  approximately  $29,668,000.  Solely  for the  purposes  of this
calculation,  shares held by directors and officers of the Registrant  have been
excluded. Such exclusion should not be deemed a determination or an admission by
the Registrant that such individuals are, in fact, affiliates of the Registrant.

      Indicate the number of shares  outstanding of each of the issuer's classes
of common stock, as of the latest  practicable date: At December 19, 1996, there
were outstanding  3,814,999 shares of the  Registrant's  Common Stock,  $.01 par
value.

Document  Incorporated  by  Reference:  Certain  portions  of  the  Registrant's
definitive  proxy statement to be filed not later than January 27, 1997 pursuant
to Regulation 14A are  incorporated  by reference in Items 10 through 13 of Part
III of this Annual Report on Form 10-K.

                                       -2-









                                     PART I

ITEM 1. BUSINESS

GENERAL

      Ark  Restaurants  Corp.  (the  "Registrant" or the "Company") is a holding
company which, through subsidiaries,  operates 26 restaurants,  two bakeries and
two corporate dining  facilities.  Of those  facilities,  20 restaurants and two
bakeries  are owned by the Company  and six  restaurants  and the two  corporate
dining facilities are owned by others and managed by the Company.

      The  Company  was  formed in 1983 to  concentrate  the  ownership  of four
restaurants  previously operated by the Company's principals.  Until 1987 all of
the Company's facilities were located in the New York City metropolitan area. In
1987,  three  facilities  were opened in Boston,  Massachusetts.  Since then the
Company has opened five facilities in the Washington,  D.C.  metropolitan  area,
one in Islamorada,  Florida, one in Rhinebeck,  New York and one in Jersey City,
New Jersey.  The Company will open in early January 1997 a group of  restaurants
in the  2,100-room  hotel to be known as New York, New York Hotel & Casino under
construction in Las Vegas, Nevada.

      In addition to the shift from a Manhattan-based  operation,  the nature of
the  facilities  operated by the Company has shifted from smaller,  neighborhood
restaurants  to larger,  destination  restaurants  intended to benefit from high
patron traffic attributable to the uniqueness of the restaurant's location. Most
of the restaurants  opened in recent years are of the latter description and the
Company intends to concentrate on developing or acquiring similar  facilities in
the future.  In fiscal 1995, the Company opened two such restaurants (B. Smith's
in  Washington  and  Bryant  Park Grill and Cafe in New  York).  The  restaurant
operations in Las Vegas will constitute the Company's largest  facilities at one
place and are to be  situated in a new,  destination-type  hotel and casino in a
major destination city.

      The names and themes of each of the  Company's  restaurants  are different
except for the Company's three America  restaurants,  two B. Smith's restaurants
and two  Sequoia  restaurants.  The  Company  intends  to open a fourth  America
restaurant and a second Gonzalez y Gonzalez  restaurant in Las Vegas,  Nevada at
the New York,  New York Hotel & Casino.  The menus in the Company's  restaurants
are  extensive,  offering a wide  variety  of high  quality  foods at  generally
moderate prices. Two of the Company's restaurants, Lutece and An American Place,
may be classified as expensive.  The  atmosphere at many of the  restaurants  is
lively and extremely  casual.  Most of the  restaurants  have separate bar areas
utilized by diners awaiting  tables.  A majority of the net sales of the Company
is derived from dinner as opposed to lunch service.  Most of the restaurants are
open seven days a week and most serve lunch as well as dinner.

      While decors differ from restaurant to restaurant, interiors are marked by
distinctive  architectural and design elements which often incorporate  dramatic
interior  open  spaces  and  extensive  glass  exteriors.  The wall  treatments,
lighting and decorations are typically vivid, unusual and, in some cases, highly
theatrical.

                                       -3-









      The  following  table sets forth certain  information  with respect to the
Company's facilities currently in operation.



                                                                              Seating
                                                                            Capacity(2)
                                                           Restaurant Size    Indoor-          Lease
      Name         Location               Year Opened(1)   (Square feet)     (Outdoor)     Expiration(3)
                                                                                    
Perretti           Columbus Avenue             1977              1,600             124            2003
                   New York, New York
                   (between 72nd and 73rd
                   Streets)

Metropolitan Cafe  First Avenue                1982              4,000        180-(50)            2006
                   New York, New York
                   (between 52nd and 53rd
                   Streets)

Ernie's            Broadway                    1983              6,600             300            2008
                   New York, New York
                   (between 75th and 76th
                   Streets)

America            18th Street                 1984              9,600             350            2004
                   New York, New York
                   (between 5th Avenue
                   and Broadway)

Woody's (4)        Seventh Avenue South        1986              1,700              90            1999
                   New York, New York
                   (between Charles and
                   10th Streets)

B. Smith's (5)     Eighth Avenue               1986              8,000             400            2006
                   New York, New York
                   (at 47th Street)

The Marketplace    Faneuil Hall Market         1987              3,000             100            2000
Cafe (4)           Boston, Massachusetts

El Rio Grande      Third Avenue                1987              4,000             160            2014
(4)(6)             New York, New York
                   (between 38th and 39th
                   Streets)

The Brewskeller    Faneuil Hall Market         1987              1,500              50            2000
Pub (4)            Boston, Massachusetts


An American        Park Avenue                 1986              6,000             180            2005
Place              New York, New York
                   (at 32nd Street)

Gonzalez y         Broadway                    1989              6,000             250            1999
Gonzalez           New York, New York
                   (between Houston and
                   Bleeker Streets)


                                       -4-











                                                                              Seating
                                                                            Capacity(2)
                                                           Restaurant Size    Indoor-          Lease
      Name         Location               Year Opened(1)   (Square feet)     (Outdoor)     Expiration(3)
                                                                                    
America            Union Station               1989             10,000             400            2009
                   Washington, D.C.

Center Cafe        Union Station               1989              4,000             200            2009
                   Washington, D.C.

Sequoia            Washington Harbour          1990             26,000       600-(400)            2005
                   Washington, D.C.

Sequoia            South Street Seaport        1991             12,000       300-(100)            2006
                   New York, New York

Beekman 1766       Mill Street                 1991              5,000             225            2001
Tavern             Rhinebeck, New York

Canyon Road        First Avenue                1984              2,500             130            2004
                   New York, New York
                   (between 76th and 77th
                   Streets)

Louisiana          Broadway                    1992              4,500             130            1999
Community Bar &    New York, New York
Grill              (between Houston &
                   Bleeker Streets)

Oar Bar & Grill    Faneuil Hall Market         1987              2,500             130            2000
(4)                Boston, Massachusetts

Jim McMullen       Third Avenue                1993              6,000             250            2002
                   New York, New York
                   (between 76th and 77th
                   Streets)

America            Tyson's Corner              1994             11,000             400            2014
                   McLean, Virginia

B. Smith's(5)      Union Station               1994              8,600             280            2009
                   Washington, D.C.

Lutece             East 50th Street            1994              2,500              92            2019
                   New York, New York
                   (between 2nd and 3rd
                   Avenues)

Lorelei Restaurant Islamorada, Florida         1994             10,000             400            2029
and Cabana Bar

Columbus Bakery    Columbus Avenue             1988              2,000              25            2002
                   New York, New York
                   (between 82nd and 83rd
                   Streets)

Bryant Park Grill  Bryant Park                 1995             25,000       180-(820)            2025
& Cafe             New York, New York



                                       -5-













                                                                              Seating
                                                                            Capacity(2)
                                                           Restaurant Size    Indoor-          Lease
      Name         Location               Year Opened(1)   (Square feet)     (Outdoor)     Expiration(3)
                                                                                    
Columbus Bakery    First Avenue                1995               2000              75            2006
                   New York, New York
                   (between 52nd and 53rd
                   Streets)

The Market at      Newport Office Tower        1995              7,500             250            2015
Newport (7)        525 Washington Blvd.
                   Jersey City, New Jersey

Universal Studios  100 Universal City          1996              8,000             280             (8)
Cafeteria (7)      Plaza, Unviveral City,
                   California

The Moving         Warner Bros.                1996              1,000              48             (8)
Picture Cafe (4)   Studio Store
                   New York, New York
                   (at 57th Street)


  (1)   Restaurants  are, from time to time,  renovated  and/or  renamed.  "Year
        Opened"  refers  to the  year in  which  the  Company  or an  affiliated
        predecessor  of the Company first opened,  acquired or began  managing a
        restaurant  at  the  applicable   location,   notwithstanding  that  the
        restaurant may have been renovated and/or renamed since that date.

  (2)   Seating  capacity refers to the seating capacity of the indoor part of a
        restaurant  available for dining in all seasons and weather  conditions.
        Outdoor seating capacity, if applicable, is set forth in parentheses and
        refers to the seating  capacity of terraces and sidewalk cafes which are
        available  for dining only in the warm  seasons and then only in clement
        weather.

  (3)   Assumes the exercise of all available lease renewal options.

  (4)   Restaurant owned by a third party and managed by the Company. Management
        fees earned by the Company are based either on a percentage of cash flow
        of the restaurant or a fixed amount or a combination of the two.

  (5)   20% of the stock of each of the corporate subsidiaries operating the two
        B. Smith's  restaurants is owned by the manager of the  restaurant.  The
        corporate  subsidiaries  owning or managing all of the other  facilities
        are wholly-owned by the Company.

  (6)   The  Company  owns  a  19% interest in the partnership which owns El Rio
        Grande.

  (7)   Corporate cafeteria managed by the Company.

  (8)   The  management   agreement  for  this  corporate   dining  facility  is
        terminable by either party upon 60 days' notice.

                                       -6-










RESTAURANT EXPANSION

   The Company has entered  into an  agreement  with New York,  New York Hotel &
Casino, a joint venture between  Primadonna  Resorts,  Inc. and MGM Grand, Inc.,
for the  Company  to design,  build and  operate a group of  restaurants  in the
2,100-room Las Vegas resort casino which is currently under  construction and is
expected  to open in early  January  1997.  The  Company  is in the  process  of
building a 450-seat  restaurant (to be named America and to be modeled after the
Company's  other  America  restaurants),  a  160-seat  steakhouse  (to be  named
Gallagher's  under a license agreement from the owner of the New York restaurant
of that name), a 120-seat  restaurant (to be named Gonzalez y Gonzalez and to be
modeled after the Company's New York restaurant of the same name) and a group of
nine small fast food  restaurants  in a food  court  with a New York  theme.  In
addition,  the  Company  will  operate  the hotel's  room  service,  its banquet
facilities and its employee cafeteria.

  The restaurant  facilities at the New York, New York Hotel & Casino  represent
the Company's first effort at designing,  constructing and operating restaurants
in Las Vegas and the first such  facilities  in  conjunction  with a large-scale
hotel and casino  operation.  The number of patrons expected to be served at the
various  facilities  at the New York,  New York Hotel & Casino far  exceeds  the
number of patrons served by the Company in any other single location.

  The Company recently signed a lease for a 10,000 square foot site in the World
Financial  Center in downtown New York City where the Company intends to open An
American Place Grill restaurant.  The site was formerly occupied by a restaurant
and the Company does not therefore  anticpate that it will be necessary to incur
significant  capital  expenditures  in  connection  with  the  opening  of  this
restaurant.

