UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934
                   For the fiscal year ended December 30, 1998

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
       For the transition period from to Commission file number: 000-28590

                              Fine Host Corporation
             (Exact name of Registrant as specified in its charter)

       Delaware                                             06-1156070
       (State or other jurisdiction of                      I.R.S. Employer
       incorporation or organization)                       Identification No.)

                             3 Greenwich Office Park
                               Greenwich, CT 06831
               (Address of principal executive offices) (Zip code)

       (Registrant's telephone number including area code) (203) 629-4320

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

                     None

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

                     Common Stock, $0.01 Par Value

         Indicate by check mark whether the registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 during the preceding 12 months (or for such shorter  period
         that the  registrant  was required to file such  reports),  and (2) has
         been subject to such filing requirements for the past 90 days. Yes X No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
         Item 405 of  Regulation  S-K is not contained  herein,  and will not be
         contained, to the best of Registrants knowledge, in definitive proxy or
         information  statements  incorporated  by reference in Part III of this
         Form 10-K or any amendment to this Form 10-K. [ X ]

         Indicate by check mark whether the  registrant  has filed all documents
         and reports  required to be filed by Section 12, 13, or 15(d) of the
         Securities  Exchange Act of 1934 subsequent to the distribution of
         securities under a plan confirmed by a court.

         Yes             No               Not applicable.


<PAGE>


         At  March  19,  1999,  the  aggregate  market  value of  shares  of the
         Registrant's  Common  Stock,  $0.01 par value  (based  upon the closing
         price of $0.21 per share of such stock on the OTC Bulletin  Board) held
         by  non-affiliates  of the  Registrant  was  approximately  $1,889,000.
         Solely for the purposes of this  calculation,  shares held by directors
         and  officers of the  Registrant  have been  excluded.  Such  exclusion
         should not be deemed a determination  or an admission by the Registrant
         that such individuals are, in fact, affiliates of the Registrant.

         The number of shares outstanding of each of the Registrant's classes of
common stock, as of March 19, 1999 is as follows:

         Title                                               Outstanding
         -----                                               ----------- 
         Common Stock, $0.01 Par Value                        9,047,970



<PAGE>


                              FINE HOST CORPORATION
                         TABLE OF CONTENTS TO FORM 10-K

         Item Number                                                   Page
         -----------                                                   ----   
PART I

         ITEM 1 - BUSINESS                                               1  
         ITEM 2 - PROPERTIES                                             6
         ITEM 3 - LEGAL PROCEEDINGS                                      7
         ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF                     
                     SECURITY HOLDERS                                    9
PART II

         ITEM 5 - MARKET FOR THE COMPANY'S EQUITY AND RELATED
                     STOCKHOLDER MATTERS                                 10
         ITEM 6 - SELECTED FINANCIAL DATA                                11
         ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATION                  12
         ITEM 7A - QUANTATATIVE AND QUALITATIVE DISCLOSURES ABOUT
                     MARKET RISK                                         19
         ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA            19
         ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                     ACCOUNTING AND FINANCIAL DISCLOSURE                 19
PART III

         ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY       20
         ITEM 11 - EXECUTIVE COMPENSATION                                22     
         ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS 
                      AND MANAGEMENT                                     26
         ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS        28


PART IV

         ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
                     ON FORM 8-K                                         F-1
















<PAGE>


PART I
------
ITEM 1 - BUSINESS
-----------------
General

     Fine Host Corporation (the "Company") is a contract food service management
company,  providing food and beverage  concession,  catering and other ancillary
services at approximately 900 facilities located in 43 states, primarily through
multi-year  contracts.  The Company  targets three  distinct  markets within the
contract food service  industry:  the  recreation  and leisure  market  (arenas,
stadiums,  amphitheaters,  civic  centers,  other  recreational  facilities  and
convention  centers);  the education and business  restaurants market (colleges,
universities,  elementary and secondary schools,  corporate  cafeterias,  office
complexes and manufacturing  plants);  and the healthcare and corrections market
(long-term care facilities,  hospitals,  prisons and jails).  The Company is the
exclusive  provider of food and beverage  services at  substantially  all of the
facilities it serves. The Company is a Delaware corporation,  formed in November
1985,  and its  principal  executive  offices are located at 3 Greenwich  Office
Park, Greenwich, Connecticut 06831. Its telephone number is (203) 629-4320.

