<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

[ ] 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: 33-62038NY

                         SARATOGA BEVERAGE GROUP, INC.
                 (Name of small business issuer in its charter)

               DELAWARE                                14-1749554
(State of incorporation or organization)   (I.R.S. Employer Identification No.)

                1 GEYSER ROAD, SARATOGA SPRINGS, NEW YORK 12866
        (Address of executive offices or other jurisdiction) (zip code)

                   Issuer's telephone number : (518) 584-6363

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

                                                    Name of each exchange
     Title of each class                             on which registered
     -------------------                            ---------------------
             None                                            None

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

                 CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes [X]     No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [ ]

Issuer's revenues for the fiscal year ended December 31, 1998 were $8,881,242.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the issuer, based on the closing sale price of the common
stock on March 8,1999 as reported on the NASDAQ SmallCap Market System, was
approximately $7,542,756. Shares of the common stock held by each officer and
director and by each person who owns 5% or more of the outstanding common stock
may be deemed to be affiliates for this purpose. This determination of
affiliate status is not necessarily a conclusive determination of the
affiliates of the issuer for other purposes.

As of March 8, 1999, the issuer had outstanding 4,740,125 shares of Class A
common stock, $.01 par value per share, and 522,955 shares of Class B common
stock, $.01 par value per share.


<PAGE>

DOCUMENTS INCORPORATED BY REFERENCE
None.

     Transitional Small Business Disclosure Format   Yes [  ]   No [X]
===============================================================================

PART I
ITEM 1.  BUSINESS

GENERAL

The Company is primarily engaged in the bottling, marketing and distribution of
spring and mineral water products and in packaging products for others
("co-packing"). The Company's product line currently includes: sparkling spring
water, sparkling essence-flavored spring water products, non-carbonated spring
water and non-carbonated spring water with flavors. All of the Company's
products are marketed as premium domestic bottled water primarily under the
proprietary brand name "Saratoga." The Saratoga brand name has been in
existence for over 125 years.

The Company's springs and bottling facilities have been operated through the
years by a number of owners, including Anheuser-Busch and, most recently, Evian
Waters of France, a division of BSN, S.A. Anheuser-Busch and Evian Waters of
France each operated the business for approximately two years. The Company was
organized and acquired the assets of its business in April 1992 from the owners
of Evian Waters of France. The Company's bottling facilities, which had been
closed since May 1991 by the previous owners, recommenced operations in May
1992. Since that time, the Company has undertaken the task of rebuilding a
distribution network and customer base for the Saratoga brand beverage
products.

Since the end of the 1980s, the bottled water industry has experienced rapid
growth. The industry is divided into two distinct segments: non-carbonated
water and sparkling (carbonated) water. The Company believes that
non-carbonated water is becoming an alternative for municipal tap water and
that it is perceived by consumers as a healthy and refreshing beverage
alternative to soft drinks, coffee, juices and juice products. The Company also
believes that sparkling water is perceived as a healthy and refreshing beverage
alternative to beer, liquor and wine. The Company anticipates that sales in the
bottled water industry will continue to grow as consumer trends involving
increased health and fitness consciousness continue to develop and grow. The
Company believes that it is well-positioned to take advantage of the
anticipated future growth of the bottled water industry.

On January 29, 1999, the Company consummated the acquisition of The Fresh Juice
Company, Inc. ("Fresh Juice"). Fresh Juice manufactures, markets and
distributes fresh squeezed and frozen fresh squeezed citrus juices, fresh fruit
smoothies (blends of juices and purees) and other non-carbonated beverages
marketed under the labels "Fresh Pik't," "the Fresh Juice Company," "Hansen's," 
"Ultimate" and "Just Pik't." Fresh Juice will be operated as a wholly owned
subsidiary of the Registrant.

Pursuant to the terms of the merger, each holder of a share of Fresh Juice
common stock received $2.244 per share in cash and 0.33 shares of Class A
common stock of the Company. In the aggregate, the stockholders of Fresh Juice
received approximately $14.3 million in cash and approximately 2.14 million
shares of Class A common stock of the Company.

Pursuant to the terms of the merger, Steven Bogen, Chief Executive Officer of
Fresh Juice, was added to the Board of Directors of the Company. Mr. Bogen also
became a consultant to the Company following the Merger. Jeffrey Heavirland, in
addition to his responsibilities of Chief Executive Officer of The Fresh Juice
of California, Inc. d/b/a Hansen's Juice Company, a subsidiary of Fresh Juice,
became an officer of the Company.

In connection with the merger, the Company consummated a financing with
NationsBank, N.A., which included an $8 million term loan and a $14 million
revolving credit facility. The financing constituted the source of the funds
for the acquisition.


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<PAGE>

In addition, concurrently with the merger, R. J. Barry Cox was added to the
Board of Directors of the Company, and John Morabito resigned from the Board of
Directors to become the Company's Executive Vice President, Sales and
Marketing.

PRODUCTS

The main product lines sold under the Saratoga label include various types of
bottled water: sparkling spring water, sparkling lemon essence-flavored spring
water, sparkling lime essence-flavored spring water, sparkling berry
essence-flavored spring water and natural non-carbonated spring water. The
company also markets a line of flavored spring water beverages under the name
Saratoga Splash.

The Company's bottled water is sold in a variety of bottle sizes. The sparkling
spring water products are packaged in three different sizes: 7.7 ounce, 12
ounce and 28 ounce glass cobalt bottles. The non-carbonated water is packaged
in .5 liter, 1 liter, 1.5 liter and 24 ounce PET recyclable bottles and 12
ounce and 28 ounce glass bottles.

On June 30, 1997 the Company entered into an agreement with Mistic Brands, Inc.
("Mistic") that granted the Company the non-exclusive right to use the
formulations and the exclusive right to use the graphic designs utilized by
Mistic in connection with beverages sold under the Saratoga Splash trademark
pursuant to the original agreement. The Company pays Mistic a royalty for cases
sold under the Saratoga Splash trademark. Saratoga Splash is a non-carbonated
fruit flavored spring water product. It currently is available in six flavors:
Lemon Frost, Orange Twist, Strawberry Mist, Blueberry Burst, Grapes Galore, and
Raspberry Rush.

In June 1997, the Company entered into a three-year master distribution
agreement whereby the Company was granted the exclusive right and license to
act as the master distributor of certain products in the United States until
June 2000. The Company receives a minimum commission of $1.00 per case for each
case of products sold. The Company is responsible for collecting the
receivables from customers and remitting payments to vendors. At December 31,
1998 $155,494 was included in accounts receivable and $115,423 in accounts
payable and accrued liabilities, related to this agreement.

MARKETING AND SALES

The Company markets its products as "premium" domestic bottled water products.
The Company believes that the proprietary Saratoga brand name, which has been
in existence for over 125 years and upscale packaging connotes a premium image.
The Company's current marketing slogan is "Everything Else Is Just Water (C)."

The Company has primarily concentrated its marketing and sales activities on
the east coast of the United States, particularly in the northeastern states,
where Saratoga is a recognizable brand name. However, the Company has sold its
product to customers across the continental United States. The Company's
products are marketed and sold to both on-premise accounts, such as restaurants
and hotels, and to off-premise accounts, such as food service accounts,
convenience stores and "mom and pop" stores, as well as distributors.

The marketing and sales activities have generally involved product promotions
and sponsorships. In addition, the Company utilizes point-of-sale advertising,
in-store displays, and trade incentive programs. The Company has also
maintained a limited public relations campaign with a focus on the tradition of
Saratoga Spring water.

As is typical in the retail food and beverage industry, from time to time the
Company has provided incentives to certain grocery stores and supermarket
chains to support the merchandising of its products. Such incentives have
generally been provided in the form of free or discounted product, on a
temporary basis. In very competitive situations however, the Company has
purchased shelf space in certain supermarkets where the exposure and sales
potential justifies the cost.



                                       3
<PAGE>

DISTRIBUTION

Since the Company commenced operations in 1992, it has been primarily focused
on securing distribution for its products. The Company's distribution network
includes primarily soft drink distributors, beer distributors and liquor
distributors. The majority of Company sales have been to distributors located
on the east coast and Puerto Rico.

COMPETITION

The bottled water industry is highly competitive, as there are over 700 brands
sold in the United States. The industry is dominated by two entities, Great
Water of France (Perrier) and Danone Group (Evian). On a regional basis, the
Company's products compete with a number of regional brands, including Poland
Springs and San Pellegrino (which are owned by The Perrier Group) in the
northeastern part of the United States and Zephyrhills (which is also owned by
The Perrier Group) in the southeastern part of the United States. The Company's
products also compete with other beverage products, including, but not limited
to, beer, liquor, wine, soft drinks, coffee, juices and juice products and "new
age" beverages.

The Company's competition includes numerous beverage bottlers and distributors,
many of which are more experienced, have greater financial and management
resources and have more established proprietary trademarks and distribution
networks than the Company. The Company believes that it is able to compete
effectively with other bottled water and beverage products because it offers a
diverse product line of quality bottled water at competitive prices.
Additionally, the Company believes that the relative proximity of its Saratoga
Springs, New York facility to several large metropolitan markets, such as New
York City and Boston, enables it to compete effectively with other regional
brands on the eastern coast of the United States.

PRODUCTION

The Company has two bottling lines, a PET line purchased and installed during
the first quarter of 1994 and substantially upgraded in 1998 and a glass
bottling line. The facility operation is at approximately 45 percent (45%) of
capacity.

SUPPLIERS

The Company does not manufacture any of the bottles or packaging in which its
products are sold. Its glass bottles are purchased from two primary suppliers
who manufacture the bottles in accordance with the Company's specifications.
The Saratoga brand name and the Company's logo are embossed on some of the
glass bottles. The Company purchases its PET bottles, caps for its PET bottles
and metal caps for its glass bottles, each from single suppliers. The Company
believes that there are alternate supplies of bottles and caps readily
available to it on comparable terms.

The Company is not affiliated with its suppliers.

MAJOR CUSTOMERS

Revenue from the Company's largest distributor, for the year ended December 31,
1998 was twenty percent (20%) of total revenues. For the year ended December
31, 1998 thirty-two percent (32%) of total revenue were generated from
co-packing. One co-packing customer represents 20% of total revenue.

TRADEMARKS

"Saratoga" is a registered trademark of the Company in the United States and
Canada for use in connection with spring water, mineral water, tonic water and
ginger ale products. The Company has sixteen other trademarks, either pending
or registered, which include the "Saratoga Vichy" name, the name "Saratoga
Splash" and the Saratoga racetrack oval label used on its bottles and
packaging.



                                       4
<PAGE>

GOVERNMENT REGULATION

Bottled water must originate from an "approved source" in accordance with
standards prescribed by the Food and Drug Administration and the state health
departments in each of the states in which the Company's products are sold.
There are annual "compliance tests" of both the source and the finished
product.

The Company believes that its water supply, products and bottling facilities
are in compliance with all applicable state and federal government regulations,
including environmental regulations.

SEASONALITY

In the beverage industry, sales typically increase in the second and third
calendar quarters due to the seasonal effects of the weather in the eastern
United States. In order to help minimize the impact of seasonally on sales, the
Company has placed considerable emphasis on expanding marketing and
distribution in the southeastern United States, with a concentration in
Florida.

EMPLOYEES

As of March 8, 1999, the Company and its subsidiaries had 3 part-time and 287
full-time employees, including 239 production, and 51 executive, sales and
administrative employees.

None of the Company's employees are represented by a labor organization, and
the Company considers its relationship with its employees to be satisfactory.

ITEM 2.  PROPERTIES

NEW YORK HEADQUARTERS

The Company owns a bottling facility and office space located on 48 acres in
Saratoga Springs, New York. The property consists of an approximately 40,000
sq. ft. building which has been substantially rebuilt since 1985. The
carbonated bottling line was installed in 1985 and the PET bottling line was
installed in 1994 and substantially upgraded during 1998. The Company believes
that its insurance policies provide adequate coverage on its facilities and
equipment. The facilities are suitable and adequate to support the Company's
current business.

In connection with the acquisition of Fresh Juice (see "Item 1. Business
Developments"), the Company acquired the following properties:

NEWARK OFFICES AND DISTRIBUTION FACILITY

Fresh Juice leases approximately 27,000 square feet of space located at 280
Wilson Avenue, Newark, New Jersey which includes a warehouse with 3,000 square
feet of freezer space, 11,000 square feet of cooler space and 7,800 square feet
of dry storage space, as well as approximately 5,200 square feet of office
space. The lease was executed in November, 1997 and provides for an initial
term which terminates on August 31, 2007. The lease contains two five year
options to renew which, if exercised, could extend the lease term through
August 31, 2012 and August 31, 2017, respectively.

