<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               Amendment Number 2
                                       to
                                   FORM 10-K/A
                           FOR ANNUAL AND TRANSITIONAL
                     REPORTS PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                                   (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 30, 2002
                                       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: 0-18222
                                RICA FOODS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

              Nevada                                             87-0432572
  (State or Other Jurisdiction of                            (I.R.S. Employer
  Incorporation or Organization)                            Identification No.)

            1840 Coral Way 101   Miami Florida                        33145
(Address of Registrant's Principal Executive Offices)               (Zip Code)

       Registrant's telephone number, including area code: (305) 858-9480
        Securities registered pursuant to Section 12(b) of the Act: None
 Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
                             value $0.001 per share

Indicate by check mark whether the registrant (i) 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 (ii) has been subject to such filing
requirements for the past 90 days. Yes [_] No [X]

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/A or any amendment to
this Form 10-K/A. [_]

The aggregate market value of the voting and nonvoting common equity held by
non-affiliates of the Registrant, as of the latest practicable date, June 2,
2003, was approximately $4,255,312. The foregoing calculation assumes that the
per share market value of the common stock is $0.95, the amount of the last
reported trade on the American Stock Exchange of January 21, 2003.

The number of shares outstanding of the Registrant's common stock, par value
$0.001 per share (the Common Stock), as of the latest practicable date June 2,
2003, was 12,864,321. There are no shares of preferred stock of the Registrant
outstanding.

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                                RICA FOODS, INC.
                                TABLE OF CONTENTS

<TABLE>
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<S>                                                                                           <C>
                                          PART I

Item 1    Business .........................................................................    3
Item 2    Properties .......................................................................   10
Item 3    Legal Proceedings ................................................................   11
Item 4    Submission of Matters to a Vote of Security Holders ..............................   13

                                         PART II

Item 5    Market for the Registrant's Common Equity and Related Stockholder
              Matters ......................................................................   14
Item 6    Selected Financial Data ..........................................................   16
Item 7    Management's Discussion and Analysis of Financial Condition and Results of
              Operations ...................................................................   17
Item 7A   Quantitative and Qualitative Disclosures about Market Risk .......................   32
Item 8    Financial Statements and Supplementary Data ......................................   34
Item 9    Changes in and Disagreements with Accountants on Accounting and
              Financial Disclosure .........................................................   34

                                         PART III

Item 10   Directors and Executive Officers of the Registrant ...............................   41
Item 11   Executive Compensation ...........................................................   42
Item 12   Security Ownership of Certain Beneficial Owners and Management and
              Related Stockholder Matters ..................................................   48
Item 13   Certain Relationships and Related Transactions ...................................   49

                                         PART IV

Item 14   Controls and Procedures ..........................................................   53
Item 15   Exhibits, Financial Statement Schedules and Reports on Form 8-K ..................   53
</TABLE>

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                                     PART I

ITEM 1. BUSINESS

Background

Rica Foods, Inc. (the "Company") was incorporated under the laws of the State of
Utah on February 6, 1986 and undertook a public offering of its securities in
1987. In April 1994, the Company changed its state of incorporation from Utah to
Nevada.

Business of the Company

The Company's operations are principally conducted through two, wholly owned
Costa Rican corporations, Corporacion Pipasa, S.A. ("Pipasa") and Corporacion As
de Oros, S.A. ("As de Oros") and their respective subsidiaries.

Pipasa, founded in 1969, is the largest poultry company in Costa Rica with a
market share of approximately 50% of the chicken meat market in Costa Rica,
according to information provided by the Costa Rican Chamber of Poultry
Producers, Camara Nacional de Avicultores de Costa Rica ("CANAVI"). The main
activities of Pipasa include the production and sale of fresh and frozen
poultry, processed chicken products, commercial eggs and concentrate for
livestock and domestic animals. Pipasa has been in the poultry business for more
than 30 years with more than 15 years of experience in exports.

As de Oros, founded in 1954, is Costa Rica's second largest poultry producer,
comprising approximately 20% of the country's poultry market, according to
information provided by CANAVI and several Company surveys, and is one of the
leaders in the Costa Rican animal feed market with a market share of
approximately 28%. As de Oros subsidiaries' also operate a chain of 28 fried
chicken quick service restaurants in Costa Rica called Restaurantes As, and
Kokoroko operated by Planeta Dorado, S.A, a Costa Rican corporation.

The Company's subsidiaries own a total of 97 urban and rural outlets throughout
Costa Rica, three modern processing plants and four animal feed plants. Due to
similar business activities, the combined operations of the subsidiaries permit
the Company to achieve operational efficiencies.

The Company promotes its brand names through advertisements and marketing events
and considers its subsidiaries to be among the most recognized Central American
chicken producers, supplying chicken in Costa Rica to Burger King, McDonalds,
Quizno's, Church's Chicken, Denny's, Tony Roma's, Hardee's, Kentucky Fried
Chicken, Pizza Hut franchises, Price Smart, Taco Bell and Gerber Products
companies. In addition, the Company, through its subsidiaries, was selected by
the McDonald's Corporation to be one of its poultry suppliers for all of Central
America.

The Company's subsidiaries do not depend on the sales of only one product but
rather a diversity of products available at a range of prices and presentations,
which represent an important strategic strength of the subsidiaries. The Company
produces and markets over 950 different products to meet consumer demands.

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Segments

Information regarding the Company's segments for the last three fiscal years is
set forth in Note 15 to the Company's consolidated financial statements for
fiscal year 2002, 2001 and 2000. Such information is incorporated herein by
reference. The following is a brief description of the main business segments of
the Company:

Broiler Chicken: Poultry is a popular food item in Costa Rica because of its
easy preparation, nutritional value and low price when compared to other
available meats, according to information provided by the Junta de Fomento
Avicola, a Costa Rican governmental institution. Poultry is a generic product,
consumed at all social levels and is not defined by geographic markets. The
Company's main brand names for broiler chicken, chicken parts, mixed cuts and
chicken breasts are Pipasa(TM) and As de Oros(TM). Polls and consumer
information gathered by the Company indicate that Costa Ricans eat chicken at
least once a week. Chicken is sold to institutional customers, schools,
hospitals, hotels, supermarkets, restaurants and small grocery stores.

Animal Feed: Animal feed is made with imported raw materials, such as corn and
soybean meal, along with the unused portions of chicken and other vitamins and
minerals. Animal feed is marketed for consumption by cows, pigs, birds, horses,
shrimp and domestic pets. The Company's animal feed products are sold through
the Ascan(TM), Aguilar y Solis(TM), Mimados(TM), Kan Kan (TM) and Nutribel(TM)
brand names. Customers for the commercial animal feed brands are mainly large
wholesalers and high scale breeders. This customer group focuses on quality and
price. Products marketed through the Mimados(TM), Dogpro(TM), Kan Kan (TM) and
Ascan(TM) brand names are targeted towards veterinarians, pet stores and
supermarkets and are sold typically to consumers with medium to higher income
levels. The Company is currently the leader in the animal feed market in Costa
Rica, with an approximate 28% market share.

By-products: By-products include sausages, bologna, chicken nuggets, chicken
patties, frankfurters, salami and pate. The Zaragoza (TM) brand name includes
chicken, beef and pork by-products. The Company's chicken by-products are sold
through the Kimby(TM), Tiquicia(TM), Chulitas(TM), Zaragoza(TM), Pimpollo (TM)
and As de Oros(TM) brand names and are sold to all social and economic levels.
These products are sold mainly in supermarkets, and sales are predominantly
driven by price. The Kimby(TM) brand name is the leading seller of chicken
by-products in Costa Rica.

Exports: Subsidiaries of the Company export different products to all countries
in Central America and the Caribbean and make occasional exports to Hong Kong
and Colombia. The Company exports the majority of its products, including
broiler chicken, by-products, animal feed and pet foods.

Quick Service: Corporacion Planeta Dorado, S.A. and its subsidiary operate 28
restaurants ( the "Restaurants") located in rural and urban areas throughout
Costa Rica, including express delivery service in some restaurants. This segment
is comprised of quick service restaurants, which offer a diversified menu of
chicken meals. The Restaurants distinguish themselves from other quick service
chains by offering dishes and using recipes and ingredients that appeal to the
taste of consumers in Costa Rica. The quick service restaurant business is
highly competitive in Costa Rica, as several other quick service chains operate
in Costa Rica.

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Other: This segment includes sales of commercial eggs, non-recurring sales of
fertile eggs, fertilizers and raw material, among others.

Distribution Network

The Company has a distribution fleet consisting of approximately 260 product
distribution trucks and supervision vehicles. Poultry delivery trucks are
equipped with refrigeration chambers to ensure delivery of fresh products daily,
thus maintaining the Company's reputation for fresh quality products. In
addition, the Company uses independent distributors to deliver larger quantities
of animal feed to some of its customers.

The Company's products are sold throughout Costa Rica, through owned or leased
delivery trucks, urban and rural retail outlets that may also be owned or
leased, supermarket chains and independent distributors. A majority of the total
distribution of the Company's products is conducted through the Company's urban
retail outlets and delivery trucks, with a smaller portion through rural
outlets. The remaining distribution is serviced through the Company's processing
plants. The retail outlets, mostly located in urban areas, are exclusively
dedicated to the sale of the Company's products and most of these outlets are
leased by the Company. As of September 30, 2002, the Company had a customer
database of approximately 26,000 customers who purchase products on a regular
and occasional basis.

Seasonality

The Company's subsidiaries have historically experienced and have come to expect
seasonal fluctuations in net sales and results of operations. The Company's
subsidiaries have generally experienced higher sales and operating results in
the months from October to January, which fall in the first and second quarters
of each fiscal year. This variation is primarily due to holiday celebrations
that occur during these periods in which Costa Ricans prepare traditional meals,
which include dishes with chicken as the main ingredient. The Company expects
this seasonal trend to continue for the foreseeable future.

Raw Materials

The primary raw material and main component for the Company's products consists
primarily of corn and soybean meal. Corn and soybean meal purchases represent
approximately 35% of the total cost of goods sold and approximately 60% of raw
material costs. Historically, the Company has been able to obtain a satisfactory
supply of these materials.

The Company imports all of its corn from the United States of America through
the Chicago Board of Trade ("CBOT") and uses commodity futures and forward
purchasing for hedging purposes to reduce the effect of changing commodity
prices on a portion of its commodity purchases. The price of corn and soybean
meal, like most grain commodities, is fairly volatile and requires constant and
daily hedging in order to minimize the effect of price increases on the
Company's profit margin. Changes in the price of corn can significantly affect
the Company's profit margin.

The Company purchases its soybean meal through Industrias Oleaginosas, S.A.
("INOLASA"), a Costa Rican corporation, in which the Company holds a 10% equity
interest. In Costa Rica, there is an applicable 5% tax for soybean meal imports,
which is not levied if such imports are purchased through INOLASA. If for any
reason INOLASA cannot deliver the soybean meal to

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the Company, the Company can buy its soybean meal directly from the CBOT. Thus
far, the Company has never had to purchase soybean meal directly from the CBOT.

Customer Relations

The majority of the Company's customers are located in Costa Rica. No single
customer accounted for more than 10% of total consolidated sales, and the
Company believes that the loss of any single customer would not have a material
adverse effect on the Company's business.

Backlog of Orders

As of September 30, 2002, the Company had no material backlog of sales orders.

Competition

Although the Company is significantly larger and better established than any one
of its domestic competitors, the Company believes it does face competitive
pressures. The Company's principal competitors are other vertically integrated
chicken companies domiciled in Costa Rica, who the Company believes have a
market share of approximately 30% of the broiler market. The Company believes
that its experience, economies of scale, and brand recognition are the primary
barriers to entry for other domestic competitors. The Company's local market
share also could potentially be threatened by foreign competition. The Company
believes that the likelihood of a threat by foreign competitors is low for
several reasons. First, the Company has a strong reputation for producing high
quality products at a reasonable price. Additionally, consumers in Costa Rica
prefer fresh chicken to frozen chicken. Due to transportation constraints and
distance, foreign competitors would have to sell frozen chicken if they were to
sell chicken in Costa Rica.

The Agriculture Ministry in Costa Rica together with the private industry sector
of Costa Rica monitors all chicken entering the country to prevent the spread of
Newcastle Disease in Costa Rica. The market in Costa Rica is also assisted by
tariff agreements at the present time. Chicken importers must pay duties as
dictated by the World Trade Organization ("WTO") (Formerly, General Agreement on
Trade and Tariffs). These agreements were reached at the Uruguay Round of the
GATT negotiations, which are scheduled to end in 2004, after which it is
probable that similar negotiations will continue. The agreements and current
negotiations that are being carried out with the present Costa Rican government
provide quotas and scaled tariffs, and permit only certain broiler chicken cuts
to enter the Costa Rican market.

These agreements provide that for fiscal year 2003, only 1,227 metric tons
("MT") of poultry meat and 143 MT of poultry by-products can be imported to
Costa Rica from countries outside of the Central American Common Market. This
quota is taxed at a rate of 34% for poultry, 29% for poultry sausages and 19%
for poultry patties. Amounts in excess of these quotas are subject to a 150%
tariff, except for whole chicken, patties and breast cuts, which are subject to
a 40% tariff.

Pricing

In Costa Rica, there are no laws against monopolies; however, there are laws
against monopolistic practices. Companies that have a dominant market share in
Costa Rica cannot arbitrarily increase prices in order to take advantage of
market position. Companies also are forbidden to work in conjunction with their
competitors in order to create price collusion. The

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Company's pricing strategies have been influenced by the devaluation of the
Costa Rican colon, economic conditions and the supply and demand of the product
in the market. Historically, the Company has consistently increased its sales
prices in order to help mitigate the effect of the devaluation of the colon. The
Company believes it has reliable historical data on consumer reactions with
respect to price increases and uses this information in its strategy to
counteract the devaluation of the colon.

Marketing

The Company has a division dedicated to marketing. The marketing department's
responsibility is to advertise the Company's various products and brand names.
In addition to television and radio advertisements, the Company's distribution
centers promote the Company's brand names by distributing posters, T-shirts and
hats with the Company's logo. In Costa Rica, the Company's brand names commonly
appear on billboards and bus stops. Other marketing techniques used by the
Company include packaging presentations, promotions and sponsoring of special
national events.

Research and Development

The Company conducts continuous research and development activities to improve
the quality of the diet fed to poultry during their growing stage. The annual
cost of such research and development programs is less than one percent of total
consolidated annual sales and is expensed as incurred.

Employee Compensation and Incentives

As of May 30, 2003, the Company employed approximately 3,300 persons.

The Company believes it has good relations with its employees. Private companies
in Costa Rica typically support their own workers' associations instead of
organized unions. These associations offer various benefits for their employees.
The success of the worker's association, Asociacion Solidarista de Empleados de
Rica Foods ("ASERICA"), and the fact that there has never been a strike at the
Company's facilities, reflects the quality of the management team and its
ability to keep the Company's employees satisfied. ASERICA provides certain
recreational facilities, healthcare and pension benefits as well as financial
services to the Company's employees. This association is located on land donated
by Mr. Chaves and is among the largest workers' associations in Costa Rica.

Salaries in Costa Rica are increased twice a year as dictated by the government
in order to counterbalance the effect of inflation and increases in the cost of
living.

At the present time, labor laws in Costa Rica require all companies to make a
severance payment under certain conditions. This law requires all companies in
Costa Rica to make a payment equivalent to 5.6% of an employee's yearly gross
salary for every year of employment up to 8 years of labor, as part of a
severance payment upon the termination of an employee. This benefit is payable
after the employee's death, retirement, or termination without cause. An
employee who resigns voluntarily or is terminated for cause forfeits his right
to any severance benefit. Since 1991, the Company has waived the 8-year limit
dictated by the labor law, and pays severance

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based on years of service. The Company is also required by Costa Rican law to
deposit an additional 3% of each employee's yearly gross salary into a pension
fund.

The Company deposits every month in ASERICA 5.33% of each employee's yearly
gross salary as part of severance pay, and the employees are required to make a
monthly deposit equivalent to 4% of their monthly salary as part of a savings
program. Every February of each year, ASERICA pays each employee 1.33% of the
5.33% initially deposited. Amounts paid or transferred to ASERICA may not
completely cover the severance payment at the time the employee leaves, since
the severance payment calculation is based on the average of the last 6 months'
salary. Any remaining amount owed by the Company must be settled when the
employee is terminated. As of September 30, 2002, the Company has recorded an
accrual in the amount of approximately $138,000 for future severance payments,
which has been included in accrued expenses. The Company believes this amount is
adequate based on past experience.

All employees in Costa Rica are protected by obligatory insurance with the Caja
Costarricense de Seguro Social ("CCSS") and the Instituto Nacional de Seguros
("INS"), which are the government's social security and insurance programs,
respectively. All companies in Costa Rica must pay the CCSS and the INS 21% and
1.74% of each employee's monthly salary, respectively. The CCSS pays 60% of the
employee's normal salary during the periods in which the employee is unable to
work. In addition to these benefits, employees must pay a total of 8% of their
monthly salary to the CCSS in order to receive healthcare, pension and maternity
care benefits, and 1% to the Banco Popular into an obligatory savings account.

Employees of the Company are provided with a profit sharing program. If either
one of the Company's subsidiaries has a successful year and generates profits in
excess of certain budgeted levels, that entity will distribute a percentage of
its net income to its employees. This incentive is calculated monthly and
distributed every two months. The Company encourages its employees to develop a
career with the Company, and accordingly, in conjunction with a local
university, the Company offers preferential rates for its employees. The main
goal of the program is developing the Company's future management team. In
addition, the Company's human resources department offers in-house and outside
training for its employees in various fields, in order to assure quality in all
areas. As of September 30, 2002, the Company had accrued approximately $73,000
for the profit sharing program, which was paid to employees during November
2002.

On May 29, 1998, the Company adopted the 1998 Stock Option Plan (the "Plan").
Under the Plan, 200,000 shares of the Company's Common Stock are reserved for
issuance upon the exercise of options. The plan is designed to serve as an
incentive for retaining and attracting persons and/or entities that provide
services to the Company and its subsidiaries. As of September 30, 2002, there
were no options outstanding under this Plan.

Poultry Raising Process

The poultry raising process starts with the import of one-day old breeder hens
from the United States. After approximately 24 weeks the breeder hens reach
reproductive maturity and begin laying fertile eggs. The hatching period lasts
21 days, which is divided into 19 days in hatching machines and two days in
birth chambers. These baby chicks are inoculated to prevent diseases. The chicks
are then brought to the Company's own raising house or to grow-out contract
farmers who raise the chicken to full size (for approximately 43 days) and
provide basic elements such as vitamins, formula and a balanced ration of feed.

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The grow-out contract farmers are a group of 168 farmers who own their own land
and facilities. These farmers have a long-term contract with the Company to
raise the baby chicks to adult birds. During fiscal year 2002, grow-out contract
farmers supplied approximately 58% of the total number of chickens needed by the
Company. These farmers are paid according to the weight and quality of the
chickens produced and the mortality rate of the chickens raised. The Company
provides veterinary services and offers vaccines and chicken feed to the farmers
at wholesale prices. Regardless of whether the Company or grow-out contract
farmers raise the chickens, they are regularly inspected for immune
deficiencies, vitamin levels and general diseases. By working in conjunction
with these grow-out contract farmers, the Company has greater flexibility to
increase or decrease the number of chickens raised depending on the Company's
growth objectives.

Once the chickens reach the desired weight, they are taken to one of the
processing plants. At the processing plants, the chickens are slaughtered and
the meat packaged or processed to make chicken by-products. The Company believes
that its processing facilities are among the most sophisticated and largest in
the country.

Costa Rica has been declared free of Newcastle Disease, and additionally, the
Company has been implementing the guidelines of the Hazardous Analysis and
Critical Control Points ("HACCP"). HACCP is a prevention-based food safety
system used widely throughout the food industry. It is a tool used to assess
hazards and to establish controls based on the prevention of food contamination.
By identifying critical points in the process flow that could lead to
contamination of food products and applying control measures at each point, the
likelihood of food borne illness is reduced. All new employees are trained as to
the proper procedures required in handling and preparing food.

Regulations

The Company's poultry hatcheries and processing plants are subject to regulation
under Costa Rican law regarding cleanliness and health standards. Exports of the
Company's poultry products are regulated in the countries in which the Company
sells its products. The Company has strict sanitary processes in order to
provide consumers with product integrity, safety and quality and is in
compliance with all health regulations.

Environmental Compliance

The Company has been and is practicing appropriate environmental policies such
as reforesting, processing and recycling of waste, producing organic fertilizer,
building oxidation lagoons and sewage treatment plants. The Company's compliance
with environmental laws and regulations relating to the discharge of material
into the environment or otherwise relating to the protection of the environment
has not had a material effect on the Company's financial position and results of
operations. For fiscal year 2002, the Company invested approximately $400,000 in
environmental projects, such as waste treatment facilities and systems to
control dust and noise pollution.

At the present time, the Company is not subject to any material costs for
compliance with any environmental laws in any jurisdiction in which it operates.
However, in the future, the Company could become subject to material costs to
comply with new environmental laws or environmental regulations in jurisdictions
in which it might conduct business. At the present time, the Company cannot
assess the potential impact of any such potential environmental regulations.

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ITEM 2. PROPERTIES

The Company conducts its operations through its production facilities and
executive offices, which are all located in Costa Rica. All facilities are owned
by the Company's subsidiaries, Pipasa and As de Oros. The Company owns seven
processing plants, two hatcheries, and various other grow-out farms, retail
outlets, and restaurants. Corporate offices of the subsidiaries and most
important processing plants are located in the central valley of Costa Rica.
Grow-out farms are located in urban and rural areas.

On February 21, 2003, the By-products plant was partially damaged by a fire. As
a result the Company has been producing its by-products in three different
facilities from three different companies. The production of by-products is
performed and managed in its entirety by the Company. The Company is in the
process of renovating the plant and estimates the reconstructed facilities will
be concluded by the end of fiscal year 2003.

The Company has pledged property and equipment of approximately $8.8 million.
Each of the Company's five business segments utilizes all of the Company's
primary properties. The following contains descriptions of the principal
facilities:

Production Area

The production area includes the following divisions: Animal Feed Production,
Breeder, Hatcheries, Grow-out division, Broiler Processing, and By-products
Processing. The production capacities are described below:

The Company owns four processing plants for its Animal Feed division. These
plants perform activities that include grinding grains, mixing flour and packing
different types of animal feed products. The facilities have a maximum capacity
to produce an aggregate of approximately 391,500 tons of animal feed annually.

The Breeder division facilities are composed of galleys, which have a maximum
capacity to produce approximately 62 million fertile eggs annually. The breeder
hens are imported from the United States when they are one-day old.

The Hatchery division consists of two incubation plants, which the Company
believes are among the most modern in Central America. The plants' incubation
and hatching halls can be expanded to increase production. The Company expects
that these plants will fulfill production needs for many years. The incubation
facilities produce approximately 43 million chicks annually.

One day after birth, chicks are transferred to the Grow-out division. During
this stage, the chicks receive three types of diet, according to growth
requirements. The growth stage lasts approximately 43 to 45 days. The Company
owns 23 grow-out farms, and leases 168 contracted grow-out farms where owners of
these farms provide service needed to grow the chicks. The Company transfers
these farmers' one-day old chicks, animal feed, and provides veterinary
services, technical advice and other services. Once chicks reach a target
weight, the Company pays the farmers an agreed upon fee for the chickens. The
facilities production capacity is approximately 31 million chickens annually,
which includes grow-out farmers.

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The Broiler division is divided into slaughter and pluck, coolers and retailers,
packing and cuts and sub-products processes. The facilities have a maximum
production capacity of approximately 59 million kilograms annually.

The By-products processing division is divided into sausage, formed, packaging,
oven and cooking areas. As of September 30, 2002, the facilities of the
By-product division had a maximum production capacity of 9.8 million kilograms
annually.

Distribution

Distribution is conducted through retail outlets in Costa Rica, the majority of
which are leased. There are a total of 28 restaurants, the majority of which are
also leased.

Administrative Area

Administrative offices of the Company are located in Miami, Florida. Staff,
administrative, marketing and financial headquarters of Pipasa and As de Oros
are located in La Ribera de Belen, Heredia, Costa Rica.

ITEM 3. LEGAL PROCEEDINGS

Pipasa is a defendant in a lawsuit brought in Costa Rica, pursuant to which the
plaintiff in such action is seeking damages in an amount equal to $3.6 million.
Pipasa was served with prejudgment liens for $1.5 million and, with the approval
of the Juzgado Sexto Civil, the court with jurisdiction over the lawsuit,
certain parcels of real estate owned by Pipasa have been substituted for such
liens. This approval was ratified by the Superior Court on November 11, 1999,
and all funds initially attached have been released and returned to Pipasa.
Costa Rica law requires the posting of guarantees by a plaintiff seeking
prejudgment liens. A ruling on these objections is pending. Pipasa has filed
several pleadings in opposition to the underlying lawsuit; a ruling on these
pleadings also remains pending.

In connection with this pending lawsuit, the plaintiff also brought suit against
Pipasa in the State of California and the State of Florida. The California
lawsuit has been dismissed without prejudice.

In Response to plaintiff's amended complaint filed in Miami-Dade County Circuit
Court on May 7, 1999, Pipasa, on July 19, 1999, filed a motion to dismiss for
lack of personal jurisdiction. The motion was denied on March 31, 2003. Pipasa
has appealed the denial to Florida's Third District Court of Appeal. No decision
is expected for at least until August 2003. Pipasa has also moved in the Circuit
Court for a stay of the Circuit Court case pending appeal. The Circuit Court has
taken the stay request under advisement. If the court grants a stay, it may also
require Pipasa to post a bond, the amount of which would have to be determined.

A separate lawsuit against Pipasa, filed by the same plaintiff in the North
District of California and styled Polaris Holding Company v. Corporacion Pipasa,
S.A., No. C 99-2160 CRB (N.D. Calif.), has been dismissed, without prejudice for
plaintiff to refile the action after resolution of the Florida action as well as
a similar action, brought by the same plaintiff against Pipasa, that is pending
in Costa Rica.

The Company cannot ascertain the basis of the claim or the relief sought, but
believes the lawsuits are without merit and intends to assert an appropriate
defense. At the present time,

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neither the Company nor Pipasa can evaluate the potential impact of this lawsuit
on the financial results of the Company, nor can the Company assess the
likelihood of an unfavorable outcome.

On or about January 8, 2002 Richard W. Baldwin, individually and on behalf of
all others similarly situated, filed a putative class action lawsuit against the
Company, Calixto Chaves, Jose Pablo Chaves, Randall Piedra and Monica Chaves
(collectively the "Defendants"). Specifically, the plaintiffs alleged violations
of Section 10(b) and Section 20(A) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated there under. The plaintiffs in the Class Actions sought
class certification, compensatory damages, pre-judgment and post-judgment
interest, attorneys' fees and costs and such other relief as the Court might
deem appropriate.

On July 24, 2002, the Court granted the Company's' Motion to Dismiss, without
prejudice. On August 7, 2002, Baldwin filed an Amended Complaint against the
Company and the individual Defendants identified above. On August 12, 2002, the
Company filed a Motion to Dismiss the Amended Complaint. On November 14, 2002,
the Court dismissed, with prejudice, the class action lawsuit.

On January 13, 2003 the Company filed a Form 10-K that appeared to include an
audit report of Deloitte & Touche. The Company recognizes that it was
potentially a violation of provisions of the Securities Exchange Act of 1934
(the "Exchange Act") for the Company to file the Form 10- K before it received a
signed audit report from Deloitte & Touche (the "Mistake"). Until very shortly
after the filing of the Form 10-K, the Company's Chief Financial Officer (the
"CFO") believed the Company was in the process of receiving the signed audit
report. Shortly after the Company learned that a signed audit report had not in
fact been received prior to filing the Form 10-K, the Company commenced the
process of collecting information regarding how the Mistake occurred and
initiated an internal investigation.

On January 24, 2003, the Staff (the "Staff") of the Securities and Exchange
Commission (the "Commission") notified the Company that it was conducting an
informal inquiry of the Company. In response to such notification, the Company
provided the Staff information regarding the Mistake.

On February 4, 2003, the Staff advised the Company that on February 7, 2003 the
Staff intended to recommend that the Commission bring a civil injunctive action
against the Company, alleging that the Company violated Sections 13(a),
13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-1
promulgated there under. The Staff further advised the Company that the Staff
intended to recommend that the Commission bring a civil injunctive action
against the Company's Chief Executive Officer (the "CEO") and CFO, alleging they
violated Section 13(b)(5) of the Exchange Act and Rules 13a-14, 13b2-1 and
13b2-2 promulgated there under, and that they aided and abetted the Company's
alleged violations.

The Company believes that the Mistake may constitute a violation of Section
13(a) of the Exchange Act and Rules 13a-1 and 12b-20 promulgated there under.
However, the Company does not believe that it has violated Sections 13(b)(2)(A)
or 13(b)(2)(B) of the Exchange Act and has so advised the Staff. The Company
believes it has been cooperating fully with the Staff and hopes to settle the
dispute. The Company and the Staff have been in detailed settlement
conversations with the Staff since February 10, 2003. Nonetheless as of the day
of this report, neither the Company, the CEO nor the CFO have definitely settled
this matter with the Staff.

                                       12

<PAGE>

Except for the legal proceedings disclosed above, no legal proceedings of a
material nature against to which the Company or subsidiaries are a party, exist
or were pending as of the date of this report. Except for the legal proceedings
disclosed above, the Company knows of no other legal proceedings of a material
nature pending or threatened or judgments entered against any director or
officer of the Company in his capacity as such.

The Company is involved in various other claims and legal actions arising in the
ordinary course of business. In the opinion of the Company's management, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity.

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

None

                                       13

<PAGE>

                                     PART II

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

Although the Company's common stock is listed on the American Stock Exchange
("AMEX") under the symbol RCF, trading of the Company's common stock on the AMEX
has been halted since January 21, 2003. The Company has been advised by the AMEX
that trading of the Company's common stock on the AMEX will be halted at least
until the Company has filed with Securities and Exchange Commission consolidated
financial statements for fiscal 2002 that include a signed audit report. There
can be no assurance that trading of the Company's common stock will ever resume
on the AMEX.

On March 4, 2003, the Company received notice from the staff of the American
Stock Exchange (the "AMEX") indicating that the Company was not in compliance
with Section 1003(d) of the AMEX's continued listing standards due to having
filed a Form 10-K for the period ended September 30, 2002, which did not have a
signed Independent Auditor's Opinion, as well as a Form 10-Q for the period
ended December 31, 2002, which was not reviewed by an Independent Auditor. Since
such notice, the Company has also filed a Form 10-Q for the period ended March
31, 2003, which was not reviewed by an Independent Auditor.