Recent Developments

     On  January  7,  1999  the   Company   filed  a  voluntary   petition   for
reorganization  under  Chapter  11 of Title 11 of the  United  States  Code (the
"Bankruptcy  Code") in the United  States  Bankruptcy  Court for the District of
Delaware  (the  "Bankruptcy   Court").   The  Company's   chapter  11  case  was
precipitated by the discovery of certain accounting  irregularities in December,
1997. As a result of these accounting  irregularities,  on February 6, 1998, the
Company  announced  that it was restating its  financial  statements  for fiscal
years 1994  through  1996,  and for the nine  months  ended  September  24, 1997
(collectively,  the  "Restatement").  In  connection  with the  discovery of the
accounting  irregularities,  certain  officers and directors of the Company were
immediately terminated.  In addition, a special committee of the Company's Board
of Directors  retained  the law firm of Schulte,  Roth & Zabel LLP to conduct an
investigation  in order to  determine  the nature  and extent of the  accounting
irregularities and to identify the persons who were responsible for the improper
activity.  This  investigation  resulted in a  comprehensive  report prepared by
Schulte Roth & Zabel LLP. All of the Company's officers, directors and employees
in any way  implicated  in the  accounting  irregularities  were  terminated  or
resigned  well  prior to the  commencement  of the  Company's  chapter  11 case.
Between  December 15, 1997 and March 20, 1998,  various lawsuits were instituted
against the Company seeking rescission and damages arising from the purchase and
sale  of  the  Company's  5%  Convertible   Subordinated  Notes  due  2004  (the
"Convertible Notes") and common stock ("Common Stock"). Commencing in May, 1998,
the  Company  initiated  a  dialogue  with  an ad hoc  committee  (the  "Ad  Hoc
Committee") of holders of the Convertible Notes for the purpose of formulating a
restructuring  of the  Convertible  Notes and resolving the pending  litigation.
After extensive  negotiations,  the Company and the Ad Hoc Committee agreed to a
financial restructuring which is embodied in the proposed plan of reorganization
(the   "Reorganization   Plan")  and  accompanying   disclosure  statement  (the
"Disclosure  Statement").  By order dated January 7, 1999, the Bankruptcy  Court
fixed  February  25, 1999 as the date and time for the  hearing to consider  the
adequacy of the Disclosure Statement. On February 19, 1999, the Company filed an
amended Disclosure Statement (the "Amended Disclosure  Statement").  As a result
of  the  modifications  set  forth  in the  Amended  Disclosure  Statement,  the
Bankruptcy  Court  continued  the  hearing  to  consider  the  adequacy  of  the
Disclosure  Statement  until March 17, 1999. On March 17, 1999,  the  Bankruptcy
Court stated that it would approve the Amended  Disclosure  Statement subject to
certain  modifications  which now have been incorporated  therein . As a result,
the  Amended  Disclosure  Statement  and ballots to vote to accept or reject the
Reorganization Plan are expected to be mailed on April 5, 1999. The deadline for
returning  the completed  ballots is expected to be May 7, 1999.  The hearing to
consider confirmation of the Reorganization Plan is scheduled for May 18, 1999.

     Pursuant to the  Reorganization  Plan (i) all of the Company's  outstanding
Convertible  Notes in the  aggregate  principal  amount of $175  million will be
exchanged for  approximately  $45 million in cash and  approximately  96% of the
outstanding  new  common  stock of the  reorganized  Company  (the  "New  Common
Stock");  (ii) holders of general  unsecured  claims will be paid in full; (iii)
all holders of rescission and damage claims against the Company  relating to the

                                       1
<PAGE>

Convertible  Notes  (including all such claims  asserted in pending  litigation)
(the "Debenture Rescission Claims") will receive in satisfaction of their claims
a ratable share of an interest in a litigation trust, 3% of the New Common Stock
and  warrants  to  purchase  750,000  shares of New Common  Stock;  and (iv) all
holders of  rescission  and damage  claims  against the Company  relating to the
Common Stock  (including all such claims  asserted in pending  litigation)  (the
"Statutorily  Subordinated Claims") and all holders of Common Stock will receive
in  satisfaction  of their  claims and equity  interests  a ratable  share of an
interest in the  litigation  trust,  1% of the New Common  Stock and warrants to
purchase 250,000 shares of New Common Stock. No distribution,  however,  will be
made under the  Reorganization  Plan to holders of Debenture  Rescission  Claims
unless the class of Convertible Notes under the Reorganization  Plan accepts the
Reorganization  Plan.  Additionally,  no  distribution  will be made  under  the
Reorganization  Plan to holders of  Statutorily  Subordinated  Claims and Common
Stock  unless all other  classes  under the  Reorganization  Plan  accept or are
deemed to accept the Reorganization  Plan. Pursuant to the Reorganization  Plan,
all Common Stock and all options (and existing plans  providing for the issuance
of  options)   relating  thereto  will  be  cancelled.   Implementation  of  the
Reorganization  Plan is subject to  confirmation  thereof in accordance with the
provisions of the Bankruptcy Code.
    