FLORIDA PRODUCTION FACILITY

Fresh Juice owns a facility located at 1000 American Superior Boulevard, Winter
Haven, Florida which consists of a 70,000 square foot facility on four acres,
20,000 square feet of which consists of either chilled or freezer space (the
"Florida Plant"). The Florida Plant contains the first spiral quick freeze
system in the citrus industry. Fresh Juice designed the Florida Plant to be
capable of producing fresh squeezed juice, fresh frozen juice and pasteurized
juice, in addition to other juice-based beverages. Each segment of the
production process is separate and distinct with separate extraction rooms,
filling rooms, blending rooms and a separate spiral freeze system for the
frozen fresh squeezed juice. The Florida Plant is equipped with 


                                       5
<PAGE>

a laboratory designed to provide an additional measure of quality control to
assist in providing optimal flavor and shelf life for its customers.

CALIFORNIA OFFICES, WAREHOUSE AND PRODUCTION FACILITY

The Company's subsidiary, The Fresh Juice Company of California, Inc. leases
commercial space in Azusa, California, in which its offices, warehouse and
production facility are located. The total amount of leased space is 35,000
square feet, consisting of approximately 3,000 square feet of office space and
approximately 32,000 square feet of production and refrigerated warehouse
space. The lease is for a ten year six month term which began on December 1,
1992. The lease contains one five year option.

ITEM 3.  LEGAL PROCEEDINGS

The Company is not a party to any material litigation. 

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

There was no submission of matters to a vote of security holders.



                                       6
<PAGE>


===============================================================================
PART II

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

The Class A common stock is traded on the NASDAQ SmallCap Market under the
symbol TOGA. The following tables lists the high and low market prices for
these shares for each quarter during which Class A common stock was traded for
the years 1998 and 1997.

                                1998                            1997
                                ----                            ----
                         High              Low          High              Low
                         ----              ---          ----              ---
    1st Quarter         3.8750           2.0630        7.7500           0.8750
    2nd Quarter         3.5630           2.7500        6.0000           2.1250
    3rd Quarter         3.2500           2.1250        3.4375           2.1250
    4th Quarter         2.7500           1.6250        3.3750           2.0000
                                                                                
As of March 8, 1999 the approximate number of common shareholders of record was
1,716.

In February, 1998, Steel Partners II, LP purchased 275,000 shares of
unregistered Class A common stock from the Company at a purchase price of $2.25
per share. Steel partners II, LP, an affiliate of a director of the Company is
a private investment fund that invests in smallcap companies.

Carl T. Wolf, a former director of the Company, purchased 175,000 shares of
unregistered Class A common stock from the Company at a purchase price of $2.25
per share in February 1998 and resold 150,000 shares of unregistered Class A
common stock to the Company for the same price on April 17, 1998.

We have been advised that Anthony Malatino, a principal stockholder of the
Company, and Warren Lichtenstein, a director and principal stockholder of the
Company, purchased 266,258 and 206,258 shares respectively of Class A common
stock in March, 1999 in a private transaction from a former Fresh Juice
stockholder. The Company was not a party to this transaction.

Since its inception in April 1992, the Company has not paid any cash dividends
on its capital stock. The Company anticipates that its future earnings, if any,
will be retained for use in the business or for other corporate purposes, and
it is not anticipated that any cash dividends on the common stock will be paid
in the foreseeable future.

ITEM 6.  MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

SAFE HARBOR STATEMENT

The Company has made, and may continue to make, various forward-looking
statements with respect to its financial position, business strategy, and plans
and objectives of management. Such forward-looking statements are identified by
the use of forward-looking words or phrases such as "anticipates," intends,"
"expects," "plans," "believe," "estimates," or words or phrases of similar
import. These forward-looking statements are subject to numerous assumptions,
risks, and uncertainties, and the statements looking forward beyond 1998 are
subject to greater uncertainty because of the increased likelihood of changes
in underlying factors and assumptions. Actual results could differ materially
from those anticipated by the 


                                       7
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forward-looking statements.

The Company's forward-looking statements represent its judgment only on the
dates such statements are made. By making any forward-looking statements, the
Company assumes no duty to update them to reflect new, changed, or
unanticipated events or circumstances.

BACKGROUND

The Company was formed in April 1992 in connection with the acquisition of
assets from Evian Waters of France. Results of operations data are presented
for the years ended December 31, 1998 and 1997. The Company's fiscal year ends
on December 31.

RESULTS OF OPERATIONS

The following selected financial data of the Company has been derived from the
financial statements and notes thereto of the Company, which are included in
this Form 10-KSB.

                                        Year ended              Year ended
                                     December 31, 1998       December 31, 1997
                                     -----------------       -----------------
Statement of Operations Data:                            
  Total revenue                             $8,881,242             $6,270,691
  Net Income                                   867,146                804,628
  Basic EPS                                      $0.27                  $0.28
  Diluted EPS                                    $0.26                  $0.25
                                   
                                   
                                        Year ended               Year ended
                                     December 31, 1998       December 31, 1997
                                     -----------------       -----------------
Percentage of Total Revenue:                              
  Total revenue                                   100%                   100%
  Cost of goods sold                                62                     60
                                                   ---                    ---
  Gross profit                                      38                     40
                                   
Operating expenses                                       
  Marketing and sales                                9                      6
  General and administrative                        11                     17
  Depreciation, amortization       
    and lease expense                                6                      6
                                                   ---                    ---
Operating Income                                    12                     11
Other (Expense) Income, net                        (2)                      2
                                                   ---                    ---
Net Income                                         10%                    13%
                                                   ===                    ===
-------------------------------------------------------------------------------
Balance Sheet Data:                
  Working capital                           $2,402,837             $2,512,738
  Total assets                               7,499,219              5,704,819
  Total indebtedness                         1,570,089              1,507,906
  Accumulated deficit                      (5,595,443)            (6,462,589)
  Total stockholders' equity                 4,390,070              2,914,024
                                   
                              

                                       8
<PAGE>

Revenue

Revenue in 1998 increased 42% to $8,881,242, an increase of $2,610,551 from
revenue of $6,270,691 in 1997. Of the $2.6 million increase in revenue,
approximately 75% is attributable to product sales. The remaining increase is
attributable to co-pack revenue.

Gross Profit Margins

Gross profit increased 34% to $3,358,308 in 1998 from $2,508,142 in 1997. The
gross profit percentage decreased two percentage points from 40% in 1997 to 38%
in 1998. The decrease in the gross profit percentage in 1998 is primarily due
to a competitive climate for the spring water PET business.

Marketing and Sales Expenses

Marketing and selling expenses increased 97% to $764,723 in 1998 from $388,709
in 1997. As a percentage of total revenue, marketing and selling expenses
increased to 9% in 1998 from 6% in 1997. The increase in marketing and sales
expenses in 1998 is primarily attributable to an increase in customer
promotions, and variable marketing expenses tied to increased sales.

General and Administrative Expenses

General and administrative expenses decreased 10% to $935,084 in 1998 from
$1,033,850 in 1997. As a percentage of total revenue, general and
administrative expenses decreased to 11% of total revenue in 1998 from 17% in
1997. The Company's general and administrative expenses are comprised primarily
of fixed costs and, as total revenue increases, they generally decrease as a
percentage of total revenue. The decrease of $98,766 in general and
administrative expenses reported by the Company in 1998 is primarily
attributable to a reduction in bad debt expense in 1998.

Depreciation, Amortization, and Equipment Lease Expense

Depreciation, amortization, and equipment lease expense increased 44% to
$566,317 in 1998 from $393,876 in 1997. As a percentage of total revenue,
depreciation, amortization and equipment lease expense was unchanged at 6% in
1998 and 1997. The increase of $172,441 in 1998 is primarily attributable to
equipment lease expense relating to the lease of equipment which began in
December, 1997. Equipment rent expense was $130,753 in 1998 and $11,050 in
1997. Depreciation and amortization increased $25,101 and $16,587 respectively
in 1998 over 1997. Depreciation and amortization was $435,563 and $393,876 for
1998 and 1997, respectively.

Other Income(Expense)

Other income of $131,990 in 1997 decreased $339,428 to other expense, net of
$207,438 in 1998. The $339,428 decrease is due to a $23,197 decrease in
commission income, a $117,072 increase in interest income, an increase of
$33,303 in interest expense and a provision for notes receivable of $400,000
in 1998. The commission income is primarily from the sale of beverage products
as part of the three-year master distribution agreement entered into in June,
1997. Interest income increased primarily due to income earned on the
$1,500,000 proceeds from the 5% Subordinated Convertible Note. Interest expense
is accrued on the unpaid principal amount of the Note. In 1998 a provision for
the full amount of the note receivable from Onyx in the amount of $400,000 was
recorded. The details of the 5% Subordinated Convertible Note and the note
receivable from Onyx are discussed in the Liquidity and Capital Resources
section below.

Income Taxes

In the year ended December 31, 1998, the Company offset substantially all
income taxes through the use of federal income tax loss carryforwards. At
December 31, 1998 and 1997 the Company has available approximately $2,774,730
and $3,781,000 respectively of federal income tax loss carryforwards which may



                                       9
<PAGE>

be subject to annual limitations on their usage and begin to expire in the year
2008.

Liquidity and Capital Resources

As of December 31, 1998, the Company's working capital was $2,402,837 including
cash and cash equivalents of $2,576,873, as compared to working capital of
$2,512,738 and cash and cash equivalents of $1,567,973 and short term
investments of $1,153,915 at December 31, 1997. The current ratio at December
31, 1998 was 2.5 to 1 as compared to 2.9 to 1 at December 31, 1997.

The Company's debt-to-equity ratio at December 31, 1998 was 35.05%. Debt
includes the $1,500,000 5% Subordinated Convertible Note and $54,556 long-term
portion of obligation under capital lease.

Subordinated Convertible Note

On June 12, 1997 the Company entered into a Securities Purchase Agreement with
Parley International, as nominee for Maerki Baumann & Co., A.G. (Zurich)
("Purchaser"), pursuant to which Purchaser acquired $1,500,000 principal amount
of the Company's 5% Subordinated Convertible Notes due 2000 (the "Note") for an
aggregate purchase price of $1,500,000 in a private placement effected under
Section 4(2) of the Securities Act of 1933. Interest on the unpaid principal
amount accrues from the date of issuance at a rate of 5% per annum. Interest
becomes due and payable on each of the first, second and third anniversaries.

The principal amount of the Note is due and payable on the third anniversary of
the Note and is convertible at the option of the holder into shares of the
Company's Class A common stock at a conversion price of $3.50 principal amount
per share. The Note is mandatorily convertible into shares of Class A common
stock in the event that the closing price of Class A common stock exceeds $5.25
for three consecutive trading days.

Global Financial Group, Inc. acted as placement agent in connection with the
offering of the Note and, in connection therewith, received a cash commission
in the amount of $80,750 and was issued a warrant to acquire 30,000 shares of
Class A common stock for an exercise price of $3.50 per share. The commission
and the fair value of the warrant, determined to be $22,800. were recorded as
deferred financing costs and are being amortized over the life of the Note,
three years.

Onyx Note Receivable

On December 23, 1997 the Company and Onyx Management Services, LLC ("Onyx")
entered into a loan agreement whereby the Company agreed to loan Onyx up to
$800,000 (the "Loan") for working capital and general business purposes. As of
December 31, 1998 the Company had loaned and advanced to Onyx a sum of
$400,000. The Loan is collateralized by all assets of Onyx.

Interest on the Onyx Note accrues at a per annum rate equal to the greater of
(i) eight percent (8%) or (ii) the Prime Rate plus one percent (1%) as in
effect on the first day of the calendar quarter for which such interest shall
accrue is payable in arrears quarterly on the first day of each calendar
quarter, beginning on April 1, 1998. At December 31, 1998, the interest rate
was 9.25%.

$300,000 of the principal amount outstanding under the Onyx Note is due and
payable in full on December 23, 2001 and the remaining unpaid principal amount
outstanding under the Onyx Note is due and payable in full on December 23,
2000. In addition, the Company acquired a ten year warrant to purchase 35% of
outstanding stock of Onyx. The warrant may be exercised by issuance of 100,000
shares of the Company's Class A common stock.

At December 31, 1998 the Company recorded an allowance of $400,000 for the Onyx
note receivable. Interest receivable from Onyx in the amount of $9,250 for the
1998 December quarter has not been paid to the Company as of March 15, 1999 and
the Company has declared a default under the Onyx Note. The Company will
continue to monitor the note receivable and to pursue collection of the Onyx
note receivable.


                                      10
<PAGE>

Bottling Lines

The Company upgraded its bottling lines in 1998. In December 1997, the Company
entered into a seven year operating lease for production equipment. The lease
contains a purchase option after 72 months.

The Company will continue to upgrade the facilities and equipment as dictated
by the growth of the business. While the Company will continue to incur costs
to develop and introduce new products, it will strive to limit such costs by
using innovative, cost effective targeted marketing techniques.