  The Company has also recently  reached an agreement in principle to manage the
restaurant  and  other  food  service  facilities  at  three  hotel  and  casino
facilities located in Primm, Nevada and owned by Primadonna  Resorts,  Inc., one
of the partners in the New York, New York Hotel & Casino.

  During  the  third  quarter  of  fiscal  1996,   the  Company   purchased  two
restaurants,  Jim  McMullen  and  Mackinac  Bar and  Grill,  which  it had  been
managing. During the first quarter of fiscal 1995, the Company opened its second
B. Smith's,  this one in Union Station,  Washington D.C. During fiscal 1994, the
Company  entered  into  agreements  to  acquire  Lutece in New York City and the
Lorelei  Restaurant  and  Cabana  Bar in  Islamorada,  Florida,  both  of  which
acquisitions were completed in the first quarter of fiscal 1995.

  During the first quarter of fiscal 1996, the Company opened a bakery  (another
Columbus  Bakery),  operating on a retail basis  similar to that of the existing
Columbus  Bakery,  in  premises  adjacent  to the  Company's  Metropolitan  Cafe
restaurant  on First  Avenue in  Manhattan.  During  fiscal  1995,  the  Company
converted a restaurant on Columbus Avenue in Manhattan into the Columbus Bakery.
Both Columbus Bakery  facilities  supply baked goods to other  facilities of the
Company in Manhattan and also sell at retail,  coffee,  baked goods and prepared
foods on a "take out" basis or for on premise consumption.

  In the third fiscal  quarter of 1995,  the Company  opened a major facility in
Bryant Park,  Manhattan.  The facility  includes a  restaurant,  the Bryant Park
Grill and an outdoor cafe,  the Bryant Park Cafe.  The Bryant Park Grill has 180
seats indoors plus 350 additional  seats on its roof and in an adjacent  outdoor
garden. The Bryant Park Cafe has 470 outdoor seats in the Bryant Park terrace.

  The opening of a new  restaurant  is  invariably  accompanied  by  substantial
pre-opening  expenses and early operating losses associated with the training of
personnel,  excess  kitchen costs and costs of  supervision  and other  expenses
during the pre-opening period and during a post-opening "shake out" period until
operations  can be considered  to be  functioning  normally.  The amount of such
pre-opening expense and early

                                        -7-









operating  loss can generally be expected to depend upon the size and complexity
of the  facility  being  opened.  The Company  estimates  that such  pre-opening
expenses and early operating losses were  approximately  $950,000 in fiscal 1995
in connection with the opening of B. Smith's in Washington,  the Columbus Bakery
and the Company's  Bryant Park facilities and  approximately  $200,000 in fiscal
1996 in connection  with the opening of the facilities at the New York, New York
Hotel & Casino.  The Company expects to incur extensive  additional  pre-opening
expenses and early  operating  losses in connection  with the opening of its Las
Vegas operations.

  The Company's  restaurants generally do not achieve substantial increases from
year to year in net sales or profits.  The Company will have to continue to open
new and  successful  restaurants  or  expand  existing  restaurants  to  achieve
significant  increases in net sales or to replace net sales of restaurants which
experience  declining  popularity or which close because of lease expirations or
other reasons. After a restaurant is opened, there can be no assurance that such
restaurant will be successful,  particularly since in many instances the Company
will  not  operate  new  restaurants  under a  tradename  currently  used by the
Company, thereby requiring each new restaurant to establish its own identity.

  The  Company  intends to  continue  to direct  its  restaurant  expertise  and
financial  resources in developing larger restaurants  benefitting from the high
patron traffic of unique locations, such as the Sequoia restaurants in the South
Street Seaport in New York and the Washington Harbour in Washington, the America
and B.  Smith's  restaurants  in Union  Station in  Washington,  the Bryant Park
facilities in New York and the planned Las Vegas facilities.  Nevertheless,  the
Company also intends to take advantage of other  opportunities  considered to be
favorable  when they  occur,  such as the  acquisition  of the  highly  regarded
restaurant Lutece.

RECENT RESTAURANT DISPOSITIONS

  In the third  quarter  of fiscal  1996,  the  Company  sold the  Whale's  Tail
restaurant  in Oxnard,  California,  which the Company had  acquired in November
1993.

  In the first  quarter of fiscal  1997,  the Company  sold three of its smaller
restaurants  (Mackinac  Bar & Grill,  The Museum Cafe and  Albuquerque  Eats/The
Rodeo Bar), each of which was operating at a loss at the time of its sale.

RESTAURANT MANAGEMENT

  Each  restaurant  is managed  by its own  manager  and has its own chef.  Food
products and other supplies are purchased from various  unaffiliated  suppliers,
in most cases by the  Company's  headquarters  personnel.  Each of the Company's
restaurants  has  two or  more  assistant  managers  and  assistant  chefs.  The
executive chef department  designs menus and supervises the kitchens.  Financial
and management  control is maintained at the corporate  level through the use of
an automated data  processing  system that includes  centralized  accounting and
reporting.  The  Company  has  developed  its  own  proprietary  software  which
processes  information  input daily at the  Company's  restaurants.  The Company
believes that the  information  generated by this process  enables it to monitor
closely the activities at each restaurant and enhances the Company's  ability to
effectively manage its restaurants.

EMPLOYEES

  At December 7, 1996, the Company employed 1,942 persons  (including  employees
at managed facilities), 37 of whom were headquarters personnel, 127 of whom were
restaurant management personnel, 530 of whom were kitchen personnel and 1,175 of
whom were restaurant service personnel. A number of the

                                        -8-










Company's  restaurant  service  personnel  are  employed on a  part-time  basis.
Changes in minimum wage levels may affect the labor costs of the Company and the
restaurant industry generally because a large percentage of restaurant personnel
are paid at or  slightly  above the  minimum  wage.  With the  exception  of the
employees at Lutece in New York,  the  Company's  employees are not covered by a
collective bargaining agreement. The Company believes its employee relations are
satisfactory.

COMPETITION

  The restaurant business is intensely competitive and involves a high degree of
risk. The Company believes that a large number of new restaurants open each year
and  that  a  significant  number  of  them  do  not  succeed.  Even  successful
restaurants  can rapidly  lose  popularity  due to changes in  consumer  tastes,
economic  conditions  and  population  and  traffic  patterns,  turnover  in key
personnel, the opening of competitive restaurants, unfavorable reviews and other
factors.  There  is  active  competition  for  competent  chefs  and  management
personnel and intense  competition  among major  restaurateurs  and food service
companies for the larger, unique sites suitable for restaurants.

GOVERNMENT REGULATION

  The  Company  is  subject  to  various  federal,  state  and  local  laws  and
regulations affecting its business, including a variety of regulatory provisions
relating to the wholesomeness of food, sanitation,  health, safety and licensing
in the sale of alcoholic beverages.  A number of the Company's  restaurants have
open or enclosed outdoor cafes which require the approval of, or licensing by, a
number of governmental  agencies. The suspension by any regulatory agency of the
food service or the liquor  license of any of the  Company's  restaurants  would
have a material  adverse  effect upon the affected  restaurant and may adversely
affect the Company as a whole.

  The New York State Liquor  Authority  must approve any  transaction in which a
shareholder  of the  Company  increases  his  holdings  to 10%  or  more  of the
outstanding  capital stock of the Company and any  transaction  involving 10% or
more of the outstanding capital stock of the Company.

SEASONAL NATURE OF BUSINESS

  The Company's business is highly seasonal. The second quarter of the Company's
fiscal year, consisting of the non-holiday portion of the cold weather season in
New York,  Boston and Washington  (January,  February and March), is the poorest
performing  quarter.  The  Company  achieves  its best  results  during the warm
weather,  attributable to the Company's  extensive outdoor dining  availability,
particularly  at Bryant Park and Sequoia in Washington  (the  Company's  largest
restaurants) and the Company's  outdoor cafes. The Company  anticipates that its
facilities in Las Vegas will operate on a more level basis through the year and,
accordingly,  may have  the  effect  of  reducing  the  seasonal  nature  of the
Company's business as it currently exists.

                                        -9-










ITEM 2. PROPERTIES

  The  Company's  restaurant  facilities  identified  in the chart above and its
executive  offices are occupied under leases.  Most of the Company's  restaurant
leases  provide for the payment of base rents plus real estate taxes,  insurance
and other expenses and, in certain instances, for the payment of a percentage of
the Company's sales at such facility. These leases (excluding leases for managed
restaurants) have initial terms expiring as follows:

                             Years Lease                   Number of
                             Term Expire                   Facilities

                             1996-2000                          8
                             2001-2005                          8
                             2006-2010                          8
                             2011-2015                          3
                             2016-2020                          1
                             2021-2025                          1
                             2026-2030                          1


      The Company's executive,  administrative and clerical offices,  located in
approximately  8,500 square feet of office space at 85 Fifth  Avenue,  New York,
New York,  are  occupied  under a lease  which  expires in October  2008,  which
includes  one  five-year  renewal  option.  The Company  maintains  an office in
Washington,  D.C. for its catering  operations,  the lease for which  expires in
December 1997.

      For information concerning the Company's future minimum rental commitments
under  non-cancelable  operating  leases,  see Note 8 of  Notes to  Consolidated
Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

      In the ordinary course of its business,  the Company is a party to various
lawsuits  arising from accidents at its restaurants  and workmen's  compensation
claims, which are generally handled by the Company's insurance carriers.

      The employment by the Company of management personnel, waiters, waitresses
and  kitchen  staff at a number of  different  restaurants  has  resulted in the
institution,  from time to time, of litigation alleging violation by the Company
of employment  discrimination  laws. Various  discrimination suits are currently
pending,  some of which involve substantial claims for compensatory and punitive
damages.  The  Company  does not  believe  that any of such  suits  will  have a
materially  adverse  effect  upon  the  Company,   its  financial  condition  or
operations.

      A  minority  shareholder  of two of the  Company's  subsidiaries  has made
various  demands which,  if proven,  would result in a claim against the Company
for approximately  $300,000.  The Company believes the demands are without merit
and the Company intends to defend against them vigorously.

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

      Not applicable.

                                        -10-










EXECUTIVE OFFICERS OF THE COMPANY

      The following table sets forth the names and ages of executive officers of
the Company and all offices held by each person:



    Name                     Age              Positions and Offices
                                                 
    Michael Weinstein         53              President

    Vincent Pascal            53              Vice President and
                                                Secretary

    Robert Towers             49              Vice President and
                                                Treasurer

    Andrew Kuruc              38              Vice President and
                                                Controller


      Each executive  officer of the Company serves at the pleasure of the Board
of Directors and until his successor is duly elected and qualifies.

      Michael  Weinstein has been  President and a director of the Company since
its inception in January 1983.  Since 1978,  Mr.  Weinstein has been an officer,
director  and 25%  shareholder  of Easy Diners,  Inc.,  a restaurant  management
company  which  operates  two  restaurants  in New York City.  Since  1976,  Mr.
Weinstein has been an officer,  director and shareholder of Teacher's Restaurant
Limited,  which owns and operates another  restaurant in New York City.  Neither
Easy Diners,  Inc. nor Teachers  Restaurant  Limited is a parent,  subsidiary or
other affiliate of the Company.  Mr. Weinstein spends  substantially  all of his
business time on Company-related matters.