On July 7, the Company announced that it received notice from the AMEX
indicating the Company is no longer in compliance with certain continued listing
standards and that the staff of the AMEX intends to file an application with the
Securities and Exchange Commission to strike the Company's common stock listing
and registration on the AMEX. The Company has exercised its right to appeal the
decision and has requested a formal hearing to continue its listing on the AMEX.
The hearing date has been set for August 26, 2003.

There can be no assurance that the Company's request for continued listing will
be granted. If the Company is unsuccessful in its appeal, the Company will seek
to take steps to enable its shares of common stock to trade on the
Over-the-Counter Bulleting Board (OTCBB), a regulated quotation service that
offers real time quotes and volume information in over-the-counter securities.
There can be no assurance that the Company's shares of common stock will be
eligible to trade on the OTCBB since, among other things, the Company has not
timely filed all of the reports it is required to file pursuant to the
Securities Exchange Act of 1934.

<TABLE>
<CAPTION>
                                                              Market Price Range
                                                              ------------------
                                                               High        Low
                                                               ----        ---
<S>                               <C>                         <C>         <C>
                                  Fiscal Year 2002
                                  ----------------
       First Fiscal Quarter       (10/1/01 to 12/31/01)       $ 3.89      $1.30
       Second Fiscal Quarter      (01/1/02 to 03/31/02)       $ 1.50      $0.45
       Third Fiscal Quarter       (04/1/02 to 06/30/02)       $ 1.56      $1.00
       Fourth Fiscal Quarter      (07/1/02 to 09/30/02)       $ 1.02      $0.70

                                  Fiscal Year 2001
                                  ----------------

       First Fiscal Quarter       (10/1/00 to 12/31/00)       $17.44      $5.00
       Second Fiscal Quarter      (01/1/01 to 03/31/01)       $ 5.38      $2.40
       Third Fiscal Quarter       (04/1/01 to 06/30/01)       $ 5.15      $2.65
       Fourth Fiscal Quarter      (07/1/01 to 09/30/01)       $ 4.55      $3.60
</TABLE>

                                       14

<PAGE>

As of June 2, 2003, the Company had 12,811,469 shares of Common Stock
outstanding and approximately 1,500 holders of record of such stock, and no
shares of preferred stock were outstanding as of that date.

Dividends

The Company has never paid any dividends on its Common Stock. The Company does
not anticipate paying cash dividends on Common Stock in the foreseeable future
based on its expected operating cash flow requirements (see Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources). The Nevada General Corporation Law
prohibits the Company from paying dividends or otherwise distributing funds to
its stockholders, except out of legally available funds. The declaration and
payment of dividends on the Company's Common Stock and the amount thereof will
be dependent upon the Company's results of operations, financial condition, cash
requirements, future prospects and other factors deemed relevant by the Board of
Directors. No assurance can be given that the Company will pay any dividends on
Common Stock in the future.

During fiscal year 2000, the Board of Directors of Pipasa declared a dividend of
637,000 series TCA shares of preferred stock to common stockholders of record of
Pipasa as of September 30, 1999, valued at $2,143,626. Based on minority
interest ownership of Pipasa (equivalent to 40.44%), Inversiones La Ribera, S.A.
received 257,602 shares, valued at $866,882. Likewise, the Company received
379,398 shares valued at $1,276,744. The dividends distributed during fiscal
year 2000 correspond to Pipasa's earnings pertaining to fiscal year 1999.

After the issuance of such preferred stock, Inversiones La Ribera, S.A. and the
Company used such shares to cancel outstanding debts with Pipasa.

During fiscal year 2000, the Board of Directors of As de Oros declared a
dividend of 590,000 series TCA shares of preferred stock of As de Oros, valued
at $1,983,327 to common stockholders of record of As de Oros as of September 30,
1999. As de Oros distributed 332,642 shares to the Company and 257,358 shares to
Comercial Angui, S.A. in accordance with As de Oros' common stock ownership as
of September 30, 1999. The dividends distributed correspond to As de Oros'
earnings pertaining to fiscal year 1999.

After the issuance of such preferred stock, the common stockholders used such
shares to cancel outstanding debts with As de Oros.

Subsidiaries' Legal Reserve

Current legislation in Costa Rica requires that 5% of annual net income (in
local currency) up to an amount equivalent to 20% of total capital stock be
allocated to a legal reserve. As of September 30, 2002 and 2001, the Company's
Subsidiaries have allocated retained earnings of $2,039,806 and $1,853,159,
respectively, for the creation of a legal reserve.

                                       15

<PAGE>

Securities Authorized For Issuance Under Equity Compensation Plans

<TABLE>
<CAPTION>
                                             Number of                                Number of securities
                                             ---------                                --------------------
                                          securities to be     Weighted- average       remaining available
                                          ----------------     -----------------       -------------------
                                            issued upon        exercise price of       for issuance under
                                            -----------        -----------------       ------------------
                                            exercise of           outstanding          equity compensation
                                            -----------           -----------          -------------------
                                        outstanding options         options                   plans
                                        -------------------         -------                   -----
<S>                                     <C>                    <C>                    <C>
Equity compensation plans approved
   by security holders                                 0                  n/a                      192,400
Equity compensation plans not
   approved by security holders                      n/a                  n/a                          n/a
</TABLE>

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data presented below should be read in conjunction with
the consolidated financial statements and related notes, Management's Discussion
and Analysis of Financial Condition and Results of Operations and the other
financial information included elsewhere in this Form 10-K/A. The data as of
September 30, 2002 and 2001 and for the fiscal years ended September 30, 2002,
2001 and 2000, are derived from the Company's audited consolidated financial
statements for fiscal years 2002, 2001 and 2000 included elsewhere in this Form
10-K/A. The data as of September 30, 2000, 1999 and 1998 and for the fiscal
years ended September 30, 1999 and 1998 is derived from the Company's audited
financial statements not included in this Form 10-K/A.

<TABLE>
<CAPTION>
                                                  2002            2001           2000          1999           1998
                                                  ----            ----           ----          ----           ----
                                                (In thousands of U.S dollars, except share and per share data)
<S>                                            <C>            <C>          <C>              <C>           <C>
Sales                                             130,665        127,336       123,628        118,550        98,794
Cost of sales                                      87,487         86,841        83,757         77,275        71,464
Income from operations                              9,908          5,694         6,385         12,427         6,155
Income before income taxes and minority
     interest                                       4,180          1,188         3,725          8,174         3,641
Net income applicable to stockholders               2,917          1,349         2,889          3,041         1,130
Basic earnings per common share               $      0.23    $      0.11   $      0.24     $     0.43    $     0.16
Diluted earnings per common share             $      0.23    $      0.11   $      0.24     $     0.42    $     0.16
Total assets                                       90,847         90,850        88,182         70,323        63,005
Long-term debt, net of current portion             16,018         20,890        21,821         21,444        22,559
Basic weighted average number of shares
     outstanding                               12,811,469     12,810,021    11,874,190      7,122,170     7,078,949
Diluted weighted average number of
     shares outstanding                        12,811,469     12,810,021    11,878,474      7,269,769     7,113,265
</TABLE>

                                       16

<PAGE>

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

General

Management is responsible for preparing the Company's consolidated financial
statements and related information that appears in this Form 10-K/A. Management
believes that the consolidated financial statements fairly reflect the form and
substance of transactions and reasonably present the Company's consolidated
financial condition and results of operations in conformity with generally
accepted accounting principles in the United States of America ("GAAP").
Management has included in the Company's consolidated financial statements
amounts that are based on estimates and judgments, which it believes are
reasonable under the circumstances. The Company maintains a system of internal
accounting policies, procedures and controls intended to provide reasonable
assurance, at the appropriate cost, that transactions are executed in accordance
with the Company's authorization and are properly recorded and reported in the
consolidated financial statements, and that assets are adequately safeguarded.

On March 4, 2003, the Company received notice from the staff of the American
Stock Exchange (the "AMEX") indicating that the Company was not in compliance
with Section 1003(d) of the AMEX's continued listing standards due to having
filed a Form 10-K for the period ended September 30, 2002, which did not have a
signed Independent Auditor's Opinion, as well as a Form 10-Q for the period
ended December 31, 2002, which was not reviewed by an Independent Auditor. Since
such notice, the Company has also filed a Form 10-Q for the period ended March
31, 2003, which was not reviewed by an Independent Auditor.

On July 7, the Company announced that it received notice from the AMEX
indicating the Company is no longer in compliance with certain continued listing
standards and that the staff of the AMEX intends to file an application with the
Securities and Exchange Commission to strike the Company's common stock listing
and registration on the AMEX. The Company has exercised its right to appeal the
decision and has requested a formal hearing to continue its listing on the AMEX.
The hearing date has been set for August 26, 2003.

There can be no assurance that the Company's request for continued listing will
be granted. If the Company is unsuccessful in its appeal, the Company will seek
to take steps to enable its shares of common stock to trade on the
Over-the-Counter Bulleting Board (OTCBB), a regulated quotation service that
offers real time quotes and volume information in over-the-counter securities.
There can be no assurance that the Company's shares of common stock will be
eligible to trade on the OTCBB since, among other things, the Company has not
timely filed all of the reports it is required to file pursuant to the
Securities Exchange Act of 1934.

The Company's operations are primarily conducted through its 100% owned
subsidiaries, Pipasa and As de Oros and their respective subsidiaries. The
Company is the largest poultry company in Costa Rica. As de Oros also owns and
operates a chain of quick service restaurants in Costa Rica operated under the
name Restaurantes As de Oros and Kokoroko.

Seasonality

The Company has historically experienced and has come to expect seasonal
fluctuations in net sales and results of operations. The Company has generally
experienced higher sales and operating results in the months from October to
January, which fall in the first and second quarters of each fiscal year. This
variation is primarily due to holiday celebrations that occur during these
periods in which Costa Ricans prepare traditional meals that include dishes with
chicken as the main ingredient. The Company expects this seasonal trend to
continue for the foreseeable future.

                                       17

<PAGE>

Fiscal Year 2002 compared to Fiscal Year 2001

For the year ended September 30, 2002, the Company generated net income
applicable to common stockholders of $2,917,291 ($0.23 earnings per share),
compared to $1,348,784 ($0.11 earnings per share) for the year ended September
30, 2001. For fiscal year 2002, net sales increased by 2.61% when compared to
fiscal year 2001, mainly due to increases in the sales of the animal feed,
by-products and export segments. Consolidated segment profit margin has also
increased due to lower production costs as a result of efficiencies due to new
investments in production facilities and equipments made during fiscal years
2001 and 2000.

For calendar year 2002, according to the Banco Central of Costa Rica ("BCCR"),
the Gross Domestic Product ("GDP") increased by 2.8% for calendar year 2002,
compared to 0.9% for calendar year 2001. The inflation rate was 9.7% for
calendar year 2002 compared to 11.0% for calendar 2001. The devaluation of the
colon with respect to the U.S. dollar reached 10.8% for calendar year 2002,
compared to 7.4% for calendar year 2001. Exports increased 4.7% in calendar year
2002 compared to a decrease of 14.2% for calendar year 2001. External
investments in the country reached approximately $642 million for 2002 compared
to $454 million during 2001. The deficit of the government of Costa Rica
increased to 4.0% of GDP in calendar 2002 compared to 2.9% of GDP in calendar
2001.

The following describes the performance by segment (in millions of U.S.
dollars):

<TABLE>
<CAPTION>
Segments:                                                 2002             2001            2000
---------                                                 ----             ----            ----
<S>                                                     <C>              <C>             <C>
Sales, net
    Broiler                                             $ 67.87          $ 70.20         $ 73.48
    Animal Feed                                           26.00            24.62           22.42
    By-Products                                           14.78            13.74           11.69
    Exports                                                7.94             6.18            4.56
    Quick Service                                          5.58             6.47            8.03
    Other                                                  8.50             6.13            3.45
                                                        -------          -------         -------
Total net sales                                          130.67           127.34          123.63
                                                        -------          -------         -------
    Broiler                                               16.89            14.74           15.03
    Animal Feed                                            3.40             2.82            2.45
    By-Products                                            2.68             2.02            2.70
    Exports                                                0.80             0.45            0.02
    Quick Service                                          0.06             0.36            0.33
    Other                                                  0.13             0.64            0.39
                                                        -------          -------         -------
Gross profit less selling expenses                        23.96            21.03           20.92
                                                        -------          -------         -------
General and administrative expenses and
    goodwill amortization                                 14.05            15.34           14.53
Other non-operating expenses                               5.73             4.50            2.66
                                                        -------          -------         -------
Income before taxes and minority interest               $  4.18          $  1.19         $  3.73
                                                        =======          =======         =======
</TABLE>

The Company uses segment profit margin information to analyze segment
performance, which is defined as gross profit less selling expenses as a
percentage of sales, since selling expenses and costs have a direct effect on
sales per segment.

Broiler sales decreased by 3.3%, mainly due to a 5.7% decrease in volume. The
Company believes this decrease is mainly due to a relative reduction in consumer
purchasing power due to

                                       18

<PAGE>

economic conditions in Costa Rica, which causes a reduction in the consumption
of Broiler Chickens. The profit margin of this segment increased from 21.0% to a
24.9%, mainly due to production efficiencies and better distribution logistics,
which resulted in lower costs.

Animal Feed sales increased by 5.6% for fiscal year 2002 when compared to fiscal
year 2001, which reflects a relative increase in volume and per unit sales
prices. Segment profit increased from 11.5% for fiscal year 2001 to 13.1% for
fiscal year 2002, mainly due to a shift in product mix to more profitable
products, production efficiencies and change to more efficient distribution
logistics.

By-product sales increased by 7.6% for fiscal year 2002 when compared to fiscal
year 2001, mainly due to relative increase in volume and per unit sales prices.
Production efficiencies and a change in the product mix to more profitable
products also contributed to an increase in segment profit from 14.7% for fiscal
year 2001 to 18.1% for fiscal year 2002.

Export sales increased by 28.5% for fiscal year 2002 when compared to fiscal
year 2001, mainly due to an increase in sales of extruded feed and pellet feed,
pet foods and baby chicks. This increase was partly offset by a decrease in the
exports of broiler chickens, but not other chicken related products, to
Honduras. Since March 2002, exports to the country of Honduras have been
suspended due to a Honduran restriction on the import of broiler chickens. The
Company is working with Governmental authorities in Costa Rica to reestablish
broiler chicken exports to Honduras. Profit margin increased from 7.3% for
fiscal year 2001 to 10.1% for fiscal year 2002, mainly due to a variation in the
product mix to more profitable products.

Quick service sales decreased by 13.8% for fiscal year 2002 when compared to
fiscal year 2001, mainly due to strong market competition. The Company believes
that strong market competition also resulted in a decrease in profit margin from
5.6% to 1.1%.

Sales for the other products segment increased by 38.7% for fiscal year 2002
when compared to fiscal year 2001, mainly due to an increase in the sale of raw
material. Profit margin decreased from 10.4% for fiscal year 2001 to 1.5% for
fiscal year 2002, mainly due to variations in the sales mix to less profitable
products.

Operating expenses decreased by 4.4% or $1.53 million for fiscal year 2002 when
compared to fiscal year 2001. The decrease was mainly due to the discontinuation
of the amortization of goodwill in fiscal year 2002. For fiscal 2002, General
and Administrative expenses decreased by $494,402 or 3.4% when compared to
fiscal year 2001 mainly due to Company's effort to improve efficiencies and
adopt cost measures. Likewise, Selling expenses decrease of $249,128 or 1.28%
for fiscal year 2002, when compared to fiscal 2001, was mainly due to
efficiencies in distribution logistics. Operating expenses represented 25.5% and
27.3% of net sales for fiscal years 2002 and 2001, respectively.

For fiscal year 2002, non-operating expenses increased by 27.1%, mainly due to
an increase in the devaluation rate in Costa Rica, which resulted in an increase
in the foreign exchange loss, and the absence of offsetting gains from the sale
of fixed assets in fiscal year 2002 when compared to fiscal year 2001.

The Company's income tax expense was $1,041,596 for fiscal year 2002, compared
to a benefit of $390,833 for fiscal year 2001. Effective rates for fiscal years
2002 and 2001 were 24.9% and 32.9%, respectively. The variation is mainly due to
the elimination of significant tax benefits in

                                       19

<PAGE>

Costa Rica and an increase in taxable income for fiscal year 2002. During 2001,
the government of Costa Rica enacted changes in the income tax law, applicable
for fiscal years ending after September 30, 2001. Such changes provide, among
other things, the elimination of the restatement of property, plant and
equipment, thereby significantly reducing the related tax depreciation; and
elimination of the one-time deduction equivalent to 50% of the prior year's
investment in property, plant and equipment to be used in agricultural and
industrial activities.

For September 30, 2002 and 2001 the Company established a full valuation
allowance for the tax depreciation resulting from the restatement of property,
plant and equipment. The Company believes that it is more likely than not that
this depreciation will not continue to be deductible in the future, and has
therefore, recorded a full valuation allowance.

The Company also included the effect of net operating loss carry forwards
related to operations in the United States to determine the valuation allowance
for 2002 and 2001. Management believes that it is more likely than not that
these net operating losses will not be utilized in the future, based on the
projected financial performance of Rica Foods, Inc. in the United States.

Fiscal Year 2001 Compared to Fiscal Year 2000

The Company's operations resulted in a $0.11 diluted earnings per share for the
fiscal year ended September 30, 2001, as compared to a $0.24 diluted earnings
per share during the fiscal year ended September 30, 2000. Results of operations
for fiscal year 2001, when compared to fiscal year 2000, were negatively
impacted by adverse economic factors that have affected Costa Rica, as well as
North and Central America. According to information issued by the BCCR,
commodity exports for Costa Rica for the year ended September 30, 2001 decreased
by 18.97% when compared to the year ended September 30, 2000. This decrease was
mainly due to the economic slow-down in the United States, which according to
information issued by the BCCR, purchased 52.5% of total exported commodities
during fiscal year 2000. Other external factors that have negatively impacted
the Costa Rican economy include increases in the international price of oil,
decrease in international prices of coffee and banana and investments from
external sources during fiscal year 2000, which has continued through fiscal
year 2001 according to information issued by the Ministry of Foreign Commerce of
Costa Rica. However, the Costa Rican economy has recently experienced positive
factors such as a devaluation rate of only 6.77% for the year ended September
30, 2001, which had been the lowest since March 1994, according to information
issued by the BCCR, while variations in the inflation rate during the same
period have been below the average for the same period.

In response to the adverse economic outlook, the Costa Rican government has
lowered interest rates beginning in 2001 in an effort to increase consumption,
investment and employment rates, and has implemented a plan to promote the
development of small and medium sized companies in Costa Rica. Additionally, the
current government plans to continue to keep increases in devaluation rates
within normal parameters.

The decrease in the Costa Rican consumer's purchasing power affects the overall
demand for goods and services in Costa Rica, including the demand for the
Company's products. As a result, sales for some segments of the Company, mainly
the broiler and by-products segments, fell short of expectations. In response,
the Company has temporarily lowered the sales price of certain products, mainly
in the broiler and By-products segments, and shifted its product mix to include
lower priced products which, in the aggregate, have contributed to lower sales
for fiscal year

                                       20

<PAGE>

2001, than those that were budgeted for the Company. During the quarter ended
September 30, 2001, the Company increased sales prices of those products
directed towards customers with higher purchasing power, which resulted in an
increase in sales and profit ratios. The Company plans to increase its sales
prices periodically during the next fiscal year, depending on the economic
outlook of the Company.

Broiler sales decreased by 4.5% for fiscal year 2001 when compared to fiscal
year 2000. The decrease is attributable to a reduction in sales volume of 3.5%,
in addition to temporary decreases of sales prices of certain products offered
by the Company during this period. The decrease in profit margin due to
discounts was offset by operating efficiencies in the production process.
Segment profit margin did not vary significantly, increasing from 20.5% to
21.0%.

Animal feed sales increased by 9.8% for fiscal year 2001 when compared to fiscal
year 2000. The increase is attributable to an increase in sales volume of 6.5%,
primarily in the pet food and pellet line of products, resulting from an
increase in market share and increase in sales of higher profit products.
Segment profit margin increased from 10.9% for fiscal year 2000 to 11.5% for
fiscal year 2001, mainly due to operating efficiencies as a result of capital
investments and a shift in the product mix to higher profit products.

Sales of by-products increased by 17.5% for fiscal year 2001 when compared to
fiscal year 2000. This increase was primarily due to a sales volume increase of
29.9%, offset by temporary decreases of sales prices for some products offered
by the Company. Sales for fiscal 2001 include sales of the new Zaragoza brand
name. The temporary decrease in sales prices offered, variations in the sales
mix to include more lower profit products and an increase in the cost of raw
materials contributed to a decrease in the segment profit margin from 23.1% for
fiscal year 2000 to 14.7% for fiscal year 2001.

Export sales increased by 35.5% for fiscal year 2001 when compared to fiscal
year 2000, mainly due to increased sales of broilers to Honduras, fertile eggs,
pet food products and live chicks. Segment profit margin increased from 0.4% to
7.3% due to lower operating expenses and variations in the sales mix to more
profitable products and increases in the sales volume.

Sales for the quick service segment continue to be negatively affected by
greater competition and market saturation. Sales for fiscal year 2001 decreased
by 19.4% when compared to fiscal year 2000. Segment profit margin increased from
4.1% for fiscal year 2000 to 5.6% for fiscal year 2001, mainly due to an
increase in operating efficiencies and lower production costs.

Sales for the other segments increased by 77.7% for fiscal year 2001 when
compared to fiscal year 2000. This increase is attributable to the increase in
the sale of commercial eggs. Segment profit margin decreased slightly from 11.0%
for fiscal year 2000 to 10.4% for fiscal year 2001, primarily due to variations
in the sales mix. Sales of other products represented 4.8% and 2.8% of total net
sales for the years ended September 30, 2001 and 2000, respectively.

Operating expenses increased by 3.9% for fiscal year 2001 when compared to
fiscal year 2000. Operating expenses represent 27.3% and 27.1% of net sales for
the years ended September 30, 2001 and 2000, respectively. The increase is
primarily due to general increases in professional services, advertising,
employee payroll in accordance with the Company's policies, increase in vehicle
leasing as a result of new distribution routes and the substitution of old
vehicles, offset by lower operating expenses from the quick service and export
segments.

                                       21

<PAGE>

Other expenses increased by 69.4% for fiscal year 2001 when compared to fiscal
year 2000. The increase is primarily due to an increase in interest expense and
foreign exchange losses resulting from an overall increase in debt.

The Company's income tax resulted in a benefit of $390,833 for fiscal year 2001,
compared to an expense of $80,223 for fiscal year 2000. The tax benefit for
fiscal year 2001 is the result of deferred income taxes. The benefit is mainly
the result of temporary differences recognized between the financial statement
and tax basis.

Financial condition

As of September 30, 2002, the Company had $2.73 million in cash and cash
equivalents. The working capital deficit was $9.78 million and $10.31 million as
of September 30, 2002 and 2001, respectively. The current ratios were 0.79 and
0.76 as of September 30, 2002 and 2001, respectively.

Cash provided by operating activities amounted to approximately $6.66 million
and $4.22 million for fiscal years 2002 and 2001, respectively. The increase is
mainly due to increases in net income and accounts payable, partly offset by
increases in accounts receivables and inventories. Due to the Company's
increased use of vendor financing in lieu of credit facilities, accounts payable
balances have increased as inventory balances have increased.

Funds used for investing activities for fiscal year 2002 totaled approximately
$6.46 million, compared to $8.80 million for fiscal year 2001. The Company
invested $5.0 million in property, plant and equipment for fiscal year 2002,
compared to $8.40 million for fiscal year 2001. Historically, the Company has
made significant capital investments in property, plant and equipment in order
to obtain operating efficiencies, allow expansion into international markets and
develop new products. As a result, capital expenditures for fiscal year 2002 are
primarily related to replacing equipment. In June 2002, the Company sold assets
for approximately $2 million, which was originally acquired with external
financing. This sale was used as a financial strategy to decrease outstanding
debt. During fiscal year 2002, the Company also invested in other assets of
strategic importance. Although the book value of the Company's property, plant
and equipment has decreased since September 30, 2001, the Company believes the
productive capacity was not materially impacted in the year ended September 30,
2002. The book value of property, plant and equipment decreased mainly as a
result of translation adjustment, depreciation, and retirement or sale of
assets.

Cash used for financing activities for fiscal year 2002 amounted to $4.41
million compared to cash provided by financing activities amounting to $3.10
million during fiscal year 2001. In the fiscal year ended September 30, 2002,
the Company retired $27.6 million and $10.1 million of short-term and long-term
debt, respectively, and incurred $26.5 million and $6.1 million of new
short-term and long-term debt, respectively.

As of September 30, 2002, the Company owned virtually all of the property, plant
and equipment it uses in its production facilities and financial headquarters in
Costa Rica, of which some assets are pledged as security for the credit
facilities described below aggregating to $6.9 million. In addition, $1.9
million of assets are being pledged as collateral for the Polaris litigation.
The Company leases or rents virtually all of the assets it uses in its
distribution and retail operations. The Company has operating leases for
vehicles, cooling equipment and building facilities for its restaurants and
retail outlets.

                                       22

<PAGE>

The Company has been reliant and continues to rely upon cash from operations,
short-term bank lines of credit, vendor financing, and long-term debt to provide
cash to finance its operational, investing and financial activities.

Short-Term Debt

As of September 30, 2002, the Company had arranged 12 short-term lines of credit
and commitments (the "Lines of Credit") with banks and raw material suppliers
for a maximum aggregate principal amount of $26.8 million, of which $23.5
million has been utilized.

As of September 30, 2002, Notes payable amounted to $17.1 million, and are due
from October 2002 through September 2003 and bear annual interest at rates
ranging from 4.53% to 11.50% in U.S. dollars and from 16.2% to 20.0% in Costa
Rican colones. As of September 30, 2002, Lines of Credit with a maximum
principal balance of $7.04 million were secured by property with an estimated
market value of approximately $2.14 million. The other Lines of Credit are not
secured by assets of the Company.

As of September 30, 2002, $7.27 million of the Lines of Credit with raw material
suppliers are included in accounts payable on the Company's balance sheet.

Long-Term Debt

As of September 30, 2002, Long-term debt amounted to $24.2 million of which $8.2
million in principal amount was due in the short-term. As of September 30, 2001,
Long-term debt amounted to $28.1 million, of which $7.2 million in principal
amount was due in the short-term. Long-term debt is primarily denominated in
U.S. dollars and bears interest at rates that range from 2.47% to 11.96% in U.S.
dollars and 24.00% to 24.5% in colones. As of September 30, 2002, Long-term debt
amounting to $4.9 million was secured by property valued at $4.8 million. Bank
loans are due from November 2002 to October 2008.

As a general practice in Costa Rica, banks require high-ranking executives of
the companies to serve as guarantors of loans. Accordingly, Mr. Calixto Chaves
and/or Mr. Jorge Quesada personally guaranteed (the "Guarantee Services") the
repayment of Lines of Credit, and the Short and Long-Term Bank Lines. As of
September 30, 2002, Mr. Chaves and Mr. Quesada had provided Guarantee Services
with respect to bank lines with a maximum principal balance of $27,279,083 and
$13,349,083, respectively. The Company believes that it is, and in the near
future will be substantially dependent on Mr. Chaves, Mr. Quesada, or another
third party to provide the Guarantee Services in order for the Company to secure
financing on terms comparable to the terms provided by the Lines of Credit and
Long-Term Bank Lines. Neither Mr. Chaves nor Mr. Quesada have an obligation to
provide Guarantee Services to the Company in the future.

During the first quarter of 1998, the Company completed a private placement with
Pacific Life Insurance Company ("PacLife") of $20 million in notes payable
bearing an annual interest rate of 11.71%, (11.96% beginning in January 2001)
and comprised of $8 million in Series A Senior Notes and $12 million in Series B
Senior Notes (collectively, the "Notes"). The Notes are not

                                       23

<PAGE>

secured by the Company's assets. However, Pipasa and As de Oros serve as
guarantors of the Notes. The principal amount of the Notes is payable in five
consecutive annual installments of $4 million each commencing January 15, 2001.
Interest is payable semiannually on the unpaid balance until the principal
amount is paid in full.

In connection with the issuance of the Notes, the Company entered into certain
negative covenants (the "Negative Covenants") in favor of PacLife. More
specifically, among other things, the Company covenanted to refrain from
participating in any material transaction, except transactions in the ordinary
course of business with arms-length terms with any person (other than a
subsidiary) which directly or indirectly through one or more intermediaries
controls, is controlled by, or is in common control with the Company. The
Company further agreed that it would not incur additional debt unless that ratio
of the Company's consolidated total debt to the Company's consolidated earnings
before interest, taxes, depreciation, and amortization ("EBITDA") was less than
3 to 1 (the "New Debt Covenant"). Likewise, the Company agreed to restrict its
subsidiaries from incurring any additional debt unless the sum of (i) the total
debt outstanding of all subsidiaries and (ii) debt secured by liens does not
exceed .5 times the Company's EBITDA (the "Subsidiary Debt Covenant"). The
Company also covenanted that it would not create or incur any lien securing its
consolidated total debt unless the sum of (i) the debt secured by such liens and
(ii) the debt incurred by the Company's subsidiaries pursuant to the Subsidiary
Debt Covenant would not exceed .5 times the Company's EBITDA (the "Lien
Covenant"). The Notes contain a provision requiring the Company to pay PacLife a
fee in the event the Notes are satisfied prior to their scheduled maturity.

The Company has paid PacLife all principal and interest due under the Notes in
accordance with the term of the Notes.

As of January 14, 2002, the Company obtained a waiver of certain possible
breaches of the Negative Covenants contained in the amended and restated note
purchase agreement dated December 28, 2000, among Rica, Pipasa, As de Oros, and
PacLife (the "Amended Agreement"). The potential breaches did not involve any
payment violation. The Company has made all required payments to PacLife,
including a payment of $4.96 million of principal and interest in January 2002
and a payment of $750,000 of interest in July 2002. In addition, the Company
made the next required principal and interest payment of $4.7 million on January
15, 2003. Thereafter, the principal amount of Notes was reduced to $8 million.

As of September 30, 2002 and December 31, 2002, the Company had regained
compliance with the provisions of all except one of the Note's covenants
regarding transactions with affiliates (the "Affiliate Covenant"). However, on
January 9, 2002, PacLife granted the Company a conditional waiver with respect
to the Company's breach of the Affiliate Covenant. As a condition to the waiver,
the Company has agreed that the aggregate amount of the loans to affiliates
shall not be increased at any time, and, if any of such loans are repaid,
neither the Company nor any of its subsidiaries shall make any additional
affiliate loans.