Acquisition of Fresh Juice Company, Inc. (Unaudited)

On January 29, 1999, the Company acquired The Fresh Juice Company, Inc. ("Fresh
Juice"). Fresh Juice produces, markets and sells fresh squeezed and frozen
fresh squeezed orange juice, grapefruit juice, fresh fruit smoothies and other
non-carbonated beverages nationally under the brand names "Just Pik't", "Fresh
Pik't", "Florida Pik't", "Ultimate" and "Hansen's". The majority of the juice
produced by Fresh Juice is fresh squeezed orange juice. The transaction was
accounted for as a purchase. The purchase price of $21.7 million was comprised
of cash of approximately $16.4 million and 2,133,553 shares of Saratoga Class A
common stock. The cash payment was financed through a credit agreement
consummated with NationsBank, N.A., which included an $8 million term loan and
a $14 million revolving credit facility. Preliminary estimates anticipate that
the purchase price exceeded the fair value of net assets acquired by
approximately $15.1 million, which is being amortized on a straight-line basis
over 25 years.

The following summarized unaudited proforma financial information for the years
ended December 31, 1998 and 1997 assumes the acquisition had occurred on
January 1 of each year:

PRO FORMA INFORMATION
(in millions, except per share data)                 1998            1997
-------------------------------------------------------------------------------
Net sales                                            $46.5            $47.7
Net (loss)                                            (1.3)            (0.3)
(Loss) per share
  Basic and fully diluted                           ($0.25)          ($0.06)
-------------------------------------------------------------------------------

These amounts include Fresh Juice's results for years ended November 30 and the
Company's results for years ended December 31, 1998 and 1997 after giving
effect to certain proforma adjustments. Proforma information includes
adjustments for interest expense that would have been incurred to finance the
acquisition, amortization of goodwill acquired in the acquisition, increase in
inventory and cost of goods sold to fair value, and adjustments to record
income taxes at the expected effective rate. The proforma information does not
include any adjustment for depreciation of the fair value of plant and
equipment because the fair value has not yet been determined. The proforma data
is for informational purposes only and may not necessarily reflect the results
of operations of the Company had the acquired business operated as part of the
Company for the years ended December 31, 1998 and 1997.

Future minimum operating and capital lease commitments for Fresh Juice through
2007 approximate $3,600,000.

YEAR 2000

The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices or
engage in similar normal business activities.



                                      11
<PAGE>

State of Readiness

The Company relies on systems developed by other parties in regard to its
business, accounting and operational software. The Company believes that its
significant business, accounting and operations software are not year 2000
compliant. Additionally, the Company has assessed the impact of this issue on
its production equipment. The new bottling line installed in 1998 is certified
year 2000 compliant by the equipment manufacturer. Older manufacturing
equipment is relay controlled and is not believed to be affected by the year
2000 problem.

Cost

The Company has evaluated its management information systems (including
information technology ("IT") and non-IT computerized systems and has prepared
a plan for year 2000 compliance. The Company estimates that the cost to modify
its management information systems to become year 2000 compliant and to rebuild
its network systems will be approximately $350,000. Such modification is
expected to be completed and tested prior to December 31, 1999.

Risk

The Company relies on third party suppliers for raw materials, transportation,
utilities, and other critical services. Company operations could be affected by
the interruption of significant suppliers. The Company has initiated efforts to
evaluate the status of suppliers' compliance with year 2000 issues and are in
the process of determining alternatives and contingency plan requirements. In
the event that its current vendors are unable to certify that they will be year
2000 compliant by early 1999 or if such suppliers are unable to certify that
their failure to be year 2000 compliant will not adversely affect the Company,
the Company will be reviewing its alternatives with respect to other vendors.
There can be no assurance that the Company will be able to find suppliers which
are acceptable to the Company. Another option could include the accumulation of
inventory to assure production capability if warranted. These efforts are
intended to minimize risk, but cannot eliminate the potential for disruption
due to third party failures to be year 2000 compliant.

The Company also is dependent on customers for sales and for cashflow.
Interruptions in our customers' operations due to year 2000 could result in
decreased revenue, increased inventory and cash flow reductions. The Company is
in the process of evaluating its customers' year 2000 risks, as well as
developing alternative sales strategies. The cost of this evaluation is
expected to be nominal.

Despite the Company's efforts in regard to the year 2000 issue, the Company's
business, financial condition or results of operations could be materially
adversely affected by the failure of its systems and applications or those
operated by other parties to properly manage dates beyond 1999.

Contingency Plans

Given that modification to its management information systems (MIS)is expected
to be completed and tested by December 31, 1999, the Company has not prepared a
contingency plan pertaining to its information systems. We have been advised
that (MIS) can be brought into compliance by purchasing software "patches" in
the event that the Company has not completed the modification of its MIS to
become year 2000 compliant by December 31, 1999. The Company is in the process
of developing a contingency plan based on its evaluation of significant
suppliers and customers in regard to year 2000 compliance. The contingency plan
includes the identification of backup suppliers and broadening the customer
base.

                                      12
<PAGE>

New Accounting Standards

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard No. 130, Reporting Comprehensive Income. This standard
requires companies to disclose certain information regarding comprehensive
income and its components (revenues, expenses, gains, and losses) and is
required to first be disclosed in annual financial statements for fiscal years
beginning after December 15, 1997. The Company requires no additional
disclosure under this standard for the year ended December 31, 1998. 

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard No. 131, Disclosures about Segments of an Enterprise and
Related Information. This standard requires companies to disclose certain
information regarding operating segments in interim and annual financial
statements, and is required to first be disclosed in annual financial
statements for fiscal years beginning after December 15, 1997. The Company
requires no additional disclosure under this standard for the year ended
December 31, 1998 because management operates the business as one segment, the
bottling and sales of water to third parties. Management has not yet determined
the extent of additional disclosure required in 1999 from the acquisition of
The Fresh Juice Company, Inc.

The Financial Accounting Standards Board has also issued Statement of Financial
Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging
Activities. The standard establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that a company
recognize derivatives as assets or liabilities measured at fair value. This
standard is effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management has not yet determined the impact of adoption of this
accounting standard.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 13.

ITEM 8.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

None.



                                      13
<PAGE>
===============================================================================
PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

As of March 8, 1999, the Directors, executive officers and key employees of the
Company are as follows:

  Name                                  Age             Position

Robin Prever (1)                        38       Chief Executive Officer
                                                  and Chairman of the Board
Adam Madkour                            47       Executive Vice President
Gayle Henderson                         51       Chief Financial Officer
John A. Morabito(4)                     39       Executive Vice President
Jeffrey Heavirland                      38       Executive Vice President
R. J. Barry Cox                         54       Director
Steven Bogen                            42       Director
Warren Lichtenstein (2)(3)              33       Director
Leonard Toboroff (1)(2)(3)              66       Director
------------
(1)  Member of the Audit Committee.
(2)  Member of the Compensation Committee.
(3)  Member of the Stock Option Committee
(4)  Resigned as director effective January 29, 1999

Ms. Prever has been the president, chief executive officer and a director of
the Company since its inception in April 1992. She was the secretary of the
Company from its inception until April 1993. Ms. Prever was a vice president of
Gabelli Asset Management Company ("GAMCO"), an investment advisory firm, where
she was employed from 1986 to 1993. Ms. Prever is an attorney and has been a
member of the bar in the State of Florida since 1985.

Mr. Madkour has been the chief operating officer of the Company since September
1993. Mr. Madkour was general manager of manufacturing for the Deer Park
Division of Clorox Inc. since 1987, and is an electrical engineer.

Ms. Henderson has been the chief financial officer of the Company since
November 15, 1997. Mrs. Henderson, who is a New York State Certified Public
Accountant, brings several years of financial management experience from the
food manufacturing industry. She was a member of the financial management group
for the Charles Freihofer Baking Company, Inc., a division of Best Foods.

Mr. Morabito has been a director of the Company since June 1993, Mr. Morabito
has been the director of sales development for United Distillers Glenmore, Inc.
since 1989. From 1986 through 1989, he was a regional manager for Brown-Foreman
Beverage Company and from 1983 through 1986 he was a regional manager for
Joseph Victori Wine Company. Prior to that time, Mr. Morabito was employed by
each of Foreman Brothers Incorporated and D. Bertoline and Sons as a sales
representative. Mr. Morabito resigned from the Board of Directors to become
Executive Vice President of Sales and Marketing for the Company effective
January 29, 1999.



                                      14
<PAGE>

Mr. Heavirland became a director of the Company on January 29, 1999 with the
merger between the Company and Fresh Juice. Mr. Heavirland has held several
positions with Hansen's Juices, Inc. He was Director of Sales from July 1988 to
December 1993; Vice President of Sales and a Director from December 1993 to
January 1994; Director, Vice President and Secretary from January 1994 to
December 2, 1996. Mr. Heavirland was President, Chief Executive Officer and
Assistant Secretary of The Fresh Juice Company of California, Inc. from
December 2, 1996 to January 29, 1999. He was also Vice President of Sales and
Administration of The Fresh Juice Company, Inc. ("Fresh Juice") from October
27, 1997 to January 29, 1999 and a Director from June, 1997 to January 29,
1999.

Mr. Cox became a director of the Company on January 29, 1999 with the merger
between the Company and Fresh Juice. Mr. Cox has extensive experience in the
food and beverage industry, including serving as Chairman of the world-famous
Hard Rock Cafe in its formative years as a public company. Mr. Cox was Director
for Whitchurch from 1988 - 1995 and a director for the Pelican Group, Inc. from
1991 - 1993. Mr. Cox replaces John Morabito, who resigned from the Board of
Directors to become an executive officer of the Company.

Mr. Bogen became a director of the company on January 29, 1999 with the merger
between the Company and Fresh Juice. Mr. Bogen was Chief Executive Officer of
The Ultimate Juice Company ("Ultimate Juice"), Inc. from 1988 to January 29,
1999; Chairman of the Board of Ultimate Juice from 1989 through March 31, 1996;
Chairman of the Board of Clear Springs Citrus, Inc. ("Clear Springs") from July
27, 1993 through August 31, 1996; President of Clear Springs from July 27, 1993
through March 11, 1994; Co-Chairman of the Board, Chief Executive Officer, and
Secretary of Fresh Juice from April 1, 1996 to January 29, 1999.

Mr. Lichtenstein has been a director of the Company since June 29, 1994. Mr.
Lichtenstein has been with Steel Partners II, LP since 1990. Prior thereto, he
was with Ballantrae, a private investment firm, for two years. Mr. Lichtenstein
serves as a director of SL Industries, Inc., Synercom Technology Inc. and
Gateway Communications, Inc.

Mr. Toboroff has been a director of the Company since June 1993 and was elected
Chairman of the Board of Company on December 12, 1995. He resigned as Chairman
effective November 6, 1996. He has been vice president and vice chairman of the
board of Allis-Chalmers Corp. since May 1988. Mr. Toboroff has been a
practicing attorney since 1961 and from January 1, 1988 to December 31, 1990
was counsel to Summit Solomon & Feldesman in New York City. He has been a
director of Ameriscribe, Inc. since August 1987 and was the chairman and chief
executive officer thereof from December 1987 to May 1988. Mr. Toboroff was a
director from May 1982 through September 1988, chairman and chief executive
officer in June 1982 and vice chairman from June 1982 through September 1988 of
American Bakeries Company. Mr. Toboroff is also an executive vice president and
a director of Riddell Sports, Inc. Mr. Toboroff is a director of Banner
Industries and Engex Corporation.

All directors of the Company hold office until the next annual meeting of
stockholders or until their successors are elected and qualify. All
non-employee directors are reimbursed for reasonable expenses incurred in
connection with attending meetings of the Board of Directors. Directors of the
Company are also entitled to participate in the Stock Option Plan. All
non-employee directors receive a fee of 5,000 options per year, and $1,000 for
each quarterly meeting attended. Additionally, 100,000 options were granted to
Mr. Toboroff, 50,000 options were granted to Mr. Lichtenstein, 10,000 options
were granted to Mr. Morabito, 50,000 options were granted to Mr. Madkour, and
100,000 options were granted to Ms. Prever on January 2, 1998 based on the
closing price of the Company's Class A common stock at January 5, 1998. (see
Item 10, Executive Compensation, Stock Option Plan.) During 1998, 150,000
options of Ms. Prever's expired. Executive officers hold office until their
successors are chosen and qualify, subject to earlier removal by the Board of
Directors.

ITEM 10.    EXECUTIVE COMPENSATION

The following table sets forth the compensation paid or accrued for such
services rendered during such period by the chief executive officer and chief
operations officer. No other executive officer of the Company had aggregate
compensation from the Company exceeding $100,000 in 1998.