     On December 14, 1998, the Company's Board of Directors appointed William D.
Forrest as  President  and Chief  Operating  Officer  and  Gerald P.  Buccino as
Chairman of the Board.  Mr.  Forrest,  who had been  actively  involved with the
Company as part of Buccino & Associates Inc. ("Buccino & Associates"), which had
been  retained on December 16, 1997 as the  Company's  crisis  management  firm,
assumed  the  position  of Chief  Executive  Officer on January 1, 1999 when Mr.
Buccino's term as Chief  Executive  Officer expired in accordance with his March
1, 1998 Employment Agreement. Effective January 1, 1999, Mr. Forrest was elected
as a Director of the Company to fill the vacancy  created by the  resignation of
Catherine B. James.

     Mr. Forrest and the Company  entered into an employment  agreement dated as
of December 14, 1998.  Pursuant to the  employment  agreement,  Mr. Forrest will
serve the Company as President and Chief Executive  Officer until the earlier of
(i) the effective date of the confirmation of the Company's  Reorganization Plan
"Effective  Date") or (ii) December 14, 1999.  In addition to a $60,000  signing
bonus  received in December,  Mr.  Forrest will be paid $400,000 per annum and a
bonus of (i) $300,000 if the Effective  Date occurs on or before May 5, 1999; or
(ii) $200,000 if the Effective  Date occurs after May 5, 1999,  but on or before
June 5, 1999; or (iii) $150,000 if the Effective Date occurs after June 5, 1999,
but prior to January, 2000.

     Pursuant to a  Settlement  Agreement  dated as of December  14, 1998 by and
among Mr.  Buccino,  Buccino & Associates and the Company,  the Company paid the
Buccino  parties  $400,000 and has committed to pay an additional  $100,000 as a
success fee within five business days of the Effective Date.

     Effective  January 15, 1999,  Randall K. Ziegler resigned as Executive Vice
President and Director of the Company.  Pursuant to a Separation  and Consulting
Agreement, the Company retained Mr. Ziegler for a period of nine months at a fee
of $13,750 per month and agreed to pay Mr.  Ziegler an  aggregate  of $50,000 in
bonuses  provided  that  certain  accounts  are awarded to the Company  with Mr.
Ziegler's  assistance.  In  addition,  the  Company  agreed  to pay Mr.  Ziegler
severance  for an  additional  nine months in the amount of $13,750 per month in
exchange for a release of the Company.

     Effective in December, 1998, Chris Verros was promoted to Group President -
Recreation  and Leisure of the  Company.  Mr.  Verros was Senior Vice  President
Recreation and Leisure,  North prior to assuming  responsibility  for all of the
Company's Recreation and Leisure accounts as Group President.


Services and Operations

     The Company  provides a wide array of food services,  ranging from food and
beverage  concessions,   such  as  hot  dogs,  sandwiches,  soda  and  beer,  to
sophisticated  catering and fine dining in a formal  setting.  At its convention
center locations, the Company routinely serves banquets attended by thousands of
persons.

     The  Company  is  the   exclusive   provider  of  food  and   beverages  at
substantially  all of the  facilities it serves and is  responsible  for hiring,
training and  supervising  substantially  all of the food service  personnel and
ordering,  receiving,  preparing and serving  substantially  all of the items of
food and beverage  sold.  At facilities  serviced by the Company,  the Company's
client is  responsible  for  attracting  patrons on an  event-specific  basis at
recreation and leisure  facilities  and  convention  centers and on a continuing
basis at education and corporate  dining  facilities.  As a result,  the Company
does not incur the expense of  marketing to the broader  public,  and is able to
focus on  operations,  client  satisfaction,  account  retention and new account
development.
                                      2


<PAGE>



Clients

     The Company provides  contract food services  principally to recreation and
leisure  facilities,  education  and  corporate  dining  facilities,  healthcare
facilities  and  corrections  facilities.  As of December 30, 1998,  the Company
provided contract food service management at approximately 900 facilities.

     Recreation  and Leisure  Facilities.  The Company  offers food and beverage
concession  and  catering  services to arenas,  stadiums,  amphitheaters,  civic
centers and other recreational  facilities.  These facilities typically select a
food service  provider on the basis of its ability to generate  increased volume
from concession sales while maintaining high quality and attendee  satisfaction.
As of December 30, 1998, the Company provided  services to facilities  hosting 6
minor  league  baseball  teams and 7 minor  league  hockey  teams.  Major league
recreation and leisure  facilities  served by the Company  presently include Pro
Player  Stadium  in Miami,  Florida  (home of the  Miami  Dolphins  and  Florida
Marlins) and Sun Devil Stadium in Tempe,  Arizona (home of the Arizona Cardinals
and the Arizona State  University  Sun Devils).  Commencing in the fall of 1998,
the Company began providing full service concession  operations at Raymond James
Stadium  in Tampa,  Florida,  home of the Tampa  Bay  Buccaneers  and at PSI Net
Stadium in Baltimore, Maryland, home of the Baltimore Ravens.