Pursuant to the terms of the Amended Agreement, the Company is obligated to
furnish PacLife, within 120 days after the end of each fiscal year, audited
financial statements for the preceding fiscal year and an auditor's certificate
indicating that the auditor is not aware of any events of default under the
Amended Agreement (the "Financial Certifications"). The auditing firm must be of
recognized "national" standing.

                                       24

<PAGE>

As a result of the Company's inability to provide PacLife the Financial
Certifications by February 27, 2003, the Company technically defaulted under
the Amended Agreement and PacLife had the right to declare all of the
outstanding Notes immediately due and payable and the entire unpaid principal
amount of such Notes, plus accrued and unpaid interest thereon and a yield
maintenance amount.

As of March 31, 2003 the Company was not in compliance with the Lien Covenant,
Financial Certification requirement and the Affiliate Covenant. On July 9, 2003,
PacLife granted the Company a conditional waiver with respect to the Company's
breach of the Affiliate and Lien Debt Covenants as of March 31, 2003. On May 5,
2003, Pacific Life granted the Company with a conditional waiver for the
provision of the Financial Certifications, which is conditioned upon the Company
delivering the Financial Certifications to PacLife no later than July 31, 2003.

Obligations under short-term and long-term debt and operating leases as of
September 30, 2002 are as follows:

<TABLE>
<CAPTION>
                                                 Payments due by Period
                                                 ----------------------
                           Total        Less than 1 Year       1-3 years      4-5 years
                           -----        ----------------       ---------      ---------
<S>                     <C>             <C>                   <C>             <C>
Short-term debt         $17,074,336        $17,074,336        $         -     $        -
Long-term debt           24,209,090          8,190,702         14,948,084      1,070,304
Leases                    1,778,467          1,337,982            440,485              -
                        -----------        -----------        -----------     ----------
Total                   $43,061,893        $26,603,020        $15,388,569     $1,070,304
                        ===========        ===========        ===========     ==========
</TABLE>

The Company projects that it will need to satisfy at least $26.6 million of
short-term debt, long-term debt and capital lease payments within the fiscal
year ended September 30, 2003. The Company also projects that it will seek to
acquire the use of additional $6 million of property, plant and equipment within
fiscal 2003, the use of which equipment may be secured by purchase or lease.
Aside from cash generated from operations and the financing sources previously
described, the Company has not secured financing to satisfy the Company's
projected capital needs.

The Company expects to continue to generate cash from operations and has been
seeking to conserve its capital resources by leasing and renting items of
property, plant and equipment. The Company has used Lines of Credit as a means
of financing for more than 25 years, and has historically been able to increase
limits on its Lines of Credit when necessary.

Although the Company has been exploring more cost efficient and longer term
sources of capital, the Company has not yet secured an alternative long-term
financing source that would insulate it from the risks associated with a loss of
one of its relatively short-term capital sources.

                                       25

<PAGE>

Nevertheless, management expects that there will be sufficient resources
available to meet the Company's cash requirements for the next 12 months.


Potential Acquisitions

The Company is continuing to explore the acquisition of majority of the
outstanding common stock of Industrias Avicolas Integradas, S.A. ("Indavinsa"),
and Avicola Core Etuba Ltda. ("Core"), both engaged in the production and
distribution of poultry. The Company would acquire the majority of the
outstanding stock of Core from the Company's Chief Executive Officer. The
Company is closely evaluating the performance of these companies to determine
if, when and how the Company should integrate its business with the acquisition
targets, and has postponed indefinitely investments in these two companies.

On February 20, 2003, Port Ventures, S.A. ("Port Ventures") and Corporacion As
de Oros, S.A. ("As de Oros"), a wholly owned subsidiary of the Company, entered
into a Stock Purchase Agreement (the "Agreement"), pursuant to which As de Oros
agreed to acquire from Port Ventures, 2,040 shares of common stock of Logistica
de Granos, S.A. ("Logistica"), representing 51% of the issued and outstanding
shares of capital stock of Logistica (the "Shares"), for a purchase price of
US$2,580,000 (the "Purchase Price"). Logistica is the owner of 19% of the issued
and outstanding capital stock of Sociedad Portuaria de Caldera, S.A. ("SPC") and
Sociedad Portuaria Granelera de Caldera, S.A. ("SPGC") (collectively, the "Port
Companies"). The Port Companies are seeking to acquire concessions (the
"Concessions") being granted by the Government of Costa Rica to refurbish and
operate Puerto Caldera, a major seaport located on the Pacific coast of Costa
Rica and considered by the Company as strategic to its raw material purchases.

Port Ventures is the sole shareholder of Logistica and Port Ventures is
directly owned and controlled by Jose Pablo Chaves Zamora ("Mr. JP Chaves").
Mr. JP Chaves is the indirect holder of approximately 2.17% of the outstanding
shares of the Company. Mr. JP Chaves is also the son of the Company's Chief
Executive Officer, Mr. Calixto Chaves. Mr. JP Chaves does not hold any positions
or titles with the Company or any of its subsidiaries.

The closing of the purchase and sale of the Shares is subject to: (i) the final
grant by the Government of Costa Rica of the Concessions and (ii) the execution
of definitive agreements between the Government of Costa Rica and each of the
Port Companies regarding the construction and operation of Puerto Caldera.

The Agreement provides that Port Ventures may require that As de Oros remit the
Purchase Price for the Shares in installments, prior to the fulfillment of the
conditions to closing set forth above. Upon such payment, As de Oros will
receive a "bill of exchange" for the amount of such Purchase Price and a pro
rata amount of shares will be issued and held by a Trust representing all
participants in the Consortiums in escrow until the closing. In the event that
the transactions contemplated under the Agreement are not closed, Port Ventures
must return to As de Oros the pro rata portion of the Purchase Price paid, plus
interest, and As de Oros, must return the bills of exchange. If Port
Ventures does not return the portion of the Purchase Price paid, As de Oros may,
in its discretion, seek to enforce the "bill of exchange".

                                       26

<PAGE>

The Company expects to close this transaction before calendar year 2003, when
the definitive approval of the Government of Costa Rica is expected to be
obtained.

As of July 8, 2003, As de Oros has remitted approximately 55% of the Purchase
Price to Port Ventures (the "Remitted Payment") in exchange for bills of
exchange. The bills of exchange are not secured by tangible assets or readily
marketable collateral. In the event the Concessions are not ratified to the Port
Companies, the Company anticipates that As de Oros will have limited ability to
recoup its investment in Port Ventures. Port Ventures has agreed for As de Oros
not need to make any further payments until the Concessions are finally
ratified.

As with any business acquisition, there can be no assurance that the Company
will close these acquisitions and there can be no assurance that these
acquisition efforts will prove to be beneficial to the Company. Even if the
Company's board of directors, audit committee and management team believe the
Company should pursue a development or acquisition opportunity and successfully
negotiate the contracts critical to such venture, the Company anticipates that
it may be required to seek the consent of PacLife and potentially certain other
third parties before initiating development efforts or concluding an
acquisition. The Company will continue to evaluate financial performance and
giving the necessary collaboration in order to obtain the necessary judging
elements to arrive to a definite decision.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which require the
Company to make estimates and assumptions. The Company believes that of its
significant accounting policies (see Note 1 to the Company's audited
consolidated financial statements), the following may involve a higher degree of
judgment and complexity.

Impairment of long-lived assets and goodwill: The Company assesses long-lived
assets for impairment whenever events and circumstances indicate that the
carrying value of an asset may not be recoverable from the estimated future cash
flows expected to result from its use and eventual disposition. If impairment
indicators are present, the Company must measure the fair value of the assets in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 144
"Accounting for the Impairment or Disposal of Long-lived Assets" to determine if
adjustments are to be recorded. Management must make assumptions regarding
estimated future cash flows and other factors to determine the fair value of the
respective asset.

Although to date the Company's assessment has not required it to record any
impairments of long-lived assets, if the estimates and assumptions used to make
such assessment should change in the future, the Company could be required to
record impairment charges. On October 1, 2001, the Company adopted SFAS No. 142,
"Goodwill and Other Intangible Assets," and was required to assess its goodwill
for impairment issues upon adoption, and then at least annually thereafter.
During the year ended September 30, 2002, the Company was not required to record
any impairment losses related to goodwill and other intangible assets.

Contingent liabilities: We account for contingencies in accordance with SFAS No.
5, "Accounting for Contingencies". SFAS No. 5 requires that we record an
estimated loss from a

                                       27

<PAGE>

loss contingency when information available prior to issuance of our financial
statements indicates that it is probable that a liability has been incurred at
the date of the financial statements and the amount of the loss can be
reasonably estimated. Management's judgment is based on a review of all cases
brought against it in collaboration with the Company internal and external legal
council to determine the amount of any claims and the likelihood that such claim
will be successful. Accounting for contingencies such as environmental and legal
matters requires us to use our judgment. The outcome of some of these cases and
the monetary or other awards can be very difficult to estimate, so that an error
in the estimate can have very significant, but unpredictable effects on the
Company. As of September 30, 2002, the Company performed an analysis of these
contingencies and estimated that no reserve was required.

Provision for severance pay: At the present time, labor laws in Costa Rica
require all companies in Costa Rica to make a payment equivalent to 5.6% of an
employee's yearly gross salary for every year of employment, as part of a
severance payment upon the termination of an employee. The Company deposits
every month 5.33% of each employee gross salary, of which 1.33% is paid every
February of each year, and the remaining 4% deposited in ASERICA is paid upon
termination. Amounts paid or transferred to ASERICA may not completely cover the
severance payment at the time the employee leaves, since the severance payment
calculation is based on the average of the last 6 months' salary. Any remaining
amount owed by the Company must be settled when the employee is terminated. As
of September 30, 2002, the Company has accrued approximately $138,000 for future
severance payment which is included in accrued expenses. The Company believes
the amount is adequate based on past experience. The Company must assess the
adequacy of the provisioned amount, which is estimated using historical
experience and other critical factors. The assumptions used to arrive at
provisioned amounts are reviewed regularly by management. However, actual
expenses could differ from these estimates and could result in adjustments to be
recognized.

Income taxes: The Company accounts for income taxes in accordance with SFAS No.
109, "Accounting for Income Taxes". Under SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statement carrying amount 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. SFAS No. 109 also requires that deferred tax assets be
reduced by a valuation allowance if it is more likely than not that some portion
or all of the deferred tax asset will not be realized. In assessing a valuation
allowance for a deferred tax asset, the Company estimates future taxable income
and provides a valuation allowance when it is more likely than not to be
recovered. Future taxable income could be materially different than amounts
estimated, in which case the valuation allowance would need to be adjusted. As
of September 30, 2002 and 2001, the Company had valuation allowances amounting
to $2,921,271 and $3,646,594, respectively.

Allowance for doubtful accounts: The allowance for doubtful accounts reflects
estimated losses resulting from the inability to collect required payments from
our customers. The allowance for doubtful accounts is based on management's
review of the overall condition of accounts receivable balances and review of
significant past due accounts. If the financial condition of our customers were
to deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required. For the years ended September 30, 2002
and 2001, the

                                       28

<PAGE>

Company recorded a write-off of doubtful receivables amounting to approximately
$375,000 and $121,700, respectively.

Inventory: Inventories are stated at the lower of cost or market and their cost
is determined using the weighted-average method, except for inventories in
transit, which are valued at specific cost. The costs associated with breeder
hens during their growth period are capitalized as inventories until they reach
their production stage, which is approximately 20 weeks after they hatch.
Capitalized costs are amortized over the productive life of the hens based on a
percentage calculated according to the estimated production cycle of the hen.
The productive life of hens is estimated based on historical data. Finished
products, raw materials and other supplies are regularly evaluated to determine
that market conditions are correctly reflected in their recorded carrying value.
An inventory obsolescence provision is provided based upon conditions such as
aged products, low turnover, or damaged or obsolete products.

Property, plant and equipment: Property, plant and equipment are recorded at
cost. Property plant and equipment acquired through purchase method accounting
reflect market value at the date of acquisition. Management must evaluate
whether improvements to property, plant and equipment that extend their useful
lives are capitalized or expensed. The Company uses the straight-line method
over the estimated useful live. Useful lives assigned to depreciable assets are
based on guidelines used for manufacturing companies. The Company has reviewed
these guidelines and has deemed them appropriate based on assessments made by
engineers and past experience.

Impact of Recently Issued Accounting Standards

Effective July 1, 2001 and January 1, 2002, the Financial Accounting Standard
Board ("FASB") issued SFAS No. 141, "Business Combinations", and SFAS No. 142,
"Goodwill and Other Intangible Assets," respectively. SFAS No. 141 requires all
business combinations entered into after June 30, 2001 to be accounted for under
the purchase method and specifies the types of acquired intangible assets that
are required to be recognized and reported separate from goodwill. The Company
elected to early adopt the provisions of SFAS No. 142 effective October 1, 2001.

SFAS No. 142 requires that goodwill and intangible assets with indefinite lives
no longer be amortized, but instead tested for impairment at least annually and
written down with a charge to operations when the carrying amount exceeds the
estimated fair value. The cost of intangible assets with determinable useful
lives continues to be amortized over the useful lives of the assets. In
connection with the transition provisions for adopting this standard, the
Company performed a transitional impairment test using discounted cash flows and
found no impairment. In accordance with SFAS No. 142, the Company discontinued
the amortization of goodwill and indefinite-lived intangible assets effective
October 1, 2001. Had the provisions of SFAS No. 142 been in effect during fiscal
years 2001 and 2000, a reduction of amortization expense and an increase in net
income of $787,535 and $953,828 or an increase of $0.06 and $0.08 per share,
respectively, would have been recorded.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which addresses the financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The Company adopted SFAS No. 143 on October
1, 2002 and does not expect it to have a material impact on the Company's
financial position, results of operations or cash flows.

                                       29

<PAGE>

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 replaces SFAS No. 121, "Accounting
for the Impairment of Long-Lived assets and for Long-Lived Assets to Be Disposed
Of," and establishes a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations. SFAS No. 144 requires that
long-lived assets to be disposed of by sale, including those of discontinued
operations, be measured at the lower of carrying value or fair value less costs
to sell, whether reported in continuing operations or in discontinued
operations. Discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet been incurred.
SFAS No. 144 also broadens the reporting of discontinued operations to include
all components of an entity with operations that can be distinguished from the
rest of the entity and will be eliminated from the ongoing operations of the
entity in a disposal transaction. The Company adopted SFAS No. 144 on October 1,
2002 and did not have a material effect on the Company's financial position,
results of operations or cash flows.

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", which amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The transition guidance and annual disclosure provisions of Statement
148 are effective for fiscal years ending after December 15, 2002, with earlier
application permitted in certain circumstances. The interim disclosure
provisions are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002. The Company does not
currently have any recorded stock based compensation expense, thus the adoption
of SFAS 148 does not have a material impact on its financial position or results
of operations.

In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires that the
guarantor recognize, at the inception of certain guarantees, a liability for the
fair value of the obligation undertaken in issuing such guarantee. FIN 45 also
requires additional disclosure requirements about the guarantor's obligations
under certain guarantees that it has issued. The initial recognition and
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002 and the
disclosure requirements are effective for financial statement periods ending
after December 15, 2002. The Company does not expect the adoption of FIN 45 will
have a material impact on its financial position, results of operations or cash
flows.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities". This
Statement amends Statement 133 for decisions made (1) as part of the Derivatives
Implementation Group process that effectively required amendments to Statement
133, (2) in connection with other Board projects dealing with financial
instruments, and (3) in connection with implementation issues raised in relation
to the application of the definition of a derivative, in particular, the meaning
of an initial net investment that is smaller than would be required for other
types of contracts that

                                       30

<PAGE>

would be expected to have a similar response to changes in market factors, the
meaning of underlying, and the characteristics of a derivative that contains
financing components. The Company does not anticipate that the adoption of this
pronouncement will have a material effect on the financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. Some of the provisions of this Statement
are consistent with the current definition of liabilities in FASB Concepts
Statement No. 6, Elements of Financial Statements. The remaining provisions of
this Statement are consistent with the Board's proposal to revise that
definition to encompass certain obligations that a reporting entity can or must
settle by issuing its own equity shares, depending on the nature of the
relationship established between the holder and the issuer. While the Board
still plans to revise that definition through an amendment to Concepts Statement
6, the Board decided to defer issuing that amendment until it has concluded its
deliberations on the next phase of this project. That next phase will deal with
certain compound financial instruments including puttable shares, convertible
bonds, and dual-indexed financial instruments. The Company does not anticipate
that the adoption of this pronouncement will have a material effect on the
financial statements.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." Interpretation 46 changes the criteria by which one
company includes another entity in its consolidated financial statements.
Previously, the criteria were based on control through voting interest.
Interpretation 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation requirements
apply to older entities in the first fiscal year or interim period beginning
after June 15, 2003. Certain of the disclosure requirements apply in all
financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The Company does not expect the
adoption to have a material impact to the Company's financial position or
results of operations.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF
SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

The Company and its representatives may, from time to time, make written or oral
forward-looking statements with respect to their current views and estimates of
future economic circumstances, industry conditions, company performance and
financial results. These forward-looking statements are subject to a number of
factors and uncertainties which could cause the Company's actual results and
experiences to differ materially from the anticipated results and expectations
expressed in such forward-looking statements. The Company cautions readers not
to place undue reliance on any forward-looking statements, which speak only as
of the date made. Among the factors that may affect the operating results of the
Company are the following: (i)

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<PAGE>

fluctuations in the cost and availability of raw materials, such as feed grain
costs in relation to historical levels; (ii) market conditions for finished
products, including the supply and pricing of alternative proteins which may
impact the Company's pricing power; (iii) risks associated with leverage,
including cost increases attributable to rising interest rates; (iv) changes in
regulations and laws, including changes in accounting standards, environmental
laws, occupational and labor laws, health and safety regulations, and currency
fluctuations; and (v) the effect of, or changes in, general economic conditions.

This management discussion and analysis of the financial condition and results
of operations of the Company may include certain forward-looking statements,
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, including,
without limitation, statements with respect to anticipated future operations and
financial performance, growth and acquisition opportunity and other similar
forecasts and statements of expectation. Words such as expects, anticipates,
intends, plans, believes, seeks, estimates, should and variations of those words
and similar expressions are intended to identify these forward-looking
statements. Forward-looking statements made by the Company and its management
are based on estimates, projections, beliefs and assumptions of management at
the time of such statements and are not guarantees of future performance. The
Company disclaims any obligations to update or review any forward-looking
statements based on the occurrence of future events, the receipt of new
information or otherwise.

Actual future performance outcomes and results may differ materially from those
expressed in forward-looking statements made by the Company and its management
as a result of a number of risks, uncertainties and assumptions. Representative
examples of these factors include, without limitation, general industrial and
economic conditions; cost of capital and capital requirements; shifts in
customer demands; changes in the continued availability of financial amounts and
the terms necessary to support the Company's future business.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

General

Market risks relating to the Company's operations result primarily from changes
in currency exchange rates, interest rates and commodity prices. The sections
below describe the Company's exposure to interest rates, foreign exchange rates
and commodities prices. The sensitivity analyses presented below are
illustrative and should not be viewed as predictive of future financial
performance. Additionally, the Company cannot assure that the Company's and/or
its subsidiaries' actual results in any particular year will not differ from the
amounts indicated below.

Foreign Exchange Risk

The subsidiaries of the Company operate in Costa Rica and are exposed to market
risk from changes in U.S. currency exchange rates. Foreign exchange risk derives
from the fact that the Company makes its payments in U.S. dollars for the
majority of its imported raw materials and bank facilities, and its revenues are
mostly denominated in colones. The Company does not currently maintain a trading
portfolio and does not utilize derivative financial instruments to manage such
risks. To mitigate its exposure to variations in devaluations, the Company
periodically increases sales prices of some of its products during the year,
varies the product mix

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<PAGE>

to those with higher profit and seeks efficiencies in its costs. In addition,
the company seeks to increase its exports sales. For fiscal year 2002, export
sales increased by 28.48% when compared to fiscal year 2001.

The exchange rate between the colon and the U.S. dollar is determined in a free
exchange market, supervised by the Banco Central de Costa Rica ("BCCR"). For the
last 20 years, the BCCR has utilized the crawling peg method whereby the colon
is devalued daily on a systematic basis.

As of September 30, 2002, the Company had outstanding indebtedness of
approximately $41.5 million denominated in U.S. dollars. The potential foreign
exchange loss resulting from a hypothetical 10% increase during the year in the
devaluation of the colon/dollar exchange rate would be approximately $408,000.
This loss would be reflected in the balance sheet as increases in the principal
amount of its dollar-denominated indebtedness and in the income statement as an
increase in foreign exchange losses, reflecting the increased cost of servicing
dollar-denominated indebtedness. This analysis does not take into account the
positive effect that the hypothetical increase would have on accounts receivable
and other assets denominated in U.S. dollars.

Interest Rate Risk

As of September 30, 2002, the Company had outstanding a total of approximately
$41.5 million in loans and other debt primarily in U.S. Dollars, of which $29.5
million bore variable interest rates, based on LIBOR or Prime Rate. A
hypothetical, simultaneous and unfavorable change of 10% in the Company's
variable rate in effect as of September 30, 2002 would result in a potential
increase in interest expense of $309,000. The sensitivity analysis model may
overstate the impact of the Company's interest rate risk, as uniform increases
of all interest rates applicable to its financial liabilities are unlikely to
occur simultaneously.

Commodity Risk

The Company imports all of its corn and soybean meal, the primary ingredients in
chicken feed, from the United States. Fluctuations in the price of corn may
significantly affect the Company's profit margin. The price of corn and soybean
meal, like most grain commodities, is fairly volatile and requires constant and
daily hedging in order to minimize the effect of price increases on the
Company's profit margin.

The Company purchases its corn through the Chicago Board of Trade ("CBOT") and
has been actively hedging its exposure to corn price fluctuations since 1991.
The Company's strategy is to hedge against price increases in corn and soybean
meal, and it is not involved in speculative trading. Contract terms range from
one month to six months. The Company buys directly from the spot market if
market conditions are favorable, but as a general rule, the Company purchases
most of its corn through contracts. The Company's hedging strategy is set in its
annual budget, which determines how much corn and soybean meal the Company will
need and the price the Company must pay in order to meet budget forecasts. The
Company uses an internal pricing model to prepare sensitivity analyses. The
Company bases its target prices on the worst case price assumptions (i.e. high
prices). The prices paid by the Company for corn and soy bean meal were 0.95%
and 0.02% below its budgeted prices, respectively, for the year ended September
30, 2002. The Company purchases its soybean meal through a company in Costa
Rica, INOLASA, in which the Company holds a 10% equity interest. In Costa Rica,
there is an applicable 5% tax for

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<PAGE>

soybean meal imports, which is not levied if such imports are purchased through
INOLASA. If for any reason INOLASA cannot deliver the soybean meal to the
Company, the Company can buy its soybean meal directly from the CBOT. Thus far,
the Company has never had to purchase soybean meal directly from the CBOT.

The Company accounts for its futures transactions in accordance with the
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". The contracts that effectively
meet risk reduction criteria are recorded using hedge accounting. Derivatives
that are not hedges are adjusted to fair value through income. No
ineffectiveness was recognized on cash flow hedges during fiscal 2002 or 2001.
The Company expects that losses in the amount of $96,989 recorded in other
comprehensive loss as of September 30, 2002, related to cash flow hedges, will
be recognized within the following 3 months. The Company generally does not
hedge anticipated transactions beyond 6 months.

The Company has a $500,000 credit line with Futures U.S.A., Inc. ("FIMAT") and
draws upon this credit line to cover its initial margin deposit. The interest
rate paid on this line of credit averages an annual rate of less than 10% on
drawn amounts.

For the year ended September 30, 2002, a hypothetical 10% increase in the
monthly price of corn and soybean meal would have resulted in an increase in
cost of sales of approximately $2.14 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this item is incorporated by reference to the
independent Auditor's Report issued by Stonefield Josephson Inc. on May 23, 2003
and Arthur Andersen on December 7, 2001 included on page F-2 and from the
consolidated financial statements and supplementary data, on pages F-3 through
F-39 on this Form 10-K/A.

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

Resignation of Deloitte & Touche

On January 23, 2002, Deloitte & Touche provided the Chairman of the Company's
Audit Committee a letter which read as follows:

This is to confirm that the client-auditor relationship between Rica Foods, Inc.
(Commission File No. 001-1499) and Deloitte & Touche, S.A. has ceased on January
23, 2003.

The Company believes Deloitte & Touche has resigned as the Company's independent
accountant.

Events Preceding Resignation

Deloitte & Touche began serving as the Company's auditors on August 5, 2002,
reviewed the Company's Form 10-Q for the quarter ended June 30, 2002 and, until
very recently, has been conducting an audit of the Company and its major
operating subsidiaries.

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Between approximately December 18, 2002 and January 13, 2002, Deloitte & Touche
also assisted the Company by providing it comments to the Company's Form 10-K
for the fiscal year ended September 30, 2002 (the "Form 10-K").

At approximately 5:30 PM EST on January 13, 2003 the Company filed the Form 10-K
with the Securities and Exchange Commission (the "SEC"). The Form 10-K contained
a number of financial errors.

At the time of filing, the Company's Chief Financial Officer (the "CFO") was
aware that "Due from Stockholders" in the amount of $5,495,437 was classified as
an asset account instead of a contra-equity account and "Preferred Stock" in the
amount of $2,216,072 was classified as part of "Minority Interest" instead of a
component of Stockholders' Equity (collectively, the "Non-Preferred
Classifications"). The Board and Audit Committee do not believe that the CFO
thought, at the time the Form 10-K was filed, that there were material errors in
the consolidated financial statements included in the filing.

At the time of filing, the Company was not aware of the following errors: (i)
Net income applicable to common shareholders for the year 2000 did not tie with
the corresponding amount in Statement of Stockholders' Equity by $17,875; and
(ii) Accumulated Other Comprehensive Loss in the Statement of Stockholders'
Equity for the year 2002 was misstated by $36. In addition, the CFO did not
realize that the certain changes to the audit report requested by Deloitte &
Touche were not made.

The Form 10-K also appeared to include a signed audit report from Deloitte &
Touche. The Board and Audit Committee recognize that it was potentially a
violation of Article III of Regulation S-X for the Company to file a Form 10-K
before it received a signed audit report from Deloitte & Touche. However, until
very shortly after the filing of the Form 10-K, the CFO believed the Company was
in the process of receiving the Signed Audit Report.

The CFO immediately contacted Deloitte & Touche to discuss filing an amendment
to the Form 10-K that evening. The Company anticipated that the Form 10-K would
disclose the errors associated with the Form 10-K filing and include an audit
report signed by Deloitte & Touche (the "Form 10-K Amendment Plan"). From the
evening of January 13, 2003 until the late afternoon of January 16, 2003, the
Company believed that Deloitte & Touche was in agreement with the Form 10-K
Amendment Plan.

At approximately 6 PM EST on January 16, 2003, Mr. Castro and Mr. Danillo
Villalta, the managing partner of Deloitte's office in Costa Rica, spoke with
the Chairman of the Company's audit committee, Mr. Federicio Vargas. During the
meeting, Mr. Castro and Mr. Villalta informed Mr. Vargas of Deloitte & Touche's
intent to send the letter described below. Mr. Castro also indicated that
Deloitte & Touche was considering sending to the SEC a letter comparable to the
one described below if Deloitte and Touche's requests were not met.

At approximately 9 PM EST on January 16, 2003, the Company's Board of Directors
(the "Board") and Audit Committee of the Company received a letter from Deloitte
& Touche which indicated in relevant part:

The 2002 Form 10-K includes an audit report, dated December 13, 2002, that was
purportedly issued and signed by "Deloitte & Touche's on the Company's
consolidated financial statements

                                       35

<PAGE>

and related financial statement schedule as of and for the year ended September
30, 2002. Deloitte and Touche has not issued any reports or provided its consent
in connection with the Company's 2002 consolidated financial statements and has
not provided, and does not provide, its permission for the Company to use
Deloitte & Touche's name, or reports purportedly signed by "Deloitte & Touche",
in connection with the 2002 Form 10-K.

Deloitte & Touche hereby requests that you take the appropriate action to advise
all recipients of the 2002 Form 10-K by filing a Form 8-K with the SEC to state
(1) that the use of Deloitte & Touche's name and the inclusion of the report
that was purportedly issued and signed by Deloitte & Touche was unauthorized;
(2) that Deloitte & Touche has not issued any reports or provided its consent;
and (iii) that Deloitte and Touche is not otherwise associated in any manner
with the 2002 Form 10-K.

Deloitte & Touche also hereby requests that you cease and desist from (1) using
Deloitte & Touche's name without its prior written permission, and (2) using any
reports or consents not issued and signed by Deloitte & Touche in any document.

As you are aware, the Company's consolidated financial statements included in
the 2002 Form 10-K are incorrect, and we are working with the Company on the
correction of such financial statements. However, since the Company has not yet
issued its correct financial statements, we are not in a position to report on
the Company's financial statements.

The Company's Board, Audit Committee and Executive Officers were surprised by
Deloitte & Touche's communications since the Company believed it had been
working with Deloitte & Touche to effectuate the Form 10-K Amendment Plan.

The Board, Audit Committee and Executive Officers were also surprised that
Deloitte & Touche had specifically requested language to be included in the Form
8-K that, when read in its entirety, strongly suggested that: (i) Deloitte &
Touche had absolutely no involvement in the preparation of the financial
statements included in the Form 10-K nor in the inclusion of the audit report in
the Form 10-K; and (ii) Deloitte & Touche has provided no indicia of consent to
the Company that it could include the signed audit report in the Form 10-K.

The Board and Audit Committee believed that the Form 8-K text proposed by
Deloitte & Touche was not fair and balanced disclosure of the historical events.
Deloitte & Touche had clearly been serving as the Company's independent
accountant, reviewing its quarterly reports on Form 10-Q, and providing comments
to the Form 10-K. The Board and Audit Committee also believe that the actions of
Deloitte & Touche leading up to the filing of the Form 10-K contributed to the
CFO's mistaken belief that the Company was in the process of receiving a Signed
Audit Report.

Nonetheless, the Board and Audit Committee recognized that the Company had filed
a Form 10-K, had not received a signed audit report from Deloitte & Touche and
needed to apprise the investing public as soon as possible. On January 17, 2003,
the Board and Audit Committee were already concerned that they could no longer
rely on Deloitte & Touche's communications from the late evening of January 13,
2003 to January 17, 2003 to the effect that Deloitte & Touche could be in a
position to send the Company a signed audit report within hours or days. Despite
repeated requests, Deloitte & Touche had not provided the Company with a
specific list of remaining open audit items.