                                      15
<PAGE>

                                   Annual Compensation           Awards
                                   -------------------           ------
              Position           Year    Salary    Bonus  Securities Underlying
              --------           ----    ------    -----   
                                                            Options/SARs (#)
                
Robin Prever, President          1998   $125,000  $63,937   100,000 options
    and Chief Executive Officer  1997   $125,000
                                 1996   $125,000

Adam Madkour, Chief              1998   $100,000  $19,787    50,000 options
    Operating Officer            1997   $100,000   $5,600
                                 1996   $ 90,000

Employment Agreements

In June 1993, the Company entered into an employment agreement with its
president and chief executive officer providing for annual compensation of
$125,000. The agreement provided for payment of an annual bonus at the sole
discretion of the Board of Directors, with a minimum bonus each year equal to
5% of the Company's pre-tax profit in each contract year. On January 28, 1999,
the Company entered into a new four year employment agreement with its
president, chief executive officer and chairperson of the Board (and a
director) ("the Executive") , providing for annual compensation of $200,000
with annual cost of living adjustments and other increases at the discretion of
the compensation committee. The compensation committee of the Company Board
shall set goals on an annual basis for the Executive's performance as an
officer of the Company, and shall cause the Company to pay to her an annual
bonus in addition to the Salary based on the achievement by the Executive of
such goals. Non-qualified stock options to purchase 300,000 shares of Class A
common stock at an exercise price of $2.375 per share, the fair market value on
the date of grant, were issued as part of this agreement and shall vest over a
three year period from the date of grant at a rate of 33% per year, commencing
with the first anniversary of the date of grant. Upon the termination of her
employment agreement for any reason, any unvested stock options shall lapse,
and the Executive shall have one year from the date of termination to exercise
any vested stock options. Executive's vested stock options shall be exercisable
for a period of ten (10) years from the date of issuance. Under her employment
agreement, the Executive wil not engage in a business which competes with the
Company for the term of the employment agreement and for two years thereafter.

In the event that (i) other than following a change in control, the Executive's
employment is terminated by the Company in breach of her employment agreement,
or the Executive shall terminate her employment for Good Reason (as defined in
her employment agreement), (ii) the Executive's employment shall be terminated
for any reason, other than for Cause (as defined in her employment agreement),
death or Disability (as defined in her employment agreement), within six (6)
months following a change in control (as defined in her employment agreement)
of the Company, or (iii) the Executive terminates her employment immediately
upon a change in control, then the Company will pay the Executive as a
severance and non-competition payment equal to (x) her base salary and (y) the
average bonus actually paid to the Executive with respect to the last two
years, in each case for the remainder of her term plus one year; provided,
however, that the Company shall not be required to pay the Executive more than
2.99 times the Executive's base salary and bonus compensation for the calendar
year prior to such termination. Such amount shall be paid either in a lump sum
or in monthly installments, at the Executive's discretion.



                                      16
<PAGE>
The following table sets forth information with respect to Robin Prever and
Adam Madkour concerning the unexercised options held as of the end of the last
fiscal year. Robin Prever and Adam Madkour did not exercise options during the
Company's fiscal year ended December 31, 1998.

                        FISCAL YEAR-ENDED OPTION VALUES

                    NUMBER OF UNEXERCISED        VALUE OF UNEXERCISED IN-THE-
                           OPTIONS                     MONEY OPTIONS AT
                     AT DECEMBER 31, 1998              DECEMBER 31, 1998
                ------------------------------  ------------------------------
Name             Exercisable    Unexercisable    Exercisable    Unexercisable

Robin Prever        65,000          50,000          50,000           --
Adam Madkour        71,000          25,000          25,000


Stock Option Plan

In June 1993, the Board of Directors of the Company approved the adoption of
the Saratoga Spring Water Company 1993 Stock Option Plan (the "1993 Stock
Option Plan"). The 1993 Stock Option Plan provided for the issuance of options
covering up to 466,000 shares of Class A common stock (subject to adjustments
in the event of stock splits, stock dividends and similar dilutive events) and
Stock Appreciation Rights in tandem with options. Generally, Stock Appreciation
Rights will be subject to the same terms and conditions as options. Options may
be granted under the 1993 Stock Option Plan to employees, officers or directors
of, and consultants and advisors to the Company.

On December 12, 1995 the shareholders of the Company approved an amendment to
the 1993 Stock Option Plan increasing the number of shares available for
issuance from 466,000 to 616,000.

Options granted to employees may either be incentive stock options (as defined
in the Internal Revenue Code of 1986, as amended) or non qualified stock
options. The purchase price of the Class A common stock made subject to an
option shall be determined by the Compensation Committee at the time of grant,
provided that the purchase price of incentive stock options may not be less
than the fair market value of the Company's Class A common stock on the date of
grant. Subject to the foregoing, the terms of each option and the increments in
which it is exercisable are determined by the Compensation Committee, provided
that no option may be exercised after ten years and one day from the date of
grant (ten years in the case of an incentive stock option). To the extent that
the aggregate fair market value, as of the date of grant, of the shares for
which incentive stock options become exercisable for the first time by an
optionee during any calendar year exceeds $100,000, the portion of such option
which is in excess of the $100,000 limitation will be treated as a non
qualified stock option. In addition, if an optionee owns more than 10% of the
total voting power of all classes of the Company's stock at the time the
individual is granted an incentive stock option, the purchase price per share
cannot be less than 110% of the fair market value on the date of grant and the
term of the incentive stock option cannot exceed five years from the date of
grant. Generally, options vest over a three year period unless the Compensation
Committee accelerates such provisions.

Furthermore, under the 1993 Stock Option Plan, directors who are not also
employees of the Company receive an Option ("Initial Option") to purchase 2,000
shares of Class A common stock upon their initial election to the Board of
Directors, exercisable at the fair market value on the date of grant. On June
23, 1993, each person who was then a non-employee director received 2,000
options ("IPO Options"), at an exercise price of $5.00 per share. These options
are exercisable as to 33 1/3% of the shares subject thereto on the date of
grant, and as to 33 1/3% on each of the following two anniversaries of such
date of grant. In addition, on the date of each annual meeting of stockholders
held subsequent to January 1, 1994, each qualified director will automatically
receive options ("Annual Options") to purchase 2,000 shares of Class A common
stock exercisable 50% per year over a period of two years beginning on the date
of grant, at the fair market value of the Class A common stock on the date of
grant. The Company intends to seek stockholder approval at the 1999 annual
meeting of stockholders to retroactively, as of June 29, 1998, terminate this
provision of the 1993 Stock Option Plan, given the approval of the 1998 Stock
Option Plan (as hereinafter defined).

                                     17
<PAGE>


Generally, options granted to directors under the 1993 Stock Option Plan will
terminate three months after the date of the director's termination,
resignation or retirement from the Board of Directors of the Company, but in no
event after the option has expired by its terms. If any option granted under
the 1993 Stock Option Plan should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased shares will become
available for further grant under the Stock Option Plan.

At the annual meeting of stockholders held on October 28, 1998 the Saratoga
Beverage Group, Inc. 1998 Stock Option Plan (the "1998 Stock Option Plan") was
approved. The 1998 Stock Option Plan provides for the issuance of options
covering up to 900,000 shares of Class A Common Stock or Class B Common Stock
(collectively "Shares") (subject to adjustments in the event of stock splits,
stock dividends and similar dilutive events). Options may be granted under the
1998 Stock Option Plan to employees, officers or directors of the Company. The
1998 Stock Option Plan will be administered by the Stock Option Committee of
the Board (the "Committee").

Options granted to employees may either be incentive stock options (as defined
in the Internal Revenue Code of 1986, as amended) ("ISOs") or non-qualified
stock options ("NQSOs"). The purchase price of the Shares made subject to an
option shall be determined by the Stock Option Committee at the time of grant,
provided that the purchase price of incentive stock options may not be, and the
price of non-qualified options generally will not be, less than the fair market
value of the Class A Common Stock on the date of grant. Subject to the
foregoing, the terms of each option and the increments in which it is
exercisable are determined by the Stock Option Committee, which will generally
provide that no option may be exercised after ten years from the date of grant.
If an optionee owns more than 10% of the total voting power of all classes of
the Company's stock at the time the individual is granted an ISO, the purchase
price per share cannot be less than 110% of the fair market value on the date
of grant and the term of the ISO cannot exceed five years from the date of
grant.

Non-employee directors and key employees (defined as full-time employees) of
the Company or any future Subsidiary Corporation (as defined in the 1998 Stock
Option Plan) of the Company are eligible to participate in the 1998 Stock
Option Plan; provided, however, that ISOs may only be granted to employees of
the Company or a Subsidiary Corporation. Each non-employee director of the
Company on January 1 of a year during the term of the 1998 Stock Option Plan
will automatically receive options to purchase 5,000 shares of Class A common
stock at the fair market value of the Class A common stock on the date of
grant.

Any one optionee may not be granted options to purchase in excess of 300,000
shares of Common Stock during any fiscal year of the Company; provided,
however, that the Committee may adopt procedures for the counting of shares
relating to any grant of options to ensure appropriate counting, avoid double
counting and provide for adjustments in any case in which the number of shares
actually distributed differs from the number of shares previously counted in
connection with such grant; provided further, however, that the options granted
under the 1993 Plan shall not be treated as outstanding.

During 1998, a total of 437,501 stock options were granted, 30,000 were
exercised, and 190,120 expired from the 1993 Stock Option Plan and the 1998
Stock Option Plan. The Company did not grant stock appreciation rights.


                                      18
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 8, 1999, certain information with
respect to the beneficial ownership of the common stock by (i) each director
and nominee for director of the Company, (ii) each person named in the
compensation table, (iii) all persons known by the Company to be the beneficial
owner of more than 5% of the outstanding shares of the Company's voting
securities and (iv) all officers, directors and nominees for directors of the
Company as a group.

                           Number of Shares
                              of common          Percentage Beneficially Owned
Name and Stock            Stock Beneficially     -----------------------------
Address of                      Owned            Of Shares         Of Voting
Beneficial Owner         At March 8, 1999 (1)    (1)(2)(3)        Power (2)(3)
-----------------        ---------------------   ----------       ------------
                                                
Anthony Malatino (6)              778,127(21)        15.2%             30.4%
Robin Prever (4)                  318,285(12)         5.9%             13.3%
Adam Madkour (4)                   71,050(13)         1.4%              1.0%
Gayle Henderson(4)                  1,792(14)            *                 *
Warren Lichtenstein (5)           591,758(15)        11.3%              8.1%
John Morabito (7)                       0(19)            *                 *
Leonard Toboroff (8)              197,500(16)         3.7%              2.7%
Jeffrey Heavirland (9)             31,106(17)            *                 *
Steven Bogen(10)                  406,793(18)         7.9%              5.6%
R. J. BarryCox(11)                      0(20)            *                 *
                                                
  All officers and                              
  directors as a group              1,618,284        28.2%             29.3%
  (9 persons)                                   
                                               
-----------------
*    Less than 1%.

     (1)  Based upon 4,740,125 shares of Class A common stock and 522,955
          shares of Class B common stock outstanding at March 8, 1999.
     (2)  The information presented with respect to stock ownership and related
          percentage information is based on common stock as a percentage of
          the aggregate number of shares of common stock outstanding, treating
          the Class A common stock and the Class B common stock as a single
          class. The number of shares of Class A common stock outstanding does
          not include (i) 30,000 shares issuable upon exercise of warrants to
          Global Financial Group, Inc. for acting as placement agent in
          connection with the offering of the 5% subordinated convertible note,
          (ii) shares issuable upon exercise of certain outstanding stock
          options or reserved for issuance pursuant to the Company's Stock
          Option Plan.
     (3)  The Class A common stock and the Class B common stock are identical,
          except that the holders of the Class A common stock are entitled to
          one vote per share, whereas the holders of the Class B common stock
          are entitled to five votes per share on all matters submitted for
          stockholder vote.
     (4)  The business address of each of Mr. Madkour, Ms. Henderson, and Ms.
          Prever is c/o Saratoga Beverage Group, Inc., 11 Geyser Road, Saratoga
          Springs, New York 12866.
     (5)  The business address of Mr. Lichtenstein is c/o Steel Partners II,
          LP, 750 Lexington Avenue, New York, NY 10022.
     (6)  The business address of Mr. Malatino is c/o Morgan Stanley Dean
          Witter, 340 Broadway, Saratoga Springs, NY 12866.
     (7)  The business address of Mr. Morabito is 11 Geyser Rd, Saratoga
          Springs, NY 12866.
     (8)  The business address of Mr. Toboroff is c/o Lincolnshire Management,
          Inc., 780 3rd Avenue, 40th Floor, New York, NY 10017.
     (9)  The business address of Mr. Heavirland is c/o The Fresh Juice Company
          of California, Inc., 875 

                                      19
<PAGE>



          West Eighth Street, Azusa, CA 91702-2247.
     (10) The business address of Mr. Bogen is The Fresh Juice Company of New
          York, Inc., 280 Wilson Avenue, Newark, NJ 07105.
     (11) The business address of Mr. Cox is 11 Geyser Rd., Saratoga Springs,
          NY 12866.
     (12) Includes 115,000 shares of Class A common stock issuable upon
          exercise of certain options that are exercisable within 60 days,
          35,325 shares of Class A common stock outstanding and 167,960 shares
          of Class B common stock outstanding, and excludes 300,000 shares
          issuable upon options that are not exercisable within 60 days.
     (13) Includes 71,000 shares of Class A common stock issuable upon exercise
          of certain options that are exercisable within 60 days, 50 shares of
          Class A common stock outstanding, and excludes 29,000 shares issuable
          upon options that are not exercisable within 60 days.
     (14) Includes 1,667 shares of Class A common stock issuable upon exercise
          of certain options that are exercisable within 60 days, 125 shares of
          Class A common stock outstanding, and excludes 23,333 shares issuable
          upon options that are not exercisable within 60 days.
     (15) Includes 85,500 shares of Class A common stock issuable upon exercise
          of certain options that are exercisable within 60 days, 506,258
          shares of Class A common stock outstanding, and excludes 27,500
          shares issuable upon options that are not exercisable within 60 days.
     (16) Includes 197,500 shares of Class A common stock issuable upon
          exercise of certain options that are exercisable within 60 days, and
          excludes 27,500 shares issuable upon options that are not
          exercisablewithin 60 days.
     (17) No shares of Class A common stock issuable upon exercise of certain
          options that are exercisable within 60 days, 31,106 shares of Class A
          common stock outstanding, and excludes 100,000 shares issuable upon
          options that are not exercisable within 60 days
     (18) Includes 406,793 shares of Class A common stock outstanding. There
          are no shares issuable upon options. 
     (19) No shares of Class A common stock issuable upon exercise of certain
          options that are exercisable within 60 days, no shares of Class A
          common stock are outstanding, and excludes 75,000 shares issuable
          upon options that are not exercisable within 60 days.
     (20) No shares of Class A common stock issuable upon exercise of certain
          options that are exercisable within or past 60 days and no shares of
          Class A common stock are outstanding.
     (21) Includes 423,132 shares of Class A common stock outstanding and
          354,995 shares of Class B common stock outstanding.