      Vincent  Pascal was elected  Vice  President,  Assistant  Secretary  and a
director of the Company in October  1985.  Mr.  Pascal  became  Secretary of the
Company in January 1994.

      Robert Towers has been employed by the Company since November 1983 and was
elected Vice President, Treasurer and a director in March 1987.

      Andrew Kuruc has been  employed as  Controller  of the Company since April
1987 and was elected as a director of the Company in November 1989.

                                        -11-









                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

       Effective  December 14, 1994, the Company's Common Stock, $.01 par value,
began  trading  in the  over-the-counter  market on the Nasdaq  National  Market
("Nasdaq")  under the symbol  "ARKR".  For more than the  two-year  period prior
thereto,  the Company's  Common Stock was traded on the American  Stock Exchange
("AMEX"). The high and low sale prices for the Common Stock from October 3, 1994
through September 30, 1996 are as follows:



Calendar 1994                                   High             Low

                                                           
Fourth Quarter
    October 1 - December 13 (AMEX)              8 3/8            7
    December 14 - December 31 (Nasdaq)          8 1/2            7

Calendar 1995

First Quarter                                   10 1/4           7 1/2
Second Quarter                                  10 1/2           8 1/4
Third Quarter                                   10 1/4           8
Fourth Quarter                                  10               7 1/4

Calendar 1996

First Quarter                                   8                6
Second Quarter                                  11 1/2           7 1/4
Third Quarter                                   10               7 3/4



DIVIDENDS

      The Company has not any paid cash  dividends  since its inception and does
not intend to pay dividends in the  foreseeable  future.  Under the terms of the
Second Amended and Restated  Credit  Agreement  between the Company and its main
lender,  the Company may pay cash dividends and redeem shares of Common Stock in
any fiscal year only to the extent of an  aggregate  amount  equal to 20% of the
Company's consolidated operating cash flow for such fiscal year.

NUMBER OF SHAREHOLDERS

      As of December 19, 1996, there were 104 holders of record of the Company's
Common Stock.

                                      -12-









ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth certain financial data for the fiscal years ended
1992 through 1996. This information should be read in conjunction with the 
Company's Consolidated Financial Statements and the notes thereto appearing at
page F-1.




                                                                                  Year Ended
                                                     ----------------------------------------------------------------------
                                                     September 28,  September 30,   October 1,    October 2,     October 3,
                                                         1996            1995          1994          1993           1992
                                                                                                 

OPERATING DATA: 

Net sales                                             $76,795,940    $73,026,907    $60,404,339   $55,973,227    $49,283,481

Gross restaurant profit                                55,934,475     53,001,963     43,562,653    40,364,491     35,406,559

Operating income                                          507,996        960,794        840,452     3,384,230      2,671,891

Other income, net                                         743,615        937,763        507,200       268,606        250,558

Income before provision
  for income taxes and
  extraordinary item                                    1,241,611      1,898,557      1,347,652     3,652,836      2,922,449

Income (loss) before
  extraordinary item                                      788,762      1,121,126        643,032     1,817,637      1,473,133

NET INCOME (LOSS)                                         788,762      1,121,126      1,150,802     1,936,737      1,546,033

Income (loss) per share
  before extraordinary
  item and cumulative
  effect of accounting
  change                                              $      0.24    $      0.34    $      0.20   $      0.57    $      0.48
        
NET INCOME (LOSS)
  PER SHARE                                           $      0.24    $      0.34    $      0.36   $      0.61    $      0.50

Weighted average
  number of shares
  used in computation                                   3,241,394      3,251,336      3,225,680     3,198,429      3,101,719

BALANCE SHEET DATA
  (end of period):
  Total assets                                         32,379,479     28,541,920     21,768,747    19,037,744     17,579,531

  Working capital (deficit)                            (1,303,920)        40,996      1,517,601       490,956       (151,773)

  Long-term debt                                        6,403,866      4,014,162        761,386       165,728      1,537,243

  Shareholders' equity                                 17,804,394     16,706,301     15,210,202    13,908,116     11,444,566

  Shareholders' equity
    per share                                                5.49           5.24           4.88          4.51           3.88

  Facilities in operation
    at end of year, including
    managed                                                    32             32             27            26             24








                                        -13-









ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

ACCOUNTING PERIOD

      The Company's fiscal year ends on the Saturday  nearest  September 30. The
fiscal years ended  September  28, 1996,  September 30, 1995 and October 1, 1994
included 52 weeks.

NET SALES

      Net sales at restaurants  and bars owned by the Company  increased by 5.2%
from fiscal  1995 to fiscal  1996 and by 20.9% from fiscal 1994 to fiscal  1995.
The increase in fiscal 1996 was primarily due to the first full  operating  year
of one of the Company's  largest  restaurant which opened in fiscal 1995 (Bryant
Park Grill & Cafe) and a full  operating  year of a restaurant  which was closed
for  part of  fiscal  1995  (Ernie's),  offset  in part by a  decrease  in sales
resulting from a restaurant which the Company sold in fiscal 1996 (Whale's Tail)
and from declining net sales at four restaurants  classified as restaurants held
for sale (of which three were sold in the first  quarter of fiscal 1997  (Museum
Cafe,  Rodeo Bar and  Mackinac  Bar and Grill).  Same store sales in fiscal 1996
decreased by 3.0% principally due to decreased customer counts.

      The increase in fiscal 1995 was due  primarily  to sales from  restaurants
acquired  or opened in fiscal  1995  (Bryant  Park Grill & Cafe,  B.  Smith's in
Washington, DC, Lorelei Restaurant and Cabana Bar and Lutece) and the first full
operating  year of a  restaurant  opened  in fiscal  1994  (America  in  McLean,
Virginia). Same store sales in fiscal 1995 decreased by 0.8%.

COSTS AND EXPENSES

      The  Company's  cost of sales  consists  principally  of food and beverage
costs  at  restaurants  and  bars  owned  by the  Company.  Cost of  sales  as a
percentage of net sales was 27.2% in fiscal 1996, 27.4% in fiscal 1995 and 27.9%
in 1994. The Company believes its  sophisticated  centralized  purchasing system
has enabled it to efficiently  utilize its purchasing power by upgrading product
quality while controlling costs.

      Operating  expenses of the  Company,  consisting  of  restaurant  payroll,
occupancy and other expenses at restaurants and bars owned by the Company,  as a
percentage  of net sales,  were 67.9% in fiscal  1996,  as  compared to 66.7% in
fiscal  1995 and 64.2% in fiscal  1994. The increase in fiscal 1996 from  fiscal
1995 was primarily due to a decline in same  store  sales in particular  at  the
restaurants  held for sale combined with certain losses on  the  disposition  of
those  restaurants.  Restaurant  payroll as a percentage  of net sales was 36.1%
in fiscal 1996, 35.9% in fiscal 1995 and 34.9% in fiscal 1994. Payroll  expenses
in fiscal 1995 were impacted  by costs  associated  with new restaurant openings
and  to  a  special  charge  related  to the settlement of a claim at one of the
Company's New York restaurants alleging violations of federal and state wage and
hour  laws.  Occupancy  expenses  (consisting  of  rent, rent taxes, real estate
taxes,  insurance   and  utility  costs)  was  12.8%  in  fiscal  1996  and were
approximately 12.5% in both fiscal 1995 and fiscal 1994.

      The  Company  incurred  approximately  $200,000 of  pre-opening  and early
operating losses at newly opened restaurants in fiscal 1996,  $950,000 in fiscal
1995 and  $430,000 in fiscal  1994.  The Company  typically  incurs  significant
pre-opening  expenses in connection with its new restaurants  which are expensed
as incurred.  Furthermore,  it is not uncommon that such restaurants  experience
operating losses during the early months of operation.

                                        -14-









      General  and  administrative  expenses,  as a  percentage  of  net  sales,
remained  constant  at 5.8% in fiscal  1996 as  compared to fiscal 1995 and were
6.6% in fiscal 1994.  The decrease in fiscal 1995 was  primarily due to the fact
that the Company was able to manage the 20.9%  increase in net sales with only a
nominal  increase in general  and  administrative  expenses.  In fiscal 1994 the
Company had increased  development  staff in  expectation of the fiscal 1995 new
restaurants and acquisitions.  If net sales at managed restaurants were included
in consolidated net sales,  general and administrative  expenses as a percentage
of net sales  would have been 5.0% in both  fiscal 1996 and fiscal 1995 and 5.6%
in fiscal 1994.

      As of September  28, 1996 the Company  managed seven  facilities  owned by
others (El Rio Grande, and Woody's in Manhattan, The Universal Studios Corporate
Dining Facilities in Universal City, California, The Market at Newport in Jersey
City, New Jersey, the Marketplace Cafe, Oar Bar & Grill, and the Brewskeller Pub
in  Boston,  Massachusetts).  Net  sales of  these  restaurants,  which  are not
included in net sales, were $12,802,000  during fiscal 1996,  $10,839,000 during
fiscal 1995 and, $10,643,000 during fiscal 1994. Management fee income in fiscal
1994 is net of charges  totaling  $719,000 from the  write-off of  unrecoverable
advances to a managed restaurant in Miami, Florida,  which the Company no longer
manages and from the write-off of a discontinued New York catering operation.

      Interest  expense  was  $426,000  in fiscal,  $359,00  in fiscal  1995 and
$143,000 in fiscal  1994.  The  increases in fiscal 1996 from fiscal 1995 and in
fiscal  1995 from 1994 were  principally  due to  borrowings  to finance the new
restaurant openings and acquisitions.

      Interest  income was  $87,000  in fiscal  1996,  $78,000  in fiscal  1995,
$93,000 in fiscal 1994.

      Other income, which generally consists of purchasing service fees, and the
sale of logo  T-shirts at various  restaurants,  was  $1,083,000 in fiscal 1996,
$1,219,000 in fiscal 1995 and $557,000 in fiscal 1994. A significant  portion of
the amounts  received in fiscal  1996 and fiscal  1995 were  principally  due to
amounts the Company  received by a third party due to the  temporary  closing in
fiscal 1994 and fiscal 1995 of a restaurant (Ernie's).

INCOME TAXES

      The provision for income taxes reflects Federal income taxes calculated on
a  consolidated  basis and state and local income taxes  calculated  by each New
York subsidiary on a non consolidated  basis.  Most of the restaurants  owned or
managed by the Company are owned or managed by a separate subsidiary.

      For state  and  local  income  tax  purposes,  the  losses  incurred  by a
subsidiary  may  only  be used to  offset  that  subsidiary's  income  with  the
exception  of the  restaurants  which  operate  in the  District  of  Columbia .
Accordingly,  the Company's  overall  effective tax rate has varied depending on
the level of losses incurred at individual  subsidiaries.  The Company's overall
effective tax rate was 37% in fiscal 1996,  40% in fiscal 1995 and 52% in fiscal
1994.  The  Company's  effective  rate  in  fiscal  1996  and  fiscal  1995  was
significantly  benefited by tax credits  available to the Company for FICA taxes
paid by the  Company  with  respect  to tip  income of  service  personnel.  The
effective  tax rate in fiscal  1994 was  negatively  impacted  by the charges to
management  fee income  totaling  $719,000 from the  write-off of  unrecoverable
advances to a managed restaurant in Miami, Florida,  which the Company no longer
manages and from the write-off of a discontinued New York catering operation.