     Food service  offered in  convention  centers  consists  primarily of large
scale catering and banquet functions held in the facility's ballroom and banquet
halls,  catering and concession services to functions held in meeting rooms, and
concession  services  offered  to  convention  and trade show  attendees.  Major
convention center clients include the Austin Convention Center in Austin, Texas;
the D. L. Lawrence  Convention  Center in Pittsburgh,  Pennsylvania;  the Oregon
Convention  Center  in  Portland,  Oregon;  and the  Midwest  Express  Center in
Milwaukee, Wisconsin.

     Education and Business Restaurants.  The Company provides food and beverage
concession and catering services to student cafeterias,  food courts, snack bars
and clubs at  colleges,  universities  and  elementary  and  secondary  schools.
College student dining habits have changed  dramatically  in recent years,  with
students  tending to eat smaller  meals  throughout  the day and evening,  often
paying with debit cards in lieu of cash or traditional  board plans. In response
to these  changes,  the Company now offers  increased  quality and choices among
food and beverage items at educational  facilities,  including  recognized brand
name foods served in  educational  facilities  by the Company's  employees.  The
Company has contractual  arrangements with quick serve restaurant  concepts such
as Subway  Corporation,  Pizza  Hut,  Inc.  and Taco Bell Corp.  to offer  their
products at various dining  locations at educational  institutions.  The Company
presently  provides  dining  services to students at colleges  and  universities
including  Alfred  University  in Alfred,  New York;  Boise State  University in
Boise,  Idaho;  Morris Brown  College in Atlanta,  Georgia;  Mt. Hood  Community
College in Gresham, Oregon; and Xavier University in New Orleans, Louisiana. The
Company also provides  food services to secondary  schools such as the following
school districts: Newark, New Jersey; Bonneville, Idaho; and Marana, Arizona.

     The Company  provides food and beverage  services to corporate dining rooms
and cafeterias,  office complexes and manufacturing plants. The Company serves a
diversified  mix of large  corporate  clients,  focusing on more upscale  office
dining.  Clients include  facilities of Carnival  Cruise Lines,  Burger King and
Becton Dickinson and Company.

     Healthcare  and  Corrections.  The  Company  provides  food,  beverage  and
catering  services to hospitals,  nursing homes and  retirement  communities.  A
registered  dietitian provides guidance in meeting the diverse nutritional needs
at these  facilities.  The Company provides menu planning,  recipe  development,
diet  instructions  and nutritional care planning as part of its healthcare food
service operations. Healthcare clients include Allina Health System, Benedictine
Health Dimensions, Ebenezer Social Ministries and the State of South Dakota.







                                       3


<PAGE>


     The Company  provides  food and  beverage  services  to prisons,  jails and
residential   facilities.   These   facilities   range  from  minimum   security
correctional  facilities to maximum  security  state  penitentiaries.  They also
include  children's  homes,  juvenile  detention  centers and other  residential
corrections facilities.  Many of these facilities are accredited by the American
Correctional  Association.  The Company  provides food and beverage  services at
corrections facilities for the State of Minnesota, the State of South Dakota and
Corrections Corporation of America, as well as numerous county jails.

Contracts

     The Company  generally enters into one of the following types of contracts:
profit and loss contracts  ("P&L"),  profit  sharing  contracts and, to a lesser
extent, management fee contracts.

     Under P&Ls,  the Company  receives  substantially  all of the  revenues and
bears all the expenses of the operation. These expenses include rent paid to the
client,  typically  calculated as a fixed  percentage  of various  categories of
sales. While the Company often benefits from greater upside potential with a P&L
contract,  it is responsible for the costs of running the food service operation
and consequently bears greater risk than with a management fee or profit sharing
contract.  Under profit  sharing  contracts,  the Company  typically  receives a
percentage  of profits  earned at the facility plus a fixed fee or percentage of
sales as an  administrative  fee.  Revenues  derived  under a limited  number of
management  fee  contracts  are based upon a fixed  minimum  fee. The Company is
reimbursed for  substantially  all of its on-site expenses incurred in providing
food and beverage  services under all management fee contracts.  A number of the
Company's management fee contracts provide for an additional incentive fee based
on a percentage of sales over a base threshold level.

     The Company  often  provides a capital  commitment  in its bid to win a new
facility  contract.  This  commitment  most  frequently  takes  the  form  of an
investment in food service equipment and leasehold  improvements,  which upgrade
the  facility  itself and can  increase  the returns to both the Company and the
facility owner by generating  increased sales.  Occasionally,  the Company makes
loans or advances to the client,  the  proceeds of which are  generally  used to
improve an existing  facility or to  complete a new  facility.  When the Company
makes an investment, loan or advance to a facility under either a management fee
or profit sharing contract, ordinarily the amount of the commitment is repaid to
the Company out of the  revenues  generated  by the food  service  operation  in
accordance  with  an  amortization  schedule  set  forth  in the  contract.  P&L
contracts  ordinarily  do not require the  repayment of invested  capital to the
Company during the contract term.  Most of the Company's  contracts  require the
client to  reimburse  the Company for any  unamortized  invested  capital in the
event of the expiration or  termination of the contract for any reason,  and the
Company  generally keeps title to the subject assets until such payment is made.
Invested capital that is repaid is usually amortized over a period of time equal
to or greater than the term of the contract.