Stockholder Agreement; Voting Agreement

Anthony Malatino, the chairman of the board of the Company until December 12,
1995, and Robin Prever, the president, chief executive officer and a director
of the Company, entered into a voting trust agreement, dated August 17, 1992,
as amended in April 1993 (the "Stockholder Agreement"). This agreement expired
in 1998.

On October 13, 1998, Saratoga Beverage Group, Inc. ("Saratoga"), Steven Bogen
("Bogen"), Robin Prever ("Prever") and Anthony Malatino ("Malatino") entered in
a Stockholder Agreement in which it was agreed to vote all of their Saratoga
Securities to elect, re-elect and prevent any proposed removal of, Bogen as a
member of Saratoga's Board of Directors. This Stockholder Agreement shall
expire on the earlier of the date (i) after the Effective Date (as defined in
the Merger Agreement) that Bogen directly owns less than 400,000 shares of
Class A comn stock, (ii) of the termination of the Merger Agreement by any
party thereto pursuant to the terms thereof, (iii) Bogen is convicted of a
felony or a misdemeanor involving moral turpitude, dishonesty, theft or
unethical business conduct, or (iv) Bogen breaches his fiduciary duties, in a
material fashion, to Saratoga or its stockholders.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

At December 31, 1998, the Company's cash and cash equivalent balance includes
approximately $2,506,177 in a money market account with Dean Witter Reynolds,
Inc. A principal stockholder of the 


                                      20
<PAGE>

Company is an officer of Dean Witter Reynolds, Inc.

ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K

(a) The following documents are filed as a part of this report:

     1.  Financial Statements:  See Index To Financial Statements
     2.  Exhibits included herein:

         a)   Exhibits and Index

Exhibit No.

2.1(1)         (P) Agreement and Plan of Merger
3.1(1)         (P) Restated Certificate of Incorporation of Saratoga
3.2(1)         (P) By-Laws of Saratoga
3.3(10)        Amendment to By-Laws of Saratoga
4.1(1)         (P) Specimen of Class A Stock Certificate
5.1(12)        Opinion of Swidler Berlin Shereff Friedman, LLP
9.1(11)        Restated Voting, Standstill and Proxy Agreement dated as of
               October 13, 1998
9.2(11)        Stockholder Agreement dated October 13, 1998 by and among
               Saratoga, Robin Prever, Anthony Malatino and Steven Bogen
10.1(2)+       (P) Employment Agreement entered into by the Registrant and
               Robin Prever
10.2(1)+       (P) Form of the Saratoga Spring Water Company 1993 Stock Option
               Plan
10.3(2)+       (P) Consulting Agreement entered into by Saratoga and Leonard
               Toboroff
10.4(1)        (P) Letter Agreement between Saratoga and Owens-Brockway Glass
               Containers
10.5(2)        (P) Partnership Agreement, dated July 21, 1993, by and between
               JNJ Distributors, Inc. and Saratoga Springs Distribution Corp.,
               as amended by Amendment of Partnership Agreement hereto dated
               November 9, 1993
10.6(2)        (P) Stock Agreement, dated July 21, 1993, by and between JNJ
               Distributors, Inc. and Saratoga Spring Water Company
10.7(2)        (P) Distribution Agreement, dated March 25, 1993, by and between
               Joseph Victori Wines, Inc. and JNJ Distributors, Inc.
10.8(5)        Termination Agreement dated as of January 31, 1997 between
               Saratoga and Triarc
10.9(3)        (P) Cott Co-pack Agreement dated as of June 8, 1995
10.10(4)       Manufacturing and Distribution Agreement, dated as of July 23,
               1996, by and between Saratoga and Mistic Brands, Inc.
10.11(6)       Bottling Agreement, dated April 16, 1997, by and among Saratoga,
               Hype Corporation, Hype Beverage Corporation, World Wide Beverage
               Inc., Hype Water Company, Inc., Hyperholics Inc., R.J. Barry Cox
               and Nigel Spiro
10.12(6)+      Line of Credit dated as of April 10, 1997 to Saratoga from Robin
               Prever and Anthony Malatino
10.13(7)       Saratoga Splash Agreement, dated as of June 30, 1997, by and
               between Saratoga and Mistic Brands, Inc.
10.14(7)       Master Distribution Agreement dated as of June 16, 1997 by and
               among Saratoga Beverage 


                                      21
<PAGE>

               Group, Inc., Hype Corporation, World Wide Beverage Inc., Global
               Brands AG, Hype Water Company, Inc. and Hyperholics Inc.
10.15(8)       Loan Agreement, Securities Purchase Agreement, Secured
               Promissory Note, and Warrants for Messrs. Holliday, Merhi and
               Barr in connection with the loan to Onyx Management Services,
               LLC
10.16(9)+      Securities Purchase Agreement dated February 12, 1998 between
               Saratoga and Carl T. Wolf
10.17(9)+      Stock Option Agreement dated February 25, 1998 between Saratoga
               and Steel Partners II, L.P.
10.18(9)+      Securities Purchase Agreement dated February 25, 1998 between
               Saratoga and Carl T. Wolf
10.19(9)       Option Agreement dated March 16, 1998 between Saratoga and
               Steven Smith
10.20(9)       Letter agreement dated March 29, 1998 between Saratoga and The
               Fresh Juice Company, Inc.
10.21(9)+      Amended and Restated Stock Option Agreement dated April 17, 1998
               between Saratoga and Carl T. Wolf
10.22(9)       Letter agreement dated April 24, 1998 between Saratoga and The
               Fresh Juice Company, Inc.
10.23(11)+     Form of the Saratoga Beverage Group, Inc. 1998 Stock Option Plan
10.24(12)      Commitment letter dated September 24, 1998 between Saratoga and
               NationsBank, N.A.
10.25(11)      Restated Agreement and Plan of Merger dated as of October 13,
               1998 by and among Saratoga, Rowale Corp. and The Fresh Juice
               Company, Inc.
10.26(11)+     Employment Agreement dated October 13, 1998 between Saratoga and
               Jeffrey Heavirland
10.27(11)      Letter agreement dated October 13, 1998 among Saratoga, Fresh
               Juice and Steven Smith (amending the agreement set forth in
               Exhibit 10.30 hereof)
10.28(12)+     Letter agreements dated December 2, 1998 among Saratoga, Fresh
               Juice and Steven Bogen (amending the agreement set forth in
               Exhibit 10.31 hereof)
10.29(12)+     Letter agreement dated December 2, 1998 among Saratoga, Fresh
               Juice and Jeffrey Heavirland
10.30(12)      Employment Agreement effective April 1, 1996 between The Fresh
               Juice Company, Inc. and Steven Smith
10.31(12)      Employment Agreement effective April 1, 1996 between The Fresh
               Juice Company, Inc. and Steven M. Bogen
10.32(12)      Supply Agreement dated March 31, 1996 between The Fresh Juice
               Company, Inc. and Natural Juice Company, Inc.
10.33(12)      Agreement of Lease dated November 24, 1997 between The Fresh
               Juice Company of New York, Inc. and 280 Wilson Avenue
               Associates, L.L.C. and guaranteed by The Fresh Juice Company,
               Inc.
10.34(12)      Industrial Real Estate Lease dated June 17, 1992 between
               Hansen's Juices, Inc. and Pruco Life Insurance Company
21.1(11)       Subsidiaries of Saratoga
25.1(13)       Credit Agreement by and among Saratoga Beverage Group, Inc., as
               Borrower, NationsBank, National Association, as Agent and Lender
               and The Lenders Party Hereto from time to time dated January 29,
               1999
25.2(13)       Robin Prever Employment Agreement dated January 28, 1999
27.0(13)       Financial Data Schedule

-------------
(1)            Incorporated herein by reference to Saratoga's Registration
               Statement on Form SB-2 filed with the SEC on June 16, 1993
               (Registration No. 33-62038NY).
(2)            Incorporated herein by reference to Saratoga's Form 10-KSB filed
               with the SEC on March 30, 1994.
(3)            Incorporated herein by reference to Saratoga's Form 10-KSB filed
               with the SEC on March 29, 1996.
(4)            Incorporated herein by reference to Saratoga's Form 10-QSB filed
               with the SEC on November 12, 1996.
(5)            Incorporated herein by reference to Saratoga's Form 10-KSB filed
               with the SEC on April 15, 1997.
(6)            Incorporated herein by reference to Saratoga's Form 10-QSB filed
               with the SEC on May 13, 1997.


                                      22
<PAGE>

(7)            Incorporated herein by reference to Saratoga's Form 10-QSB filed
               with the SEC on August 8, 1997.
(8)            Incorporated herein by reference to Saratoga's Form 10-KSB filed
               with the SEC on March 20, 1998.
(9)            Incorporated herein by reference to Saratoga's Form 10-QSB filed
               with the SEC on May 11, 1998.
(10)           Incorporated herein by reference to Saratoga's Form 10-QSB filed
               with the SEC on August 5, 1998.
(11)           Incorporated herein by reference to Saratoga's Form 10-QSB filed
               with the SEC on November 5, 1998.
(12)           Incorporated herein by reference to Saratoga's Registration
               Statement on Form S-4 filed with the SEC on December 24, 1998
               (Registration No. 33-369707)
(13)           Filed herewith
(+)            Management agreement.

(P) Paper filing.

(b) Reports on From 8-K: Form 8-K was filed on October 23, 1998 to disclose the
Restated Agreement and Plan of Merger dated as of October 13, 1998 among
Saratoga Beverage Group, Inc., Rowale Corp. and The Fresh Juice Company, Inc.