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<PAGE>

The Board and Audit Committee informed Deloitte & Touche in writing on January
17, 2003 that, given the delays already experienced, the Company believed it
would be best to apprise the investing public of any errors in the Form 10-K
pursuant to a Form 10-K amendment to be filed on January 20th or 21st of 2003.
The Company believed that, relative to a Form 8-K, a Form 10-K Amendment would
provide investors far more comprehensive, detailed and balanced textual and
financial information.

At 9:40 PM EST on January 17, 2003, Mr. Castro advised the General Counsel and
the Chairman of the Company's Audit Committee that unless the Company filed the
form of Form 8-K requested by Deloitte & Touche, Deloitte & Touche would send to
the SEC a copy of a letter comparable to Deloitte & Touche's January 16, 2003
letter to the Company.

The Company became increasingly suspicious of Deloitte & Touche's actions when
Mr. Castro repeatedly refused to discuss the Company's proposal that it might be
in the best interest of the investing public, the Company and Deloitte to
announce any Form 10-K deficiencies in a Form 10-K amendment rather than a Form
8-K.

Despite the growing lack of confidence in Deloitte & Touche by the Board and
Audit Committee, the CFO continued to incorporate Deloitte & Touche's comments
into a draft Form 10-K Amendment. The Company was not aware of any disagreements
with Deloitte & Touche on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Deloitte & Touche, would
have caused it to make reference to the subject of the disagreement in
connection with its report. The Company also continued to speak to Mr. Castro
and draft a Form 8-K.

At approximately 9 PM EST on January 20, 2003 the Company provided Mr. Castro
with a proposed draft of the Form 8-K which reads in relevant part as follows:

It has come to the Company's attention that Deloitte & Touche, the Company's
independent auditors ("Deloitte"), did not provide the Company with a signed
audit report for inclusion in the Company's Form 10-K. Accordingly, the
independent accountant's report apparently contained in the Form 10-K should not
be relied upon.

The Company does not intend to file an amendment to its Form 10-K for the fiscal
year ended September 30, 2002 until Deloitte has completed its audit and
provided the Company with a signed audit report.

The Company has received some preliminary comments from Deloitte and anticipates
correcting some errors that appear in its financial statements. The Company does
not know if the changes to its financial statements requested by Deloitte will
be material. The Company has requested more definitive guidance from Deloitte
pursuant to Section 10A(k) of the Securities Exchange Act of 1934 and hopes to
hear from Deloitte in the near future.

At approximately 11 PM EST on January 20, 2003, Mr. Castro provided the Company
with a proposed draft of the Form 8-K which reads in relevant part as follows:

The Company wishes to advise all recipients of its Form 10-K for the year ended
September 30, 2002 filed on January 13, 2003 (1) that the use of the name of
Deloitte & Touche, the Company's independent auditors, and the inclusion of the
audit report that was purportedly issued and signed

                                       37

<PAGE>

by Deloitte & Touche was unauthorized; (2) that Deloitte & Touche has not issued
any reports or provided its consent; and (3) that Deloitte & Touche is not
otherwise associated in any manner with the 2002 Form 10-K.

The Company does not intend to file an amendment to its Form 10-K for the fiscal
year ended September 30, 2002 until Deloitte & Touche has completed its audit
and provided the Company with a signed audit report.

The Company has determined that there are material errors in its consolidated
financial statements and will correct those errors in an amended Form 10-K/A as
soon as possible.

The Company had not determined that there were material errors in its financial
statements at the time of the filing of the Form 10-K. The Company was also
discouraged by Deloitte & Touche's insistence upon including in the text the
exact same wording that the Company had previously identified to Deloitte &
Touche as less than a fair and balanced disclosure of historical events. The
Company was also discouraged by Mr. Castro's refusal to provide the Company with
the contact information of the individuals at Deloitte & Touche's national
office who Mr. Castro claimed were dictating the terms of the proposed Form 8-K.
The Company reiterated its concerns to Deloitte and at approximately 7:30 AM EST
on January 21, 2003 Mr. Castro sent the Company another proposed draft of the
Form 8-K which reads in relevant part as follows:

The Company wishes to advise all recipients of its Form 10-K for the year ended
September 30, 2002 filed on January 13, 2003 (1) that the use of the name of
Deloitte & Touche, the Company's independent auditors, and the inclusion of the
audit report that was purportedly issued and signed by Deloitte & Touche was
unauthorized; (2) that Deloitte & Touche has not issued any reports or provided
its consent; and (3) that Deloitte & Touche is not otherwise associated in any
manner with the 2002 Form 10-K.

The Company does not intend to file an amendment to its Form 10-K for the fiscal
year ended September 30, 2002 until Deloitte & Touche has completed its audit
and provided the Company with a signed audit report.

The Company is aware that the financial statements that were filed on January
13, 2003 contain errors. At this time the Company is not aware of all of the
changes to its financial statements that will be required but will correct all
errors in an amended Form 10-K/A as soon as possible.

At approximately 3 PM EST on January 21, 2003, Mr. Castro sent the Company an
email that reads in relevant part as follows (translated from Spanish):

I confirm to you that the terms in which the revised phrase "3) that Deloitte &
Touche is not otherwise associated in any manner with the Company's 2002 Form
10-K" refers to the filing with the errors that were sent on Monday and in no
instance does it mean that we are not involved with the work to complete the
audit for the 2002 10-K.

Also, I confirm in writing our conversation regarding the fact that the Form 8-K
should be filed no later than one hour prior to the market closing today. In the
event this does not occur, we would be sending the SEC a letter within the same
parameters as the one sent via fax to Don Federico last Friday.

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<PAGE>

Based upon conversations between Mr. Castro and the Company between January 17,
2003 and January 20, 2003, by January 21, 2003 the Company believed that
Deloitte & Touche did not intend to provide the Company with a signed audit
report for the proposed Form 10-K by the close of business by January 21, 2003.
By January 21, 2003, the Company also believed that Deloitte &Touche was not
willing to meaningfully negotiate the terms of the Form 8-K.

On January 21, 2003, the Company filed a Form 8-K announcing the following:

It has come to the Company's attention that Deloitte & Touche, the Company's
independent auditors, did not provide the Company with a signed audit report for
inclusion in the Company's Form 10-K. Accordingly, the independent accountant's
report apparently contained in the Form 10-K should not be relied upon.

The Company does not intend to file an amendment to its Form 10-K for the fiscal
year ended September 30, 2002 until Deloitte & Touche has completed its audit
and provided the Company with a signed audit report.

The Company has been working with Deloitte & Touche to finalize the financials
to be included in the Form 10-K amendment. The Company has received some
preliminary comments from Deloitte & Touche and anticipates correcting some
errors that appear in the financial statements of the Form 10-K. The Company
does not know if Deloitte & Touche will have additional comments to the
financial statements or if the requested changes by Deloitte & Touche will be
material.

On the evening of January 22, 2003, the CFO, the General Counsel and outside
counsel to the Company received a phone call from various representatives of
Deloitte & Touche. Deloitte & Touche notified the Company that it was
considering withdrawing from its relationship with the Company due to Deloitte &
Touche's inability to trust management of the Company and Deloitte & Touche's
perception that the Company had responded inappropriately to Deloitte's letter
of January 16, 2002. However, Deloitte & Touche confirmed that prior to the
filing of the Form 10-K Deloitte & Touche had never called into question its
ability to rely upon or trust management of the Company.

On the evening of January 22, 2003, the Board and Audit Committee also received
a letter from Deloitte & Touche that reads in relevant parts as follows:

We believe the Form 8-K is inaccurate and did not take into account (a) our
letter to you dated January 16, 2003, a copy of which is attached, advising you
of the actions we believed the Company should take with respect to the Form 10-K
filed by the Company on January 13, 2003 and (b) the extensive comments we
provided to you on your proposed draft of the Form 8-K.

Contrary to the statements made in the Form 8-K filed, we believe that the
Company was aware that we had neither issued an auditors' report on the
Company's financial statements for the fiscal year ended September 30, 2002 nor
provided our consent in connection with the Company's 2002 consolidated
financial statements included in the 2002 Form 10-K filed on January 13, 2003.
Also, we believe that the Company knowingly included an auditors' report
purportedly issued and signed by "Deloitte & Touche." The Company was also
aware, at the time the 2002 Form 10-K was filed, that there were material errors
in the consolidated financial statements included in such filing.

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<PAGE>

As a result of the above, we are seriously evaluating our existing
client-auditor relationship.

The Company believes that some of the beliefs expressed in Deloitte's letter of
January 22, 2002 are unfounded. The Company believes the Form 8-K is materially
accurate and that the text proposed by Deloitte & Touche was not a fair and
balanced disclosure of historical events (see discussion above). The Company
further believes that, until very shortly after the filing of the Form 10-K, the
Company's CFO believed the Company was in the process of receiving the Signed
Audit Report. In addition, the Board and the Audit Committee believe that the
actions of Deloitte & Touche leading up to the filing contributed to the CFO's
belief that the Company was in the process of receiving a Signed Audit Report
from Deloitte & Touche.

Contrary to Deloitte's statements of January 22, 2003, the Board and the Audit
Committee do not believe that the CFO thought, at the time the Form 10-K was
filed, that there were material errors in the consolidated financial statements
included in such filing.

Aside from the events described above, the Company does not believe there were
any disagreements with Deloitte & Touche on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Deloitte & Touche,
would have caused it to make reference to the subject of the disagreement in
connection with its report.

On April 1, 2003, the audit committee of the Company engaged the services of
Stonefield Josephson, Inc. ("Stonefield Josephson") as its new independent
auditors. Stonefield Josephson was engaged to audit the financial statements of
the Company for the fiscal year ending September 30, 2002 and review the
financial statements of the Company for the quarter ended December 31, 2002 and
each quarter thereafter.

During the Company's two most recent fiscal years and through April 1, 2003,
neither the Company nor any of its subsidiaries consulted Stonefield Josephson
regarding any of the following: (i) any matter that was the subject of a
disagreement with the Company's former accountants on a matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure; (ii) any reportable event (as such term is defined in Item
304(a)(1)(v)); or (iii) the application of accounting principles to a proposed
or completed transaction or the type of audit opinion that might be rendered on
the registrant's financial statements.

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<PAGE>

                                    PART III

 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of the Company, their ages and present
positions held in the Company, as of the date of this report, are as follows:

Officer Name                    Age   Position Held

Calixto Chaves ..............   57    Chairman, Chief Executive Officer,
                                      President and Director
Carlos Zamora ...............   41    Chief Operating Officer
Federico Vargas .............   69    Director and Chairman of the Audit
                                      Committee
Jorge M. Quesada ............   54    Director, Treasurer and Executive
                                      President of Pipasa and As De Oros
Luis J. Lauredo .............   54    Director and Member of the Audit Committee
Alfred E. Smith, IV .........   52    Director
Monica Chaves ...............   32    Director and Secretary,
Gina Sequeira ...............   33    Chief Financial Officer
Grant "Jack" Peeples ........   73    Director and Member of the Audit Committee
Jose Zamora .................   50    Production Vice President of operating
                                      Subsidiaries

The Company's directors will serve in such capacity until the next annual
meeting of stockholders of the Company and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
directors. Calixto Chaves and Monica Chaves are father and daughter. Monica
Chaves, Jose Pablo Chaves, Carlos Zamora and Jorge M. Quesada are the daughter,
son, cousin and brother-in-law of Calixto Chaves, respectively. Otherwise, there
are no family relationships among the Company's officers and directors, nor are
there any arrangements or understandings between any of the directors or
officers of the Company or any other person pursuant to which any officer or
director was or is to be selected as an officer or director.

Mr. Calixto Chaves. Mr. Chaves is Chairman of the Board, Chief Executive Officer
and President of the Company and has served as such since 1996. Mr. Chaves also
founded Pipasa in 1969 and has since served as its Chairman of the Board. He
currently serves on the board of directors of Central American Oils and
Derivatives, S.A. and American Oleaginous Industry. From 1994 to 1996, he was a
board member of Cerveceria Americana, a private brewery. In 1994, he served as
an advisor to the President of Costa Rica and the Ministry of Economic Business
Affairs. From 1983 to 1985, he was a member of the Board of Directors of the
Sugar Cane Agricultural League. From 1982 to 1986, he served as Minister of the
Costa Rican Ministry of Industry, Energy and Mines and became Minister of
Natural Resources in 1986.

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<PAGE>

Dr. Carlos Zamora. Dr. Zamora has served as the Chief Operating Officer of the
Company since July 2001. Dr. Zamora served as the Vice President of the Live
Production division of Pipasa from 1999 to July 2001. From 1997 until 1998, Dr.
Zamora served as the general vice president of As de Oros, and was responsible
for the merger and integration of Pipasa and As de Oros. For ten years prior to
the merger, Dr. Zamora served in various capacities in the Company's Integrated
Poultry Production Systems. Dr. Zamora obtained his Doctorate degree in
Veterinary Medicine from the Universidad Nacional of Costa Rica in 1988.

Dr. Federico Vargas. Dr. Vargas has been a member of the Board of Directors
since August 1996 and is currently the Chairman of the Audit Committee. Dr.
Vargas has also served on the board of directors of Pipasa since January 1995,
served on the board of directors of Restaurante As de Oros, a subsidiary of As
de Oros, from November 1999 until June 2001, and served as a member of the board
of directors of Financiera Belen from February 1999 until July 2001. He has
served as a Professor of Economics and Social Sciences at the University of
Costa Rica from 1963 to the present. Dr. Vargas has been extensively involved in
political activities since 1974. From 1990 to 1994, he served as a Deputy in the
Costa Rican Assembly. From 1993 to 1994, he was Chairman of the Legislative
Section of the Partido Liberacion Nacional of Costa Rica. Prior to 1990, Dr.
Vargas held a number of political offices including Minister of Finance on two
occasions, Ambassador of Costa Rica to the United States, Ambassador of Costa
Rica to the Organization of American States, Counselor to the President of Costa
Rica in Finance and External Debt, with the rank of Minister of Economics, and
Advisor to the President of Costa Rica. Dr. Vargas serves on the boards of
directors and advisory bodies of numerous charitable and educational
organizations and is the author of a number of publications in economic and
educational matters. He obtained his Bachelor's degree in Business
Administration from Nichols College in Massachusetts in 1954 and his Ph.D. from
the University of Colorado in 1967. He has also attended the Wharton School of
Finance and Commerce at the University of Pennsylvania. Dr. Vargas graduated
from the University of Costa Rica with a degree in Business Administration.

Mr. Jorge M. Quesada. Mr. Quesada has been a member of the Board of Directors of
the Company since August 1996 and was the Company's Chief Financial Officer from
August 1996 to September 1998. Mr. Quesada served on the Company's Audit
Committee from August 1996 until June 2001. Mr. Quesada has held numerous
positions with Corporacion Pipasa, S.A. since 1985, and was its Executive Vice
President from 1990 to 1999. Mr. Quesada served as the Executive President of
Pipasa and Corporacion As de Oros, S.A. ("As de Oros") since March 1, 1999. He
was a member of the board of directors of Banco de Fomento Agricola (d/b/a Banco
Cuscatlan) from 1991 to 1996. From 1987 to 1991, he was on the board of
directors of Financiera Belen, S.A. Mr. Quesada has conducted numerous seminars
regarding marketing topics. He obtained his Degree in Business Administration,
with emphasis on Public Accounting, from the University of Costa Rica in 1984.

Honorable Ambassador Luis Lauredo. Mr. Lauredo has served as Director and a
member of the Audit Committee of the Company since August 2001. Mr. Lauredo also
served as a director from August 1996 until December 1999, at which time he
resigned to serve as the United States Ambassador to the Organization of
American States. Mr. Lauredo served as Ambassador until June 2001. Mr. Lauredo
served as the Chairman of the Audit Committee from August 1996 to July 2000. Mr.
Lauredo joined the law firm of Hunton & Williams in July 2001 and works out of
its Miami and Washington, D.C. offices, focusing on international trade and
governmental affairs. Mr. Lauredo is and has served as a director of Colonial
Bank of South Florida since October, 2001. From 1995 to 1999, Mr. Lauredo was
President of Greenberg Traurig Consulting, Inc., an

                                       42

<PAGE>

affiliate of the international law firm, Greenberg Traurig, Hoffman, Lipoff,
Rosen & Quentel. From 1994 to 1995, he was Executive Director of the Summit of
the Americas. From 1992 to 1994, he was a Commissioner on the Florida Public
Service Commission, as well as Chairman of the International Relations Committee
of the National Association of Regulatory Utility Commissioners. In his career,
Mr. Lauredo has held a number of positions in the banking industry, including
Senior Vice President of the Export-Import Bank of the United States of America.
He has represented the President of the United States as special U.S. Ambassador
to the inaugurations of the Presidents of Colombia, Venezuela, Brazil, and Costa
Rica. He also served as a founding Director of the Hispanic Council on Foreign
Affairs (Washington, D.C.). Mr. Lauredo received his B.A. from Columbia
University in New York City and has attended the University of Madrid in Spain
and Georgetown University Law Center in Washington, D.C.

Mr. Alfred E. Smith, IV. Mr. Smith has been a member of the Board of Directors
of the Company since June 1, 1994. Mr. Smith has been the Managing Director of
the Wall Street firm of Bear Wagner since April 2001 and was the Managing
Director of Hunter Specialists, LLC, New York, from January 1997 to April 2001.
From 1979 to 1996, he was with CMJ Partners, a New York Stock Exchange member
firm. Mr. Smith is the Chairman of the Government Relations Committee of the New
York Stock Exchange, Director and Secretary of the Alfred Emanuel Smith Memorial
Foundation, Chairman of the Cardinal's Committee for the Laity-Wall Street
Division since 1985, Founder and Chairman of Hackers for Hope since 1989,
Director of the Center for Hope since 1989, a Director at the Catholic Youth
Organization until 1997, member of the President's Council of Memorial Sloan
Kettering Hospital since 1986, and a member of the New York City Advisory Board
of the Enterprise Foundation. Mr. Smith is also a member of the Board of
Trustees of St. Vincent's Hospital and Medical Center, since 1986, and the
Cavalry Hospital since 1998, and was a member of the Board of Trustees of Iona
Prep School, Saint Agnes Hospital, and Our Lady of Mercy Medical Center. Mr.
Smith is a member of the Association of the Sovereign Military Order of Malta.
He has received numerous awards for his charity humanitarian work, including
"Wall Street 50" Honoree Humanitarian Award, Terence Cardinal Cooke Center in
1999; Man of the Year Award at Iona Prep in 1986, Club of Champions Gold Medal
Award of the Catholic Youth Organization, Ellis Island Medal of Honor, the
National Brotherhood Award of the National Conference of Christians and Jews,
the Graymoor Community Service Award by the Franciscan Friars of the Atonement,
the American Cancer Society's Gold Sword of Hope Award, and the Terence Cardinal
Cooke Humanitarian Award by Our Lady of Mercy Medical Center. Mr. Smith was
educated at Villanova University.

Ms. Monica Chaves. Ms. Chaves has served as a Director and the Secretary of the
Company since 1996 and as a director of Pipasa since October 1999. Ms. Chaves
joined Pipasa as assistant manager in the company's Finance Division in 1991
where she was in charge of Pipasa's Special Investment Department. In 1996, when
the Company went public, Ms. Chaves assumed the Company's Investor Relations
Department. Ms. Chaves has served as the Vice President of Administration of
Pipasa and As de Oros since March 1, 1999. Ms. Chaves received a Bachelor's
degree in Business Administration from Saint Michaels College, Vermont. Ms.
Chaves is the daughter of Mr. Calixto Chaves.

Ms. Gina Sequeira. Ms. Sequeira was appointed Chief Financial Officer on
November 8, 2002. Ms. Gina joined the Company in April 1996 and has served in
the financial /accounting area of the Company. She obtained her degree in
accounting from the Universidad Internacional de las

                                       43

<PAGE>

Americas in 1994, and has been a member of the Institute of Certified Public
Accountants of Costa Rica for 4 years. Ms. Sequeira worked in external auditing
before joining the Company.

Mr. Grant "Jack" Peeples. Mr. Peeples has served as a Director and a member of
the Audit Committee since August 2001. He served in the Korean War as an
Airborne Infantry Officer and Rifle Company Commander. He was awarded Combat
Infantryman Badge, Bronze Star for Valor and Purple Heart. He graduated from the
University of Florida College of Law in 1957, joined the law firm of former
Governor Leroy Collins in Tallahassee, Florida. Mr. Peeples was appointed as
Legislative Counsel to Governor Collins in 1958 and appointed to the Governor's
Cabinet as State Beverage Director in 1959. Mr. Peeples returned to the private
practice of law in 1961, specializing in legislative and administrative practice
in Tallahassee, Florida; founding partner in Peeples, Earl & Blank in 1970
specializing in environmental law, and Senior Trial Counsel in numerous landmark
environmental and regulatory cases. Retired from Peeples, Earl & Blank in 1994
and joined White & Case as Of Counsel. Served as Campaign Chairman and Chairman
of Transition Team for Governor Lawton Chiles and Legislative and Senior Counsel
to the Governor. Vice-Chairman of Governor's Commission on Governance,
Vice-Chairman of Governor's Commission on the Homeless, Chairman of Florida
Aviation Commission, Co-Chairman of the Dade County Homeless Trust, Board Member
of the Florida Independent College Fund, Member of the Board of Overseers,
University of Florida Medical School, and representative of the Governor and
Cabinet on the Downtown Development Authority. He has also served as General
Counsel and member of the Board of Directors of Deltona Corporation, a NYSE
company, as member of the Board of Directors and Chairman of the Audit Committee
of United Petroleum Group, a Hunt family company, as Senior Counsel and member
of the Board of Directors of Senior Networks, Inc.

                                       44

<PAGE>

Jose Zamora. Mr. Zamora joined the Company in 1974 and has served as production
Vice-President since 1991. Mr. Zamora is affiliated with the Costa Rican Poultry
Chamber and has been a member of the Junta de Fomento Avicola de Costa Rica.

Mr. Pedro J. De Matheu, who commenced service as a Director of the Company in
August 2001, resigned as Director on February 27, 2003. Mr. De Matheu did not
resign as a result of any disagreement with the Company on any matter relating
to the Company's operations, policies or practices. Compliance with Section
16(a) of the Securities Exchange Act of 1934

Compliance with Section 16(a) of the Securities Exchange Act of 1934 Sec 16(a)
of the Securities Exchange Act 1934, as amended (the "1934 Act"), requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of the Company's outstanding Common Stock, to file with the
Securities and Exchange Commission (the "SEC") initial report of ownership and
report changes in ownership of Common Stock. Such persons are required by SEC
regulations to furnish the Company with copies of all such reports they file.

To our knowledge, based solely on a review of the copies of reports furnished to
us and written or oral representations that no other reports were required for
such persons, all Section 16(a) filing requirements applicable to our officers,
directors and greater than ten percent (10%) beneficial owners have been
complied with, except for a Form 4 required to be filed by Alfred Smith, IV in
March 2002 and a late filing of a Form 4 required to be filed by Comercial
Angui, S.A. in December 2001.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth, for the fiscal years ended September 30, 2002,
2001 and 2000 the aggregate compensation awarded to, earned by or paid to Mr.
Chaves, the Company's Chief Executive Officer. The table also sets forth the
aggregate compensation awarded to, earned by or paid to the other three most
highly compensated officers for the fiscal year ended September 30, 2002. No
Executive Officer of the Company or its subsidiaries, other than Mr. Chaves,
earned compensation in excess of $100,000 during the fiscal years ended
September 30, 2000 and 2001. The Company neither granted any restricted stock
awards or stock appreciation rights to nor made any long-term incentive plan
payouts to any of the Named Executive Officers during the fiscal years ended
September 30, 2002, 2001, and 2000.

<TABLE>
<CAPTION>
                                   Fiscal         Salary             Bonus          All Other
                                   ------         ------             -----          ---------
Name and Principal Position         Year      Compensation(1)    Compensation     Compensation(2)
---------------------------         ----      ---------------    ------------     ---------------
<S>                                 <C>             <C>               <C>                <C>
Calixto Chaves                      2002            $160,336          $3,491             $18,133
Chief Executive Officer             2001            $145,233                             $ 7,179
                                    2000            $136,764                             $ 5,633

Jorge Quesada Chaves                2002            $124,796          $3,106             $15,764
Treasurer, Director and
Executive President

Jose Zamora                         2002            $ 88,159          $2,229             $12,806
Production Vice-president
of operating subsidiaries

Carlos Zamora                       2002            $ 93,362          $2,389             $13,380
Chief Operating Officer
</TABLE>
                                       45

<PAGE>

   (1) Salary compensation was paid in Costa Rican colones and in dollars. For
       the purposes of this presentation, all compensation has been converted to
       U.S. dollars at the then current exchange rate for Costa Rican colones.

   (2) Represents Director's fees payable for action as a Director of Pipasa and
       other incentive compensation.

Compensation of Directors

The Company reimburses all members of the Board of Directors for their expenses
in connection with their activities as Directors of the Company. Directors of
the Company receive additional compensation for their services as Directors at a
rate of $200 for each Board Meeting that they attend.

Employment Agreements and Change in Control Agreements

The Company has no employment agreements and no change in control agreements
with any executive officer.

Compensation Committee Interlocks and Insider Participation

The Company has a Compensation Committee currently consisting of Mr. Lauredo.
Mr. Lauredo is not nor ever was an officer of the Company. Prior to his
resignation as a Director on February 27, 2003, Mr. De Mattheu also served as a
member of the Compensation Committee. Mr. De Mattheu is not nor ever was an
officer of the Company. This Committee makes the determinations for stock
issuances pursuant to the Company's compensation plans. The Company has no
retirement, pension or profit sharing plans covering its officers and directors,
but has contemplated the implementation of such a plan in the future.

Board Compensation Committee Report on Executive Compensation

The Compensation Committee of the Board of Directors (the "Committee") is
responsible for establishing and administering the policies for the Company's
compensation programs and for approving the compensation levels of the
executives and managers of the Company and its subsidiaries, including its Chief
Executive Officer. The Committee also reviews with the Chief Executive Officer
guidelines for salaries and bonus awards applicable to the Company's employees
other than its executives and managers.

Statement of Philosophy of Executive Compensation

The executive compensation program of the Company is designed to (i) provide
base compensation reasonably comparable to that offered by other leading
companies to their executives and managers so as to attract and retain talented
personnel, (ii) motivate certain executives and managers to achieve the
strategic goals set by the Company, and (iii) further align the interests of the
executives and managers with the long-term interests of the Shareholders. To
implement this philosophy, the Company offers its executives and managers
compensation packages that include a mix of salary, the opportunity to receive
discretionary incentive bonus awards, and, at times, stock options.

In determining the level and form of executive compensation to be paid or
awarded, the Committee relies primarily on the recommendations of the Human
Resources Department, which provides the Committee an assessment of the subject
executive's performance and the Company's performance in light of its strategic
objectives. The Committee considered a number of factors in

                                       46

<PAGE>

establishing compensation in the fiscal year ended September 30, 2002, none of
which was quantified, ranked or assigned relative weight.

   .   The Company's retention of its position as one of the leading producers
       and distributors of poultry products in Costa Rica.

   .   The further diversification, expansion, and broadening of the Company's
       core business and new service offerings.

   .   Individual performance and contributions to the Company.

   .   Individual compensation history.

Salary

The base salary of executives and managers is determined initially by analyzing
and evaluating the responsibilities of the position and comparing the proposed
base salary with that of executives and managers in comparable positions in
other companies. Adjustments are determined by objective factors such as the
Company's performance and the individual's contribution to that performance and
subjective considerations such as additional responsibilities taken on by the
executive or manager. The Committee awarded increases in base salary to certain
of the executive officers and managers of the Company, including the Chief
Executive Officer.

Incentive Awards

In addition to paying a base salary, the Company offers its executives and
managers an opportunity to earn discretionary incentive bonuses as a component
of overall compensation based on the performance of the individual and the
individual's business unit. For the fiscal year ended September 30, 2002, the
Committee awarded bonuses to certain of the Company's executives and managers.

CEO Compensation

Mr. Calixto Chaves, the Company's Chief Executive Officer, was paid a salary of
$160,336 for the fiscal year ended September 30, 2002. The Committee considered
the same factors described above in establishing Mr. Chaves' compensation, with
particular emphasis on Mr. Chaves' service and various contributions to the
Company.

                                PERFORMANCE GRAPH

The following graph sets forth the cumulative total shareholder return on the
Company's Common Stock over the last six fiscal years, as compared to the total
returns of the NASDAQ Stock Market Index and a group of peer companies (the
"Peer Group"). The graph assumes $100 was invested on September 30, 1997 and
that all dividends were reinvested in the Company's Common Stock, the NASDAQ
Stock Market Index and the Peer Group.

The Peer Group includes the Company, Cagle's, Inc., Industrias Bachoco S.A.,
Pilgrim's Pride Corporation (CLA and CLB) Sanderson Farms, Inc., Seaboard
Corporation, Tyson Foods, Inc., and WLR Food, Inc. The Peer Group consists of
companies that are engaged in the poultry slaughtering and processing business.
Companies included in the Peer Group were weighted by market capitalization from
the beginning of each period for which a return is indicated.

                                       47

<PAGE>

                   ASSUMES $100 INVESTED ON SEPTEMBER 30, 1997
                           ASSUMES DIVIDEND REINVESTED
                      FISCAL YEAR ENDING SEPTEMBER 30, 2002

<TABLE>
<CAPTION>
                                         Sep-97       Sep-98     Sep-99     Sep-00     Sep-01     Sep-02
                                         ------       ------     ------     ------     ------     ------
<S>                                       <C>        <C>        <C>        <C>         <C>        <C>
RICA FOODS, INC .....................     100.00     112.50     255.55     366.66      80.00      17.33
SIC CODE INDEX ......................     100.00     101.58     165.72     220.07      89.94      70.84
NASDAQ MARKET INDEX- U.S. COS .......     100.00      89.91      68.03      44.92      49.04      48.46
</TABLE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

The following table sets forth, as of June 19, 2003, the number of shares of
Common Stock of the Company which were owned beneficially by (i) each person who
is known by the Company to own beneficially more than 5% of its Common Stock,
(ii) each director and nominee for director, (iii) certain executive officers of
the Company, and (iv) all directors and officers as a group. Unless otherwise
indicated, the address of each beneficial owner is Rica Foods, Inc., 1840 Coral
Way 101 Miami, Florida 33145

<TABLE>
<CAPTION>
Name and Address                             Amount and Nature of           Percentage of
----------------                             --------------------           -------------
of Beneficial Owner                      Beneficial Ownership (1)(2)       Shares Owned (1)
-------------------                      ---------------------------       ----------------
<S>                                                 <C>                        <C>
Mr. Calixto Chaves                                  5,548,433(3)(4)            43.13%
Comercial Angui S.A.                                2,238,655(5)               17.40%
Mr. Jorge M. Quesada                                   45,794(6)                   *
Ms. Monica Chaves                                     133,334(7)                1.04%
Mr. Alfred E. Smith IV                                 34,534                      *
Dr. Carlos Zamora                                         200                      *
Dr. Federico Vargas                                         0                      *
Hon. Amb. Luis Lauredo                                      0                      *
Mr. Grant "Jack" Peeples                                    0                      *
Mr. Jose Zamora                                        47,295                      *
Ms. Gina Sequeira                                         200                      *
All directors and executive officers as a
group (11 persons)                                  5,809,590(3)(4)(6)(7)      45.15%
</TABLE>

* Indicates less than 1% of outstanding shares owned.