     The length of contracts varies  depending on the type of facility,  type of
contract  and  financial  investment.   Contracts  for  Recreation  and  Leisure
facilities  typically include the largest capital  investment by the Company and
generally have a term of three to ten years.  Contracts for  convention  centers
generally  have a term  of  three  to five  years.  Education  market  contracts
generally have a term of one to five years. Business restaurant accounts,  which
generally require the smallest capital investment by the Company, typically have
a shorter term than those in the recreation and leisure,  convention  center and
education  areas,  and generally  contain a provision  allowing  either party to
terminate for convenience after a short notice period, typically ranging from 30
to  90  days.  The  Company's  remaining  contracts,  including  healthcare  and
corrections  accounts,  generally  have a fixed  term and in any  fiscal  year a
number of these contracts either expire or come up for renewal.

     Certain municipalities and governmental  authorities require that a certain
percentage  of  food  service  contract  bids  be  from  minority-owned   and/or
women-owned  businesses  ("MBEs"  and  "WBEs,"  respectively).  The  Company has
entered into joint ventures with four MBEs/WBEs to operate facilities located in
Orlando, Florida; Portland, Oregon; Fort Worth, Texas; and Milwaukee, Wisconsin.
It is likely  that the  Company  will be  required  to partner  with  additional
MBEs/WBEs  in the future as a  precondition  to winning  certain  municipal  and
governmental authority facility food service contracts.


                                         4


Sales and Marketing

     The Company  selectively  bids for both privately owned facility  contracts
and contracts  awarded by  governmental  and  quasi-governmental  agencies.  The
privately  negotiated  transactions  are usually  competitive in nature,  with a
privately owned facility owner or operator soliciting proposals from the Company
and  several of its  competitors.  These bids  often  require a Company  team to
formulate a rapid response and make a proposal encompassing, among other things,
a capital  investment  and other  financial  terms.  In certain cases, a private
facility owner may choose to negotiate with the Company exclusively for a period
of  time.   Governmental   contracts   are   usually   awarded   pursuant  to  a
request-for-proposal  process.  Bidding  in  publicly  controlled  venues  often
requires  more than a year of effort by a Company  team,  focusing  on  building
meaningful  relationships  in the local  community in which the venue is located
and raising the profile of the Company name with the decision makers within that
community.  During this bidding period,  the Company expends  substantial  time,
effort and funds preparing a contract proposal and negotiating the contract.

     Members of the Company's sales and marketing team maintain a high degree of
visibility  in  various  industry  trade  associations.  Virtually  all  of  the
Company's clients and potential  clients in facilities  operated by governmental
and  quasi-governmental  authorities  are  members of these  trade  groups.  The
Company  regularly  exhibits  at  industry  trade  shows  held for and by groups
comprised of recreation and leisure facility owners,  convention center managers
and representatives of colleges, universities,  elementary and secondary schools
and  healthcare and  corrections  facilities.  The Company also  advertises on a
regular basis in magazines and periodicals  that focus on the public  facilities
industry.

Competition

     The Company encounters significant competition in each area of the contract
food service  market in which it operates.  Food service  companies  compete for
clients on the basis of quality and service standards,  innovative approaches to
food service  facilities  design and  maximization of sales and price (including
capital  expenditures).  Competition may result in price  reductions,  decreased
gross  margins and loss of market share.  Certain of the  Company's  competitors
compete  with the Company on both a national  and  international  basis and have
greater financial and other resources than the Company. In addition, existing or
potential  clients may elect to "self operate"  their food service,  eliminating
the  opportunity  for the  Company to compete for the  account.  There can be no
assurance that the Company will be able to compete successfully in the future or
that  competition  will not have a  material  adverse  effect  on the  Company's
business, financial condition or results of operations.

Employees

     As of December  30, 1998,  the Company had  approximately  3,250  full-time
employees  and 11,000  employees  hired on a part-time  or on an  event-by-event
basis. The number of part-time employees varies significantly from time to time.
The Company  believes that its future success will depend in large part upon the
continued  service of its senior  management  personnel  and upon the  Company's
continuing ability to attract and retain highly qualified managerial  personnel.
Competition  for  highly  qualified  personnel  is  intense  and there can be no
assurance that the Company will be able to retain its key  managerial  personnel
or that it will be able to attract and retain additional managerial personnel in
the future.  Approximately  5% of the Company's total employees  (including full
and part-time) are covered by collective bargaining agreements.  The Company has
not experienced any work stoppage and considers its relations with its employees
to be  satisfactory.  The  Company  has hired and expects to continue to need to
hire a large number of qualified, temporary workers at particular events.