      The Company's overall effective tax rate in the future will be affected by
factors  such  as the  level  of  losses  incurred  at the  Company's  New  York
facilities  (which  cannot be  consolidated  for state and local tax  purposes),
pre-tax  income  earned  outside  of New York City  (where  income tax rates are
substantially  lower  in  comparison  to New  York  income  tax  rates)  and the
utilization of state and local net operating loss

                                        -15-










carry forwards.  In order to more effectively utilize tax loss carry forwards at
restaurants that were  unprofitable,  the Company has merged certain  profitable
subsidiaries with certain loss subsidiaries.

      As a result of the  enactment of the Revenue  Reconciliation  Act of 1993,
the Company is entitled,  commencing  January 1, 1994,  to a tax credit based on
the amount of FICA taxes paid by the Company  with  respect to the tip income of
restaurant  service  personnel.  The net benefit to the Company was  $349,000 in
fiscal, $299,000 in fiscal 1995 and $173,000 in fiscal 1994.

      The Company adopted the Financial Accounting Standards Board Statement No.
109, "Accounting for Income Taxes" (SFAS No. 109), as of the beginning of fiscal
1994. This statement supersedes  Accounting Principles Board Opinion No. 11  and
requires an asset and liability approach for financial  accounting and reporting
of income  taxes.  The  cumulative  effect of this  adoption was to increase net
income by $508,000 in fiscal 1994.

LIQUIDITY AND SOURCES OF CAPITAL

      The Company's primary source of capital is cash provided by operations and
funds available from the $12,000,000  revolving  credit  agreement with its main
bank. The Company utilizes capital  primarily to fund the cost of developing and
opening new restaurants and acquiring existing restaurants.

      The net cash used in  investing  activities  in fiscal  1996  ($6,693,000)
fiscal 1995  ($9,096,000) and fiscal 1994  ($3,008,000) was principally from the
Company's continued  investment in fixed assets associated with constructing new
restaurants  and  acquiring  existing  restaurants.  In fiscal  1996 the Company
commenced  construction  of a group of restaurant  facilities  (the "Business --
Restaurant Expansion") in the 2,035 room New York New York Hotel & Casino resort
in Las Vegas, Nevada which is scheduled to open in January 1997. In fiscal 1995,
the Company  opened a 1,000 seat  restaurant  in Bryant Park,  a nine-acre  park
behind the New York City Public  Library  (Bryant  Park Grill & Cafe) and opened
another restaurant in Union Station in Washington, DC (B.Smith's,  the Company's
second such restaurant).  The Company also acquired two restaurants - a renowned
French  restaurant in New York City (Lutece) and a casual  restaurant and bar in
the Florida  Keys  (Lorelei  Restaurant  and Cabana Bar).  In fiscal  1994,  the
Company opened a 400 seat restaurant (America in Tyson's Corner Shopping Complex
in McLean,  Virginia) and completed the  acquisition  of a restaurant in Oxnard,
California (Whale's Tail).

      The  net  cash  provided  by  financing  activities  in  fiscal  1996  was
principally from the Company's  borrowings on its main credit facility exceeding
repayments  on such  facility.  In fiscal 1995 net cash  provided  by  financing
activities  was  principally  from the  Company's  borrowings on its main credit
facility  exceeding  repayments on such facility and from the sale  leaseback of
various kitchen  equipment in a restaurant  opened in New York City (Bryant Park
Grill & Cafe).  In  fiscal  1994 the  Company  received  proceeds  from the sale
leaseback  of various  kitchen  equipment  in the  restaurant  opened in McLean,
Virginia (America).

      At  September  28,  1996 the  Company  had a working  capital  deficit  of
$1,304,000 as compared to working  capital of $41,000 at September 30, 1995. The
significant  decrease  in working  capital in fiscal  1996 from  fiscal 1995 was
principally due to cash expended for the Las Vegas  restaurants.  The restaurant
business  does  not  require  the  maintenance  of  significant  inventories  of
receivables,  thus the Company is able to operate with minimal and even negative
working capital.

      In March 1996 the  Company and its main bank  agreed to an  extension  and
increase of the existing Revolving Credit and Term Loan Facility.  The agreement
includes a $5,000,000  facility for working  capital  purposes at the  Company's
existing restaurants and a $7,000,000 facility for use in construction of

                                        -16-










and as working capital for the Las Vegas restaurants which are scheduled to open
in January 1997. The Company  expects that its capital  commitments  for the Las
Vegas restaurants to be approximately $15,000,000.  The two facilities each have
two year terms  enabling  the  Company to borrow  until March 1998 at which time
outstanding  loans may be  converted  into two year term loans.  The  $5,000,000
facility  will  convert  into a two  year  self-amortizing  term  loan  and  the
$7,000,000 facility will convert into a two year loan amortizing $6,000,000 over
the two  year  period  with the  balance  of  $1,000,000  paid at  maturity.  At
September 28, 1996, the Company had borrowings of $5,400,000  outstanding  under
this agreement.

      The Company also a four year $2,000,000  Letter of Credit Facility for use
in lieu of lease security  deposits and a one year (extendible for an additional
six  months)  $2,000,000  Letter  of  Credit  of  Facility  to be used to assure
construction of the Las Vegas restaurants. At September 28, 1996 the Company had
delivered $3,325,000 in irrevocable letters of credit on these two facilities.

      In  December  1996,  the  Company  raised  $6,065,994  through  a  private
placement of 551,454  shares of its common stock at $11 per share.  The proceeds
were used to repay a portion  of the  Company's  outstanding  borrowings  on its
Revolving  Credit  and  Term  Loan  Facility  and for  the  payment  of  capital
expenditures on the Las Vegas restaurants.

      The amount of indebtedness  that may be incurred by the Company is limited
by the revolving credit agreement with its main bank.  Certain provisions of the
agreement may impair the Company's ability to borrow funds.

RESTAURANT EXPANSION

      The  Company  recently  signed a lease  for a new  facility  in the  World
Financial  Center in downtown New York City where the Company intends to open An
American Place Grill restaurant.  The site was formerly occupied by a restaurant
and the Company does not therefore  anticpate that it will be necessary to incur
significant  capital  expenditures  in  connection  with  the  opening  of  this
restaurant.

      The Company has also recently  reached an agreement in principle to manage
the  restaurant  and other food  service  facilities  at three  hotel and casino
facilities located in Primm, Nevada and owned by Primadonna  Resorts,  Inc., one
of the  partners in the New York,  New York Hotel & Casino.  These  arrangements
will not require any significant capital expenditures by the Company.

      Although the Company is not currently committed to any other projects, the
Company is exploring additional opportunities for expansion of its business. The
Company  expects to fund its projects  through cash from operations and existing
credit  facilities.   Additional   expansion  may  require  additional  external
financing.

RECENT DEVELOPMENTS

      In the first quarter of fiscal 1997, the Company sold three of its smaller
restaurants  (Mackinac  Bar & Grill,  The Museum Cafe and  Albuquerque  Eats/The
Rodeo Bar),  each of which was operating at a loss at the time of its sale.  The
Company recognized a net gain of approximately $150,000 in connection with these
sales.

                                        -17-











ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      See page F-1.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  ON  WITH  ACCOUNTANTS  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

      None.

                                        -18-










                                       PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      See Part I, Item 4. "Executive Officers of the Company." Other information
required by this item is incorporated by reference from the Company's definitive
proxy  statement  to be filed  not later  than  January  27,  1997  pursuant  to
Regulation 14A of the General Rules and Regulations ("Regulation 14A") under the
Securities Exchange Act of 1934, as amended.

ITEM 11. EXECUTIVE COMPENSATION

      The  information  required by this item is  incorporated by reference from
the Company's  definitive proxy statement to be filed not later than January 27,
1997 pursuant to Regulation 14A.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The  information  required by this item is  incorporated by reference from
the Company's  definitive proxy statement to be filed not later than January 27,
1997 pursuant to Regulation 14A.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The  information  required by this item is  incorporated by reference from
the Company's  definitive proxy statement to be filed not later than January 27,
1997 pursuant to Regulation 14A.

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K



   (a)  (1)    FINANCIAL STATEMENTS:                                          PAGE

                                                                            
               Report of Independent Certified
               Public Accountants                                               F-1

               Consolidated Balance Sheets --
               at September 28, 1996 and September 30, 1995                     F-2

               Consolidated Statements of Operations --
               For each of the three fiscal years ended
               September 28, 1996, September 30, 1995 and October 1, 1994       F-3

               Consolidated  Statements of  Shareholders'  Equity -- For each of
               the three fiscal years ended  September  28, 1996,  September 30,
               1995 and October 1, 1994                                         F-4

               Consolidated Statements of Cash Flows --
               For each of the three fiscal years ended
               September 28, 1996, September 30, 1995 and October 1, 1994       F-5

               Notes to Consolidated Financial Statements                       F-6


                                        -19-









        (2)    EXHIBITS:

        3.1    Certificate of Incorporation of the Registrant,  filed on January
               4,  1983,  incorporated  by  reference  to  Exhibit  3.1  to  the
               Registrant's Annual Report on Form 10-K for the fiscal year ended
               October 1, 1994 (the "1994 10-K").

        3.2    Certificate of Amendment of the Certificate of  Incorporation  of
               the  Registrant  filed  on  October  11,  1985,  incorporated  by
               reference to Exhibit 3.2 to the 1994 10-K.

        3.3    Certificate of Amendment of the Certificate of  Incorporation  of
               the Registrant filed on July 21, 1988,  incorporated by reference
               to Exhibit 3.3 to the 1994 10-K.

        3.4    By-Laws  of  the Registrant, incorporated by reference to Exhibit
               3.4 to the 1994 10-K.

        10.1   Amended and  Restated  Redemption  Agreement  dated June 29, 1993
               between  the  Registrant  and  Michael Weinstein, incorporated by
               reference to Exhibit 10.1 to the 1994 10-K.

        10.2   Form  of  Indemnification  Agreement  entered  into  between  the
               Registrant and each of Michael Weinstein,  Ernest Bogen,  Vincent
               Pascal,  Robert  Towers,  Jay Galin,  Andrew  Kuruc and Donald D.
               Shack,  incorporated  by  reference  to Exhibit  10.2 to the 1994
               10-K.

        10.3   Ark Restaurants Corp. Amended Stock Option Plan, incorporated  by
               reference to Exhibit 10.3 to the 1994 10-K.

        10.4   Second Amended and Restated Credit Agreement dated as of March 5,
               1996  between the  Company  and Bank Leumi  Trust  Company of New
               York,   incorporated   by  reference  to  Exhibit  10.52  to  the
               Registrant's  Quarterly  Report  on Form  10-Q for the  quarterly
               period ended March 30, 1996 (the "March 1996 10-Q").

        10.5   Ark Restaurants Corp. 1996 Stock  Option  Plan,  incorporated  by
               reference to Exhibit 10.53 to the March 1996 10-Q.