                                       48

<PAGE>

(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from June 19, 2003 upon exercise of
options, warrants and convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants and convertible
securities that are held by such person (but not those held by any other person)
and that are exercisable within 60 days from June 19, 2003 have been exercised.

(2) Unless otherwise notes, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them.

(3) Includes 861,315 shares of Common Stock held of record by Atisbos de Belen,
S.A. ("Atisbos"), a Costa Rican corporation wholly-owned by Mr. Calixto Chaves
and his wife, 704,857 shares of Common Stock held of record by Inversiones
Leytor, S.A., a Costa Rican company wholly-owned by Mr. Chaves, and 298,667
shares of Common Stock held of record by O.C.C., S.A. ("O.C.C."), a Costa Rican
company wholly-owned by Mr. Chaves and his wife. Does not include 133,334 shares
owned by his adult daughter and 402,604 shares held of record by RTROSPTVA S.A.,
A Costa Rican Corporation wholly owned by Jose Pablo Chaves, Mr. Chaves' adult
son.

(4) Includes 3,683,595 shares of Common Stock held by Inversiones La Ribera
("Ribera"), a Costa Rican corporation owned by Mr. Chaves and his wife.

(5) Includes 2,238,655 shares of common Stock held by Comercial Angui S.A., a
Costa Rican Corporation owned by Mr. Echeverria and his wife.

(6) Includes 45,794 shares held by Jorque, S.A., a closely-held Costa Rican
company whose principal shareholders are the wife and sons of Mr. Jorge Quesada.

(7) Held of record by Moninternacional, S.A., a Costa Rican corporation owned by
Monica Chaves, the adult daughter of Mr. Chaves. Mr. Chaves disclaims any
beneficial ownership of these shares.

Potential Change in Control

On July 18, 2003, Mr. Chaves, Monica Chaves, Jose Pablo Chaves, Comerical Angui,
and certain other parties (the "Pledging Parties") pledged, among other things,
an aggregate of 5,168,271 shares of common stock, including, among others,
2,093,562 shares beneficially owned by Mr. Chaves, 133,334 shares beneficially
owned by Monica Chaves, 402,604 shares beneficially owned by Jose Pablo Chaves
and 1,236,655 shares benefically owned by Comerical Angui (collectively, the
"Pledged Shares"). The Pledged Shares secure a credit line extended by a
financial institution to Mr. Chaves and various corporations affiliated with Mr.
Chaves (the "Credit Line"). Unless and until there is a default on the Credit
Line, the Pledging Parties will retain voting control over the Pledged Shares.

Mr. Chaves has previously pledged 3.4 million shares of common stock to secure
certain of his personal obligations, which obligations aggregated to less than
$1.6 million as of July 2003. Mr. Chaves anticipates that a portion of the
proceeds from the Credit Line may be used to pay these outstanding obligations.
In the event that such personal obligations are satisfied prior to the
satisfaction of the Credit Line, these 3.4 million shares will be pledged to
secure the Credit Line.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Guarantees

Since the Company's inception in 1969 and since 1991, Mr. Chaves and Mr.
Quesada, respectively, have personally guaranteed the repayment of the various
notes, loans and credit facilities (the "Credit Arrangements") of the Company
and its various operating subsidiaries. As of September 30, 2002, an aggregate
of $30,151,178 of the Company's Credit Arrangements were personally guaranteed
by either Mr. Chaves or Mr. Quesada, and Mr. Chaves and Mr. Quesada had
personally guaranteed the repayment of $27,279,083 and $13,349,083 of Credit
Arrangements, respectively.

                                       49

<PAGE>

The Company agreed to compensate Mr. Chaves for the guarantee services described
above in an amount equal to 1% per annum of the aggregate loan amount subject to
his personal guarantee (the "Financial Service Fee"). In satisfaction of the
Financial Service Fee, the Company will, as of the end of each fiscal quarter,
make a quarterly payment to Mr. Chaves in an amount equal to .25% of the daily
average aggregate loan balance subject to the personal guarantees (the
"Quarterly Payment"). If, as of the end of the fiscal quarter, Mr. Chaves is
indebted to the company, Mr. Chaves has the option in his sole discretion to
either, (i) direct the Company to use the quarterly payment to off-set the
amount he owes the Company or (ii) receive the Quarterly Payment in cash. Mr.
Quesada does not receive, nor has he ever received, any compensation for
providing the guarantee services described above.

Loans to Related Parties

<TABLE>
<CAPTION>
Name                       September 30, 2000     September 30, 2001      September 30, 2002
----                       ------------------     ------------------      ------------------
<S>                             <C>                    <C>                     <C>
Calixto Chaves                  $4,857,052 (1)         $7,665,688 (2)          $6,894,658 (4)
Monica Chaves                       39,326                133,645                       -
Maya Tiamx, S.A                     29,137                 30,523 (3)              30,626 (3)
Jose Pablo Chaves                   16,527 (3)             61,596                       -
</TABLE>

(1) Includes $3,582,659 owed to the Company by Inversiones La Ribera,
("Ribera"), a Costa Rican company owned by Mr. Chaves and his wife.

(2) Includes $5,570,126, $431,938 and $903,427 owed to the Company by Ribera,
Atisbos and O.C.C., Costa Rican companies owned by Mr. Chaves and his wife. The
figure provided also includes $213,551 owed to the Company by Avicola Core
Etuba, Ltda. ("Core"), a Brazilian company of which the majority of outstanding
shares are beneficially owned by Mr. Chaves.

(3) Maya TIAMX, S.A., is a Costa Rican company owned by Mr. Jose Pablo Chaves.

(4) Consists of $5,495,438, $354,442, $793,707 and $251,072 owed to the Company
by Ribera, Atisbos, O.C.C. and Core.

At various times in the past, Mr. Chaves and companies controlled by him have
borrowed money from the Company. Since September 30, 2000, Mr. Chaves' largest
aggregate amount of indebtedness outstanding occurred at September 30, 2001. The
loans made to Ribera, Atisbos and O.C.C., all Costa Rican companies owned by Mr.
Calixto Chaves and his wife, are evidenced by thirteen promissory notes payable
on demand (the "Loans"), nine of which are denominated in U.S. dollars and
accrue interest at the rate of 8%, and four of which are denominated in Costa
Rican colones and which accrue interest at rates ranging from 16% to 24%.

The amounts outstanding from Core as of September 30, 2002 and 2001, include a
promissory note of $128,628, bearing an interest rate of 11%, and other account
receivables that originate mainly from expenses incurred in a due diligence
process.

Mr. Chaves has provided collateral for the Loans by the subscription of a
guarantee trust contract for the benefit of Pipasa. The guarantee contract
contains two assets, two farms, with an aggregate value of approximately $4
million, as estimated by real estate brokers as of May 2002. As of the date of
this Report, Mr. Chaves has informed the Company that the properties submitted
as collateral are free from encumbrance.

Since September 30, 2000, the largest aggregate amount of indebtedness
outstanding for both Mr. Jose Pablo Chaves

                                       50

<PAGE>

and Ms. Monica Chaves occurred at September 30, 2001. The loans to Mr. Jose
Pablo Chaves and Ms. Monica Chaves were evidenced by Notes, which bore interest
at a rate of 10.5%.

Loans From Related Parties

Name                         September 30, 2001          September 30, 2002
----                         ------------------          ------------------
Calixto Chaves                     $67,671                            --
Monica Chaves                       22,331                            --

The loans to the Company identified above were principally generated in
instances where, for the sake of convenience, expediency or efficiency, the
lender advanced expenses for the benefit of the Company. The lenders were repaid
but not remunerated for providing such services.

Severance Payments

During fiscal year 2002, the subsidiaries of the Company, Pipasa and As de Oros,
authorized the Chief Executive Officer to receive $275,411 as an advanced
payment with respect to accrued severance benefits for serving as President of
the subsidiaries. The severance benefit was used to satisfy interest expenses on
outstanding loans owed to the subsidiaries by the Chief Executive Officer. No
cash was disbursed or paid to the Chief Executive Officer in this transaction.
This has been presented as a non cash reconciling item on the accompanying
consolidated statement of cash flows.

Proposed Transaction

The Company is continuing to explore the development and/or acquisition of
strategic business opportunities that it perceives as complementary with its
core business. For instance, in December 2000, the Company announced its intent
to acquire a majority of the outstanding common stock of Avicola Core Etuba,
Ltda. ("Core"), a Brazilian company engaged in the production and distribution
of poultry products, from the Company's Chief Executive Officer. In March 2001,
the Company agreed to acquire a 75% stake of Core for $3.5 million, and an
option for the remaining 25% stake for $1.7 million. The Company is evaluating
closely the performance of Core to determine if, when and how the Company should
integrate its business with Core, and has postponed indefinitely its acquisition
of Core.

On February 20, 2003, Port Ventures, S.A. ("Port Ventures") and Corporacion As
de Oros, S.A. ("As de Oros"), a wholly owned subsidiary of the Company, entered
into a Stock Purchase Agreement (the "Agreement"), pursuant to which As de Oros
agreed to acquire from Port Ventures, 2,040 shares of common stock of Logistica
de Granos, S.A. ("Logistica"), representing 51% of the issued and outstanding
shares of capital stock of Logistica (the "Shares"), for a purchase price of
US$2,580,000 (the "Purchase Price"). Logistica is the owner of 19% of the issued
and outstanding capital stock of Sociedad Portuaria de Caldera, S.A. ("SPC") and
Sociedad Portuaria Granelera de Caldera, S.A. ("SPGC") (collectively, the "Port
Companies"). Port the Companies are seeking to acquire concessions (the
"Concessions") being granted by the Government of Costa Rica to refurbish and
operate Puerto Caldera, a major seaport located on the Pacific coast of Costa
Rica and considered by the Company as strategic to its raw material purchases.

                                       51

<PAGE>

Port Ventures is the sole shareholder of Logistica and Port Ventures is directly
owned and controlled by Jose Pablo Chaves Zamora ("Mr. JP Chaves"). Mr. JP
Chaves is the indirect holder of approximately 2.17% of the outstanding shares
of the Company. Mr. JP Chaves is also the son of the Company's Chief Executive
Officer, Mr. Calixto Chaves. Mr. JP Chaves does not hold any positions or titles
with the Company or any of its subsidiaires

The closing of the purchase and sale of the Shares is subject to: (i) the final
grant by the Government of Costa Rica of the Concessions and (ii) the execution
of definitive agreements between the Government of Costa Rica and each of the
Port Companies regarding the construction and operation of Puerto Caldera.

The Agreement provides that Port Ventures may require that As de Oros remit the
Purchase Price for the Shares in installments, prior to the fulfillment of the
conditions to closing set forth above. Upon such payment, As de Oros will
receive a "bill of exchange" for the amount of such Purchase Price. And a pro
rata amount of shares will be issued and held by a Trust representing all
participants in the Consortiums in escrow until the closing. In the event that
the transactions contemplated under the Agreement are not closed, Port Ventures
must return to As de Oros the pro rata portion of the Purchase Price paid, plus
interest, and As de Oros, must return the bills of exchange. If Port Ventures
does not return the portion of the Purchase Price paid, As de Oros may, in its
discretion, seek to enforce the bill of exchange.

The Company expects to close this transaction before calendar year 2003, when
the definitive approval of the Government of Costa Rica is expected to be
obtained.

As of July 8, 2003, As de Oros has remitted approximately 55% of the Purchase
Price to Port Ventures (the "Remitted Payment") in exchange for bills of
exchange. The bills of exchange are not secured by tangible assets or readily
marketable collateral. In the event the Concessions are not ratified to the Port
Companies, the Company anticipates that As de Oros will have limited ability to
recoup its investment in Port Ventures. Port Ventures has agreed for As de Oros
not need make any further payments until the Concessions are finally ratified.

There can be no assurance that the Company will close the Core transaction or
any other transaction and there can be no assurance that the Company's
acquisition efforts will prove to be beneficial to the Company. Even if the
Company's Board of Directors, audit committee and management team believe the
Company should pursue a development of acquisition opportunity and successfully
negotiate the contracts critical to such venture, the Company anticipates that
it may be required to seek the consent of PacLife and potentially certain other
third parties before initiating development efforts or concluding an
acquisition.

                                       52

<PAGE>

                                     PART IV


ITEM 14. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Sections 13a-14(c) and
15d-14(c) of the Securities Exchange Act of 1934, as amended). Based upon that
evaluation, the Company's Chief Executive Officer and its Chief Financial
Officer concluded that the Company's disclosure controls and procedures were
effective.

(b) Changes in Internal Controls

There were no significant changes in the Company's internal controls or other
factors that could significantly affect these controls subsequent to the date of
their evaluation.


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) Financial Statements

The financial statements incorporated by reference in Item 8 of this Form 10-K/A
are included beginning on page F-1 as follows:

(A) Independent Auditors' Report

(B) Consolidated Balance Sheets for September 30, 2002 and, 2001.

(C) Consolidated Statements of Income for the years ended September 30, 2002,
    2001 and 2000.

(D) Consolidated Statements of Stockholders' Equity for the years
    ended September 30, 2002, 2001 and 2000.

(E) Consolidated Statements of Cash Flows for the years ended September 30, 2002
    2001 and 2000.

(F) Notes to Consolidated Financial Statements for fiscal years 2002, 2001 and
    2000.

(2) Financial Statement Schedules

All financial statement schedules have been omitted as the required information
is inapplicable or has been included in the Notes to Consolidated Financial
Statements.


(b) The following is a list of Current Reports on Form 8-K filed during the
fourth quarter of fiscal 2002 and first two quarters of fiscal 2003:

                                       53

<PAGE>

The Company filed a Current Report on Form 8-K dated August 19, 2002 under Item
9 events relating to Regulation FD Disclosure

The Company filed a current report on Form 8-K dated August 22, 2002 under Item
4 relating to a change in the Company's auditors.

The Company filed a Current Report on Form 8-K dated November 20, 2002 under
Item 5 relating to a press release disclosing the Company's Fitch rating and the
appointment of a new Chief Financial Officer.

The Company filed a Current Report on Form 8-K dated January 13, 2003 under Item
5 relating to the Company's filing of the Form 10-K for the year ended September
30, 2002 without obtaining a signed audit report from Deloitte & Touche.

The Company filed a Current Report on Form 8-K dated January 23, 2003 under Item
4 relating to the resignation of Deloitte & Touche as the Company's independent
public accountants.

The Company filed a Current Report on Form 8-K dated January 30, 2003 under Item
9 relating to the Chief Executive Officer and the Chief Financial Officer's
inability to make the certifications required by Section 906 of the
Sarbanes-Oxley Act in connection with the Company's filing of Amendment No. 1 to
the Form 10-K/A for the year ended September 30, 2002.

The Company filed a Current Report on Form 8-K/A dated January 23, 2003 under
Item 4, as an amendment No.1 to Form 8-K relating to resignation of Deloitte &
Touche as the company's independent public accountants.

The Company filed a Current Report on Form 8-K/A dated January 23, 2003 under
Item 4, as an amendment No.2 to Form 8-K relating to the response of Deloitte &
Touche regarding their resignation as the Company's independent public
accountants.

The Company filed a Current Report on Form 8-K dated February 19, 2003 under
Item 9 relating to the Chief Executive Officer and the Chief Financial Officer's
inability to make the certifications required by Section 906 of the
Sarbanes-Oxley Act in connection with the Company's filing of Form 10-Q for the
three months ended December 31, 2002.

The Company filed a Current Report on Form 8-K/A dated January 23, 2003 under
Item 4, as an amendment No.3 to Form 8-K relating to the response of Deloitte &
Touche regarding their resignation as the Company's independent public
accountants.

The Company filed a Current Report on Form 8-K dated February 21, 2003 under
Item 5 relating to the damage of the Company's by-product plant by a fire.

The Company filed a Current Report on Form 8-K dated April 4, 2003 under Item 4
relating to engagement of services of Stonefield Josephson, Inc as its new
independent auditors.

The Company filed a Current Report on Form 8-K dated May 20 2003 under Item 9
relating to the Chief Executive Officer and the Chief Financial Officer's
inability to make the certifications required by Section 906 of the
Sarbanes-Oxley Act in connection with the Company's filing of Form 10-Q for the
six months ended March 31, 2003.

The Company filed a Current Report on Form 8-K dated July 7, 2003 under Item 5
relating to the notification from the American Stock Exchange (the "AMEX")
indicating the Company is no longer in compliance with certain listing standards
and that the staff of the AMEX intends to file an application with Securities
and Exchange Commission to strike the Company's common stock from listing and
registration on the AMEX.


                                       54

<PAGE>

(c) Exhibits

The following exhibit is filed with this report.

 Exhibit No.   Exhibit Description

      3.1      Amended and Restated Articles of Incorporation of the Company*
      3.2      Amended and Restated Bylaws of the Company(1)
      4.1      Amended and Restated Note Purchase Agreement, dated December 28,
               2000, by and among the Company, Corporacion Pipasa, S.A,
               Corporacion As de Oros, and Pacific Life Insurance Company*
      10.1     Promissory Note, dated March 1, 2002, from Inversiones La Ribera
               to Corporacion Pipasa, S.A*
      10.2     Promissory Note, dated March 1, 2002, from Inversiones La Ribera
               to Corporacion Pipasa, S.A*
      10.3     Promissory Note, dated January 31, 2001, from Inversiones La
               Ribera to Corporacion Pipasa, S.A*
      10.4     Promissory Note, dated May 14, 2002, from Inversiones La Ribera
               to Corporacion Planeta Dorado*
      10.5     Promissory Note, dated October 30, 2001, from Inversiones La
               Ribera to Corporacion Pipasa, S.A*
      10.6     Promissory Note, dated October 30, 2001, from Inversiones La
               Ribera to Corporacion Pipasa, S.A*
      10.7     Promissory Note, dated January 31, 2001, from Inversiones La
               Ribera to Corporacion Pipasa, S.A*
      10.8     Promissory Note, dated October 30, 2001, from Inversiones La
               Ribera to Corporacion Pipasa, S.A*
      10.9     Promissory Note, dated May 29, 2001, from Inversiones La Ribera
               to As de Oros*
      10.10    Promissory Note, dated May 29, 2001, from Inversiones La Ribera
               to As de Oros*
      10.11    Promissory Note, dated April 1, 2001, from O.C.C. to Corporacion
               Pipasa, S.A*
      10.12    Promissory Note, dated April 1, 2001, from Atisbos De Belen to
               Corporacion Pipasa, S.A*
      10.13    Promissory Note, dated April 1, 2001, from Atisbos De Belen to
               Corporacion Pipasa, S.A*
      10.14    Promissory Note, dated January 31, 2001, from Avicola Core Etuba,
               R.L. to Corporacion Pipasa, S.A.*
      21       Subsidiaries of registrant*
      99.1     Certification of the Chief Executive Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002*
      99.2     Certification of the Chief Financial Officer pursuant to Section
               906 of the Sarbanes-Oxley Act of 2002*

----------------------
* Filed herewith

1  Incorporated by Reference to the Company's 10-KSB40, as filed with the
   Commission on October 13, 1995.

                                       55

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                Rica Foods, Inc.

Dated: July 28, 2003     By: /s/ Calixto Chaves
                             ----------------------------
                             Calixto Chaves
                             Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

DATE: July 28, 2003                /s/ CALIXTO CHAVES
                                   ------------------
                                   Calixto Chaves, Director,
                                   Chairman of the Board, Chief Executive
                                   Officer and President

DATE: July 28, 2003                /s/ GINA SEQUEIRA
                                   -----------------
                                   Gina Sequeira, Chief Financial Officer

DATE: July 28, 2003                /s/ JORGE M. QUESADA
                                   --------------------
                                   Jorge M. Quesada, Director, Treasurer,
                                   and Executive President

DATE: July 28, 2003                /s/ DR. FEDERICO VARGAS
                                   -----------------------
                                   Dr. Federico Vargas, Director

DATE: July 28, 2003                /s/ ALFRED SMITH, IV
                                   --------------------
                                   Alfred Smith, Director

DATE: July 28, 2003                /s/ MONICA CHAVES
                                   -----------------
                                   Monica Chaves, Director and Secretary

DATE: July 28, 2003                /s/ LUIS J. LAUREDO
                                   -------------------
                                   Luis J. Lauredo, Director

DATE: July 28, 2003                /s/ GRANT "Jack" PEEPLES
                                   ------------------------
                                   Grant "Jack" Peeples, Director

                                       56

<PAGE>

CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Calixto Chaves, certify that:

1. I have reviewed this annual report on Form 10-K/A of Rica Foods, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

   DATE: July 28, 2003

                                            /s/ CALIXTO CHAVES
                                            ------------------
                                            Calixto Chaves
                                            Chief Executive Officer
                                            Chairman of the Board

                                       57

<PAGE>

I, Gina  Sequeira, certify that:

1. I have reviewed this annual report on Form 10-K/A of Rica Foods, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

DATE: July 28, 2003

                                            /s/ GINA SEQUEIRA
                                            -----------------
                                            Gina Sequeira
                                            Chief Financial Officer

                                       58

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Rica Foods, Inc.

We have audited the consolidated balance sheet of Rica Foods, Inc. (a Nevada
corporation) and subsidiaries, as of September 30, 2002 and the related
consolidated statements of income, stockholders' equity and cash flows for the
year ended September 30, 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance 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 audit provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Rica
Foods, Inc. and subsidiaries, as of September 30, 2002, and the results of its
consolidated operations and their consolidated cash flows for the year ended
September 30, 2002, in conformity with accounting standards generally accepted
in the United States of America.

Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. Schedule II in Item 14 of
Part IV herein is presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.


/s/ Stonefield Josephson, Inc.
--------------------------------------
Stonefield Josephson, Inc.
Santa Monica, California. May 23, 2003

                                      F-1

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of

RICA FOODS, INC.,

We have audited the accompanying consolidated balance sheets of RICA FOODS, INC.
(a Nevada corporation) and subsidiaries as of September 30, 2001 and 2000, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended September 30, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of RICA FOODS, INC. and
subsidiaries as of September 30, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 2001 in conformity with accounting principles generally accepted
in the United States.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. Schedule II listed in Item 14 of Part IV herein is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN

Mexico City, Mexico December 7, 2001, (except with respect to the matter
discussed in Note 9, as to which the date is January 14, 2002).

This is a copy of the audit report previously issued by Arthur Andersen in
connection with Rica Foods, Inc. filing on Form 10-K for the year ended
September 30, 2001. This audit report has not been reissued by Arthur Andersen
in connection with this filing on Form 10-K/A.

                                      F-2

<PAGE>

                        RICA FOODS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           September 30, 2002 and 2001

                                                     2002              2001
                                                     ----              ----
Assets
------
Current assets:
     Cash and cash equivalents                   $  2,728,293     $  4,920,870
     Short-term investments                         2,492,266          851,905
     Notes and accounts receivable                 15,925,710       11,825,622
     Due from related parties                       1,429,847        1,635,363
     Inventories                                   14,145,070       12,833,325
     Deferred income taxes                            417,352          412,854
     Prepaid expenses                                 782,826        1,034,629
                                                 ------------     ------------
Total current assets                               37,921,364       33,514,568

Property, plant and equipment                      39,627,144       45,827,917
Long-term receivables-trade                           901,009          595,596
Long-term investments                               4,109,309        4,312,411
Other assets                                        6,564,407        4,413,723
Goodwill                                            1,723,414        2,186,090
                                                 ------------     ------------
Total assets                                     $ 90,846,647     $ 90,850,305
                                                 ============     ============

Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
     Accounts payable                            $ 18,975,032     $ 14,444,895
     Accrued expenses                               3,428,707        3,917,787
     Notes payable                                 17,074,336       18,175,269
     Current portion of long-term debt              8,190,702        7,216,726
     Due to stockholders                                    -           74,634
                                                 ------------     ------------
Total current liabilities                          47,668,777       43,829,311

Long-term debt, net of current portion             16,018,388       20,889,821
Due to stockholders                                         -           15,368
Deferred income taxes                               2,124,450        2,162,090
                                                 ------------     ------------
Total liabilities                                  65,811,615       66,896,590

Minority interest                                   1,336,445        1,336,445

Commitments and contingencies (Note 20)

Stockholders' equity:
     Common stock                                      12,865           12,865
     Preferred stock                                2,216,072        2,216,072
     Additional paid-in capital                    25,800,940       25,800,940
     Accumulated other comprehensive loss         (12,206,661)      (9,625,035)
     Retained earnings                             13,654,202       10,736,911
                                                 ------------     ------------
                                                   29,477,418       29,141,753
Less:
     Due from stockholders                         (5,495,437)      (6,256,089)
     Treasury stock, at cost                         (283,394)        (268,394)
                                                 ------------     ------------
Total stockholders' equity                         23,698,587       22,617,270
                                                 ------------     ------------
Total liabilities and stockholders' equity       $ 90,846,647     $ 90,850,305
                                                 ============     ============

The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.

                                      F-3

<PAGE>

                        RICA FOODS, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                  Years ended September 30, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                                                               2002                 2001               2000
                                                               ----                 ----               ----
<S>                                                        <C>                  <C>                <C>
Sales                                                      $130,665,439         $127,336,366       $123,628,327
Cost of sales                                                87,487,065           86,840,951         83,756,904
                                                           ------------         ------------       ------------
Gross profit                                                 43,178,374           40,495,415         39,871,423
                                                           ------------         ------------       ------------

Operating expenses:
     General and administrative                              14,054,980           14,549,382         13,577,143
     Selling                                                 19,215,331           19,464,459         18,955,061
     Amortization of goodwill                                         -              787,535            953,828
                                                           ------------         ------------       ------------
                                                             33,270,311           34,801,376         33,486,032
                                                           ------------         ------------       ------------

Income from operations                                        9,908,063            5,694,039          6,385,391

Other expenses (income):
     Interest expense                                         4,662,341            4,638,878          3,548,935
     Interest income                                         (1,501,963)          (1,182,587)        (1,110,747)
     Foreign exchange loss, net                               3,298,051            2,319,389          1,562,549
     Miscellaneous, net                                        (730,610)          (1,269,231)        (1,340,039)
                                                           ------------         ------------       ------------
                                                              5,727,819            4,506,449          2,660,698
                                                           ------------         ------------       ------------
Income before income taxes and minority interest              4,180,244            1,187,590          3,724,693
Income tax expense (benefit)                                  1,041,596             (390,833)            80,223
                                                           ------------         ------------       ------------
Income before minority interest                               3,138,648            1,578,423          3,644,470
Minority interest                                                75,959               77,293            572,631
                                                           ------------         ------------       ------------
Net income                                                    3,062,689            1,501,130          3,071,839
Preferred stock dividends                                       145,398              152,346            182,892
                                                           ------------         ------------       ------------
Net income applicable to common stockholders               $  2,917,291         $  1,348,784       $  2,888,947
                                                           ============         ============       ============
Basic earnings per share                                   $       0.23         $       0.11       $       0.24
                                                           ============         ============       ============
Diluted earnings per share                                 $       0.23         $       0.11       $       0.24
                                                           ============         ============       ============
Basic weighted average number of common
    shares outstanding                                       12,811,469           12,810,021         11,874,190
                                                           ============         ============       ============
Diluted weighted average number of common
    shares outstanding                                       12,811,469           12,810,021         11,878,474
                                                           ============         ============       ============
</TABLE>

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

                                      F-4

<PAGE>

                        RICA FOODS INC. AND SUBSIDIARIES
           Consolidated Statements of Stockholders' Equity Years ended
                       September 30, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                               Common Stock      Treasury Stock                   Additional
                               ------------      --------------      Preferred      Paid-In      Due from
                            Shares      Amount   Shares   Amount       Stock        Capital    Stockholders
                            ------      ------   ------   ------       -----        -------    ------------
<S>                         <C>         <C>      <C>     <C>        <C>          <C>           <C>
Balance, September 30,
  1999                       7,485,805  $ 7,486  47,752  $(268,394) $ 2,216,072  $ 12,137,326  $   (644,988)
Pipasa's "TCA" preferred
     stock issued as
     dividend to
     common stockholders             -        -       -          -    2,143,626             -             -
Repurchase of Pipasa's
  "TCA" preferred shares             -        -       -          -   (2,143,626)            -
Cash dividends on
  preferred stock of                 -        -       -          -            -             -             -
  Pipasa
Acquisition of 40.44%
  interest in Pipasa
  and 43.62% interest
  in As de Oros              5,354,516    5,355       -          -            -    13,463,640             -
Shares granted to
  employees                      7,600        8       -          -            -        86,856             -
Exercise of employee
  stock options                  6,400        6       -          -            -        73,128             -
Interest and other
  amounts due from                   -        -       -          -            -             -    (4,255,511)
  stockholders
Net income                           -        -       -          -            -             -             -
Translation adjustment               -        -       -          -            -             -             -

Total comprehensive
  income                             -        -       -          -            -             -             -
                            ----------  -------  ------  ---------  -----------  ------------  ------------
Balance, September 30,
  2000                      12,854,321  $12,855  47,752  $(268,394) $ 2,216,072  $ 25,760,950  $ (4,900,499)