Government Regulation

     The  Company's  business  is subject to  various  governmental  regulations
incidental to its operations,  such as environmental,  employment and health and
safety  regulations.  Since it serves  alcoholic  beverages  at many  convention
centers and  recreation  and leisure  facilities,  the Company also holds liquor
licenses  incidental to its contract food service business and is subject to the
liquor license requirements of the states in which it holds a liquor license. As
of December 30, 1998, the Company and its affiliates  held liquor licenses in 23
states.  While the application  procedures and requirements for a liquor license
vary by state,  the Company has  received an  alcoholic  beverage  license  with
respect to every  application it has  submitted,  and has never had an alcoholic
beverage license revoked or suspended.

                                        5
<PAGE>

     Typically,  liquor licenses must be renewed  annually and may be revoked or
suspended for cause at any time.  Alcoholic beverage control  regulations relate
to  numerous  aspects of the  Company's  operations,  including  minimum  age of
patrons and employees,  hours of operation,  advertising,  wholesale purchasing,
inventory  control  and  handling,  and  storage  and  dispensing  of  alcoholic
beverages.  The Company has not  encountered any material  problems  relating to
alcoholic  beverage  licenses to date. The failure to receive or retain a liquor
license in a particular location could adversely affect the Company's ability to
obtain such a license elsewhere.

     The  Company  is  subject to  "dram-shop"  statutes  in the states in which
facilities are located.  These statutes generally provide a person injured by an
intoxicated  person the right to recover  damages from an  establishment,  which
wrongfully served alcoholic beverages to the intoxicated individual. The Company
carries liquor liability coverage as part of its existing  comprehensive general
liability insurance,  which it believes is adequate. While the Company maintains
such  insurance,  there can be no assurance that such insurance will be adequate
to cover any  potential  liability or that such  insurance  will  continue to be
available on commercially acceptable terms.

     In  addition,   various  federal  and  state  agencies  impose  nutritional
guidelines  and other  requirements  on the Company at certain of the education,
healthcare  and  corrections  facilities  it serves.  The cost of the  Company's
compliance with governmental  regulations has not been material.  However, there
can be no assurance that additional federal or state legislation,  or changes in
regulatory implementation,  would not limit the activities of the Company in the
future or significantly increase the cost of regulatory compliance.


ITEM 2 - PROPERTIES
-------------------

     The following is a summary by operating  segment of the principal  physical
properties occupied by the Company:

                                      Approximate
         Location                     Square Feet  Occupancy
         --------                     -----------  --------- 
         Education and Business 
            Restaurants:
         ---------------------- 
         Freeville, NY                  18,000     Lease expiring December 2004
         Miami, FL                       3,800     Lease expiring October 1999
         Rochester, NY                   6,000     Lease expiring May 2003
         Ronkonkoma, NY                  5,300     Lease expiring July 1999
         Vestal, NY                     22,000     Lease expiring  August 1999

         Health and Corrections:
         ---------------------- 
         Roseville, MN                  15,300     Leases expiring August 1999
                                                      and August 2000
         All Other:
         ---------
         Greenwich, CT                  25,200     Leases expiring June 2004
            (Corporate headquarters)                  and August 2008
         Raleigh, NC                     4,900     Lease expiring November 2002
         Tempe, AZ                       1,400     Lease expiring December 1999


     The  Company  believes  that if it were unable to renew the lease on any of
these  facilities,  other  suitable  facilities  would be  available to meet the
Company's needs.




                                       6

<PAGE>



ITEM 3 - LEGAL PROCEEDINGS
--------------------------
     In January 1996,  the Company was served with a complaint  naming it as one
of five defendants in a lawsuit  brought by multiple  plaintiffs in the New York
State Supreme Court  alleging  damages  arising out of the Woodstock II Festival
held in August 1994 in  Saugerties,  New York.  The  promoter of the festival is
also a defendant.  According to the complaint,  the plaintiffs were hired by the
Company (which had a concession  agreement with the promoter of the festival) as
subcontractors of food, beverage and/or merchandise.  In their complaint,  which
seeks  approximately  $5.9 million in damages,  the  plaintiffs  allege  damages
arising  primarily  from the failure to provide  adequate  security  and prevent
festival  attendees  from  bringing food and  beverages  into the festival.  The
Company and the promoter have made  cross-demands  for  indemnification  against
each other under applicable provisions of their concession  agreement.  On April
4, 1996,  the other  defendants  named in the suit  answered the  complaint  and
asserted cross-claims for contribution and indemnification  against the Company.
Thereafter,  the Company  answered the complaint and asserted a cross-claim  for
indemnification  against the promoter and a cross-claim for contribution against
all of its codefendants.