        *21    Subsidiaries of the Registrant.

        *23    Consent of Deloitte & Touche LLP.

        *27    Financial  Data Schedule  pursuant to Article 5 of Regulation S-X
               filed with EDGAR Version only.

        ---------------------------------
        *Filed Herewith

   (b)         Reports on Form 8-K:
               None

                                        -20-






INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Ark Restaurants Corp.

We have audited the accompanying consolidated balance sheets of Ark Restaurants
Corp. and its subsidiaries as of September 28, 1996 and September 30, 1995, and
the related consolidated statements of operations, shareholders' equity and cash
flows for each of the three fiscal years in the period ended September 28, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Ark Restaurants Corp. and
subsidiaries as of September 28, 1996 and September 30, 1995, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended September 28, 1996, in conformity with generally accepted
accounting principles.

As discussed in Note 1 to the consolidated financial statements, effective
October 3, 1993, the Company changed its method of accounting for income taxes
to conform with Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes.

New York, New York
December 6, 1996




                                      F-1








ARK RESTAURANTS CORP. AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS
- ----------------------------------------------------------------------------------------------------

                                                           September 28,               September 30,
ASSETS                                                          1996                       1995
CURRENT ASSETS:

                                                                                 
 Cash and cash equivalents                                 $   907,003                 $ 1,271,284
 Accounts receivable                                         1,462,499                   1,273,827
 Current portion of long-term receivables (Note 2)              93,951                     163,436
 Inventories (Note 3)                                          840,216                     888,344
 Deferred income taxes (Note 11)                               631,027                     395,539
 Prepaid expenses                                              464,571                     957,018
 Other current assets                                          409,374                     534,852
                                                            ----------                 -----------
    Total current assets                                     4,808,641                   5,484,300
                                                            ----------                 -----------
LONG-TERM RECEIVABLES (Note 2)                                 360,344                   1,414,909
ASSETS HELD FOR SALE (Note 3)                                2,614,090                       -
FIXED ASSETS - At cost (Notes 4 and 7):
 Leasehold improvements                                     13,019,524                  14,421,187
 Furniture, fixtures and equipment                          11,113,933                  12,369,017
 Leasehold improvements in progress                          6,289,726                     133,789
                                                            ----------                 -----------
                                                            30,423,183                  26,923,993
 Less accumulated depreciation and amortization             11,325,141                  10,548,687
                                                            ----------                 -----------
                                                            19,098,042                  16,375,306
                                                            ----------                 -----------
INTANGIBLE ASSETS - Net (Note 4)                             3,885,095                   4,336,347
DEFERRED INCOME TAXES (Note 11)                                933,547                     476,543
OTHER ASSETS (Note 5)                                          679,720                     454,515
                                                            ----------                 -----------
                                                           $32,379,479                $ 28,541,920
                                                            ----------                 -----------
                                                            ----------                 -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
 Accounts payable - trade                                  $ 2,365,939                $  2,035,769
 Accrued expenses and other current liabilities  (Note 6)    3,030,684                   2,849,292
 Current maturities of capital lease obligations (Note 8)      240,855                     204,042
 Current maturities of long-term debt (Note 7)                 150,689                      88,832
 Accrued income taxes (Note 11)                                324,394                     265,369
                                                            ----------                 -----------
   Total current liabilities                                 6,112,561                   5,443,304
                                                            ----------                 -----------
OBLIGATIONS UNDER CAPITAL LEASES (Note 8)                      662,347                     929,985

LONG-TERM DEBT - Net of current maturities (Notes 4 and 7)   6,253,177                   3,925,330

OPERATING LEASE DEFERRED CREDIT (Note 8)                     1,547,000                   1,537,000

COMMITMENTS (Notes 7 and 8)

SHAREHOLDERS' EQUITY (Notes 7 and 9):
 Common stock par value S.01 per share - authorized,
   10,000,000 shares; issued, 4,608,882 and
   4,536,382 shares, respectively                               46,089                      45,364
 Additional paid-in capital                                  7,79O,242                   7,481,636
 Retained earnings                                          11,215,462                  10,426,700
                                                            ----------                 -----------
                                                            19,051,793                  17,953,700
Less treasury stock, 1,345,337 shares                        1,247,399                   1,247,399
                                                            ----------                 -----------
                                                            17,804,394                  16,706,301
                                                            ----------                 -----------
                                                          $ 32,379,479                $ 28,541,920
                                                            ----------                 -----------
                                                            ----------                 -----------




See notes to consolidated financial statements.

                                      F-2





ARK RESTAURANTS CORP. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------


                                                                                Year Ended
                                                            ------------------------------------------------------
                                                             September 28,      September 30,          October 1,
                                                                 1996                1995                 1994
                                                                                            
NET SALES                                                    $ 76,795,940       $ 73,026,907         $ 60,404,339

COST OF SALES                                                  20,861,465         20,024,944           16,841,686
                                                             ------------       ------------          -----------
   Gross restaurant profit                                     55,934,475         53,001,963           43,562,653

MANAGEMENT FEE INCOME (Note 10)                                 1,204,808            925,332               59,159
                                                             ------------       ------------          -----------
                                                               57,139,283         53,927,295           43,621,812

OPERATING EXPENSES: 
 Payroll and payroll benefits                                  27,740,390         26,191,191           21,092,870
 Occupancy                                                      9,843,110          9,035,078            7,554,536
 Depreciation                                                   2,664,892          2,289,211            1,694,530
 Other                                                         11,918,198         11,227,851            8,427,639
                                                             ------------       ------------          -----------
                                                               52,166,590         48,743,331           38,769,575

GENERAL AND ADMINISTRATIVE EXPENSES                             4,474,697          4,223,170            4,011,785
                                                             ------------       ------------          -----------
                                                               56,641,287         52,966,501           42,781,360
                                                             ------------       ------------          -----------

OPERATING INCOME                                                  497,996            960,794              840,452
                                                             ------------       ------------          -----------
OTHER EXPENSE (INCOME):
 Interest expense (Note 7)                                        425,810            359,159              143,130
 Interest income                                                  (86,708)           (77,856)             (93,347)
 Other income (Note 12)                                        (1,082,717)        (1,219,066)            (556,983)
                                                             ------------       ------------          -----------
                                                                 (743,615)          (937,763)            (507,200)
                                                             ------------       ------------          -----------

INCOME BEFORE PROVISION FOR INCOME TAXES AND CUMU-
 LATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE              1,241,611          1,898,557            1,347,652

PROVISION FOR INCOME TAXES (Note 11)                              452,849            777,431              704,620
                                                             ------------       ------------          -----------

INCOME BEFORE CUMULATIVE EFFECT OF A CHANGE IN
 ACCOUNTING PRINCIPLE                                             788,762          1,121,126              643,032

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING
 PRINCIPLE (Note 11)                                                 -                 -                  507,770
                                                             ------------       ------------          -----------

NET INCOME                                                   $    788,762       $  1,121,126          $ 1,150,802
                                                             ------------       ------------          -----------
                                                             ------------       ------------          -----------

INCOME PER SHARE:
Income before cumulative effect of a change in
 accounting principle                                               $ .24        $       .34          $       .20
Cumulative effect of a change in accounting principle                -                -                       .16
                                                             ------------       ------------          -----------

NET INCOME                                                   $        .24       $        .34          $       .36
                                                             ------------       ------------          -----------
                                                             ------------       ------------          -----------

WEIGHTED AVERAGE NUMBER OF SHARES USED IN
 COMPUTATIONS                                                   3,241,394          3,251,336            3,225,680
                                                             ------------       ------------          -----------
                                                             ------------       ------------          -----------


See notes to consolidated financial statements. 

                                      F-3








ARK RESTAURANTS CORP. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 28, 1996, SEPTEMBER 30, 1995, AND OCTOBER 1, 1994 
- -----------------------------------------------------------------------------------------------------------------------------------

                                                    Common Stock        Additional                                      Total
                                                  ---------------        Paid-In         Retained       Treasury      Shareholders'
                                                  Shares     Amount      Capital         Earnings        Stock          Equity

                                                                                                    

BALANCE, OCTOBER 2, 1993                       4,430,582     $44,306   $6,956,437       $8,154,772    $(1,247,399)     $13,908,116
 Exercise of stock options                        31,250         312       67,813            -               -              68,125
 Tax benefit on exercise of options                  -          -          83,159            -               -              83,159
 Net income                                          -          -            -           1,150,802           -           1,150,802
                                               ---------    --------   ----------      -----------    ------------      ----------

BALANCE, OCTOBER 1, 1994                       4,461,832      44,618    7,107,409        9,305,574     (1,247,399)      15,210,202
 Exercise of stock options                        74,550         746      182,111            -               -             182,857
 Tax benefit on exercise of options                  -            -       192,116            -               -             192,116
 Net income                                          -            -           -          1,121,126           -           1,121,126
                                               ---------    --------   ----------      -----------    ------------      ----------

BALANCE SEPTEMBER 30, 1995                     4,536,382      45,364    7,481,636       10,426,700     (1,247,399)      16,706,301
 Exercise of stock options                        72,500         725      183,650                                          184,375
 Tax benefit on exercise of options                                       124,956                                          124,956
 Net income                                                                                788,762            -            788,762
                                               ---------    --------   ----------      -----------    -----------       ----------

BALANCE, SEPTEMBER 28, 1996                    4,608,882    $ 46,089   $7,790,242      $11,215,462    $(1,247,399)     $17,804,394
                                               ---------    --------   ----------      -----------    -----------       ----------
                                               ---------    --------   ----------      -----------    -----------       ----------





See notes to consolidated financial statements.