                                      23
<PAGE>




SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated:     March 30, 1999

                                 By:  /s/ Robin Prever          
                                    ------------------------------------------
                                      Robin Prever, President

                                 By: /s/ Gayle Henderson
                                    ------------------------------------------
                                     Gayle Henderson, Chief Financial Officer

In accordance with the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

         Signature                         Capacities                    Date
         ---------                         ----------                    ----
                             President, Chief Executive Officer,
      /s/ Robin Prever       And Co-Chairman of the Board of Directors
----------------------------
        Robin Prever

      /s/ Adam Madkour       Chief Operating Officer
----------------------------
        Adam Madkour

    /s/ Gayle Henderson      Chief Financial Officer
----------------------------
      Gayle Henderson

  /s/ Jeffrey Heavirland     Executive Vice President
    Jeffrey Heavirland

   /s/ Leonard Toboroff      Director
----------------------------
     Leonard Toboroff

 /s/ Warren Lichtenstein     Director
----------------------------
    Warren Lichtenstein

     /s/ Steven Bogen        Director
----------------------------
       Steven Bogen

   /s/ R. J. Barry Cox       Director
----------------------------
     R. J. Barry Cox



                                      24
<PAGE>

ITEM 13.  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                       Page

Report of Independent Accountants.....................................  F-2

Consolidated balance sheets as of December 31, 1998 and                 
1997..................................................................  F-3

Consolidated income statements for the years 
ended December 31, 1998 and 1997......................................  F-4

Consolidated statements of stockholders' equity
for the years ended December 31, 1998 and 1997........................  F-5

Consolidated statements of cash flows for the years 
ended December 31, 1998 and 1997......................................  F-6

Notes to consolidated financial statements ...........................  F-7



                                      F-1
<PAGE>






REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Saratoga Beverage Group, Inc. and Subsidiary

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Saratoga
Beverage Group Inc. and Subsidiary at December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the two years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

                                                     PricewaterhouseCoopers LLP

Albany, New York
February 26, 1999



                                      F-2
<PAGE>



                         SARATOGA BEVERAGE GROUP, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,   DECEMBER 31,
                                                                           1998           1997
                                                                        -----------    -----------
<S>                                                                     <C>            <C>        
ASSETS
Current Assets:
       Cash and cash equivalents                                        $ 2,576,873    $ 1,567,973
       Short term investments                                                            1,153,915
       Accounts receivable, net of allowance for doubtful 
         accounts of $12,955 in 1998 and $150,695 in 1997                   874,821        689,774
       Inventories                                                          473,265        360,670
       Prepaid expenses and other current assets                             32,471         29,993
                                                                        -----------    -----------

            Total current assets                                          3,957,430      3,802,325

Property, plant and equipment, net                                        1,501,953      1,501,030
Deferred financing costs, net                                               911,607         83,415
Note receivable, net of allowance  of $400,000 in 1998                         --          300,000
Deferred acquisition costs                                                  762,890           --
Other assets, net                                                           365,339         18,049
                                                                        -----------    -----------

           TOTAL ASSETS                                                 $ 7,499,219    $ 5,704,819
                                                                        ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:
       Accounts payable and accrued liabilities                         $ 1,539,060    $ 1,282,889
       Current portion of obligation under capital lease and note            15,533          6,698
                                                                        -----------    -----------

              Total current liabilities                                   1,554,593      1,289,587

Obligation under capital lease and note                                      54,556          1,208
5% subordinated convertible note                                          1,500,000      1,500,000
                                                                        -----------    -----------

              TOTAL LIABILITIES                                           3,109,149      2,790,795
                                                                        -----------    -----------

Commitments and contingencies

Stockholders' Equity:
       Preferred stock, $.01 par value; 5,000,000 shares authorized,
         no shares issued and outstanding
       Class A common stock, $.01 par value; 50,000,000 shares
         authorized; and 2,676,139 and 2,407,039 shares issued in
         1998 and 1997, respectively                                         26,761         24,070
       Class B convertible common stock, $.01 par value;
         2,000,000 shares authorized;  522,955 and 562,055 shares
         issued and outstanding  in 1998 and 1997, respectively               5,230          5,621
       Paid-in capital                                                    9,953,522      9,346,922
       Accumulated deficit                                               (5,595,443)    (6,462,589)
                                                                        -----------    -----------

            TOTAL STOCKHOLDERS' EQUITY                                    4,390,070      2,914,024
                                                                        -----------    -----------

            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $ 7,499,219    $ 5,704,819
                                                                        ===========    ===========
</TABLE>

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



                                      F-3
<PAGE>

                         SARATOGA BEVERAGE GROUP, INC.
                         CONSOLIDATED INCOME STATEMENTS

<TABLE>
<CAPTION>
                                                 YEAR ENDED            YEAR ENDED
                                              DECEMBER 31, 1998     DECEMBER 31, 1997
                                                                    
<S>                                              <C>                   <C>        
Total Revenue                                    $ 8,881,242           $ 6,270,691
                                                                    
Cost of Goods Sold, exclusive of depreciation,                      
   amortization, and equipment lease                                
   expense shown separately below                  5,522,934             3,762,549
                                                 -----------           -----------
                                                                    
    Gross Profit                                   3,358,308             2,508,142
                                                 -----------           -----------
                                                                    
Operating Expenses:                                                 
  Marketing and sales                                764,723               388,709
  General and administration                         935,084             1,033,850
  Depreciation and amortization                      435,564               393,876
  Equipment lease expense                            130,753                11,050
                                                 -----------           -----------
                                                   2,266,124             1,827,545
                                                 -----------           -----------
                                                                    
    Operating Income                               1,092,184               680,597
                                                                    
Other Income (Expense):                                             
  Commission income                                  103,538               126,735
  Interest income                                    169,331                52,259
  Interest expense                                   (80,307)              (47,004)
  Provision for loss on note receivable             (400,000)                    0
                                                 -----------           -----------
        Other Income (Expense), net                 (207,438)              131,990
                                                 -----------           -----------
                                                                    
Income before income taxes                           884,746               812,587
Provision for income taxes                            17,600                 7,959
                                                 -----------           -----------
Net Income                                       $   867,146           $   804,628
                                                 ===========           ===========
                                                                    
Per Share Information:                                              
Basic earnings per share                               $0.27                 $0.28
Diluted earnings per share                             $0.26                 $0.25
</TABLE>
                                                                

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




                                      F-4
<PAGE>



                         SARATOGA BEVERAGE GROUP, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                       CLASS A      CLASS B      PAR         PAID-IN     ACCUMULATED     TREASURY
                                        SHARES      SHARES      VALUES       CAPITAL       DEFICIT         STOCK       TOTAL
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>          <C>        <C>           <C>             <C>         <C>       
       Balance, December 31, 1996     1,691,224    1,036,036    $27,273    $9,258,405    $(7,267,217)    $(3,990)    $2,014,471

       Conversion of Class B into
             Class A common stock       473,981    (473,981)
       Issuance of treasury stock                                                                           3,990         3,990
        Exercise of stock options        41,834                     418        75,083                                    75,501
        Issuance of stock warrant                                              22,800                                    22,800
       Exercise of stock warrants       300,000                   3,000                                                   3,000
      Forfeiture and cancellation
               of escrowed shares     (100,000)                 (1,000)                                                 (1,000)
Distribution to minority interest                                             (9,366)                                   (9,366)
                       Net Income                                                             804,628                   804,628
                                     -----------  -----------  ---------  ------------  -------------   ----------  ------------

       Balance, December 31, 1997     2,407,039      562,055     29,691     9,346,922     (6,462,589)       -         2,914,024

       Conversion of Class B into                
             Class A common stock        39,100     (39,100)
       Purchase of treasury stock                                                                       (499,500)     (499,500)
     Retirement of treasury stock     (250,000)                 (2,500)     (497,000)                     499,500
        Exercise of stock options        30,000                     300        37,200                                    37,500
       Issuance of Class A shares       450,000                   4,500     1,008,000                                 1,012,500
     Issuance of stock options in
      connection with acquisition                                              58,400                                    58,400
                       Net Income                                                             867,146                   867,146
                                     -----------  -----------  ---------  ------------  -------------   ----------  ------------
       Balance, December 31, 1998     2,676,139      522,955    $31,991    $9,953,522    $(5,595,443)      $-        $4,390,070
                                     ===========  ===========  =========  ============  =============   ==========  ============
</TABLE>


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

                                      F-5
<PAGE>

                         SARATOGA BEVERAGE GROUP, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              -----------------     -----------------
                                                                  YEAR ENDED           YEAR ENDED
                                                              DECEMBER 31, 1998     DECEMBER 31, 1997
                                                              -----------------     -----------------
<S>                                                              <C>            <C>        
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income                                                  $   867,146          $   804,628
      Adjustments to reconcile net income  to                                       
      net cash provided by operating                                                
      activities:                                                                   
      Depreciation and amortization                                  435,564              393,876
      Provision for loss on note receivable                          400,000        
      Provision for doubtful accounts                                (47,971)              56,874
      Changes in operating assets and liabilities:                                  
        Accounts receivable                                         (137,076)            (348,453)
        Inventories                                                 (112,595)            (177,598)
        Prepaid expenses and other current assets                     (2,478)              (4,566)
        Accounts payable and accrued liabilities                    (737,126)             981,222
                                                                 -----------          -----------
  Net cash provided by operating activities                          665,464            1,705,983
                                                                 -----------          -----------
  CASH FLOWS FROM INVESTING ACTIVITIES                                              
     Sale (purchase) of short term investments                     1,153,915           (1,153,915)
     Issuance of note receivable                                    (100,000)            (300,000)
     Purchase of property, plant and equipment                      (328,350)            (255,419)
     Deferred acquisition costs                                     (126,452)       
     Increase in other assets                                       (347,290)              (3,145)
                                                                 -----------          -----------
  Net cash provided by (used in) investing activities                251,823           (1,712,479)
                                                                 -----------          -----------
 CASH FLOWS FROM FINANCING ACTIVITIES                                               
     Proceeds from long-term borrowing                                                  1,500,000        
     Payment of deferred financing costs                            (448,000)             (80,750)
     Principal payments on revolving credit facility                                     (300,000)       
     Principal payments on capital lease obligations                  10,887               (5,844)
     Proceeds from issuance of common stock                        1,012,500        
     Proceeds from exercise of stock warrants                                               3,000        
     Proceeds from the exercise of stock options                      37,500               75,501
     Issuance (purchase) of treasury stock                          (499,500)               3,990
     Distribution to minority interest                                                     (9,366)       
                                                                 -----------          -----------
  Net cash provided by financing activities                           91,613            1,186,531
                                                                 -----------          -----------
  Increase in cash and cash equivalents                            1,008,900            1,180,035
  Cash and cash equivalents at beginning of period                 1,567,973              387,938
                                                                 -----------          -----------
  Cash and cash equivalents at end of period                     $ 2,576,873          $ 1,567,973
                                                                 ===========          ===========
 SUPPLEMENTAL DISCLOSURE OF CASH                                                    
 FLOW INFORMATION                                                                   
  Income taxes paid                                              $    29,161          $     3,750
                                                                 ===========          ===========
  Interest paid                                                  $    77,380          $     4,873
                                                                 ===========          ===========
 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND                                   
 FINANCING ACTIVITIES                                                               
 Acquisition of equipment under capital lease and note           $    73,070          $         0
                                                                 ===========          ===========
  Stock options issued in connection with acquisition            $    58,400          $         0
                                                                 ===========          ===========
  Accrued acquisition and financing costs                        $   993,297          $         0
                                                                 ===========          ===========
</TABLE>                                                                   

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


                                      F-6
<PAGE>





                         SARATOGA BEVERAGE GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES

COMPANY'S ACTIVITY:

Saratoga Beverage Group, Inc. (the "Company") is primarily engaged in the
bottling, marketing, and distribution of natural spring water and in packaging
products for others ("co-packing"). The Company distributes product primarily
on the east coast of the United States.

The 1998 financial statements include the Company and its wholly-owned
subsidiary, Rowale Corp. which was incorporated in the State of Delaware on
March 2, 1998. The 1997 financial statements include the Company and its
wholly-owned subsidiary, Saratoga Springs Distribution Corporation which was
dissolved in July 1997. All significant inter-company balances and transactions
have been eliminated.

USE OF ESTIMATES:

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

REVENUE RECOGNITION:

Revenue is recognized upon shipment of merchandise to a customer for Saratoga
product and upon completion of production for co-packed product.

CASH EQUIVALENTS:

The Company considers all investments with original maturities of three months
or less to be cash equivalents. Cash equivalents includes investments in money
market funds. These investments are stated at cost, which approximate market
value.

SHORT TERM INVESTMENTS:

Short term investments consist of U.S. Treasury bills and are recorded at fair
value.

INVENTORIES:

Inventories are stated at the lower of cost or market with cost being
determined by the first-in, first-out method.

PROPERTY, PLANT, EQUIPMENT AND INTANGIBLE ASSETS:

Property, plant, equipment and intangible assets are carried at cost less
allowances for accumulated depreciation and amortization. The cost of
properties held under capital leases are equal to the lower of the net present
value of the minimum lease payments or the fair market value of the leased
property at the inception of the lease. Significant additions or improvements
extending the assets' useful lives are capitalized. Normal maintenance and
repair costs are expensed as incurred. When assets are sold, retired, or
otherwise disposed of, the applicable costs and accumulated depreciation are
removed from the accounts and resulting gain or loss is recognized.

Depreciation is computed by the straight-line method at rates based upon the
estimated service life of the various classes of assets (7 to 32 years).

Trademark costs are included in the caption "Other assets." These costs are
amortized over 15 years on the straight-line basis. Deferred financing costs
related to the 5% subordinated convertible note are amortized over three years,
the life of the Note.


                                      F-7
<PAGE>

Also included in deferred financing costs at December 31, 1998 are costs
associated with the acquisition of The Fresh Juice Company, Inc. (see note 12).
When intangible assets become fully amortized, the applicable costs and
accumulated amortization are removed from the accounts. Also included in other
assets is the cost of acquiring shares of Fresh Juice stock by the Company's
wholly-owned subsidiary, Rowale Corp.

The Company evaluates impairment of intangible and long lived assets whenever
circumstances indicate that the carrying amount of an asset may not be
recoverable. An impairment loss is recognized when the carrying amount of the
assets exceeds its fair value.