     The Company has also sued a former client in the Jefferson Circuit Court of
the Commonwealth of Kentucky for certain amounts owed by the former client under
the food service contract between the parties, and the former client has filed a
counterclaim  against the Company seeking  unspecified damages for the Company's
alleged tortuous interference with a prospective  contractual  relationship with
another food service provider.

     The foregoing  legal  proceedings  have been stayed as a consequence of the
commencement of the Company's Chapter 11 case. The Company does not believe that
any liabilities  relating to the foregoing  legal  proceedings are likely to be,
individually  or in  the  aggregate,  material  to  its  consolidated  financial
position, results of operations or cash flows.

     Between  December  15, 1997 and March 25, 1998,  13 purported  class action
lawsuits  were filed in the United  States  District  Court for the  District of
Connecticut (the "Court") against the Company and certain of its officers and/or
directors (the "Shareholder  Litigation").  The complaints assert various claims
against the Company,  including claims alleging violations of Sections 10(b) and
20(a) of the Securities  Exchange Act of 1934 and/or  violations of Sections 11,
12(2)  and 15 of the  Securities  Act of  1933  and  various  rules  promulgated
thereunder,  as well as fraud and negligent  misrepresentation.  On February 13,
1998,  the  plaintiffs in the actions filed a Motion for  Consolidation  and for
Appointment  as Lead  Plaintiffs and for Approval of A Selection of Lead Counsel
(the "Motion"). On March 25, 1998, the Motion was granted. Lead Plaintiffs filed
a Consolidated  Amended Complaint on May 14, 1998. On June 29, 1998, the Company
and certain of the  individual  defendants  moved to dismiss the claim  asserted
under Section 11 of the Securities Act of 1933. The other individual  defendants
moved to dismiss the complaint in its entirety.  On October 22, 1998,  the Court
granted  the motion to dismiss  the entire  complaint  as to certain  individual
defendants  and denied the Company's  motion to dismiss the claim asserted under
Section 11 of the  Securities  Act of 1933. On December 9, 1998,  the plaintiffs
amended the complaint to add Deloitte & Touche LLP as a defendant.  On March 10,
1999,  the plaintiffs  further  amended the complaint to add William R. Berkley,
former  director  and  Chairman  of the Board of the  Company,  Joshua A. Polan,
former  director of the  Company,  NationsBank  Montgomery  Securities  and CIBC
Oppenheimer  defendants.  The Company has not yet answered  the  complaint as so
amended  and,  by reason of the  automatic  stay  provided by Section 362 of the
Bankruptcy Code, the foregoing litigation is stayed against the Company, and all
claims  asserted  therein  will be  addressed  in the  context of the  Company's
Chapter 11 case.

     On or about  January 30, 1998,  the Company and certain  other  individuals
were named as  defendants  in an action  arising out of the issuance and sale in
October 1997 of $175 million in the aggregate  principal amount of the Company's
5% Convertible  Notes (the "Bondholder  Litigation").  The plaintiffs  allegedly
purchased  the  Convertible  Notes in the  aggregate  principal  amount  of $7.5
million.  The Amended Complaint in the action,  filed on or about April 22, 1998
in the United  States  District  Court for the  Southern  District  of New York,
alleges,  among  other  things,  that the  Offering  Memorandum  prepared by the
Company in connection with the offering contained  materially false information.
The complaint  asserts  various  claims  against the Company,  including  claims
alleging  violations  of  Sections  10(b),  18(a)  and  20(a) of the  Securities
Exchange Act of 1934 and various rules promulgated thereunder,  as well as fraud
and negligent  misrepresentation.  The relief sought by the plaintiffs  includes
compensatory  damages of $1.5 million plus  interest,  punitive  damages of $0.5
million,  costs and  disbursements,  and attorneys'  fees. On July 10, 1998, the
plaintiffs filed a Second Amended Complaint.
                  
                                        7
      
<PAGE>

     On July 29, 1998,  the Company moved to dismiss the Section 10(b) fraud and
negligent  misrepresentation  counts of the Second Amended Complaint.  The other
individual  defendants  moved to dismiss  the Second  Amended  Complaint  in its
entirety.  On August 7, 1998,  the Judicial  Panel on  Multidistrict  Litigation
ordered  that the  Bondholder  Litigation  be  transferred  to the  District  of
Connecticut  and,  with the  consent of that  court,  be  assigned  to the judge
presiding  over the  Shareholder  Litigation  for  coordinated  or  consolidated
pretrial proceedings with the Shareholder  Litigation.  On October 22, 1998, the
Court in the District of Connecticut  dismissed the negligent  misrepresentation
count of the Second  Amended  Complaint,  and otherwise  denied the  defendants'
motions to dismiss the complaint.  On November 30, 1998, the defendants answered
the Second Amended Complaint.  This action is also stayed as against the Company
by reason of the automatic stay provided in Section 362 of the Bankruptcy  Code.
All claims  asserted  against the Company in the Bondholder  Litigation  will be
addressed in the context of the Company's  Chapter 11 case. (See Part II, Item 7
-  Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations - Liquidity and Capital Resources.)