                                      F-4








ARK RESTAURANTS CORP. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------------------------


                                                                                              Year Ended
                                                                             ------------------------------------------------------
                                                                             September 28,          September 30,       October 1,
                                                                                1996                    1995              1994
                                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:
 Income before cumulative effect of a change in
  accounting principle                                                       $   788,762            $1,121,126         $   643,032
 Adjustments to reconcile net income to net cash provided
 by operating activities:
 Depreciation and amortization of fixed assets                                 2,324,304             1,988,968           1,508,489
 Amortization of intangibles                                                     492,207               450,787             264,092
 Provision for loss on sale of restaurants                                       297,000                 -                     -
 Provision for uncollectible long-term receivables                                96,000               100,000             200,000
 Operating lease deferred credit                                                  10,000               151,000             220,000
 Deferred income taxes                                                          (692,492)             (302,100)           (107,005)
 Changes in assets and liabilities:
  Increase in accounts receivable                                               (184,672)             (188,651)           (420,737)
  (Increase) decrease in inventories                                             (79,847)             (126,205)              9,450
  Decrease (increase) in prepaid expenses                                        492,447              (564,747)             34,734
  (Increase) decrease in other assets, net                                      (106,727)              223,411             647,891
  Increase in accounts payable - trade                                           330,167               229,830             315,830
  Increase (decrease) in accrued income taxes                                     59,025               238,211             (47,819)
  Increase (decrease) in accrued expenses and other current liabilities          181,392               397,528             (66,257)
                                                                             -----------           -----------         -----------
     Net cash provided by operating activities                                 4,007,566             3,719,158           3,201,700
                                                                             -----------           -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Additions to fixed assets                                                    (6,833,018)           (6,610,540)         (2,820,366)
 Additions to intangible assets                                                 (110,849)             (145,872)            (39,887)
 Issuance of demand notes and long-term receivables                              (63,O92)             (224,913)           (206,512)
 Payments received on demand notes and long-term receivables                     171,651               220,772              58,940
 Restaurant sale                                                                 250,000                    -                  -
 Restaurant acquisitions                                                        (108,000)           (2,335,712)                -
                                                                             -----------           -----------         -----------
     Net cash used in investing activities                                    (6,693,308)           (9,O96,265)         (3,007,825)
                                                                             -----------           -----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Principal payment on long-term debt                                          (1,857,045)           (1,847,224)         (2,095,342)
 Issuance of long-tam debt                                                     4,100,000             4,500,000           2,250,000
 Exercise of stock options                                                       309,331               374,973             151,284
 Principal payment on capital lease obligations                                 (230,825)             (117,218)            (52,144)
 Proceeds from sale lease back                                                      -                  824,947             478,442
                                                                             -----------           -----------         -----------
     Net cash provided by financing activities                                 2,321,461             3,735,478             732,240
                                                                             -----------           -----------         -----------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                            (364,281)           (1,641,629)            926,115

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                   1,271,284             2,912,913           1,986,798
                                                                             -----------           -----------         -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                                       $   907,003           $ 1,271,284         $ 2,912,913
                                                                             -----------           -----------         -----------
                                                                             -----------           -----------         -----------

SUPPLEMENTAL INFORMATION:
 Cash payments for the following were:
   Interest                                                                  $   515,810           $   422,159         $    143,130
                                                                             -----------           -----------         ------------
                                                                             -----------           -----------         ------------

   Income taxes                                                              $   966,434           $   649,689         $    776,473
                                                                             -----------           -----------         ------------
                                                                             -----------           -----------         ------------


See notes to consolidated financial statements. 

                                      F-5










ARK RESTAURANTS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 28, 1996, SEPTEMBER 30, 1995, AND OCTOBER 1, 1994
- --------------------------------------------------------------------------------



1.   BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Ark Restaurants Corp. and subsidiaries (the "Company") own and operate 20
     restaurants, and manage 5 restaurants, of which 15 are in New York City, 4
     in Washington, D.C., three in Boston and one each in Rhinebeck, New York,
     McLean, Virginia, and Islamorada, Florida. Additionally, the Company
     operates catering businesses in New York City and Washington, D.C., as well
     as wholesale and retail bakeries in New York City, a cafe at the Warner
     Bros. store in New York City and corporate dining facilities at Universal
     Studios, California and in an office building in Jersey City, New Jersey.

     ACCOUNTING PERIOD - The Company's fiscal year ends on the Saturday nearest
     September 30. The fiscal years ended September 28, 1996, September 30, 1995
     and October 1, 1994 included 52 weeks.

     SIGNIFICANT ESTIMATES - In the process of preparing its consolidated
     financial statements, the Company estimates the appropriate carrying value
     of certain assets and liabilities which are not readily apparent from other
     sources. The primary estimates underlying the Company's financial
     statements include allowances for potential bad debts on accounts and notes
     receivable, the useful lives and recoverability of its assets, such as
     property and intangibles, fair values of financial instruments, the
     realizable value of its tax assets and other matters. Management bases its
     estimates on certain assumptions, which they believe are reasonable in the
     circumstances, and while actual results could differ from those estimates,
     management does not believe that any change in those assumptions in the
     near term would have a material effect on the Company's consolidated
     financial position or the results of operation.

     PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
     the accounts of the Company and its wholly owned and majority owned
     subsidiaries. All significant intercompany accounts and transactions have
     been eliminated in consolidation. Investments in affiliated companies where
     the Company is able to exercise significant influence over operating and
     financial policies even though the Company holds 50% or less of the voting
     stock, are accounted for under the equity method.

     CASH EQUIVALENTS - Cash equivalents include instruments with original
     maturities of three months or less.

     INVENTORIES - Inventories are stated at the lower of cost (first-in,
     first-out) or market, and consist of food and beverages.

     FIXED ASSETS - Leasehold improvements and furniture, fixtures and equipment
     are stated at cost. Depreciation of furniture, fixtures and equipment
     (including equipment under capital leases) is computed using the
     straight-line method over the estimated useful lives of the respective
     assets (7 years). Amortization of improvements to leased properties is
     computed using the straight-line method based upon the initial term of the
     applicable lease or the estimated useful life of the improvements,
     whichever is less, and ranges from 5 to 35 years.


                                      F-6





     Certain costs incurred during the construction period of restaurants,
     including rental of premises, training and payroll, are expensed as
     incurred.

     INTANGIBLE AND OTHER ASSETS - Costs associated with acquiring leases and
     subleases, principally purchased leasehold rights, have been capitalized
     and are being amortized on the straight-line method based upon the initial
     terms of the applicable lease agreements, which range from 10 to 21 years.

     Goodwill recorded in connection with the acquisition of shares of the
     Company's common stock from a former shareholder, as discussed in Note 4,
     is being amortized over a period of 40 years. Goodwill arising from
     restaurant acquisitions is being amortized over a period of 15 years.

     Legal and other costs incurred to organize restaurant corporations are
     capitalized as organization costs and are amortized over a period of 5
     years.

     Covenants not to compete arising from restaurant acquisitions are amortized
     over the contractual period of 5 years.

     Certain legal and bank commitment fees incurred in connection with the
     Company's Revolving Credit and Term Loan Facility were capitalized as
     deferred financing fees and are being amortized over four years, the term
     of the facility.

     The Company periodically assesses the recoverability of intangible assets
     on an asset by asset basis using the projected undiscounted operating
     income.

     OPERATING LEASE DEFERRED CREDIT - Several of the Company's operating leases
     contain predetermined increases in the rentals payable during the term of
     such leases. For these leases, the aggregate rental expense over the lease
     term is recognized on a straight-line basis over the lease term. The excess
     of the expense charged to operations in any year and amounts payable under
     the leases during that year are recorded as a deferred credit. The deferred
     credit subsequently reverses over the lease term (Note 8).

     OCCUPANCY EXPENSES - Occupancy expenses include rent, rent taxes, real
     estate taxes, insurance and utility costs.

     INCOME TAXES - In February 1992, the Financial Accounting Standards Board
     issued Statement of Financial Accounting Standards No. 109, Accounting for
     Income Taxes. Statement 109 requires a change from the deferred method of
     accounting for income taxes of APB Opinion 11 to the asset and liability
     method of accounting for income taxes. Under the asset and liability method
     of Statement 109, deferred tax assets and liabilities are recognized for
     the future tax consequences attributable to differences between the
     financial statement carrying amounts of existing assets and liabilities and
     their respective tax bases. Deferred tax assets and liabilities are
     measured using enacted tax rates expected to apply to taxable income in the
     years in which those temporary differences are expected to be recovered or
     settled. Under Statement 109, the effect on deferred tax assets and
     liabilities of a change in tax rates is recognized in income in the period
     that includes enactment date.

     Effective October 3, 1993, the Company adopted Statement 109 and has
     reported the cumulative effect of that change in the method of accounting
     for income taxes in the 1994 statement of operations.



                                      F-7





     INCOME PER SHARE OF COMMON STOCK - Per share data is based upon the
     weighted average number of shares of common stock and common stock
     equivalents outstanding during each year. Common stock equivalents consist
     of dilutive stock options. Fully dilutive income per share of common stock
     is not shown for the effect is not material.

     FUTURE IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS - The Financial
     Accounting Standards Board has issued Statement No. 121, "Accounting for
     the Impairment of Long-Lived Assets and for the Impairment of Long-Lived
     Assets to Be Disposed of ("SFAS 121"), which requires that long-lived
     assets and certain identifiable intangibles to be held and used by an
     entity be reviewed for impairment whenever events or changes in
     circumstances indicate that the carrying amount of an asset may not be
     recoverable. This Statement will be adopted by the Company as of September
     29, 1996. The effect of the adoption of SFAS 121 on the Company's
     consolidated financial statements is not expected to be material.

     In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
     Compensation." SFAS No. 123 establishes accounting and disclosure
     requirements using a fair value-based method of accounting for stock-based
     employee compensation plans. Under the provisions of SFAS No. 123,
     effective for the fiscal year beginning September 29, 1996, the Company may
     either adopt the new fair value-based accounting method or continue the
     intrinsic value-based method for employee stock-based compensation and
     provide pro forma disclosure of net income and earnings per share as if the
     accounting provisions of SFAS No. 123 had been adopted. The Company plans
     to adopt only the disclosure requirements of SFAS No. 123. The Company
     generally does not grant options to outsiders, accordingly, the adoption of
     SFAS No. 123 is not expected to have a material effect on the Company's
     consolidated net earnings or cash flows.

     RECLASSIFICATIONS - Certain reclassifications have been made to the 1995
     and 1994 financial statements to conform to the 1996 presentation.


                                      F-8





2.   LONG-TERM RECEIVABLES

     Long-term receivables consist of the following:




                                                                  September 28,  September 30,
                                                                      1996           1995
                                                                           

Advances for construction, working capital and certain
bankruptcy claims, at one of the Company's managed
locations, at prime interest rate plus 2% (a)                         $   -        $ 860,131

Advances for construction and working capital, at one of
the Company's managed locations, at 15% interest; due
in monthly installments through December 2000                          270,829       311,674

Advances for construction, at one of the Company's managed
locations, at prime plus 1%; due in monthly installments
through December 1999                                                   79,521        99,244

Note receivable, at 8% interest, due in monthly installments,
through August2001 (b)                                                     -         186,612

Note receivable, secured by personal guarantees of officers of a
managed restaurant and fixed assets at that location, at 15%
interest; due in monWy installments, through September 2000             98,548       115,287

Other                                                                    5,397         5,397
                                                                      --------    ----------
                                                                       454,295     1,578,345
                                                                      --------    ----------
Less current portion                                                    93,951       163,436
                                                                      --------    ----------
                                                                      $360,344    $1,414,909
                                                                      --------    ----------
                                                                      --------    ----------




     (a)  In June 1996 the Company acquired this restaurant which had been
          operated under a management agreement since December 1990. The Company
          paid the former owners $108,000 in cash and canceled advances totaling
          approximately $880,000. The purchase price totaling $1,026,000 was
          then allocated to fixed assets and intangible assets (Note 4).

     (b)  In fiscal 1993 the Company was issued a note by a third party who
          subleased and operated a restaurant since 1989 from the Company. In
          fiscal 1996, the third party defaulted on the payments. The Company
          subsequently received approximately $91,000 on settlement of the
          outstanding receivable and wrote off the remaining balance of
          approximately $96,000.

3.   ASSETS HELD FOR SALE

     At September 28, 1996 the Company was actively pursuing the sale of four
     restaurants and accordingly reclassified the net fixed assets ($2,248,231),
     net intangible assets ($503,884) and inventories ($61,975) as assets held
     for sale. The Company also provided a $200,000 charge as its estimated loss
     on disposal of these restaurants. (See Notes 4 and 14.)