INCOME TAXES:

The Company accounts for income taxes according to Financial Accounting
Standard No. 109 (FAS 109). The Standard requires the use of the asset and
liability method of accounting for income taxes. Under this method, deferred
taxes are recognized for the tax consequences of temporary differences by
applying enacted statutory tax rates applicable to future years for the
differences between the financial statement and tax basis of existing assets
and liabilities.

In the year ended December 31, 1998, the Company offset substantially all
income taxes through the use of federal income tax loss carryforwards. At
December 31, 1998 and 1997 the Company has available approximately $2,774,730
and $3,781,000 respectively of federal income tax loss carryforwards which may
be subject to annual limitations on their usage and begin to expire in the year
2008. A tax benefit has not been recognized because a valuation allowance has
been recorded for the entire amount of the deferred tax asset related to the
net operating loss carryforwards.

PER SHARE DATA:

Effective December 31, 1997, the Company implemented Financial Accounting
Standard No. 128 (FAS 128) "Earnings Per Share". In accordance with this
Standard, net income/(loss) per share is computed using the weighted average
number of shares of Class A and Class B common stock outstanding during each
year. Diluted net income(loss) per share includes the effect of all potentially
dilutive securities. Earnings per share amounts for all periods presented have
been computed in accordance with this Standard.

STOCK-BASED COMPENSATION:

Under the provisions of Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation", companies can elect to
account for stock-based compensation plans using a fair-value based method or
continue measuring compensation expense for those plans using the intrinsic
value method prescribed in the Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" (APB 25) and related
interpretations. The Company elected to continue using the intrinsic value
method to account for its stock-based compensation plans. SFAS 123 requires
companies electing to continue using the intrinsic value method to make certain
pro forma disclosures (Note 13).

RECLASSIFICATION:

Certain 1997 amounts have been reclassified to conform with the 1998
presentation.

                                      F-8
<PAGE>

NEW ACCOUNTING STANDARDS:

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard No. 130, Reporting Comprehensive Income. This standard
requires companies to disclose certain information regarding comprehensive
income and its components (revenues, expenses, gains, and losses) and is
required to first be disclosed in annual financial statements for fiscal years
beginning after December 15, 1997. The Company requires no additional
disclosure under this standard for the year ended December 31, 1998.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard No. 131, Disclosures about Segments of an Enterprise and
Related Information. This standard requires companies to disclose certain
information regarding operating segments in interim and annual financial
statements, and is required to first be disclosed in annual financial
statements for fiscal years beginning after December 15, 1997. The Company
requires no additional disclosure under this standard for the year ended
December 31, 1998 because management operates the business as one segment, the
bottling and sales of water to third parties. Management has not yet determined
the extent of additional disclosure required in 1999 from the acquisition of
The Fresh Juice Company, Inc. 

The Financial Accounting Standards Board has also issued Statement of Financial
Accounting Standard No. 133, Accounting for Derivative Instruments and Hedging
Activities. The standard establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that a company
recognize derivatives as assets or liabilities measured at fair value. This
standard is effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management has not yet determined the impact of adoption of this
accounting standard.



                                      F-9
<PAGE>



2.  EARNINGS PER SHARE

     The calculation of earnings per share is as follows:

                                             1998               1997
                                             ----               ----


Numerator

Net income (loss)                          $867,146 Basic      $804,628 Basic

Impact of potential common shares:
             Interest expense on 5%
             subordinated convertible
             note                            75,000              41,485
                                           --------            --------

                                           $942,146 Diluted    $846,086 Diluted
                                           ========            ========



Denominator
     Weighted-average
     outstanding shares                   3,166,327 Basic    2,924,589  Basic
     Impact of potential common shares:
              Stock options                  74,282             27,280
              Convertible debt              428,571            428,571         
                                          ---------          ---------

                                          3,669,180 Diluted  3,380,440  Diluted
                                          =========          =========

Outstanding warrants and options for 230,158 and 440,358 shares of stock in
1998 and 1997 respectively were not included in the calculation of earnings per
share because they were considered to be anti-dilutive. Additionally, the
Company issued 2,133,553 shares of Class A common stock in connection with its
acquisition of Fresh Juice in January, 1999 which are not included in this
calculation.

3.   INVENTORIES

Inventories consist of the following:

                                     1998            1997
                                     ----            ----

     Raw Materials                 $152,459        $115,863
     Finished Goods                 320,806         244,807
                                  ---------       ---------

     Total Inventories             $473,265        $360,670
                                  =========       =========


                                     F-10
<PAGE>




4.   PROPERTY, PLANT, AND EQUIPMENT

Balances of major classes of assets and allowances for depreciation and
amortization, are as follows:

                                                1998             1997
                                                ----             ----
     Land                                      $303,892          $303,892
     Building                                   718,265           493,221
     Machinery & equipment                    2,340,635         2,153,555
     Computer equipment                          71,946            60,586
     Furniture & fixtures                       121,198           107,249
     Equipment under capital lease               62,814            18,974
     Construction in progress                     3,717           83,570
                                            ------------      ------------
                                              3,622,467         3,221,047
     Less:

     Accumulated depreciation               (2,110,450)       (1,715,273)
     Accumulated amortization
       equipment under capital lease           (10,064)           (4,744)
                                            ------------      ------------
                                             $1,501,953        $1,501,030
                                            ============      ============


Depreciation and amortization expense on property, plant and equipment for the
years ended December 31, 1998 and 1997 was $400,497 and $372,786 respectively.

5.   NOTE RECEIVABLE

On December 23, 1997 the Company and Onyx Management Services, LLC ("Onyx")
entered into a loan agreement whereby the Company agreed to loan Onyx a maximum
of $800,000 (the "Loan") for working capital and general business purposes. As
of December 31, 1998 the Company had loaned and advanced to Onyx a sum of
$400,000. The Onyx loan is collateralized by all assets of Onyx.

Interest on the principal amount of the note at a per annum rate equal to the
greater of (i) eight percent (8%) or (ii) the Prime Rate plus one percent (1%)
as in effect on the first day of the calendar quarter for which such interest
shall accrue is payable in arrears quarterly on the first day of each calendar
quarter, beginning on April 1, 1998. At December 31, 1998, the interest rate
was 9.25%.

$300,000 of the principal amount outstanding under the Onyx note shall become
due and payable in full on December 23, 2001 and the remaining unpaid principal
amount outstanding under the Onyx note shall be come due and payable in full on
December 23, 2000. In addition, the Company has a ten year warrant to purchase
35% of outstanding stock of Onyx for 100,000 shares of the Company's Class A
common stock.

At December 31, 1998 the Company recorded an allowance of $400,000 for the Onyx
note receivable. Interest receivable from Onyx in the amount of $9,250 for the
1998 December quarter has not been paid to the Company as of March 15, 1999 and
the Company has declared a default under the Onyx Note. The Company will
continue to monitor the note receivable and to pursue collection of the Onyx
note receivable.

6.   INDEBTEDNESS

The Company entered into a Securities Purchase Agreement with Parley
International, as nominee for Maerki Baumann & Co., A.G. (Zurich)
("Purchaser"), pursuant to which Purchaser acquired $1,500,000 principal amount
of the Company's 5% Subordinated Convertible Notes due 2000 (the "Note") for an


                                      F-11
<PAGE>

aggregate purchase price of $1,500,000 in a private placement effected under
Section 4(2) of the Securities Act of 1933. Interest becomes due and payable on
each of the first, second and third anniversaries.

The principal amount of the Note is due and payable on the third anniversary of
the Note and is convertible at the option of the holder into shares of the
Company's Class A common stock at a conversion price of $3.50 principal amount
per share. The Note is mandatorily convertible into shares of Class A common
stock in the event that the closing price of Class A common stock exceeds $5.25
for three consecutive trading days.

Global Financial Group, Inc. acted as placement agent in connection with the
offering of the Note and, in connection therewith, received a cash commission
in the amount of $80,750 and was issued a warrant to acquire 30,000 shares of
Class A common stock for an exercise price of $3.50 per share. The warrant was
determined to have a fair value of $22,800, using the Black Scholes Valuation
method. The financing costs are amortized over the life of the Note, three
years.

On January 31, 1997, the Company and Triarc Companies, Inc. ("Triarc")
terminated their credit agreement. As consideration for terminating the
agreement and canceling certain warrants, Saratoga paid the $300,000
outstanding principal balance on the revolving credit facility plus accrued
interest through January 30, 1997 and issued 300,000 shares of Class A common
stock to Triarc for $0.01 per share.

7.   COMMITMENTS AND CONTINGENCIES

Future minimum rental commitments under capital leases and non-cancelable
operating leases at December 31, 1998 are:

 Year Ended                   Operating Leases       Capital Leases
 ----------                   ----------------       --------------
 1999                             $130,754              $11,870
 2000                              130,754               10,641
 2001                              130,754               10,641
 2002                              130,754               10,641
 2003                              130,754                5,764
 Thereafter                        119,858
                             -------------------------------------

                                 $773,628                49,557
                             ================
 Less
 Implicit Interest                                       (8,172)
                                                     -------------
                                                        $41,385
                                                     =============

Rental expense for the years ended December 31, 1998 and December 31, 1997 was
$130,754 and $17,223, respectively.

In June 1993, the Company entered into an employment agreement with its
president and chief executive officer providing for annual compensation of
$125,000. The agreement provided for payment of an annual bonus at the sole
discretion of the Board of Directors, with a minimum bonus each year equal to
5% of the Company's pre-tax profit in each contract year. On January 28, 1999,
the Company entered into a new four year employment agreement with its
president, chief executive officer and chairperson of the Board (and a
director), providing for annual compensation of $200,000. The compensation
committee of the Company Board shall set goals on an annual basis for the
Executive's performance as an officer of the Company, and shall cause the
Company to pay to an annual bonus in addition to the Salary based on the
achievement by the Executive of such goals. Non-qualified stock options to
purchase 300,000 shares of Class A common stock were issued at a price of
$2.438 per share as part of this agreement and shall vest over a three year
period from the date of grant at a rate of 33% per year, commencing with the
first anniversary of the date of grant. Executive's vested stock options shall
be exercisable for a period of ten (10) years from the date of issuance.


                                     F-12
<PAGE>
8. RELATED PARTY TRANSACTIONS

At December 31, 1998 and 1997, the Company's cash and cash equivalent balance
includes approximately $2,506,177 and $2,487,000 respectively in a money market
account and short term investments with Dean Witter Reynolds, Inc. A principal
stockholder of the Company is an officer of Dean Witter Reynolds, Inc.

9. PREFERRED STOCK

The Company's Restated Certificate of Incorporation authorizes the issuance of
5,000,000 shares of preferred stock with such designations, rights, and
preferences as may be determined from time to time by the Board of Directors
without further stockholder action. The terms of any series of preferred stock
may include priority claims to assets and dividends and voting or other rights.
No preferred shares have been issued.

10. COMMON STOCK

The Class A common stock and the Class B common stock are identical, except
that the holder of each share of Class A common stock is entitled to one vote,
and the holder of each share of Class B common stock is entitled to five votes
on each matter submitted to stockholder vote. Each share of Class B common
stock is convertible at any time at the option of the holder into one share of
Class A common stock. Subject to certain limited exceptions, each share of
Class B common stock will automatically be converted into one share of Class A
common stock upon any sale or transfer thereof or upon the death of the Class B
common stockholder. At December 31, 1998, 522,955 shares of class A common
stock are reserved for issuance upon conversion of Class B shares.

11.  STOCK OPTIONS AND WARRANTS

In June 1993, the Board of Directors of the Company approved the adoption of
the Saratoga Spring Water Company 1993 Stock Option Plan (the "1993 Stock
Option Plan"). The 1993 Stock Option Plan provided for the issuance of options
covering up to 466,000 shares of Class A common stock (subject to adjustments
in the event of stock splits, stock dividends and similar dilutive events) and
Stock Appreciation Rights in tandem with options. Generally, Stock Appreciation
Rights will be subject to the same terms and conditions as options. Options may
be granted under the 1993 Stock Option Plan to employees, officers or directors
of, and consultants and advisors to the Company.

On December 12, 1995 the shareholders of the Company approved an amendment to
the 1993 Stock Option Plan increasing the number of shares available for
issuance from 466,000 to 616,000.

Options granted to employees may either be incentive stock options (as defined
in the Internal Revenue Code of 1986, as amended) or non qualified stock
options. The purchase price of the Class A common stock made subject to an
option shall be determined by the Compensation Committee at the time of grant,
provided that the purchase price of incentive stock options may not be less
than the fair market value of the Company's Class A common stock on the date of
grant. Subject to the foregoing, the terms of each option and the increments in
which it is exercisable are determined by the Compensation Committee, provided
that no option may be exercised after ten years and one day from the date of
grant (ten years in the case of an incentive stock option). To the extent that
the aggregate fair market value, as of the date of grant, of the shares for
which incentive stock options become exercisable for the first time by an
optionee during any calendar year exceeds $100,000, the portion of such option
which is in excess of the $100,000 limitation will be treated as a non
qualified stock option. In addition, if an optionee owns more than 10% of the
total voting power of all classes of the Company's stock at the time the
individual is granted an incentive stock option, the purchase price per share
cannot be less than 110% of the fair market value on the date of grant and the
term of the incentive stock option cannot exceed five years from the date of
grant. Generally, options vest over a three year period unless the Compensation
Committee accelerates such provisions.