<CAPTION>


                            Accumulated Other    Retained          Total        Comprehensive
                              Comprehensive      Earnings      Stockholders'    Income For the
                                  Loss           --------         Equity            Period
                                  ----                            -------           ------
<S>                         <C>                  <C>           <C>              <C>
Balance, September 30,
  1999                            $(6,828,500)   $6,481,305    $  13,100,307
Pipasa's "TCA" preferred
     stock issued as
     dividend  to
    common stockholders                     -             -        2,143,626
Repurchase of Pipasa's
  "TCA" preferred shares                                          (2,143,626)
Cash dividends on
  preferred stock of                        -      (165,017)        (165,017)
  Pipasa
Acquisition of 40.44%
  interest in Pipasa
  and 43.62% interest
  in As de Oros                             -             -       13,468,995
Shares granted to
  employees                                 -             -           86,864
Exercise of employee
  stock options                             -             -           73,134
Interest and other
  amounts due from                          -                     (4,255,511)
  stockholders
Net income                                  -     3,071,839        3,071,839         3,071,839
Translation adjustment             (1,930,237)                    (1,930,237)       (1,930,237)
                                                                                   -----------
Total comprehensive
  income                                    -             -                -        $1,141,602
                            -----------------    ----------    -------------        ==========
Balance, September 30,
  2000                            $(8,758,737)   $9,388,127    $  23,450,374
</TABLE>

                            (Continued on next page)

                                      F-5

<PAGE>

                        RICA FOODS INC. AND SUBSIDIARIES
    Consolidated Statements of Stockholders' Equity Years ended September 30,
                               2002, 2001 and 2000
                                   (Continued)

<TABLE>
<CAPTION>
                                 Common Stock           Treasury Stock
                                 ------------           --------------                       Additional
                                                                               Preferred      Paid-In        Due from
                                 Shares      Amount    Shares      Amount        Stock        Capital     Stockholders
                                 ------      ------    ------      ------        -----        -------     -------------
<S>                            <C>          <C>        <C>       <C>         <C>            <C>           <C>
Cash dividends on preferred
  stock of Pipasa                       -         -         -             -            -              -              -
Interest and other amounts
  due from stockholders                 -         -         -             -            -              -     (1,355,590)
Issuance of common stock           10,000        10         -             -            -         39,990              -
Net income                              -         -         -             -            -              -              -
Translation adjustment                  -         -         -             -            -              -              -
Total comprehensive income              -         -         -             -            -              -              -
                               ----------   -------   -------    ----------  -----------    -----------   ------------
Balance, September 30, 2001    12,864,321   $12,865    47,752    $ (268,394) $ 2,216,072    $25,800,940   $ (6,256,089)
                               ----------   -------   -------    ----------  -----------    -----------   ------------
Cash dividends on preferred
  stock of Pipasa
Payment received from
  stockholders                                                                                                 760,652
Repurchase of common
  stock                                                 5,100       (15,000)
Net income
Translation adjustment
Derivative unrealized
  loss
Total comprehensive income              -         -         -             -            -              -              -
                               ----------   -------   -------    ----------  -----------    -----------   ------------
Balance, September 30, 2002    12,864,321   $12,865    52,852    $ (283,394) $ 2,216,072    $25,800,940   $ (5,495,437)
                               ==========   =======    ======    ==========  ===========    ===========   ============
<CAPTION>

                             Accumulated                                    Comprehensive
                                Other                           Total           Income
                            Comprehensive      Retained     Stockholders'      For the
                                 Loss          Earnings        Equity           Period
                                 ----          ---------       ------           ------
<S>                         <C>               <C>          <C>               <C>
Cash dividends on preferred
  stock of Pipasa                        -      (152,346)        (152,346)
Interest and other amounts
  due from stockholders                  -             -       (1,355,590)
Issuance of common stock                 -             -           40,000
Net income                                     1,501,130        1,501,130       1,501,130
Translation adjustment            (866,298)                      (866,298)       (866,298)
                                                                            -------------
Total comprehensive income               -             -                -   $     634,832
                            --------------   -----------    -------------   =============
Balance, September 30, 2001    $(9,625,035)  $10,736,911    $  22,617,270
                            --------------   -----------    -------------
Cash dividends on
  preferred stock of Pipasa                     (145,398)        (145,398)
Payment received from
  stockholders                                                    760,652
Repurchase of common
  stock                                                           (15,000)
Net income                                     3,062,689        3,062,689       3,062,689
Translation adjustment          (2,484,637)                    (2,484,637)     (2,484,637)
Derivative unrealized
  loss                             (96,989)                       (96,989)        (96,989)
                                                                            -------------
Total comprehensive income               -             -                -   $     481,063
                            --------------   -----------    -------------   =============
Balance, September 30, 2002 $  (12,206,661)  $13,654,202    $  23,698,587
                            ==============   ===========    =============
</TABLE>

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

                                      F-6

<PAGE>

                        RICA FOODS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                  Years ended September 30, 2002, 2001 and 2000

<TABLE>
<CAPTION>
                                                                          2002              2001             2000
                                                                          ----              ----             ----
<S>                                                                       <C>              <C>              <C>
Cash flows from operating activities:
Net income                                                               $ 3,062,689       $  1,501,130     $  3,071,839
Adjustments to reconcile net income to net cash provided by
    operating activities:
Depreciation and amortization                                              5,078,259          4,307,654        4,038,238
Production poultry                                                         3,463,403          3,262,770        2,331,767
Uncollected sale of equipment                                                365,072                  -                -
Allowance for inventory obsolescence                                         139,340             17,428           33,004
Amortization of goodwill                                                           -            787,535          953,828
Stock options and grants issued to employees                                       -                  -          159,998
Derivative unrealized loss                                                   (96,989)                 -                -
Gain on sale of productive assets                                           (227,557)          (579,298)        (509,272)
Deferred income tax benefit                                                  (78,471)          (412,854)        (323,798)
Provision for doubtful accounts                                              449,598            122,150          352,058
Minority interest                                                             75,959             77,293          572,631
Changes in operating assets and liabilities:
    Notes and trade receivables                                           (4,534,914)        (1,462,022)      (1,576,074)
    Inventories                                                           (4,910,227)        (1,721,099)      (2,708,186)
    Prepaid expenses                                                         211,142            (23,059)        (583,532)
    Accounts payable                                                       4,530,138         (1,716,183)       4,162,139
    Accrued expenses                                                        (489,080)            55,129          258,264
    Long-term receivables-trade                                             (378,872)             4,133         (449,519)
                                                                         -----------       ------------     ------------
    Net cash provided by operating activities                              6,659,490          4,220,707        9,783,385
                                                                         -----------       ------------     ------------
Cash flows from investing activities:
    Short-term investments                                                (1,640,361)          (765,349)         (53,809)
    Additions to property, plant and equipment                            (4,996,703)        (8,403,574)     (17,253,793)
    Increase in long-term investments                                       (186,731)          (281,858)               -
    Proceeds from sales of productive assets                               4,145,084          1,205,870        1,850,024
    Increase in other assets                                              (3,778,447)          (559,744)      (1,995,606)
                                                                         -----------       ------------     ------------
    Net cash used in investing activities                                 (6,457,158)        (8,804,655)     (17,453,184)
                                                                         -----------       ------------     ------------
Cash flows from financing activities:
    Preferred stock cash dividends                                          (221,357)          (229,639)        (271,296)
    Short-term financing:
New loans                                                                 26,507,366         21,958,360       21,317,219
Payments                                                                 (27,664,430)       (16,601,868)     (16,620,357)
</TABLE>

(Continued on next page)

                                      F-7

<PAGE>

                        RICA FOODS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                  Years ended September 30, 2002, 2001 and 2000
                                   (Continued)

<TABLE>
<CAPTION>
                                                                        2002            2001            2000
                                                                        ----            ----            ----
<S>                                                                 <C>             <C>             <C>
Long-term financing:
   New loans                                                           6,152,158      7,292,955       6,769,264
   Payments                                                          (10,101,843)    (6,390,382)     (1,355,247)
Deferred debt costs                                                       22,043         24,444          28,609
Common stock issued                                                            -         40,000               -
Treasury stock acquired                                                  (15,000)             -               -
Due from stockholders and related party                                  913,203     (2,993,429)     (2,741,213)
                                                                    ------------    -----------     -----------
Net cash provided by (used in) financing activities                   (4,407,860)     3,100,441       7,126,979
                                                                    ------------    -----------     -----------
Effect of exchange rate changes on cash and cash equivalents           2,012,951      2,147,741         886,288
Increase (decrease) in cash and cash equivalents                      (2,192,577)       664,234         343,468
Cash and cash equivalents at beginning of year                         4,920,870      4,256,636       3,913,168
                                                                    ------------    -----------     -----------
Cash and cash equivalents at end of year                            $  2,728,293    $ 4,920,870     $ 4,256,636
                                                                    ============    ===========     ===========

Supplemental disclosures of cash flow information:
   Cash paid during year for:
     Interest                                                       $  4,911,103    $ 5,533,017     $ 3,859,677
                                                                    ============    ===========     ===========
     Income taxes                                                   $    283,758    $   209,186     $   517,903
                                                                    ============    ===========     ===========
Supplemental schedule of non-cash investing activities:
   Common stock dividends paid as preferred shares
     From Pipasa                                                    $          -    $         -     $ 2,143,626
                                                                    ============    ===========     ===========
     From As de Oros                                                $          -    $         -     $ 1,983,327
                                                                    ============    ===========     ===========
   Pipasa's preferred stock repurchased in exchange for
     outstanding receivables                                        $          -    $         -     $ 2,143,626
                                                                    ============    ===========     ===========
   As de Oros' preferred stock repurchased in exchange for
     outstanding receivables                                        $          -    $         -     $ 1,983,327
                                                                    ============    ===========     ===========
   Acquisition of business:
   Fair value of assets acquired                                    $          -    $         -     $ 4,600,000
                                                                    ============    ===========     ===========
   Common stock issued                                              $          -    $         -     $ 7,880,000
                                                                    ============    ===========     ===========
   Benefits for Chief Executive Officer                             $    275,411    $         -     $         -
                                                                    ============    ===========     ===========
</TABLE>

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

                                      F-8

<PAGE>

                                RICA FOODS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Rica Foods, Inc. (the "Company"), formerly Quantum Learning Systems, Inc., was
incorporated under the laws of the State of Utah on February 6, 1986 and filed a
public offering in 1987. In April 1994, the Company changed its state of
incorporation from Utah to Nevada. The Company's operations are largely
conducted through its 100% owned subsidiaries, Corporacion Pipasa, S.A. and
subsidiaries ("Pipasa") and Corporacion As de Oros, S.A. and subsidiaries ("As
de Oros"). The Company's subsidiaries' primary business is derived from the
production and sale of broiler chickens, processed chicken, beef and pork
by-products, commercial eggs, and premixed feed and concentrate for livestock
and domestic animals. The Company's subsidiaries own 97 urban and rural outlets
throughout Costa Rica, three modern processing plants and four animal feed
plants. As de Oros also owns and operates two chains of 28 quick service
restaurants in Costa Rica called Restaurantes As de Oros and Kokoroko. Pipasa
and As de Oros export its products to all countries in Central America,
Colombia, Dominican Republic and Hong Kong.

In April 1996, Pipasa, entered into an agreement and plan of reorganization with
the Company, pursuant to which the Company acquired 59.56% of the common stock
of Pipasa in exchange for the issuance of 5,191,190 shares of the Company's
common stock to the stockholders of Pipasa. On December 7, 1999, the Company
consummated the acquisition of 40.44% remaining minority interest in exchange
for a total of 3,683,595 shares of the Company's common stock valued at $4.7 per
share (as of the date in which the purchase agreement was announced), resulting
in an aggregate purchase price of $17,312,897. These acquisitions were accounted
for as a reverse acquisition, whereby Pipasa was treated as the accounting
acquirer and the Company as the legal acquirer; therefore, first and second
acquisitions are under common control. No goodwill resulted from these
transactions.

On February 26, 1998, the Company consummated an agreement with Comercial Angui,
S.A., a Corporation in Costa Rica, to purchase 56.38% of the outstanding common
stock of As de Oros for consideration consisting of a promissory note with a
stated amount of $2.4 million due in January, 2000, and 815,686 shares of the
Company's common stock, having a then current market value of approximately $2.6
million. On November 22, 1999, the Company consummated the acquisition of the
remaining 43.62% shares of common stock of As de Oros in exchange for a total of
1,670,921 shares of the Company's common stock valued at $4.7 per share (as of
the date in which the purchase agreement was announced), resulting in an
aggregate purchase price of $7,853,328. The Company accounted for these
acquisitions under the purchase method of accounting and allocated $11.5 million
of excess purchase price over book value to property, plant and equipment and
$3.9 million to goodwill. These transactions did not involve common control.

The Company's references herein to fiscal years 2002, 2001 or 2000 encompass the
years ended September 30, 2002, 2001 and 2000, respectively.

Accounting Principles

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP"). The accounting records of the subsidiaries, Pipasa and As de Oros, which
are maintained in Costa Rican colones and in accordance with accounting
principles generally accepted in Costa Rica, have been translated into U.S.
dollars and converted into U.S. GAAP for consolidation purposes.

                                      F-9

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Principles of Consolidation

The consolidated financial statements include the accounts of Rica Foods, Inc.
and its subsidiaries, Pipasa and As de Oros. Subsidiaries of Pipasa ("Pipasa de
El Salvador de C.V." and "Pipasa de Honduras de C.V.") and As de Oros ("Planeta
Dorado, S.A." and "Corasa Estudiantes, S.A.)" have been included in the
consolidated financial statements for the Company.

All significant intercompany balances and transactions have been eliminated in
consolidation. For fiscal years prior to 2001, before adoption of SFAS 142, the
Company used the straight-line method to amortize the excess of the purchase
price over the fair market value of the net assets acquired over a period of
five years (See Change in Accounting Policies - Accounting for Goodwill).

Minority Interest

Minority Interest is comprised of Preferred Shares of As de Oros, amounting to
$1,336,445. Preferred cash dividends (see Note 12) distributed to As de Oros'
preferred share holders are treated as a reduction to income.

Reclassifications

Certain prior period balances have been reclassified to conform to the fiscal
year 2002 presentation.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant estimates made by management
include but are not limited to the valuation of inventories, estimated useful
life, the possible outcome of litigations and the ultimate collection of
customer receivables. Actual results in subsequent periods could differ from
management's estimates.

Foreign Currency Translation

Most of the Company's transactions take place in Costa Rica and are denominated
in local currency, the colon ((cent)). The exchange rate between the colon and
the U.S. dollar is determined in a free exchange market, supervised by the Banco
Central de Costa Rica. As of September 30, 2002, 2001 and 2000, commercial
exchange rates were (cent)369.12, (cent)334.58 and (cent)313.35 per $1.00,
respectively.

The financial statements of Pipasa and As de Oros have been translated into U.S.
dollars on the basis of the colon ((cent)) as the functional currency, as
follows: assets and liabilities have been translated at the commercial exchange
rates in effect on the balance sheet dates; stockholders' equity has been
translated at historical exchange rates and income and expenses have been
translated at average exchange rates in effect during the fiscal years. Foreign
currency gains and losses resulting from transactions denominated in foreign
currencies, including intercompany gains and losses resulting from transactions,
are included in the results of operations. The related translation adjustments
for each fiscal year, along with the cumulative amounts as of the balance sheets
dates, are reflected in the accumulated other comprehensive loss section of the
consolidated statements of stockholders' equity.

                                      F-10

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Cash, Cash Equivalents and Short-term Investments/Fair Value of Financial
Instruments

The Company classifies as cash and cash equivalents all interest-bearing
deposits with original maturities of three months or less. The fair value of a
financial instrument represents the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a
forced sale or liquidation.

As of September 30, 2002, Short-term investments were primarily comprised of
certificate of deposits in U.S. dollars, and are carried on the balance sheet at
fair market value, which approximates cost. Certificates have a maturity from 6
to 12 months and bear interest at rates from 6.79% to 9.50%.

The carrying value of cash and cash equivalents, short-term investments, notes
and accounts receivable, due from related parties, accounts payable, notes
payable and due to stockholders, are a reasonable estimate of their fair value
due to the short-term nature of those instruments. The Company estimates that
the carrying value of current installments of long-term debt and long-term debt
approximates fair value because interest rates are adjustable based on market
interest rates.

Long-term Investments

Long-term investments are comprised of equity securities and trust accounts.
Equity securities do not exceed 10% participation and are thus, recorded at
their historical cost. Long-term investments are comprised of non-marketable
equity and debt Securities from privately held companies. Although market value
of the investments in equity securities is not readily determinable, management
assesses these investments for other-than-temporary impairment and believes that
the fair value of these investments exceeds its carrying amount.

Futures Contracts

Futures and option contracts with original maturities of less than one year are
used to hedge fluctuations in corn and soybean meal prices, which are considered
to be a hedge against changes in the amount of future cash flows related to
commodities purchases. The Company does not enter into derivative transactions
for speculative purposes. The Company accounts for its futures transactions in
accordance with the Statement of Financial Accounting Standards ("SFAS") No.
133, "Accounting for Derivative Instruments and Hedging Activities". The
contracts that effectively meet risk reduction criteria are recorded using hedge
accounting. Derivatives that are not hedges are adjusted to fair value through
income. No ineffectiveness was recognized on cash flow hedges during fiscal 2002
or 2001. The Company expects that losses in the amount of $96,989 recorded in
other comprehensive loss as of September 30, 2002, related to cash flow hedges,
will be recognized into costs of production within the next 3 months. The
adoption of SFAS No. 133 effective beginning in fiscal year 2001 did not have a
material effect on the Company's financial position or results of operations. As
of September 30, 2002, the Company has futures contracts in place to hedge
purchases of commodities for $1.76 million, with a fair value of approximately
$1.64 million. The Company generally does not hedge anticipated transactions
beyond 6 months.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using
the weighted-average method, except for inventories in transit, which are valued
at specific cost. Live poultry inventory represents chicks in grow-out stage,
breeders and layer hens. Breeder and layer hen costs are accumulated up to the
production stage (approximately 20 weeks) and are amortized over the estimated
production lives (approximately 65 weeks for breeder and approximately 80 weeks
for layer hens) based on a percentage calculated according to the estimated

                                      F-11

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

production cycle of the hen, including a residual value. After approximately 43
days, chicks in grow-out stage are transferred to the processing plants.
Accumulated costs consist primarily of animal feed and labor costs. Production
poultry represents the accumulated amortization of breeder and layer hens in
their productive stage.

The Company contracts farmers for its grow-out process. These farmers have a
long-term contract with the Company to raise the baby chicks to adult birds.
Ownership of the chickens is not transferred to the farmers, and all animal
feed, medicine and other expenses incurred are accumulated as Live Poultry
inventory. These farmers are paid according to the weight and quality of the
chickens produced, which is recorded as inventory.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Improvements to property,
plant and equipment that extend their useful lives are capitalized. Costs for
maintenance, repairs and minor renewals are charged to expense when incurred.

Depreciation expense is recorded using the straight-line method over the
following estimated useful lives: buildings and facilities--50 years; machinery
and equipment from 5 to 20 years. Guidelines used to establish useful life of
depreciable assets are primarily tax driven. The Company has reviewed these
guidelines and has deemed them appropriate based on assessments made by
engineers and past experience, which are consistent with management's estimates
of the useful lives. Land is recorded at cost and is not depreciated.

Costs of leasehold improvements on properties that are accounted for as
operating leases are capitalized and amortized over the respective lease term
using the straight-line method. Net capitalized leasehold rights amounted to
$492,745 and $666,000 as of September 30, 2002 and 2001, respectively.

Applicable interest charges incurred during the construction of new facilities
are capitalized as one of the cost elements and are amortized over the assets'
estimated useful lives. Interest capitalized during fiscal years 2002 and 2001
was $187,600 and $860,815, respectively.

Impairment Charges

The Company assesses long-lived assets for impairment whenever events and
circumstances indicate that the carrying value of an asset may not be
recoverable from the undiscounted estimated future cash flows expected to result
from its use and eventual disposition. Impairments will be recognized in
operating results to the extent that carrying value exceeds discounted cash
flows of future operations. The Company did not recognize any impairment losses
for the years ended September 30, 2002, 2001 or 2000.

Software Development Costs

The Company capitalizes costs associated with software developed for internal
use. The Company accounts internally developed software according to Statement
of Position 98-1 "Software for Internal Use" ("SOP-98-1"). Under the provisions
of SOP 98-1, the Company capitalizes costs associated with software developed
for internal use when both the preliminary project stage is completed and
management has authorized further funding for the project, which it deems
probable of completion and use for the function intended. Capitalized costs
include direct costs of materials, services consumed in developing the software,
payroll and payroll-related costs for employees who are directly associated with
and who devote time to the internal-use software project, and interest costs
incurred while developing the software. Capitalization of such costs ceases when
the project is substantially

                                      F-12

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

completed and ready for its intended use. The carrying value, net of
amortization of software and development costs included in other assets in the
consolidated balance sheets amounting to $749,643 and $1,133,444 as of September
30, 2002 and 2001, respectively, is regularly reviewed by the Company to
determine if an impairment loss should be recognized.

Capitalized internal software development costs are amortized using the
straight-line method over a period of five years, which totaled $290,400,
$291,316 and $175,957 for the years ended September 30, 2002, 2001 and 2000,
respectively.

Comprehensive Income

The Company reports comprehensive income in accordance with SFAS No. 130,
"Reporting Comprehensive Income". Accumulated other comprehensive income
includes the cumulative translation adjustment and adjustments of commodity
future contracts to fair value.

Deferral of Loan Costs

The Company is deferring certain commitment fees and other direct loan
origination costs. These charges are being amortized over the contractual life
of the related loans.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs amounted to
$1,335,980, $1,306,599 and $829,811 for the fiscal years ended September 30,
2002, 2001 and 2000, respectively. Advertising expenses are included in selling
expenses in the accompanying consolidated statements of income.

Income Taxes

The Company files a tax return in the United States, which does not include
operations of any of its subsidiaries. The Company's subsidiaries, As de Oros
and Pipasa, file individual tax returns in Costa Rica. The Company accounts for
income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes".
Under SFAS No. 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial statement carrying amount 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.

Change in Accounting Policies - Accounting for Goodwill

As of October 1, 2001, the Company early adopted the provisions of SFAS No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS No. 142 requires that
goodwill and intangible assets with indefinite lives no longer be amortized, but
instead tested for impairment at least annually and written down with a charge
to operations when the carrying amount exceeds the estimated fair value. The
purchase of As de Oros, resulted in a goodwill of $3,937,676, which prior to the
adoption of SFAS 142 the Company amortized such goodwill, over a period of five
years. As of September 30, 2001, goodwill, net of amortization, amounted to
$2,186,090. In connection with the transition provisions for adopting this
standard, the Company performed a transitional impairment test using discounted
cash flows and found no impairment. In accordance with SFAS No. 142, the Company
discontinued the amortization of goodwill effective October 1, 2001. Had the
provisions of SFAS No. 142 been in effect during fiscal years 2001 and 2000, a
reduction of

                                      F-13

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

amortization expense and an increase in net income of $787,535 and $953,828 or
an increase of $0.06 and $0.08 per share, respectively, would have been
recorded.

Revenue Recognition

The Company recognizes revenue upon transfer of ownership of the product to the
customer which occurs when the product is physically received by the customer.
Sales discounts are primarily recorded in the period in which the related sale
is recognized. Returned products due to damaged products for which the Company
assumes responsibility are minimal and are recorded in the period in which they
are received. Returned products amounted to $28,900, $63,430 and $88,200 for
fiscal years ended September 30, 2002, 2001 and 2000.

Impact of Recently Issued Accounting Standards

Effective July 1, 2001 and January 1, 2002, the Financial Accounting Standard
Board ("FASB") issued SFAS No. 141, "Business Combinations", and SFAS No. 142,
"Goodwill and Other Intangible Assets," respectively. SFAS No. 141 requires all
business combinations entered into after June 30, 2001 to be accounted for under
the purchase method and specifies the types of acquired intangible assets that
are required to be recognized and reported separate from goodwill. The Company
elected to early adopt the provisions of SFAS No. 142 effective October 1, 2001.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which addresses the financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The Company adopted SFAS No. 143 on October
1, 2002 and does not expect it to have a material impact on the Company's
financial position, results of operations or cash flows.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 replaces SFAS No. 121, "Accounting
for the Impairment of Long-Lived assets and for Long-Lived Assets to Be Disposed
Of," and establishes a single accounting model for the impairment or disposal of
long-lived assets, including discontinued operations. SFAS No. 144 requires that
long-lived assets to be disposed of by sale, including those of discontinued
operations, be measured at the lower of carrying value or fair value less costs
to sell, whether reported in continuing operations or in discontinued
operations. Discontinued operations will no longer be measured at net realizable
value or include amounts for operating losses that have not yet been incurred.
SFAS No. 144 also broadens the reporting of discontinued operations to include
all components of an entity with operations that can be distinguished from the
rest of the entity and will be eliminated from the ongoing operations of the
entity in a disposal transaction. The Company adopted SFAS No. 144 on October 1,
2002 and did not have a material effect on the Company's financial position,
results of operations or cash flows.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections".
SFAS No. 145 rescinds SFAS No. 4, "Reporting Gains and Losses from
Extinguishments of Debt", and an amendment of that Statement, SFAS No. 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements", thereby
gains and losses from extinguishments of debt are no longer classified as
extraordinary items within the income statement unless considered unusual and
infrequent. SFAS No. 145 also rescinds SFAS No. 44, "Accounting for Intangible
Assets of Motor Carriers". SFAS No. 145 amends SFAS No. 13, "Accounting for
Leases", to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease

                                      F-14

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

modifications that have economic effects that are similar to sale leaseback
transactions. SFAS No. 145 also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. The Company adopted SFAS
No.145 beginning October 1, 2002 and does not expect it to have a material
impact on its results of operations, financial position or cash flows.

In June 2002, the FASB issued SFAS No. 146, "Accounting for the Costs Associated
with Exit or Disposal Activities." SFAS No. 146 is effective for exit or
disposal activities that are initiated after December 31, 2002 and requires
recording costs associated with exit or disposal activities at their fair values
when a liability has been incurred. Under previous guidance, certain exit costs
were accrued upon management's commitment to an exit plan, which is generally
before an actual liability has been incurred. The adoption of SFAS No. 146 did
not have a material impact on the Company's financial position, results of
operations or cash flows.

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", which amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The transition guidance and annual disclosure provisions of Statement
148 are effective for fiscal years ending after December 15, 2002, with earlier
application permitted in certain circumstances. The interim disclosure
provisions are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002. The Company does not
currently have any recorded stock based compensation expense, thus the adoption
of SFAS 148 does not have a material impact on its financial position or results
of operations.

In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 requires that the
guarantor recognize, at the inception of certain guarantees, a liability for the
fair value of the obligation undertaken in issuing such guarantee. FIN 45 also
requires additional disclosure requirements about the guarantor's obligations
under certain guarantees that it has issued. The initial recognition and
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002 and the
disclosure requirements are effective for financial statement periods ending
after December 15, 2002. The Company does not expect the adoption of FIN 45 will
have a material impact on its financial position, results of operations or cash
flows.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.
This Statement amends Statement 133 for decisions made (1) as part of the
Derivatives Implementation Group process that effectively required amendments to
Statement 133, (2) in connection with other Board projects dealing with
financial instruments, and (3) in connection with implementation issues raised
in relation to the application of the definition of a derivative, in particular,
the meaning of an initial net investment that is smaller than would be required
for other types of contracts that would be expected to have a similar response
to changes in market factors, the meaning of underlying, and the characteristics
of a derivative that contains financing components. The Company does not
anticipate that the adoption of this pronouncement will have a material effect
on the financial statements

                                      F-15

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". This Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. Some of the provisions of this Statement
are consistent with the current definition of liabilities in FASB Concepts
Statement No. 6, Elements of Financial Statements. The remaining provisions of
this Statement are consistent with the Board's proposal to revise that
definition to encompass certain obligations that a reporting entity can or must
settle by issuing its own equity shares, depending on the nature of the
relationship established between the holder and the issuer. While the Board
still plans to revise that definition through an amendment to Concepts Statement
6, the Board decided to defer issuing that amendment until it has concluded its
deliberations on the next phase of this project. That next phase will deal with
certain compound financial instruments including puttable shares, convertible
bonds, and dual-indexed financial instruments. The Company does not anticipate
that the adoption of this pronouncement will have a material effect on the
financial statements.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." Interpretation 46 changes the criteria by which one
company includes another entity in its consolidated financial statements.
Previously, the criteria were based on control through voting interest.
Interpretation 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity. The
consolidation requirements of Interpretation 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation requirements
apply to older entities in the first fiscal year or interim period beginning
after June 15, 2003. Certain of the disclosure requirements apply in all
financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The Company does not expect the
adoption to have a material impact to the Company's financial position or
Results of operations.

2. NOTES AND ACCOUNTS RECEIVABLE AND LONG-TERM RECEIVABLES-TRADE

Notes and accounts receivable consist of the following:

                                                     2002              2001
                                                     ----              ----
Accounts:
     Trade receivables                          $ 12,087,074       $  8,110,149
     Other                                         2,446,833          3,358,753
                                                ------------       ------------
                                                  14,533,907         11,468,902
Less: Allowance for doubtful accounts               (546,671)          (656,543)
                                                ------------       ------------
                                                  13,987,236         10,812,359
Add: Short-term notes-trade                        1,938,474          1,013,263
                                                ------------       ------------
                                                $ 15,925,710       $ 11,825,622
                                                ============       ============

                                      F-16

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Short-term notes trade bear market interest rates that range from 8% to 10.50%
in U.S. dollars and 24% in Colones.

Other accounts receivables include amount dues from Industrias Avicolas
Integradas, S.A. ("Indavinsa") amounting to $1,931,043 and $1,127,198 as of
September 30, 2002 and 2001 respectively. Short-term notes include promissory
notes from Indavinsa amounting to $1,201,000 and $351,000 as of September 30,
2002 and 2001, respectively, which bear market interest rates that range from 6%
to 11.5%. The Company regularly enters into commercial transactions with
Indavinsa, whereby it sells company's products such as pet food and live
chickens. The Company has also sold used poultry equipment to Indavinsa.

The Company maintains an allowance for doubtful accounts receivable upon the
expected collectibility of receivables. For the years ended September 30, 2002
and 2001, the Company recorded a write-off of doubtful receivables amounting to
approximately $375,000 and $121,700, respectively.

                                          2002                 2001
                                          ----                 ----
     Accounts:

        Trade receivables                 $ 354,455            $ 120,478
        Other                               546,554              475,118
                                          ---------            ---------
                                          $ 901,009            $ 595,596
                                          =========            =========

Long-term trade receivables consist of promissory notes that bear interest rates
of 34% in colones and 8% in U.S. dollars. Other long-term receivables originate
from credit to customers and a receivable from a trust fund.