                                      F-9









4.   INTANGIBLE ASSETS

     Intangible assets consist of the following:





                                                                    September 28,  September 30,
                                                                         1996         1995
                                                                             

Goodwill (a)                                                          $3,962,877    $3,812,877
Purchased leasehold rights (b)                                           552,740     1,277,740
Noncompete agreements and other (a)                                      840,000     1,158,000
Organization costs                                                       600,030       575,949
                                                                      ----------    ----------
                                                                       5,955,647     6,824,566

Less accumulated amortization                                          2,070,552     2,488,219
                                                                      ----------    ----------
                                                                      $3,885,095    $4,336,347
                                                                      ----------    ----------
                                                                      ----------    ----------





     (a)  In August 1985, certain subsidiaries of the Company acquired
          approximately one-third of the then outstanding shares of common stock
          (964,599 shares), from a former officer and director of the Company
          for a purchase price of $3,000,000. The consolidated balance sheets
          reflect the allocation of $2,946,000 to goodwill.

          During fiscal 1996 the Company acquired two restaurants for
          approximately $108,000 in cash, the cancellation of long-term
          receivables of $880,000 and the assumption of notes payable totaling
          $550,000. The acquisitions were accounted for as purchase transactions
          with the purchase price allocated as follows: inventories $28,000,
          leasehold improvements $575,000, furniture, fixtures and equipment
          $350,000 and intangible assets $679,000.

          During fiscal 1995, the Company acquired two restaurants for
          approximately $2,336,000 in cash plus the assumption of $900,000 in
          liabilities. These acquisitions were accounted for as purchase
          transactions with the purchase prices allocated as follows:
          inventories, $348,000; other assets, $30,000; leasehold improvements,
          $865,000; furniture, fixtures and equipment, $393,000; and intangible
          assets, $1,600,000.

     (b)  Purchased leasehold rights arise from acquiring leases and subleases
          of various restaurants.

5.   OTHER ASSETS

     Other assets consist of the following:






                                                                    September 28,  September 30,
                                                                         1996          1995
                                                                              

Deposits                                                              $ 453,038     $ 392,018
Investments in and advances to affiliates (a)                            53,740        62,497
Deferred financing fees                                                 172,942           -
                                                                      ---------     --------- 
                                                                      $ 679,720     $ 454,515
                                                                      ---------     --------- 
                                                                      ---------     --------- 







                                      F-10










     (a)  The Company, through a wholly owned subsidiary, became a general
          partner with a 19% interest in a partnership which acquired on July 1,
          1987 an existing Mexican food restaurant, El Rio Grande, in New York
          City. Several related parties also participate as limited partners in
          the partnership. The Company's equity in earnings of the limited
          partnership was $48,000, $60,000, and $75,000 for the years ended
          September 28, 1996, September 30, 1995 and October 1, 1994,
          respectively.

          The Company also manages El Rio Grande through another wholly owned
          subsidiary on behalf of the partnership. Management fee income
          relating to these services was $450,000, $519,000 and $383,000 for the
          years ended September 28, 1996, September 30, 1995 and October 1,
          1994, respectively (Note 10).

6.   ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     Accrued expenses and other current liabilities consist of the following:





                                                                                      SEPTEMBER 30,    SEPTEMBER 30,
                                                                                          1996             1995
 
                                                                                                 
Sales tax payable                                                                      $   569,731      $   667,399
Accrued wages and payroll related costs                                                    717,772          636,734
Other current liabilities                                                                1,743,181        1,545,159
                                                                                      -------------    -------------
                                                                                       $ 3,030,684      $ 2,849,292
                                                                                      -------------    -------------
                                                                                      -------------    -------------

 

7.   LONG-TERM DEBT

     Long-term debt consists of the following:



                                                                                      SEPTEMBER 30,    SEPTEMBER 30,
                                                                                          1996             1995
 
                                                                                                 
Revolving Credit and Term Loan Facility with interest at the prime rate, plus 1%,
  payable on March 1, 1998 (a)                                                         $ 5,400,000      $ 3,000,000
Promissory note payable to a landlord of a restaurant site, payable in monthly
  installments through May 1996                                                                  -           29,717
Note issued in connection with acquisition of restaurant site, at 7.25%, payable in
  monthly installments through January 1, 2000 (b)                                         516,320          572,063
Note issued in connection with acquistion of restaurant site, at 8.5%, payable in
  monthly installments through April 2001 (c)                                              487,546                -
Note issued in conneciton with acquisition of restaurant site, at prime plus 2.5%,
  payable in monthly installments through February 1997 (d)                                      -          412,382
                                                                                      -------------    -------------
                                                                                         6,403,866        4,014,162
Less current maturities                                                                    150,689           88,832
                                                                                      -------------    -------------
                                                                                       $ 6,253,177      $ 3,925,330
                                                                                      -------------    -------------
                                                                                      -------------    -------------

 


                                      F-11





     (a)  In March 1996, the Company and its main bank agreed to an extension
          and increase of the existing Revolving Credit and Term Loan Facility.
          The agreement includes a $5,000,000 facility for working capital
          purposes at the Company's existing restaurants and a $7,000,000
          facility for use in construction of and as working capital for
          restaurant facilities to be operated by the Company in a new
          resort/casino under construction in Las Vegas, Nevada. The facilities
          each have two-year revolving terms, at the end of which they will
          convert into term loans payable over 24 months. The $5,000,000
          facility will convert into a two-year self-amortizing term loan, and
          the $7,000,000 facility will convert into a two-year loan amortizing
          $6,000,000 over the two-year period with the $1,000,000 balance due at
          maturity. Outstanding revolving loans bear interest at 1% above the
          bank's prime rate until converted into term loans, at which time the
          interest rate is 1 1/2% above the bank's prime rate. The Company paid
          a commitment fee of $150,000 at closing and a facility of 1/2% is due
          on any unused portion of the revolving credit facility.

          The agreement includes a four-year $2,000,000 Letter of Credit
          Facility for use for the Company's existing restaurants, and a
          one-year (with a six-month extension available at the Company's
          option) $2,000,000 Letter of Credit Facility for the Las Vegas
          Project. The Company is generally required to pay commissions of 
          1 1/2% per annum on outstanding letters of credit.

          The Company's subsidiaries each guaranteed the obligations of the
          Company under the foregoing facilities and granted security interests
          in their respective assets as collateral for such guarantees. In
          addition, the Company pledged stock of such subsidiaries as security
          for obligations of the Company under such facilities.

          The agreement includes restrictions relating to, among other things,
          indebtedness for borrowed money, capital expenditures, advances to
          managed businesses, mergers, sale of assets, dividends, and liens on
          the property of the Company. The agreement also contains financial
          covenants requiring the Company to maintain a minimum ratio of debt to
          net worth, minimum shareholders' equity, and a minimum ratio of cash
          flow prior to debt service. The Company is in compliance with all
          covenants.

     (b)  In November 1994, the Company issued a $600,000 note in connection
          with the acquisition of a restaurant in the Florida Keys. The Company
          remits monthly payments of $7,044 inclusive of interest until January
          1, 2000, at which time the outstanding balance of $358,511 is due. The
          debt is secured by the leasehold improvements and tangible personal
          property at the restaurant.

     (c)  In April 1996 the Company acquired a restaurant for $550,000, which
          was financed by issuing a note payable in monthly installments of
          $13,461, inclusive of interest.

     (d)  In March 1996 the Company sold a restaurant in Oxnard, California to
          the note holder. The note holder remitted $250,000 in cash to the
          Company and released the Company from its then-remaining note
          obligation totaling $404,589, resulting in a loss of $97,000.



                                      F-12





     Required principal payments on long-term debt are as follows:



YEAR                                                                                                     AMOUNT
 
                                                                                                    
1997                                                                                                   $  150,689
1998                                                                                                    1,525,534
1999                                                                                                    2,497,840
2000                                                                                                    2,229,803
                                                                                                       ----------
                                                                                                       $6,403,866
                                                                                                       ----------
                                                                                                       ----------

  
     During the fiscal years ended September 28, 1996, September 30, 1995 and
     October 1, 1994, interest expense was $515,810, $422,159 and $143,130,
     respectively, of which $90,000 and $63,000 was capitalized during the
     fiscal years ended September 28, 1996 and September 30, 1995.

     The carrying value of the Corporation's long-term debt approximates its
     current aggregate fair value.

8.   LEASES

     The Company leases its restaurants, bar facilities, and administrative
     headquarters through its subsidiaries under terms expiring at various dates
     through 2029. Most of the leases provide for the payment of base rents plus
     real estate taxes, insurance and other expenses and, in certain instances,
     for the payment of a percentage of the restaurants' sales in excess of
     stipulated amounts at such facility.

     As of September 28, 1996, future minimum lease payments, net of sublease
     rentals, under noncancellable leases are as follows:



                                                                                       OPERATING       CAPITAL
YEAR                                                                                    LEASES         LEASES
 
                                                                                               
1997                                                                                  $ 6,698,957    $   321,235
1998                                                                                    7,218,288        321,235
1999                                                                                    6,805,795        263,365
2000                                                                                    6,456,808        154,118
2001                                                                                    6,587,227              -
Thereafter                                                                             38,218,707              -
                                                                                      -----------    -----------
Total minimum payments                                                                $71,985,782      1,059,953
                                                                                      -----------
                                                                                      -----------
Less amount representing interest                                                                        156,751
                                                                                                     -----------
Present value of net minimum lease payments                                                          $   903,202
                                                                                                     -----------
                                                                                                     -----------



     In connection with the leases included in the table above, the Company
     obtained and delivered irrevocable letters of credit in the aggregate
     amount of $3,325,130 as security deposits under such leases.

     Rent expense (net of sublease rental income of $124,025 and $182,800 for
     the fiscal years ended September 30, 1995 and October 1, 1994,
     respectively) was $6,117,296, $5,633,662 and $4,558,202, during the fiscal
     years ended September 28, 1996, September 30, 1995 and October 1, 1994,
     respectively. Rent expense for the fiscal years ended September 28, 1996,
     September 30, 1995 and October 1, 1994 



                                      F-13






     includes approximately $10,000, $151,000 and $220,000 of operating lease
     deferred credits, representing the difference between rent expense
     recognized on a straight-line basis and actual amounts currently payable.
     Contingent rentals, included in rent expense, were $547,038, $405,399 and
     $253,725 for the fiscal years ended September 28, 1996, September 30, 1995
     and October 1, 1994, respectively.

9.   STOCK OPTIONS

     On October 15, 1985, the Company adopted a Stock Option Plan (the "Plan")
     pursuant to which the Company reserved for issuance an aggregate of 175,000
     shares of common stock. In May 1991 and March 1994, the Company amended
     such Plan to increase the number of shares issuable under the Plan to
     350,000 and 447,650, respectively. In March 1996, the Company adopted a
     second plan and reserved for issuance an additional 135,000 shares. Options
     granted under the Plans to key employees and directors are exercisable at
     prices at least equal to the fair market value of such stock on the dates
     the options were granted. The options expire five years after the date of
     grant and are generally exercisable as to 25% of the shares commencing on
     the first anniversary of the date of grant and as to an additional 25%
     commencing on each of the second, third and fourth anniversaries of the
     date of grant.