                                     F-13
<PAGE>

Furthermore, under the 1993 Stock Option Plan, directors who are not also
employees of the Company receive an Option ("Initial Option") to purchase 2,000
shares of Class A common stock upon their initial election to the Board of
Directors, exercisable at the fair market value on the date of grant. On June
23, 1993, each person who was then a non-employee director received 2,000
options ("IPO Options"), at an exercise price of $5.00 per share. These options
are exercisable as to 33 1/3% of the shares subject thereto on the date of
grant, and as to 33 1/3% on each of the following two anniversaries of such
date of grant. In addition, on the date of each annual meeting of stockholders
held subsequent to January 1, 1994, each qualified director will automatically
receive options ("Annual Options") to purchase 2,000 shares of Class A common
stock exercisable 50% per year over a period of two years beginning on the date
of grant, at the fair market value of the Class A common stock on the date of
grant. The Company intends to seek stockholder approval at the 1999 annual
meeting of stockholders to retroactively, as of June 29, 1998, terminate this
provision of the 1993 Stock Option Plan, given the approval of the 1998 Stock
Option Plan (as hereinafter defined).

Generally, options granted to directors under the 1993 Stock Option Plan will
terminate three months after the date of the director's termination,
resignation or retirement from the Board of Directors of the Company, but in no
event after the option has expired by its terms. If any option granted under
the 1993 Stock Option Plan should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased shares will become
available for further grant under the Stock Option Plan.

At the annual meeting of stockholders held on October 28, 1998 the Saratoga
Beverage Group, Inc. 1998 Stock Option Plan (the "1998 Stock Option Plan") was
approved. The 1998 Stock Option Plan provides for the issuance of options
covering up to 900,000 shares of Class A Common Stock or Class B Common Stock
(collectively "Shares") (subject to adjustments in the event of stock splits,
stock dividends and similar dilutive events). Options may be granted under the
1998 Stock Option Plan to employees, officers or directors of the Company. The
1998 Stock Option Plan will be administered by the Stock Option Committee of
the Board (the "Committee").

Options granted to employees may either be incentive stock options (as defined
in the Internal Revenue Code of 1986, as amended) ("ISOs") or non-qualified
stock options ("NQSOs"). The purchase price of the Shares made subject to an
option shall be determined by the Stock Option Committee at the time of grant,
provided that the purchase price of incentive stock options may not be, and the
price of non-qualified options generally will not be, less than the fair market
value of the Class A Common Stock on the date of grant. Subject to the
foregoing, the terms of each option and the increments in which it is
exercisable are determined by the Stock Option Committee, which will generally
provide that no option may be exercised after ten years from the date of grant.
If an optionee owns more than 10% of the total voting power of all classes of
the Company's stock at the time the individual is granted an ISO, the purchase
price per share cannot be less than 110% of the fair market value on the date
of grant and the term of the ISO cannot exceed five years from the date of
grant.

Non-employee directors and key employees (defined as full-time employees) of
the Company or any future Subsidiary Corporation (as defined in the 1998 Stock
Option Plan) of the Company are eligible to participate in the 1998 Stock
Option Plan; provided, however, that ISOs may only be granted to employees of
the Company or a Subsidiary Corporation. Each non-employee director of the
Company on January 1 of a year during the term of the 1998 Stock Option Plan
will automatically receive options to purchase 5,000 shares of 


                                     F-14
<PAGE>

Class A common stock at the fair market value of the Class A common stock on
the date of grant.

Any one optionee may not be granted options to purchase in excess of 300,000
shares of Common Stock during any fiscal year of the Company; provided,
however, that the Committee may adopt procedures for the counting of shares
relating to any grant of options to ensure appropriate counting, avoid double
counting and provide for adjustments in any case in which the number of shares
actually distributed differs from the number of shares previously counted in
connection with such grant; provided further, however, that the options granted
under the 1993 Plan shall not be treated as outstanding.



                                     F-15
<PAGE>




The following relates to stock options outstanding at December 31, 1998:

<TABLE>
<CAPTION>
                                            OUTSTANDING                                 EXERCISABLE
                         --------------------------------------------------------------------------------------
                                                               WEIGHTED                            WEIGHTED
                                              WEIGHTED          AVERAGE                            AVERAGE
   EXERCISE                NUMBER OF        AVERAGE LIFE       EXERCISE          NUMBER OF         EXERCISE 
 PRICE RANGE                 SHARES             (A)              PRICE            SHARES            PRICE
---------------------------------------------------------------------------------------------------------------
<S>                     <C>                   <C>            <C>               <C>               <C>  
$0.94 -- 2.50              367,062               7.6            $2.23             201,062           $2.24
$2.51 -- 5.00              209,158               6.9             3.19             204,158            3.21
$7.51 -- 10.00               1,000               4.9             8.75               1,000            8.75
                             -----                                                  -----
    Total                  577,220               7.4             2.59             406,220            2.74
                           =======                                                =======
</TABLE>

     (a) Average remaining contractual life in years.

The following activity occurred during 1998 and 1997 with respect to options
granted under the stock option plans:

<TABLE>
<CAPTION>
                                               1998                                   1997
                                 ---------------------------------     -----------------------------------
                                                WEIGHTED-AVERAGE                       WEIGHTED-AVERAGE
                                    SHARES       EXERCISE PRICE         SHARES          EXERCISE PRICE
                                 -------------------------------------------------------------------------
<S>                              <C>             <C>                <C>                  <C>  
Outstanding on January 1            359,839         $5.02              444,006              $4.32
Granted at fair value               437,501          2.37               15,423               2.59
Exercised                            30,000          1.25               41,834               1.78
Expired                             190,120          6.74               57,756               1.29
                                 -----------                           ------- 
Outstanding on December 31          577,220          2.59              359,839               5.02
                                                                       =======
                                 ===========                      
Exercisable on December 31          406,220          2.74              349,791               5.09
                                 ===========                           =======
</TABLE>
                                                                

Shares available for grant were 853,436 and 200,817 at December 31, 1998 and
December 31, 1997, respectively.

The Company applies APB Opinion No. 25 and related interpretations in
accounting for the stock option plans. Accordingly, no compensation expense has
been recognized for employee option grants. Non-employee option grants of
30,000 options with an estimated fair value of $58,400 have been included in
deferred acquisition costs and will be included in the determination of the
purchase price of Fresh Juice. Had compensation cost for the stock option plans
been determined based on the fair value at the grant dates, for awards under
the plan, the Company's net income and net income per share would have been
reduced as follows:

         YEAR ENDED DECEMBER 31              1998                 1997
------------------------------------------------------------------------------
Net income (loss)
    As reported                            $867,146              $804,628
    Pro forma                              $465,148              $781,970
Earnings per share
    Basic EPS as reported                     $0.27                 $0.28
    Diluted EPS as reported                   $0.26                 $0.25
    Pro forma Basic EPS                       $0.15                 $0.27
    Pro forma Diluted EPS                     $0.13                 $0.24

                                     F-16
<PAGE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes Option - pricing model with the following weighted average
assumptions used for grants in 1998 and 1997, respectively; dividend yields of
0 percent for both years; expected volatility of 88.9 percent for 1998 and
103.0 percent for 1997; risk-free interest rates of 5.6 and 6.0 percent for
1998 and 1997 respectively; and expected lives of five years for both years.
The weighted-average fair value of options granted was $2.36 and $2.59 for the
years ended December 31, 1998 and 1997, respectively. The impact of SFAS No.
123 may not be representative of the effect on future years because options
vest over several years and additional option grants may be made each year.

In connection with the Company's initial public offering, the Company's
underwriter, D.H. Blair Investment Banking Corp. received a total of 120,000
common stock purchase warrants exercisable over four years, commencing one year
after the effective date of the public offering. These warrants expired June
22, 1998.

12. EMPLOYEE BENEFIT PLAN

On April 1, 1998 the Company adopted a 401(k) Profit Sharing Plan which
provides for an employee salary deferral contribution and Company
contributions. Employees are permitted to contribute a percentage of their
compensation as defined by the Plan Documents. The Company contributes for each
participant a matching contribution equal to 50% of the participant's "eligible
contributions." The Company may or may not contribute an additional amount of
matching contributions determined by the Company at its discretion. Total
Company contributions for 1998 were $11,691.

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value.

CASH, CASH EQUIVALENTS, AND SHORT TERM INVESTMENTS:

The carrying amount of cash and cash equivalents at December 31, 1998 and 1997
was $2,576,873 and $1,567,973, respectively, which approximates fair value
because of the short maturity of those financial instruments. The short-term
investments of $1,153,915 at December 31, 1997 included two United States
Treasury Bills due May 21, 1998 and November 12, 1998 with a yield to maturity
of 5.3770%.

DEBT:

The carrying amount of short-term debt, including capital lease obligations, at
December 31, 1998 and 1997 was $15,533 and $6,698 respectively, which
approximates fair value. The carrying amount of long-term debt at December 31,
1998 and 1997 was $1,554,556 and $1,501,208 respectively which approximate fair
value. The fair value of these financial instruments was based on the Company's
current borrowing rates for similar types of borrowing arrangements.

14.  CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of cash and trade receivables. At December
31, 1998 and 1997, approximately $2,506,122 and $113,000 of cash was on deposit
at financial institutions in excess of Federal deposit insurance limits.

Revenue from the Company's largest distributor, for the years ended December
31, 1998 and 1997 was 20% and 15% of total revenues, respectively. For the
years ended December 31, 1998 and 1997 32% and 36% of total revenues were
generated from co-packing. One co-packing customer represents 19% and


                                     F-17
<PAGE>

22% of total revenue for the years ended December 31, 1998 and 1997,
respectively.

In June 1997, the Company entered into a three-year master distribution
agreement whereby the Company was granted the exclusive right and license to
act as the master distributor of certain products in the United States until
June 2000. The Company receives a minimum commission of $1.00 per case for each
case of products sold. The Company is responsible for collecting the
receivables from customers and remitting payments to vendors. At December 31,
1998 $155,494 was included in accounts receivable and $115,423 in accounts
payable and accrued liabilities, related to this agreement.

15.  ACQUISITION OF THE FRESH JUICE COMPANY, INC. (Unaudited)

On January 29, 1999, the Company acquired The Fresh Juice Company, Inc. ("Fresh
Juice"). Fresh Juice produces, markets and sells fresh squeezed and frozen
fresh squeezed orange juice, grapefruit juice, fresh fruit smoothies and other
non-carbonated beverages nationally under the brand names "Just Pik't", "Fresh
Pik't", "Florida Pik't", "Ultimate" and "Hansen's". The majority of the juice
produced by Fresh Juice is fresh squeezed orange juice. The transaction was
accounted for as a purchase. The purchase price of $21.7 million was comprised
of cash of approximately $16.4 million and 2,133,553 shares of Saratoga Class A
common stock. The cash payment was financed through a credit agreement
consummated with NationsBank, N.A., which included an $8 million term loan and
a $14 million revolving credit facility. Preliminary estimates anticipate that
the purchase price exceeded the fair value of net assets acquired by
approximately $15.1 million, which is being amortized on a straight-line basis
over 25 years.

The following summarized unaudited proforma financial information for the years
ended December 31, 1998 and 1997 assumes the acquisition had occurred on
January 1 of each year:

PRO FORMA INFORMATION

(in millions, except per share data)              1998        1997
----------------------------------------------------------------------
Net sales                                        $46.5        $47.7
Net (loss)                                        (1.3)        (0.3)
(Loss) per share
  Basic and fully diluted                        ($0.25)      ($0.06)
----------------------------------------------------------------------

These amounts include Fresh Juice's results for years ended November 30 and the
Company's results for years ended December 31, 1998 and 1997 after giving
effect to certain proforma adjustments. Proforma information includes
adjustments for interest expense that would have been incurred to finance the
acquisition, amortization of goodwill acquired in the acquisition, increase in
inventory and cost of goods sold to fair value, and adjustments to record
income taxes at the expected effective rate. The proforma information does not
include any adjustment for depreciation of the fair value of plant and
equipment because the fair value has not yet been determined. The proforma data
is for informational purposes only and may not necessarily reflect the results
of operations of the Company had the acquired business operated as part of the
Company for the years ended December 31, 1998 and 1997.

Future minimum operating and capital lease commitments for Fresh Juice through
2007 approximate $3,600,000.


                                     F-18
<PAGE>

INDEX TO EXHIBITS

Exhibit                                                                 No.  
-------------------------------------------------------------------------------
NationsBank NA Credit Agreement dated January 29, 1999                  25.1

Robin Prever Employment Agreement                                       25.2