3. BALANCES AND TRANSACTIONS WITH STOCKHOLDERS AND RELATED PARTIES

Related Party Guarantees

Since the Company's inception in 1969 and since 1991, Mr. Chaves and Mr.
Quesada, respectively, have personally guaranteed the repayment of the various
notes, loans and credit facilities (the "Credit Arrangements") of the Company
and its various operating subsidiaries. As of September 30, 2002, an aggregate
of $30,151,178 of the Company's Credit Arrangements were personally guaranteed
by either Mr. Chaves or Mr. Quesada, and Mr. Chaves and Mr. Quesada had
personally guaranteed the repayment of $27,279,083 and $13,349,083 of Credit
Arrangements, respectively.

The Company agreed to compensate Mr. Chaves for the guarantee services described
above in an amount equal to 1% per annum of the aggregate loan amount subject to
his personal guarantees (the "Financial Service Fee"). In satisfaction of the
Financial Service Fee, the Company will, as of the end of each fiscal quarter,
make a quarterly payment to Mr. Chaves in an amount equal to .25% of the daily
average aggregate loan balance subject to the personal guarantees (the
"Quarterly Payment"). If, as of the end of the fiscal quarter, Mr. Chaves is
indebted to the Company, Mr. Chaves has the option in his sole discretion to
either (i) direct the Company to use the quarterly payment to off-set the amount
he owes the Company or (ii) receive the Quarterly Payment in cash. Mr. Quesada
does not receive, nor has he ever received, any compensation for providing the
guarantee services described above.

<TABLE>
<CAPTION>
     Name                      September 30, 2000    September 30, 2001   September 30, 2002
     ----                      ------------------    ------------------   ------------------
<S>                            <C>                   <C>                  <C>
     Calixto Chaves                $4,857,052  (1)     $7,665,688   (2)     $6,894,658    (4)
     Monica Chaves                     39,326             133,645                    -
     Maya Tiamx, S.A                   29,137              30,523   (3)         30,626    (3)
     Jose Pablo Chaves                 16,527  (3)         61,596                    -
</TABLE>

                                      F-17

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

(1) Includes $3,582,659 owed to the Company by Inversiones La Ribera, S.A.
("Ribera") a Costa Rican company owned by Mr. Chaves and his wife.

(2) Includes $5,570,126, $431,938 and $903,427 owed to the Company by Ribera,
Atisbos and O.C.C., Costa Rican companies owned by Mr. Chaves and his wife. The
figure provided also includes $213,551 owed to the Company by Avicola Core
Etuba, Ltda. ("Core"), a Braziian company of which the majority of the shares
are beneficially owned by Mr. Chaves.

(3) Maya TIAMX, S.A., is a Costa Rican company owned by Mr. Jose Pablo Chaves.

(4) Consist of $5,495,438, $354,442, $793,707 and $251,072 owed to the Company
by Ribera, Atisbos, O.C.C. and Core.

At various times in the past, Mr. Chaves and companies controlled by him have
borrowed money from the Company. Since September 30, 2000, Mr. Chaves' largest
aggregate amount of indebtedness outstanding occurred at September 30, 2001. The
loans made to Ribera, Atisbos and O.C.C., all Costa Rican companies owned by Mr.
Calixto Chaves and his wife, are evidenced by thirteen promissory notes payable
on demand (the "Loans"), nine of which are denominated in U.S. dollars and
accrue interest at the rate of 8%, and four of which are denominated in Costa
Rican colones and which accrue interest at rates ranging from 16% to 24%.

The amounts outstanding from Core as of September 30, 2002 and 2001, include a
promissory note of $128,628 bearing an interest rate of 11%, and other account
receivables that originate mainly from expenses incurred in a due diligence
process.

Mr. Chaves has provided collateral for the Loans by the suscription of a
guarantee trust contract for the benefit of Pipasa. The guarantee contract
contains two assets, two farms, with an aggregate value of approximately $4
million, as estimated by real estate brokers as of May 2002. As of the date of
this report Mr. Chaves has informed the Company that the properties submitted as
collateral are free from encumbrance.

Since September 30, 2000, the largest aggregate amount of indebtedness
outstanding for both Mr. Jose Pablo Chaves and Ms. Monica Chaves occurred at
September 30, 2001. The loans to Mr. Jose Pablo Chaves and Ms. Monica Chaves
were evidenced by Notes, which bore interest at a rate of 10.5%.

     Name                      September 30, 2001      September 30, 2002
     ----                      ------------------      ------------------
     Calixto Chaves                 $67,671                    $0
     Monica Chaves                   22,331                     0

The loans to the Company identified above were principally generated in
instances where, for the sake of convenience, expediency or efficiency, the
lender advanced expenses for the benefit of the Company. The lenders were repaid
but not remunerated for providing such services.

Severance Payments

During fiscal year 2002, the subsidiaries of the Company, Pipasa and As de Oros,
authorized the Chief Executive Officer to receive $275,411 as an advanced
payment with respect to accrued severance benefits for serving as President of
the subsidiaries. The severance benefit was used to satisfy interest expenses on
outstanding loans owed to the subsidiaries by the Chief Executive Officer. No
cash was disbursed or paid to the Chief Executive Officer in this transaction.
This has been presented as a non cash reconciling item on the accompanying
consolidated statement of cash flows.

                                      F-18

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Proposed Transaction

The Company is continuing to explore the development and/or acquisition of
strategic business opportunities that it perceives as complementary with its
core business. For instance, in December 2000, the Company announced its intent
to acquire a majority of the outstanding common stock of Avicola Core Etuba,
Ltda. ("Core"), a Brazilian company engaged in the production and distribution
of poultry products, from the Company's Chief Executive Officer. In March 2001,
the Company agreed to acquire a 75% stake of Core for $3.5 million, and an
option for the remaining 25% stake for $1.7 million. The Company is evaluating
closely the performance of Core to determine if, when and how the Company should
integrate its business with Core, and has postponed indefinitely its acquisition
of Core.

On February 20, 2003, Port Ventures, S.A. ("Port Ventures") and Corporacion As
de Oros, S.A. ("As de Oros"), a wholly owned subsidiary of the Company, entered
into a Stock Purchase Agreement (the "Agreement"), pursuant to which As de Oros
agreed to acquire from Port Ventures, 2,040 shares of common stock of Logistica
de Granos, S.A. ("Logistica"), representing 51% of the issued and outstanding
shares of capital stock of Logistica (the "Shares"), for a purchase price of
US$2,580,000 (the "Purchase Price"). Logistica is the owner of 19% of the issued
and outstanding capital stock of Sociedad Portuaria de Caldera, S.A. ("SPC") and
Sociedad Portuaria Granelera de Caldera, S.A. ("SPGC") (collectively, the "Port
Companies"). The Port Companies are seeking to acquire concessions (the
"Concessions") being granted by the Government of Costa Rica to refurbish and
operate Puerto Caldera, a major seaport located on the Pacific coast of Costa
Rica and considered by the Company as Strategic to its raw material purchases.

Port Ventures has been the sole shareholder of Logistica and Port Ventures is
directly owned and controlled by Jose Pablo Chaves Zamora ("Mr. JP Chaves"). Mr.
JP Chaves is the indirect holder of approximately 2.17% of the outstanding
shares of the Company. Mr. JP Chaves is also the son of the Company's Chief
Executive Officer, Mr. Calixto Chaves. Mr. JP Chaves does not hold any positions
or titles with the Company or any of its subsidiaries

The closing of the purchase and sale of the Shares is subject to: (i) the final
grant by the Government of Costa Rica of the Concessions and (ii) the execution
of definitive agreements between the Government of Costa Rica and each of the
Port Companies regarding the construction and operation of Puerto Caldera.

The Agreement provides that Port Ventures may require that As de Oros remit the
Purchase Price for the Shares in installments, prior to the fulfillment of the
conditions to closing set forth above. Upon such payment, As de Oros will
receive a "bill of exchange" for the amount of such Purchase Price and a pro
rata amount of shares will be issued and held by a Trust representing all
participants in the Consortiums in escrow until the closing. In the event that
the transactions contemplated under the Agreement are not closed, Port Ventures
must return to As de Oros the pro rata portion of the Purchase Price paid, plus
interest, and As de Oros, must return the bills of exchange. If Port Ventures
does not return the portion of the Purchase Price paid, As de Oros may, in its
discretion, seek to enforce the "bill of exchange" or retain the Shares in its
possession.

                                      F-19

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

The Company expects to close this transaction before calender year 2003, when
the definitive approval of the Government of Costa Rica is expected to be
obtained.

As of July 8, 2003, As de Oros has remitted approximately 55% of the Purchase
Price to Port Ventures (the "Remitted Payment") in exchange for bills of
exchange. The bills of exchange are not secured by tangible assets or readily
marketable collateral. In the event the Concessions are not ratified to the Port
Companies, the Company anticipates that As de Oros will have limited ability to
recoup its investment in Port Ventures. Port Ventures has agreed for As de Oros
not need make any further payments until the Concessions are finally ratified.

There can be no assurance that the Company will close the Core transaction or
any other transaction and there can be no assurance that the Company's
acquisition efforts will prove to be beneficial to the Company. Even if the
Company's Board of Directors, audit committee and management team believe the
Company should pursue a development of acquisition opportunity and successfully
negotiate the contracts critical to such venture, the Company anticipates that
it may be required to seek the consent of PacLife and potentially certain other
third parties before initiating development efforts or concluding an
acquisition.

4. INVENTORIES

Inventories consist of the following:

                                                   2002                  2001
                                                   ----                  ----
      Finished products                         $4,258,619          $  2,498,544
      In-process                                 2,939,820             3,441,187
      Live poultry - net                         3,007,081             2,861,567
      Materials and supplies-net                 1,798,148             1,864,868
      Raw materials                              1,880,515             1,892,880
      In-transit                                   260,887               274,279
                                              ------------          ------------
                                              $ 14,145,070          $ 12,833,325
                                              ============          ============

Amortization of Live Poultry amounted to $1,511,798 in 2002 and $1,396,406 in
2001. Production poultry amortization amounted to $3,463,403, $3,262,770 and
$2,331,767 for fiscal years 2002, 2001 and 2000, respectively, and are recorded
as cost of sales.

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is summarized as follows:

                                                 2002                 2001
                                                 ----                 ----
      Land                                   $  8,149,930         $  7,740,963
      Buildings and facilities                 14,547,707           13,382,905
      Machinery and equipment                  29,861,498           29,731,986
      Machinery in-transit                         91,869               31,457
      Construction in-process                   1,263,712            6,876,052
                                             ------------         ------------
                                               53,914,716           57,763,363
      Less: Accumulated depreciation          (14,287,572)         (11,935,446)
                                             ------------         ------------
                                             $ 39,627,144         $ 45,827,917
                                             ============         ============

Depreciation expense for the years ended September 30, 2002, 2001 and 2000
amounted to $4,353,948, $3,769,728 and $3,862,281, respectively.

Applicable interest charges incurred during the construction of new facilities
are capitalized as one of the cost elements and are amortized over the assets'
estimated useful lives. Interest capitalized during fiscal years 2002 and 2001
was $187,600 and $860,815, respectively.

                                      F-20

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

6. LONG-TERM INVESTMENTS

Long-term investments, which are carried at cost, consist of the following:

                                                        2002             2001
                                                        ----             ----
      Grupo Industrias Oleaginosas S.A.
        ("INOLASA")                                 $ 2,816,225      $ 3,106,955
      La Condesa, S.A.                                  541,829          597,764
       Investment trusts                                723,196          588,657
      Other (less than 50% ownership)                    28,059           19,035
                                                    -----------      -----------
                                                    $ 4,109,309      $ 4,312,411
                                                    ===========      ===========

Short-term investments are comprised primarily of certificates of deposits in
U.S. Dollars that are due from 6 to 12 months, and bear interest rates from
6.79% to 9.50%.

INOLASA is the only supplier of soybean meal in Costa Rica. The Company has a
10% ownership interest in INOLASA, which is accounted for under the cost method
and dividends are recorded in income when they are declared. During the years
ended September 30, 2002 and 2001, the Company received cash dividends from
INOLASA amounting to approximately $392,000 and $395,000, respectively. These
dividends are included in miscellaneous, net in the accompanying consolidated
statements of income.

During 1998, the Company acquired 200,000,000 preferred shares of La Condesa,
S.A., a corporation in Costa Rica engaged in the hotel business. Such shares do
not provide an ownership interest to the Company.

Investment trusts are carried at market value and bear interest rates that range
from 3.90% to 7.17% in U.S.Dollars and comprise debt investments from the public
and private sector of the Costa Rican market. The Company is continually
reinvests in these funds.

7. OTHER ASSETS

Other assets consist of the following:

                                                        2002             2001
                                                        ----             ----

      Guarantee deposits                            $   200,739         $256,441
      Self insurance trust (see Note 20)                293,583          382,380
      Real estate held for development, at cost       3,217,519          755,509
      Software -net                                   1,230,434        1,732,118
      Reforestry lands                                  604,231          608,685
      Trademarks                                        433,124          536,607
      Other                                             584,777          141,983
                                                    -----------      -----------
                                                    $ 6,564,407      $ 4,413,723
                                                    ===========      ===========

Reforestation projects are in developing stage, and as such, all expenses
incurred related to maintenance of the project are capitalized until the
developing stage is completed. Capitalized amounts approximate $55,000 per year.
Software is comprised of internally developed software and purchased software
which is ready for service. Real estate held for future development mainly
consist of land, located in urban and rural areas which can either

                                      F-21

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

be used for chicken farms, distribution warehouses and for production
facilities. These are recorded at cost of acquisition which is lower than its
fair market value as determined by independent appraisals.

8. NOTES PAYABLE

                                                     2002               2001
                                                     ----               ----

        Loans payable in U.S. Dollars           $ 16,855,813       $ 17,789,162
        Loans payable in Colones                     272,130            405,487
        Less deferred debt issuance costs            (53,607)           (19,380)
                                                ------------       ------------
                                                $ 17,074,336       $ 18,175,269
                                                ============       ============

Loans payable include lines of credit and commitments with banks to support
operations of the Company. Debt issuance costs are deferred and then amortized
over the term of the debt. Fimat USA, Inc. a brokerage firm, finances the
Company's purchases of corn and soybean meal up to $500,000. Notes payable are
due from October 2002 through September 2003 and bear annual interest rates
ranging from 4.53% to 11.50% in dollars and from 16.2% to 20.0% in colones.

As of September 30, 2002, the Company had short-term line of credit agreements
with banks in the maximum aggregate amount of $26.8 million, of which $23.5
million had already been drawn ($18.6 million for 2001, of which $17.3 million
had already been drawn). Property amounting to $2.14 million secure line of
credit agreements amounting to $7.04 million. Other lines of credit and notes
payable are unsecured.

9. LONG-TERM DEBT

Long-term debt consists of the following:

                                                       2002             2001
                                                       ----             ----

      Series A Senior Notes                       $  4,800,000     $  6,400,000
      Series B Senior Notes                          7,200,000        9,600,000
      Bank loans denominated in  U.S. dollars       12,102,539       11,741,867
      Bank loans denominated in Costa Rican
      colones                                          257,031          593,637
      Less: Deferred debt issuance costs              (150,480)        (228,957)
                                                  ------------     ------------
                                                    24,209,090       28,106,547
      Less: Current portion                          8,190,702        7,216,726
                                                  ------------     ------------
                                                  $ 16,018,388     $ 20,889,821
                                                  ============     ============

Bank loans are due from November 2002 to October 2008. Debt issuance costs are
deferred and then amortized over the term of the debt. As of September 30, 2002,
long-term debt amounting to $4.9 million was secured by property valued at $4.8
million.

During fiscal year 1998, the Company completed a private placement (the "Private
Placement") with Pacific Life Insurance Company ("PacLife") of $20 million in
notes payable, denominated in U.S. dollars bearing an annual interest rate of
11.71%, (11.96% beginning in January 2001) comprised of $8 million in Series A
Senior Notes

                                      F-22

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

and $12 million in Series B Senior Notes (collectively the "Notes"). The closing
date of the Private Placement was on January 23, 1998 for Series A and February
26, 1998 for Series B Notes. Pipasa and As de Oros serve as guarantors for this
Private Placement. Costs associated with issuance of private placement amounted
to $540,000, which is being deferred through out the life of the loan using
straight-line method of amortization.

       .      The Private Placement includes the following terms, among others:

       .      The Notes shall be payable annually in five consecutive principal
              installments amounting to $4 million each beginning on January 15,
              2001.

       .      The Notes have a two-year principal payment grace period.

       .      Applicable covenants require that there will be no significant
              organizational changes and that the Company will comply with all
              federal and local laws and regulations.

       .      Financial and business information for the Company and its
              subsidiaries will be remitted periodically to the lenders.

In connection with the issuance of the Notes, the Company entered into certain
negative covenants (the "Negative Covenants") in favor of PacLife. More
specifically, among other things, the Company covenanted to refrain from
participating in any material transaction, except transactions in the ordinary
course of business with arms-length terms with any person (other than a
subsidiary) which directly or indirectly through one or more intermediaries
controls, is controlled by, or is in common control with the Company. The
Company further agreed that it would not incur additional debt unless that ratio
of the Company's consolidated total debt to the Company's consolidated earnings
before interest, taxes, depreciation, and amortization ("EBITDA") was less than
3 to 1 (the "New Debt Covenant"). Likewise, the Company agreed to restrict its
subsidiaries from incurring any additional debt unless the sum of (i) the total
debt outstanding of all subsidiaries and (ii) debt secured by liens does not
exceed .5 times the Company's EBITDA (the "Subsidiary Debt Covenant"). The
Company also covenanted that it would not create or incur any lien securing its
consolidated total debt unless the sum of (i) the debt secured by such liens and
(ii) the debt incurred by the Company's subsidiaries pursuant to the Subsidiary
Debt Covenant would not exceed .5 times the Company's EBITDA (the "Lien
Covenant"). The Notes contain a provision requiring the Company to pay PacLife a
fee in the event the Notes are satisfied prior to their scheduled maturity.

As of January 14, 2002, the Company obtained a waiver of certain possible
breaches of the Negative Covenants contained in the amended and restated note
purchase agreement dated December 28, 2000, among Rica, Pipasa, As de Oros, and
PacLife (the "Amended Agreement"). The potential breaches did not involve any
payment violation. The Company has made all required payments to PacLife,
including a payment of $4.96 million of principal and interest in January 2002
and a payment of $750,000 of interest in July 2002. In addition, the Company
made the next required principal and interest payment of $4.7 million on January
15, 2003. Thereafter, the principal amount of Notes was reduced to $8 million.

As of September 30, 2002 and December 31, 2002, the Company had regained
compliance with the provisions of all except one of the Note's covenants
regarding transactions with affiliates (the "Affiliate Covenant"). However, on
January 9, 2002, PacLife granted the Company a conditional waiver with respect
to the Company's breach of the Affiliate Covenant. As a condition to the waiver,
the Company has agreed that the aggregate amount of the loans to

                                      F-23

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

affiliates shall not be increased at any time, and, if any of such loans are
repaid, neither the Company nor any of its subsidiaries shall make any
additional affiliate loans.

Pursuant to the terms of the Amended Agreement, the Company is obligated to
furnish PacLife, within 120 days after the end of each fiscal year, audit
financial statements for the preceding fiscal year and an auditor's certificate
indicating that the auditor is not aware of any events of default under the
Amended Agreement (the "Financial Certifications"). The auditing firm must be of
recognized "national" standing.

As a result of the Company's inability to provide PacLife the Financial
Certifications by February 27, 2003, the Company technically defaulted under the
Amended Agreement and PacLife had the right to declare all of the outstanding
Notes immediately due and payable and the entire unpaid principal amount of such
Notes, plus accrued and unpaid interest thereon and a yield maintenance amount.

As of March 31, 2003 the Company was not in compliance with the Lien Covenant,
Financial Certification requirement and the Affiliate Covenant. On July 9, 2003,
PacLife granted the Company a conditional waiver with respect to the Company's
breach of the Affiliate and Lien Debt Covenants as of March 31, 2003. On May 5,
2003, Pacific Life granted the Company with a conditional waiver for the
provision of the Financial Certifications, which is conditioned upon the Company
delivering the Financial Certifications to PacLife no later than July 31, 2003.

Interest rates for long-term debt are as follows:

                                                  2002                   2001
                                                  ----                   ----

       Private Placement                         11.96%                 11.96%
       U.S. dollar loans                     2.47% - 11.00%          4.63% - 11%
       Costa Rican colon loans               24.00% - 24.50%         22.5% - 24%

Future payments on long-term debt as of September 30, 2002 are as follows:

                       Year                              Amount
                       ----                              ------
                       2003                           $  8,190,702
                       2004                              7,029,149
                       2005                              6,495,738
                       2006                              1,423,197
                       2007                                688,516
                    Thereafter                             381,788
                                                      ------------
                                                      $ 24,209,090
                                                      ============

                                      F-24

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

10. EARNINGS PER SHARE

Earnings per share is computed on the basis of the weighted average number of
common shares outstanding plus the effect of outstanding warrants and stock
options using the treasury stock method according to SFAS No. 128, "Earnings per
Share".

The following is a reconciliation of the weighted average number of shares
currently outstanding with the number of shares used in the computations of
fully diluted earnings per share:

<TABLE>
<CAPTION>
                                                        2002             2001             2000
                                                        ----             ----             ----
      <S>                                           <C>              <C>              <C>
      Numerator:
      ----------
           Net income applicable to common
             stockholders                           $ 2,917,291      $ 1,348,784      $ 2,888,947
      Denominator:
      ------------
           Denominator for basic income per share    12,811,469       12,810,021       11,874,190
           Effect of dilutive securities:
               Options to purchase common stock               -                -            4,284
      Denominator for diluted earnings per share     12,811,469       12,810,021       11,878,474
                                                    -----------      ----------       -----------
      Earnings per share:
           Basic                                    $      0.23      $      0.11      $      0.24
                                                    ===========      ===========      ===========
           Diluted                                  $      0.23      $      0.11      $      0.24
                                                    ===========      ===========      ===========
</TABLE>

11. EMPLOYEE BENEFIT PLAN

The Company has a Stock Option Plan (the "Plan"), in which certain directors,
officers, employees and entities that provide services to the Company and its
subsidiaries are participants. In October 1999, the Company granted to
seventy-six (76) officers and employees 7,600 shares of the Company's common
stock, which vested upon issuance. Officers and employees were restricted from
selling the shares granted and exercised for a period of one year. In addition,
7,600 options to purchase shares of common stock of the Company were issued on
the same date to those same officers and employees, at an exercise price of
$6.00 which vested upon issuance and had to be exercised within a period of one
year, after which the officers and employees are restricted from selling such
shares of common stock for one additional year. Market price per share on the
date of the grant and issuance of the stock options was $11.40. As of September
30, 2000, 64 employees exercised their stock options, which totaled to 6,400
shares of common stock. All options under this plan expired on September 30,
2000 and no options were outstanding as of September 30, 2002, 2001 or 2000.

The Company applied Accounting Principles Board (APB) Opinion No. 25 in
accounting for its stock options, and accordingly, compensation costs for the
shares granted and stock options issued were expensed during fiscal year 2000.
Accordingly, compensation costs amounting to $121,598 for the shares granted and
stock options issued were expensed during the year ended September 30, 2000.
There is no material difference between pro forma earnings and earnings per
share based on the fair value of the options required to be disclosed under SFAS
123 and the earnings currently reported by the Company.

A summary of the activity of the Company's stock based compensation plan for
fiscal year 2000 is as follows:

                                      F-25

<PAGE>

                                RICA FOODS, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

<TABLE>
<CAPTION>
                                                      Number of   Weighted Average  Weighted Average
                                                      ---------   ----------------  ----------------
                                                        Shares     Exercise Price      Fair Value
                                                        ------     --------------      ----------
        <S>                                           <C>         <C>               <C>
        Outstanding as of September 30, 1999                   -                -                  -
            Granted                                        7,600           $ 6.00            $ 11.40
            Exercised                                      6,400             6.00              11.60
            Forfeited                                          -                -                  -
            Expired                                        1,200             6.00                  -
                                                      ----------
        Outstanding as of September 30, 2000                   -
                                                      ==========
</TABLE>

Employees of the Company are also provided with a profit sharing program. If
either one of the Company's subsidiaries has a successful year and generates
profits in excess of certain budgeted levels, that entity will distribute a
percentage of its net income to its employees. This incentive is calculated
monthly and distributed every two months. As of September 30, 2002, the Company
had a provision of approximately $73,000 for the profit sharing program, which
was paid to employees during November 2002.

12. STOCKHOLDERS' EQUITY

Common Stock

As of September 30, 2002 and 2001, 20,000,000 shares of common stock with a par
value of $0.001 were authorized.

During November 1997, the Board of Directors authorized the repurchase of up to
66,667 shares of the Company's common stock. The repurchase program authorizes
management, at its discretion, to make purchases from time to time, as
circumstances warrant. As of September 30, 2002, the Company had repurchased
52,852 shares for $283,394. These shares have been included in treasury stock as
of September 30, 2002.

Preferred Stock

On September 30, 2002 and 2001, 1,000,000 shares of preferred stock of the
Company were authorized. No shares of preferred stock of the Company had been
issued as of September 30, 2002. Preferred shares issued by the subsidiaries of
the Company are as follows:

Pipasa

Preferred shares issued consist of Class C preferred shares and TCA preferred
shares, which refer to "Titulos de Capital" in Costa Rica, amounting to 317,831
shares and 637,000 shares, respectively. As of September 30, 2002, there were
317,831 shares of Class C preferred shares outstanding which amount to
$2,216,072. This amount has been included in preferred stock in the accompanying
balance sheets due to reverse merger accounting resulting from the Company's
acquisition of Pipasa in 1996, as discussed in Note 1. These preferred shares
are not redeemable, are not convertible into common stock and the holders have
no voting rights. These preferred shares are comprised of subcategories and
receive dividends based on the following:

     .  Class C-A, C-B and C-D preferred shares, which amount to 186,431 shares,
        receive a 10% annual dividend payable monthly and adjustable by the
        Board of Directors.

                                      F-26

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

   .  Class C-C preferred shares, which amount to 131,400 shares, receive an
      annual dividend equal to the prime rate set by the Banco Central de Costa
      Rica plus two percent, payable monthly, which as of September 30, 2002
      averaged approximately 18.65%.

During fiscal years 2002, 2001 and 2000 dividends of $145,398, $152,346 and
$182,892 respectively, were paid on these preferred shares and are reflected as
preferred stock dividends in the accompanying consolidated statements of income.

During fiscal year 2000, the Board of Directors of Pipasa declared a dividend of
637,000 series TCA shares of preferred stock to common stockholders of record of
Pipasa as of September 30, 1999, valued at $2,143,626.

Based on minority interest ownership of Pipasa (equivalent to 40.44%),
Inversiones La Ribera, S.A. received 257,602 shares, valued at $866,882.
Likewise, the Company received 379,398 shares valued at $1,276,744. The
dividends distributed during fiscal year 2000 correspond to Pipasa's earnings
pertaining to fiscal year 1999.

After the issuance of such preferred stock, Inversiones La Ribera, S.A. and the
Company used such shares to cancel outstanding debts with Pipasa.

As de Oros

As of September 30, 2002 and 2001, 1,200,000 Class C preferred shares of As de
Oros were authorized, of which 158,374 had been issued for a total of
$1,003,287. These preferred shares are not convertible into common stock and the
holders have not voting rights. The holders of these preferred shares receive
dividends based on the following:

   .  Class C Series 1 preferred shares, which amount to 87,600 shares, receive
      a monthly dividend equal to the prime rate set by the Banco Central de
      Costa Rica plus two percent.

   .  Class C Series 2 preferred shares, which amount to 70,774 shares, receive
      a monthly dividend of no less than 10%, adjustable annually by the Board
      of Directors.

These preferred shares are included in minority interest in the accompanying
consolidated balance sheets as of September 30, 2002, and 2001. During fiscal
years 2002, 2001 and 2000 dividends of $75,959, $77,293, and $88,404,
respectively, were paid on these preferred shares and are reflected as part of
the minority interest as a reduction to income in the accompanying consolidated
statements of income.

During fiscal year 2000, the Board of Directors of As de Oros declared a
dividend of 590,000 series TCA shares of preferred stock of As de Oros, valued
at $1,983,327 to common stockholders of record of As de Oros as of September 30,
1999. As de Oros distributed 332,642 shares to the Company and 257,358 shares to
Comercial Angui, S.A. in accordance with As de Oros' common stock ownership as
of September 30, 1999. The dividends distributed correspond to As de Oros'
earnings pertaining to fiscal year 1999.

After the issuance of such preferred stock, the common stockholders used such
shares to cancel outstanding debts with As de Oros.

Immediately after the issuance of such preferred stock, As de Oros repurchased
from the stockholders a portion of the preferred stock issuance for $881,273,
which equals the value of such repurchased stock. The stockholders

                                      F-27

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

used the proceeds of the purchase to repay outstanding debts to As de Oros. As
de Oros cancelled outstanding debts from Inversiones La Ribera, S.A.

As of September 30, 2002, there are no preferred dividends in arrears.

Treasury Stock

As of September 30, 2002 and 2001, the Company held 52,852 and 47,752 shares of
common stock as treasury stock, respectively, amounting to $283,394 and
$268,394, respectively.

Retained Earnings

Current legislation in Costa Rica requires that 5% of annual net income (in
local currency) up to an amount equivalent to 20% of total common stock be
allocated to a legal reserve. As of September 30, 2002 and 2001, the Company has
allocated retained earnings of $2,039,806 and $1,853,159, respectively, for the
creation of a legal reserve.

13. OPERATING LEASES

As of September 30, 2002, the Company had operating leases for vehicles, cooling
equipment and building facilities for its restaurants and retail outlets. These
lease agreements expire between October 2002 and September 2004. At the end of
the lease term, the Company has the option of returning or buying the vehicles
or the equipment at estimated market value.

Rental expense for operating leases amounted to $1,839,386, $2,170,084 and
$1,585,886 for fiscal years 2002, 2001 and 2000, respectively.