     Additional information follows:




                                                                          1996           1995            1994
 
                                                                                            
Shares under option, beginning of year                                   189,125        183,800         195,050
Options:
     Granted                                                                   -         81,000          20,000
     Exercised                                                           (72,500)       (74,550)        (31,250)
     Canceled or expired                                                 (11,000)        (1,125)              -
                                                                      ------------    -----------    ------------
Shares under option, end of year (a)                                     105,625        189,125         183,800
                                                                      ------------    -----------    ------------
Shares available for future grant                                        135,000         20,075          99,950
                                                                      ------------    -----------    ------------
Options exercisable (a)                                                   43,125         88,125         162,550
                                                                      ------------    -----------    ------------
Price range of outstanding options (b)                                $4.375-$8.00    $2.25-$8.00    $2.125-$6.50
                                                                      ------------    -----------    ------------
                                                                      ------------    -----------    ------------



     (a) Options become exercisable at various times until expiration dates
         ranging from May 1997 through October 1999.

     (b) Prices reflect the fair market value on the dates of grant.

     The exercise of nonqualified stock options in the fiscal years ended
     September 28, 1996, September 30, 1995 and October 1, 1994 resulted in
     income tax benefits of $124,956, $192,116 and $83,159, respectively, which
     were credited to additional paid-in capital. The income tax benefits result
     from the difference between the market price on the exercise date and the
     option price.



                                      F-14





10.  MANAGEMENT FEE INCOME

     As of September 28, 1996, the Company provides management services to five
     restaurants and two corporate dining facilities owned by outside parties.
     In accordance with the contractual arrangements, the Company earns fixed
     fees and management fees based on restaurant sales and operating profits as
     defined by the various management agreements.

     The Company terminated a management agreement for a restaurant located in
     Miami, Florida in fiscal 1994 and incurred a charge of approximately
     $507,000 from uncollectible advances for working capital and restaurant
     supplies at such location.

     Restaurants managed had net sales of $12,802,305, $10,838,664 and
     $10,642,895 during the management periods within the years ended September
     28, 1996, September 30, 1995 and October 1, 1994, respectively, which are
     not included in consolidated net sales of the Company.

11.  INCOME TAXES

     As discussed in Note 1, the Company adopted Statement 109 as of October 3,
     1993. The cumulative effect of this change in accounting for income taxes
     of $507,770 is determined as of October 3, 1993 and is reported separately
     in the statement of operations for the year ended October 1, 1994.

     The provision for income taxes reflects Federal income taxes calculated on
     a consolidated basis and state and local income taxes calculated by each
     subsidiary on a nonconsolidated basis. For New York State and City income
     tax purposes, the losses incurred by a subsidiary may only be used to
     offset that subsidiary's income.

     The provision for income taxes consists of the following:

 


                                                                                         YEAR ENDED
                                                                        -------------------------------------------
                                                                        SEPTEMBER 28,    SEPTEMBER 30,    OCTOBER 1,
                                                                            1996             1995            1994
 
                                                                                                 
Current provision:
     Federal                                                             $   519,771      $   532,947     $  365,464
     State and local                                                         625,570          475,062        446,161
                                                                        -------------    -------------    ----------
                                                                           1,145,341        1,008,009        811,625
                                                                        -------------    -------------    ----------
Deferred provision (credit):
     Federal                                                                (592,721)        (314,745)      (206,955)
     State and local                                                         (99,771)          84,167         99,950
                                                                        -------------    -------------    ----------
                                                                            (692,492)        (230,578)      (107,005)
                                                                        -------------    -------------    ----------
                                                                         $   452,849      $   777,431     $  704,620
                                                                        -------------    -------------    ----------
                                                                        -------------    -------------    ----------






                                      F-15





     The provision for income taxes differs from the amount computed by applying
     the Federal statutory rate due to the following:



                                                                                         YEAR ENDED
                                                                        -------------------------------------------
                                                                        SEPTEMBER 28,    SEPTEMBER 30,    OCTOBER 1,
                                                                            1996             1995            1994
 
                                                                                                 
Provision for Federal income taxes (34%)                                 $   426,000      $   646,000     $  458,000
State and local income taxes net of Federal tax benefit                      347,000          369,000        360,000
Amortization of goodwill                                                      26,000           26,000         26,000
Tax credits                                                                 (349,000)        (299,000)      (173,000)
Other                                                                          2,849           35,431         33,620
                                                                        -------------    -------------    ----------
                                                                         $   452,849      $   777,431     $  704,620
                                                                        -------------    -------------    ----------
                                                                        -------------    -------------    ----------



     Deferred tax assets or liabilities are established for (a) temporary
     differences between the carrying amounts of assets and liabilities for
     financial reporting purposes and the amounts used for income tax purposes,
     and (b) operating loss carryforwards. The tax effects of items comprising
     the Company's net deferred tax asset are as follows:



                                                                                      SEPTEMBER 28,    SEPTEMBER 30,
                                                                                          1996             1995
 
                                                                                                 
Deferred tax assets:
     Operating loss carryforwards                                                      $   804,641      $   639,096
     Operating lease deferred credits                                                      671,537          673,530
     Carryforward tax credits                                                              835,721          361,539
     Provision for uncollectible long-term receivable                                       68,000           34,000
     Valuation allowance                                                                  (738,277)        (690,204)
                                                                                      -------------    -------------
                                                                                         1,641,622        1,017,961
Deferred tax liabilities:
     Depreciation and amortization                                                          77,048          145,879
                                                                                      -------------    -------------
Net deferred tax asset                                                                 $ 1,564,574      $   872,082
                                                                                      -------------    -------------
                                                                                      -------------    -------------



     A valuation allowance for deferred taxes is required if, based on the
     evidence, it is more likely than not that some of the deferred tax assets
     will not be realized. The Company believes that uncertainty exists with
     respect to future realization of certain operating loss carryforwards and
     operating lease deferred credits. Therefore, the Company provided a
     valuation allowance of $738,277 at September 28, 1996 and $690,204 at
     September 30, 1995. The Company has state operating loss carryforwards of
     $9,819,734 and local operating loss carryforwards of $7,101,623, which
     expire in the years 2000 through 2010.



                                      F-16





12.  OTHER INCOME

     Other income consists of the following:




                                                                                         YEAR ENDED
                                                                        -------------------------------------------
                                                                         SEPTEMBER 28,    SEPTEMBER 30,    OCTOBER 1,
                                                                             1996             1995            1994
 
                                                                                                  
Purchasing service fees                                                   $    55,551      $    67,367      $126,780
Insurance proceeds (a)                                                        726,415          914,475       242,666
Sales of logo T-shirts and hats                                               214,291          180,364        67,455
Other                                                                          86,460           56,860       120,082
                                                                         -------------    -------------    ----------
                                                                          $ 1,082,717      $ 1,219,066      $556,983
                                                                         -------------    -------------    ----------
                                                                         -------------    -------------    ----------



     (a)  In July 1994, the Company was required to close a restaurant in
          Manhattan (Ernie's) on a temporary basis to enable structural repairs
          to be made to the ceiling of the restaurant. The cost of such repairs,
          other ongoing restaurant operating expenses and a guaranteed profit
          were borne by a third party. The restaurant reopened in February 1995
          and the agreement provides that the third party continue to guarantee
          some level of operating profits through January 1998. During the
          fiscal years ended September 28, 1996 and September 30, 1995, the
          Company received $726,415 and $914,475, respectively, in excess of the
          continuing restaurant operating expenses.

13.  QUARTERLY INFORMATION (UNAUDITED)

     The following table sets forth certain quarterly operating data.



                                                                          FISCAL QUARTER ENDED
                                                       ------------------------------------------------------------
                                                       DECEMBER 30,     MARCH 30,      JUNE 29,      SEPTEMBER 28,
                                                           1995           1996           1996            1996
 
                                                                                         
1996
Net sales                                              $18,723,119     $15,450,293    $22,600,958     $20,021,570
Gross restaurant profit                                 13,545,173      11,147,783     16,684,719      14,556,800
Net income (loss)                                           25,108      (1,028,807)     1,137,265         655,196
Net income (loss) per share                            $      0.01     $     (0.32)   $      0.35     $      0.20




                                      F-17






                                                                         FISCAL QUARTER ENDED
                                                       ---------------------------------------------------------
                                                                                                       SEPTEMBER
                                                       DECEMBER 31,      APRIL 1,        JULY 1,           30,
                                                           1995            1996           1996            1996
 
                                                                                          
1995
Net sales                                               $16,357,705     $14,759,085    $21,046,818    $ 20,863,299
Gross restaurant profit                                  11,837,623      10,584,425     15,359,109      15,220,807
Net income (loss)                                           291,213        (482,122)       635,834         676,200
Net income (loss) per share                             $      0.09     $     (0.15)   $      0.20    $       0.20



14.  SUBSEQUENT EVENTS (UNAUDITED)

     COMMON STOCK PRIVATE PLACEMENT - In December 1996, the Company raised
     $6,065,994 in a private placement of 551,454 shares of its common stock at
     $11 per share. The proceeds of such offering were used to repay a portion
     of the Company's outstanding bank debt and for the payment of capital
     expenditures on its Las Vegas restaurant facilities at the New York-New
     York Hotel & Casino in Las Vegas which is scheduled to open in January
     1997.

     RESTAURANT SALES - In the first quarter of fiscal 1997, the Company sold
     three of its smaller restaurants located in the borough of Manhattan in New
     York City. The aggregate purchase price for the restaurants was $1,362,000,
     of which an aggregate of $308,000 was paid in cash and balance of
     $1,054,000 is payable over various periods. Gains of approximately $150,000
     were recognized on these sales.

                                     ******



                                      F-18







                                      SIGNATURES

      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on its behalf by the undersigned,  thereunto duly  authorized,  in the
City of New York, State of New York, on the 20th day of December, 1996.

                                              ARK RESTAURANTS CORP.

                                              By:     /s/Michael Weinstein
                                                 -------------------------------
                                                 MICHAEL WEINSTEIN, President

      Pursuant to the  requirements  of the Securities  Exchange Act of 1934, as
amended,  this  report  has been duly  signed by the  following  persons  in the
capacities and on the date indicated.



SIGNATURE                        TITLE                         DATE
                                                          
/s/ Ernest Bogen                 Chairman of the Board         December 20, 1996
- ----------------
(Ernest Bogen)

/s/ Michael Weinstein            President and Director        December 20, 1996
- ---------------------
(Michael Weinstein)

/s/ Vincent Pascal               Vice President,               December 20, 1996
- ------------------               Secretary and Director
(Vincent Pascal)

/s/ Robert Towers                Vice President, Treasurer,    December 20, 1996
- -----------------                Principal Financial Officer
(Robert Towers)                  and Director

/s/ Andrew Kuruc                 Vice President, Controller,   December 20, 1996
- ----------------                 Principal Accounting Officer
(Andrew Kuruc)                   and Director

/s/ Donald D. Shack              Director                      December 20, 1996
- -------------------
(Donald D. Shack)

/s/ Jay Galin                    Director                      December 20, 1996
- --------------
(Jay Galin)

/s/ Paul Gordon                  Director                      December 20, 1996
- -------------------
(Paul Gordon)