The future minimum lease payments under the Company's operating leases are as
follows:

           Fiscal Year
           2003                        $1,337,982
           2004                           440,485
                                       ----------
                                       $1,778,467
                                       ==========
14. INCOME TAXES

Income tax expense (benefit) attributable to income from continuing operations
for the years ended September 30, 2002, 2001 and 2000 consists of:

<TABLE>
<CAPTION>
                                                      2002          2001         2000
                                                      ----          ----         ----
    <S>                                           <C>            <C>           <C>
    Current:
    -------
       Estimated in the United States             $         -    $        -   $  12,000
       Costa Rica                                   1,120,068        26,860     392,021
                                                  -----------    ----------   ---------
       Total current taxes                          1,120,068        26,860     404,021
                                                  -----------    ----------   ---------
    Deferred:
    --------
       United States                                        -             -           -
       Costa Rica                                     (78,472)     (417,693)   (323,798)
                                                  -----------    ----------   ---------
       Total deferred income taxes                    (78,472)     (417,693)    323,798)
                                                  -----------    ----------   ---------
     Total                                        $ 1,041,596    $ (390,833)  $  80,223
                                                  ===========    ==========   =========
</TABLE>

                                      F-28

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Income tax expense differs from the amounts computed by applying the corporate
tax rate in Costa Rica of 30% to pretax income from continuous operations. The
Company presented a loss for its operations in the United States and is not
subject to any income taxes, for which a statutory rate of 35% is required. The
following table summarized the significant differences between the Costa Rican
statutory tax rate and the Company's effective tax rate:

<TABLE>
<CAPTION>
                                                                       2002           2001            2000
                                                                       ----           ----            ----

<S>                                                                <C>            <C>             <C>
    Computed statutory income tax expense                          $1,254,074     $   356,277     $ 1,117,408
                                                                   ----------     -----------     -----------
    Increase  (reduction) in income taxes resulting
        from:
    Non-taxable (income) loss, net                                   (195,016)         16,868        (343,819)
    Increase (decreases) in provisions                               (111,024)       (407,702)        110,080
    Tax benefit  under  Costa Rican  Income Tax Law
        Article 8, Section T for Agricultural
        Companies and Article 8, Section F                            (44,838)        (62,864)        (72,069)
    Deduction for reinvestment of prior year
        earnings in machinery and equipment under
        Costa Rican Income Tax Law Article 8, Section T
        for Agricultural Companies                                          -        (933,057)     (1,215,174)
    Additional depreciation permitted equivalent to
        50% of assets invested in the production process             (174,830)              -               -
    Amortization of excess market value over book
        value of property plant and equipment acquired
        in As de Oros                                                 202,690         280,786          23,573
    Depreciation of revalued assets                                  (177,443)       (209,437)       (246,145)
    Amortization of cost in excess of net assets of
        acquired business                                                   -         221,574         286,148
    Utilization of loss carry forwards                                      -         (56,224)       (411,494)
    Losses from subsidiaries and holding company                      287,983         402,946         244,677
    Sub-Part F income originated by intercompany
        loans                                                               -               -         597,356
    Other items                                                             -               -         (10,318)
                                                                   ----------     -----------     -----------
                                                                   $1,041,596     $  (390,833)    $    80,223
                                                                   ==========     ===========     ===========
</TABLE>

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at September 30, 2002
and 2001 are presented below:

                                      F-29

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

<TABLE>
<CAPTION>
                                                        2002            2001
                                                        ----            ----
<S>                                                  <C>            <C>

Deferred tax assets:

   Allowance for doubtful accounts                   $   245,330    $   178,435
   Restatement of property, plant and equipment
     depreciable for tax purposes in Costa Rica        2,543,121      3,394,155
   Net operating losses in the United States             378,150        228,622
   Vacation accrual                                      172,022        234,419
                                                     -----------    -----------
   Total gross deferred tax assets                     3,338,623      4,035,631
Less valuation allowance                              (2,921,271)    (3,622,777)
                                                     -----------    -----------
                                                     $   417,352    $   412,854
                                                     ===========    ===========
Deferred tax liabilities:

   Labor costs capitalized in internally developed
     software, expensed for income tax purposes           45,776         83,416
   Book and tax basis differences of Property,
     plant and equipment, resulting from the As
     de Oros acquisition                               2,078,674      2,078,674
                                                     -----------    -----------
Total                                                $ 2,124,450    $ 2,162,090
                                                     ===========    ===========
</TABLE>

Until July 2001, Costa Rican tax laws permitted companies to restate their
depreciable assets by increasing their book value by 5% annually, which resulted
in additional deductible expense when the restated portion was depreciated.
Changes in the income tax law, applicable for fiscal years ending after
September 30, 2001 provide among other things, the following changes in the
Costa Rican income tax law:

     .    Elimination of restatement of property, plant and equipment, thereby
          significantly reducing the related tax depreciation. In December 2001,
          the government of Costa Rica issued a decree amending this change
          stating that this depreciation expense could be deducted if it
          pertained to restatements of property, plant and equipment carried out
          before August 2001.

     .    Eliminated the one-time deduction equivalent to 50% of the prior
          year's investment in property, plant and equipment to be used in
          agricultural and industrial activities.

For September 30, 2002 and 2001 the Company established a full valuation
allowance for the deferred tax asset derived from the tax depreciation resulting
from the restatement of property, plant and equipment. A deferred tax asset has
been recorded since the Company believes that it is more likely than not that
this depreciation will continue to be deductible in the future, and it has also
recorded a full valuation allowance against the deferred tax asset. This
allowance could be adjusted in the future, based on changing conditions. In
addition, as of September 30, 2002 and 2001, the Company has approximately
$378,150 and $228,622, respectively, of net operating loss carry forwards for
U.S. Federal income tax purpose, which expire in 2022 and 2001. The Company has
established a valuation allowance for these operating loss carry forwards.
Management believes, based on projected future

                                      F-30

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

results of operations, that it is more likely than not that the tax benefit of
these loss carry forwards will not be realized. This allowance could be adjusted
in the future based on changing conditions.

Taxes in the United States have not been provided on undistributed earnings of
foreign subsidiaries, as such earnings are being retained indefinitely by such
subsidiaries for reinvestment. The amount of unremitted earnings of foreign
subsidiaries totaled approximately $5.2 million as of September 30, 2002. It is
not practicable to calculate the unrecognized deferred tax liability on those
earnings.

For fiscal years 2001 As de Oros applied loss carryforwards in the amount of
approximately $240,000 as a credit to the income tax determined in Costa Rica.
As of September 30, 2001, the Company had utilized all net operating loss
carryforwards in Costa Rica.

In accordance with income tax regulations in Costa Rica, the subsidiaries are
required to file annual income tax returns for the twelve-month period ended
September 30 of each year. According to Costa Rican's tax law, the income tax
returns of Pipasa and As de Oros for the years ended September 30, 2002, 2001,
2000 and 1999 are open to examination by the tax authorities in Costa Rica.

15. SEGMENT AND GEOGRAPHIC INFORMATION

The Company's operation is involved in the production and marketing of poultry
products, animal feed and quick service chicken restaurants. The Company's
subsidiaries distribute these products throughout Costa Rica and export mostly
within Central America and the Caribbean. The basis for determining the
Company's operating segments is the manner in which financial information is
used by management in its operations. Management operates and organizes the
financial information according to the types of products offered to its
customers. The following is a brief description of the main business segments of
the Company:

Broiler Chicken: Poultry is a popular food item in Costa Rica because of its
easy preparation, nutritional value and low price when compared to other
available meats, according to information provided by the Junta de Fomento
Avicola, a Costa Rican governmental institution. Poultry is a generic product,
consumed at all social levels and is not defined by geographic markets. The
Company's main brand names for broiler chicken, chicken parts, mixed cuts and
chicken breasts are Pipasa(TM) and As de Oros(TM). Polls and consumer
information gathered by the Company indicate that Costa Ricans eat chicken at
least once a week. Chicken is sold to institutional customers, schools,
hospitals, hotels, supermarkets, restaurants and small grocery stores.

Animal Feed: Animal feed is made with imported raw materials, such as corn and
soybean meal, along with the unused portions of chicken and other vitamins and
minerals. Animal feed is marketed for consumption by cows, pigs, birds, horses,
shrimp and domestic pets. The Company's animal feed products are sold through
the Ascan(TM), Aguilar y Solis(TM), Dogpro(TM), Mimados(TM) Kan Kan(TM), and
Nutribel(TM) brand names. Customers for the commercial animal feed brands are
mainly large wholesalers and high scale breeders. This customer group focuses on
quality and price. Products marketed through the Mimados(TM), Dogpro(TM) Kan
Kan(TM), and Ascan(TM) brand names are targeted towards veterinarians, pet
stores and supermarkets and are sold typically to consumers with medium to
higher income levels. The Company is currently the leader in the animal feed
market in Costa Rica, with an approximate 28% market share.

By-products: By-products include sausages, bologna, chicken nuggets, chicken
patties, frankfurters, salami and pate. The Zaragoza (TM) brand name includes
chicken, beef and pork by-products. The Company's chicken by-products are sold
through the Kimby(TM), Tiquicia(TM), Chulitas(TM), Zaragoza(TM), Pimpollo (TM)
and As de Oros(TM) brand names and are sold to all social and economic levels.
These products are sold mainly in supermarkets, and sales are predominantly
driven by price. The Kimby(TM) brand name is the leading seller of chicken
by-products in Costa Rica.

                                      F-31

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Exports: Subsidiaries of the Company export different products to all countries
in Central America and the Caribbean and make occasional exports to Hong Kong
and Colombia. The Company exports the majority of its products, including
broiler chicken, by-products, animal feed and pet foods.

Quick Service: Corporacion Planeta Dorado, S.A. and its subsidiary operate 28
restaurants ( the "Restaurants") located in rural and urban areas throughout
Costa Rica, including express delivery service in some restaurants. This segment
is comprised of quick service restaurants, which offer a diversified menu of
chicken meals. The Restaurants distinguish themselves from other quick service
chains by offering dishes and using recipes and ingredients that appeal to the
taste of consumers in Costa Rica. The quick service restaurant business is
highly competitive in Costa Rica, as several other quick service chains operate
in Costa Rica.

Other: This segment includes sales of commercial eggs, non-recurring sales of
fertile eggs, fertilizers and raw material, among others.

Business Segments (In millions):

<TABLE>
<CAPTION>

                                              Animal                   Quick
                                              ------                   -----
                                    Broiler    Feed    By -Products   Service    Exports   Other   Corporate   Consolidated
                                    -------    ----    ------------   -------    -------   -----   ---------   ------------
<S>                                  <C>       <C>         <C>          <C>       <C>       <C>      <C>         <C>
2002
----
Net sales                           $ 67.87    26.00       14.78         5.58      7.94      8.50          -     $ 130.67
Gross profit less selling
expenses                              16.89     3.40        2.68         0.06      0.80      0.13          -        23.96
General and Administrative
  expenses                                -        -           -            -         -         -      14.05        14.05
Income from operations                    -        -           -            -         -         -       9.91         9.91
Depreciation and amortization
  expense                              2.41     0.43        0.27         0.39      0.03      0.01       1.54         5.08
Goodwill                               0.91     0.37        0.00         0.39      0.00      0.00       0.05         1.72
Total assets                          37.84     9.50        5.48         3.79      1.15      3.29      29.80        90.85
2001
----
Net sales                           $ 70.20  $ 24.62     $ 13.74       $ 6.47    $ 6.18    $ 6.13          -     $ 127.34
Gross profit less selling
expenses                              14.74     2.82        2.02         0.36      0.45      0.64          -        21.03
General and Administrative
  expenses and goodwill
  amortization                            -        -           -            -         -         -      15.34        15.34
Income from operations                    -        -           -            -         -         -       5.69         5.69
Depreciation and amortization
  expense                              1.86     0.60        0.08         0.37      0.03      0.02       1.35         4.31
Total assets                          36.46    13.79        4.66         4.92      1.44      1.31      28.27        90.85
2000
----
Net sales                           $ 73.48  $ 22.42     $ 11.69       $ 8.03    $ 4.56    $ 3.45          -     $ 123.63
Gross profit less selling             15.03     2.45        2.70         0.33      0.02      0.39          -        20.92
  expenses
General and Administrative
  expenses and goodwill
  amortization                            -        -           -            -         -         -      14.53        14.53
Income from operations                    -        -           -            -         -         -       6.39         6.39
Depreciation and amortization
  expense                              2.57     0.63        0.08         0.22         -         -       0.54         4.04
Total assets                          34.85    10.62        4.41         6.66      1.31      0.61      29.72        88.18
</TABLE>

                                      F-32

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Geographic Information

The following represents net sales and long-lived assets by geographic location:

                                         2002         2001         2000
                                         ----         ----         ----
      Net sales:
        Costa Rica                      $122.73     $ 121.16     $119.07
        Other                              7.94         6.18        4.56
                                        -------     --------     -------
           Total                        $130.67     $ 127.34     $123.63
                                        -------     --------     -------
      Long-lived assets:
        Costa Rica                      $ 38.48     $  45.74     $ 44.30
        Other                              1.15         0.09        1.13
                                        -------     --------     -------
           Total                        $ 39.63     $  45.83     $ 45.43
                                        -------     --------     -------

16. OTHER INCOME

Miscellaneous, net consists of the following:

                                                  2002        2001       2000
                                                  ----        ----       ----

      Dividends from INOLASA                    $392,000  $  395,000  $  550,000
      Gains on sale of assets                    227,557     579,298     509,272
      Services charged and materials and
         supplies sold to contracted farmers      42,161      92,862      33,083
      Income tax refund                                -     168,663           -
      Other                                       68,892      33,408     247,684
                                                --------  ----------  ----------
                                                $730,610  $1,269,231  $1,340,039
                                                ========  ==========  ==========

During fiscal 2001, the Company made an over-payment of income taxes, and was
subsequently refunded.

17. ACQUISITIONS AND DISPOSALS OF ASSETS

The Company is continuing to explore the acquisition of majority of the
outstanding common stock of Industrias Avicolas Integradas, S.A. ("Indavinsa"),
and Avicola Core Etuba Ltda. ("Core"), both engaged in the production and
distribution of poultry. The Company would acquire the majority of the
outstanding stock of Core from the Company's Chief Executive Officer The Company
is evaluating closely the performance of these companies to determine if, when
and how the Company should integrate its business with the acquisition target.
These potential investments have been postponed indefinitely.

On February 20, 2003, Port Ventures, S.A. ("Port Ventures") and Corporacion As
de Oros, S.A. ("As de Oros"), a wholly owned subsidiary of the Company, entered
into a Stock Purchase Agreement (the "Agreement"), pursuant to which As de Oros
agreed to acquire from Port Ventures, 2,040 shares of common stock of Logistica
de Granos, S.A. ("Logistica"), representing 51% of the issued and outstanding
shares of capital stock of Logistica (the "Shares"), for a purchase price of
US$2,580,000 (the "Purchase Price"). Logistica is the owner of 19% of the issued
and outstanding capital stock of Sociedad Portuaria de Caldera, S.A. ("SPC") and

                                      F-33

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Sociedad Portuaria Port Granelera de Caldera, S.A. ("SPGC") (collectively, the
"Port Companies"). The Companies are seeking to acquire concessions (the
"Concession") being granted by the Government of Costa Rica to refurbish and
operate Puerto Caldera, a major seaport located on the Pacific coast of Costa
Rica and is Considered by the Company as Strategic to its raw material purchase.

Port Ventures has been the sole shareholder of Logistica and Port Ventures is
directly owned and controlled by Jose Pablo Chaves Zamora ("Mr. Chaves"). Mr.
Chaves is the indirect holder of approximately 2.17% of the outstanding shares
of the Company. Mr. Chaves is also the son of the Company's Chief Executive
Officer, Mr. Calixto Chaves. Mr. JP Chaves does not hold any positions or titles
with the Company or any of its subsidiaries.

The closing of the purchase and sale of the Shares is subject to: (i) the final
grant by the Government of Costa Rica of the Concessions and (ii) the execution
of definitive agreements between the Government of Costa Rica and each of the
Port Companies regarding the construction and operation of Puerto Caldera.

The Agreement provides that Port Ventures may require that As de Oros remit the
Purchase Price for the Shares in installments, prior to the fulfillment of the
conditions to closing set forth above. Upon such payment, As de Oros will
receive and a "bill of exchange" for the amount of such Purchase Price and a
pro rata amount of shares will be issued and held by a Trust representing all
participants in the Consortiums in escrow until the closing. In the event that
the transactions contemplated under the Agreement are not closed, Port Ventures
must return to As de Oros the pro rata portion of the Purchase Price paid, plus
interest, and As de Oros, must return the bills of exchange. If Port Ventures
does not return the portion of the Purchase Price paid, As de Oros may, in its
discretion, seek to enforce the bill of exchange.

The Company expects to close this transaction before calendar year 2003, when
the definitive approval of the Government of Costa Rica is expected to be
obtained.

As of July 8, 2003, As de Oros has remitted approximately 55% of the Purchase
Price to Port Ventures (the "Remitted Payment") in exchange for bills of
exchange. The bills of exchange are not secured by tangible assets or readily
marketable collateral. In the event the Concessions are not ratified to the Port
Companies, the Company anticipates that As de Oros will have limited ability to
recoup its investment in Port Ventures. Port Ventures has agreed for As de Oros
not need to make any further payments until the Concessions are finally
ratified.

As with any business acquisition, there can be no assurance that the Company
will close these acquisitions and there can be no assurance that these
acquisitions efforts will prove to be beneficial to the Company. Even if the
Company's board of directors, audit committee and management team believe the
Company should pursue a development or acquisition opportunity and successfully
negotiate the contracts critical to such venture, the Company anticipates that
it may be required to seek the consent of PacLife and potentially certain other
third parties before initiating development efforts or concluding an
acquisition. The Company will continue to evaluate financial performance in
order to obtain the necessary information to make a decision.

                                      F-34

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

18. QUARTERLY FINANCIAL DATA

Unaudited summarized financial data by quarter for fiscal 2002 and 2001 is as
follows:

<TABLE>
<CAPTION>
                                             First          Second            Third           Fourth
                                            Quarter         Quarter          Quarter          Quarter           Total
                                            -------         -------          -------          -------           -----
<S>                                     <C>              <C>              <C>               <C>            <C>
2002
----

Net Sales                                $34,782,652      $30,598,961      $31,925,390      $33,358,436     $130,665,439
Gross profit                              12,424,878       10,524,159       10,379,595        9,849,742       43,178,374
Net income                                 1,813,277          436,270          349,236          318,508        2,917,291
Basic earnings per share                   $    0.14      $      0.03      $      0.03      $      0.02     $       0.23
                                           =========      ===========      ===========      ===========     ============
Diluted earnings per share                 $    0.14      $      0.03      $      0.03      $      0.02     $       0.23
                                           =========      ===========      ===========      ===========     ============
2001
----
Net Sales                                $33,278,588      $31,342,800      $31,003,403      $31,711,575     $127,336,366
Gross profit                              11,967,922        9,719,890        8,499,093       10,308,510       40,495,415
Net income (loss)                          1,427,197         (395,693)        (633,103)         950,383        1,348,784
Basic earnings (losses) per share        $      0.11      $     (0.03)     $     (0.05)     $      0.07     $       0.11
                                         ===========      ===========      ===========      ===========     ============
Diluted earnings (losses) per share      $      0.11      $     (0.03)     $     (0.05)     $      0.07     $       0.11
                                         ===========      -==========      ===========      ===========     ============
</TABLE>

19. CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of cash equivalents, short-term investments and
trade receivables. The Company places its cash equivalents and short-term
investments with high credit quality financial institutions.

The majority of the Company's customers are located in Costa Rica. No single
customer accounted for more than ten percent of the Company's net sales or
account receivable in fiscal 2002, 2001 and 2000. Credit risk is mitigated due
to the fact that the Company's customer base is diverse and is located
throughout Costa Rica. The Company estimates an allowance for doubtful accounts
based on the credit worthiness of its customers, and general economic
conditions. Consequently, an adverse change in these factors could affect the
Company's estimate of the bad debt allowance.

20. COMMITMENTS AND CONTINGENCIES

Insurance

The Company does not have damage insurance or a specific self-insurance fund for
vehicles that are not under lease agreements. For vehicles under lease
agreement, the Company has an insurance trust fund in the amount of $293,583.
The Company has various other insurance coverage policies for some of its
facilities, productive assets and inventory that insure the Company for an
approximate amount of $32.5 million as of September 30, 2002.

                                      F-35

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

Severance Pay

At the present time, labor laws in Costa Rica require all companies in Costa
Rica to make a severance payment under certain conditions. Until February 2001,
severance pay was equivalent to one month of salary for each year of work;
commencing on March 2001, it is equivalent to an average of 20 days for each
year of work, which is equivalent to approximately 5.6% of each employee's
yearly gross salary. This indemnification is effective after death, retirement
by pension, or separation of the employee. In addition, the Company has to
deposit an additional 3% of each employee's yearly gross salary into a pension
fund.

The Company deposits every month in ASERICA 5.33% of each employee's yearly
gross salary as part of severance pay, and the employees are required to make a
monthly deposit equivalent to 4% of their monthly salary as part of a savings
program. Every February of each year, ASERICA pays each employee 1.33% of the
5.33% initially deposited. Amounts paid or transferred to ASERICA may not cover
completely the severance payment at the time the employee leaves, since
severance payment calculation is based on the average of the last 6 months'
salary. Any remaining amount owed by the Company must be settled when the
employee is terminated. As of September 30, 2002, the Company provisioned
severance pay in the amount of approximately $138,000 included in accrued
expenses and believes it is reasonable based on past experience.

Construction Commitments

In the normal course of business, the Company enters into commitments for
construction or renovations of its buildings, plant facilities and leased
outlets. As of September 30, 2002, the Company did not have any outstanding
amounts under these construction commitments.

Litigation, Claims and Assessments

Pipasa is a defendant in a lawsuit brought in Costa Rica, pursuant to which the
plaintiff in such action is seeking damages in an amount equal to $3.6 million.
Pipasa was served with prejudgment liens for $1.5 million and, with the approval
of the Juzgado Sexto Civil, the court with jurisdiction over the lawsuit,
certain parcels of real estate owned by Pipasa have been substituted for such
liens. This approval was ratified by the Superior Court on November 11, 1999,
and all funds initially attached have been released and returned to Pipasa.
Costa Rica law requires the posting of guarantees by a plaintiff seeking
prejudgment liens. A ruling on these objections is pending. Pipasa has filed
several pleadings in opposition to the underlying lawsuit; a ruling on these
pleadings also remains pending.

In connection with this pending lawsuit, the plaintiff also brought suit against
Pipasa in the State of California and the State of Florida. The California
lawsuit has been dismissed without prejudice.

In Response to plaintiff's amended complaint filed in Miami-Dade County Circuit
Court on May 7, 1999, Pipasa, on July 19, 1999, filed a motion to dismiss for
lack of personal jurisdiction. The motion was denied on March 31, 2003. Pipasa
has appealed the denial to Florida's Third District Court of Appeal. No decision
is expected for at least until August 2003. Pipasa has also moved in the Circuit
Court for a stay of the Circuit Court case pending appeal. The Circuit Court has
taken the stay request under advisement. If the court grants a stay, it may also
require Pipasa to post a bond, the amount of which would have to be determined.

                                      F-36

<PAGE>

                                RICA FOODS, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

A separate lawsuit against Pipasa, filed by the same plaintiff in the North
District of California and styled Polaris Holding Company v. Corporacion Pipasa,
S.A., No. C 99-2160 CRB (N.D. Calif.), has been dismissed, without prejudice for
plaintiff to refile the action after resolution of the Florida action as well as
a similar action, brought by the same plaintiff against Pipasa, that is pending
in Costa Rica.

The Company cannot ascertain the basis of the claim or the relief sought, but
believes the lawsuits are without merit and intends to assert an appropriate
defense. At the present time, neither the Company nor Pipasa can evaluate the
potential impact of this lawsuit on the financial results of the Company, nor
can the Company assess the likelihood of an unfavorable outcome.

On or about January 8, 2002 Richard W. Baldwin, individually and on behalf of
all others similarly situated, filed a putative class action lawsuit against the
Company., Calixto Chaves, Jose Pablo Chaves, Randall Piedra and Monica Chaves
(collectively the "Defendants"). Specifically, the plaintiffs alleged violations
of Section 10(b) and Section 20(A) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder. The plaintiffs in the Class Actions sought
class certification, compensatory damages, pre-judgment and post-judgment
interest, attorneys' fees and costs and such other relief as the Court might
deem appropriate.

On July 24, 2002, the Court granted the Company's Motion to Dismiss, without
prejudice. On August 7, 2002, Baldwin filed an Amended Complaint against the
Company and the Individual Defendants identified above. On August 12, 2002, Rica
Foods filed a Motion to Dismiss the Amended Complaint. On November 14, 2002, the
Court dismissed with prejudice the class action lawsuit.

On January 13, 2003 the Company filed a Form 10-K that appeared to include an
audit report of Deloitte & Touche. The Company recognizes that it was
potentially a violation of provisions of the Securities Exchange Act of 1934
(the "Exchange Act") for the Company to file the Form 10-K before it received a
signed audit report from Deloitte & Touche (the "Mistake"). Until very shortly
after the filing of the Form 10-K, the Company's Chief Financial Officer (the
"CFO") believed the Company was in the process of receiving the signed audit
report. Shortly after the Company learned that a signed audit report had not in
fact been received prior to filing the Form 10-K, the Company commenced the
process of collecting information regarding how the Mistake occurred and
initiated an internal investigation.

On January 24, 2003, the Staff (the "Staff") of the Securities and Exchange
Commission (the "Commission") notified the Company that it was conducting an
informal inquiry of the Company. In response to such notification, the Company
began providing the Staff information regarding the Mistake.

On February 4, 2003, the Staff advised the Company that on February 7, 2003 the
Staff intended to recommend that the Commission bring a civil injunctive action
against the Company, alleging that the Company violated Sections 13(a),
13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-1
promulgated thereunder. The Staff further advised the Company that the Staff
intended to recommend that the Commission bring a civil injunctive action
against the Company's Chief Executive Officer (the "CEO") and CFO, alleging they
violated Section 13(b)(5) of the Exchange Act and Rules 13a-14, 13b2-1 and
13b2-2 promulgated thereunder, and that they aided and abetted the Company's
alleged violations.

                                      F-37

<PAGE>

The Company believes that the Mistake may constitute a violation of Section
13(a) of the Exchange Act and Rules 13a-1 and 12b-20 promulgated there under.
However, the Company does not believe that it has violated Sections 13(b)(2)(A)
or 13(b)(2)(B) of the Exchange Act and has so advised the Staff. The Company
believes it has been cooperating fully with the Staff and hopes to settle the
dispute. The Company and the Staff have been in detailed settlement
conversations with the Staff since February 10, 2003. Nonetheless as the day of
this report, neither the Company, the CEO nor the CFO have definitely settled
this matter with the Staff.

Except for the legal proceedings disclosed above, no legal proceedings of a
material nature against to which the Company or subsidiaries are a party, exist
or were pending as of the date of this report. Except for the legal proceedings
disclosed above, the Company knows of no other legal proceedings of a material
nature pending or threatened or judgments entered against any director or
officer of the Company in his capacity as such.

The Company is involved in various other claims and legal actions arising in the
ordinary course of business. In the opinion of the Company's management, the
ultimate disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity.

                                      F-38

<PAGE>

                  SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED SEPTEMBER 30, 2002, 2001 AND 2000

<TABLE>
<CAPTION>
                                 Beginning     Additions                     Non-cash                     Ending
                                  Balance      Charged to       Cash        Reductions                    Balance
Description                       Accrual        Income      Reductions     (Additions)     Reversal      Accrual
-----------                       -------        ------      ----------     -----------     --------      -------
<S>                              <C>           <C>           <C>            <C>             <C>           <C>
Provision for doubtful
   receivables

2002                              $   656,543       449,598          -            559,470           -      $   546,671
2001                                  797,611       122,150          -            263,218           -          656,543
2000                                  675,334       352,058          -            229,781           -          797,611

Provision for inventory
   obsolescence

2002                              $    86,819       139,340          -            226,159           -      $         -
2001                                   74,682        17,428          -              5,291           -           86,819
2000                                   52,620        33,004          -             10,942           -           74,682

Deferred tax valuation
   allowance

2002                              $ 3,622,772       149,528          -            851,029           -      $ 2,921,271
2001                                3,461,326       774,943    450,661            162,836           -        3,622,772
2000                                3,429,790       294,078     81,452            181,090           -        3,461,326
</TABLE>

                                      F-39

<PAGE>

                                  Exhibit Index

<TABLE>
<CAPTION>
 Exhibit No.  Exhibit Description
<S>           <C>
    3.1       Amended and Restated Articles of Incorporation of the Company(*)
    3.2       Amended and Restated Bylaws of the Company(1)
    4.1       Amended and Restated Note Purchase Agreement, dated December 28,
                2000, by and among the Company, Corporacion Pipasa, S.A,
                Corporacion As de Oros, and Pacific Life Insurance Company(*)
    10.1      Promissory Note, dated March 1, 2002, from Inversiones La Ribera
                to Corporacion Pipasa, S.A(*)
    10.2      Promissory Note, dated March 1, 2002, from Inversiones La Ribera
                to Corporacion Pipasa, S.A(*)
    10.3      Promissory Note, dated January 31, 2001, from Inversiones La
                Ribera to Corporacion Pipasa, S.A(*)
    10.4      Promissory Note, dated May 14, 2002, from Inversiones La Ribera to
                Corporacion Planeta Dorado(*)
    10.5      Promissory Note, dated October 30, 2001, from Inversiones La
                Ribera to Corporacion Pipasa, S.A(*)
    10.6      Promissory Note, dated October 30, 2001, from Inversiones La
                Ribera to Corporacion Pipasa, S.A(*)
    10.7      Promissory Note, dated January 31, 2001, from Inversiones La
                Ribera to Corporacion Pipasa, S.A(*)
    10.8      Promissory Note, dated October 30, 2001, from Inversiones La
                Ribera to Corporacion Pipasa, S.A(*)
    10.9      Promissory Note, dated May 29, 2001, from Inversiones La Ribera to
                As de Oros(*)
    10.10     Promissory Note, dated May 29, 2001, from Inversiones La Ribera to
                As de Oros(*)
    10.11     Promissory Note, dated April 1, 2001, from O.C.C. to Corporacion
                Pipasa, S.A(*)
    10.12     Promissory Note, dated April 1, 2001, from Atisbos De Belen to
                Corporacion Pipasa, S.A(*)
    10.13     Promissory Note, dated April 1, 2001, from Atisbos De Belen to
                Corporacion Pipasa, S.A(*)
    10.14     Promissory Note, dated January 31, 2001, from Avicola Core Etuba,
              R.L. to Corporation Pipasa, S.A.*
    21        Subsidiaries of registrant(*)
    99.1      Certification of the Chief Executive Officer pursuant to Section
                906 of the Sarbanes-Oxley Act of 2002(*)
    99.2      Certification of the Chief Financial Officer pursuant to Section
                906 of the Sarbanes-Oxley Act of 2002(*)
</TABLE>

_____________________

(1)  Incorporated by Reference to the Company's 10-KSB40, as filed with the
     Commission on October 13, 1995
(*)  Filed herewith.