     On December 12, 1997,  the Company issued a press release  announcing  that
the Audit  Committee  of its Board of  Directors  (the  "Audit  Committee")  had
instructed the Company's  auditors to conduct an inquiry into certain accounting
practices,  including  the  capitalization  of  certain  expenses,  and that the
auditors  advised the Audit  Committee on December  12,  1997,  based upon their
preliminary inquiry, that certain expenses incurred during 1997 were incorrectly
capitalized rather than expensed in the period in which they were incurred.  The
Company  stated that it believed the amounts would be material and that earnings
for each of the first  three  quarters  of 1997  would need to be  restated.  On
December  15,  1997,  the  Company  issued  a  press  release   announcing  that
preliminary  indications  were that the accounting  problems were not limited to
the incorrect  capitalization  of the  expenses,  and that periods prior to 1997
would also need to be restated.  The press  release also stated that the outside
directors of the  Company's  Board of Directors  (the "Outside  Directors")  had
terminated the employment of Richard E. Kerley,  Chairman of the Board and Chief
Executive Officer, and Nelson A. Barber, Senior Vice President and Treasurer. On
February 19, 1998, the Securities and Exchange  Commission issued a formal order
of  investigation  into the events  relating  to the  December  12 and 15,  1997
announcements relating to accounting irregularities.

     On  January  7,  1999  the   Company   filed  a  voluntary   petition   for
reorganization  under  Chapter  11 of Title 11 of the  United  States  Code (the
"Bankruptcy  Code") in the United  States  Bankruptcy  Court for the District of
Delaware  (the  "Bankruptcy   Court").   The  Company's   chapter  11  case  was
precipitated by the discovery of certain accounting  irregularities in December,
1997. As a result of these accounting  irregularities,  on February 6, 1998, the
Company  announced  that it was restating its  financial  statements  for fiscal
years 1994  through  1996,  and for the nine  months  ended  September  24, 1997
(collectively,  the  "Restatement").  In  connection  with the  discovery of the
accounting  irregularities,  certain  officers and directors of the Company were
immediately terminated.  In addition, a special committee of the Company's Board
of Directors  retained  the law firm of Schulte,  Roth & Zabel LLP to conduct an
investigation  in order to  determine  the nature  and extent of the  accounting
irregularities and to identify the persons who were responsible for the improper
activity.  This  investigation  resulted in a  comprehensive  report prepared by
Schulte Roth & Zabel LLP. All of the Company's officers, directors and employees
in any way  implicated  in the  accounting  irregularities  were  terminated  or
resigned  well  prior to the  commencement  of the  Company's  chapter  11 case.
Between  December 15, 1997 and March 20, 1998,  various lawsuits were instituted
against the Company seeking rescission and damages arising from the purchase and
sale  of  the  Company's  5%  Convertible   Subordinated  Notes  due  2004  (the
"Convertible Notes") and common stock ("Common Stock"). Commencing in May, 1998,
the  Company  initiated  a  dialogue  with  an ad hoc  committee  (the  "Ad  Hoc
Committee") of holders of the Convertible Notes for the purpose of formulating a
restructuring  of the  Convertible  Notes and resolving the pending  litigation.
After extensive  negotiations,  the Company and the Ad Hoc Committee agreed to a
financial restructuring which is embodied in the proposed plan of reorganization
(the   "Reorganization   Plan")  and  accompanying   disclosure  statement  (the
"Disclosure  Statement").  By order dated January 7, 1999, the Bankruptcy  Court
fixed  February  25, 1999 as the date and time for the  hearing to consider  the
adequacy of the Disclosure Statement. On February 19, 1999, the Company filed an
amended Disclosure Statement (the "Amended Disclosure  Statement").  As a result
of  the  modifications  set  forth  in the  Amended  Disclosure  Statement,  the
Bankruptcy  Court  continued  the  hearing  to  consider  the  adequacy  of  the
Disclosure  Statement  until March 17, 1999. On March 17, 1999,  the  Bankruptcy
Court stated that it would approve the Amended  Disclosure  Statement subject to
certain  modifications  which now have been incorporated  therein . As a result,
the  Amended  Disclosure  Statement  and ballots to vote to accept or reject the
Reorganization Plan are expected to be mailed on April 5, 1999. The deadline for
returning  the completed  ballots is expected to be May 7, 1999.  The hearing to
consider confirmation of the Reorganization Plan is scheduled for May 18, 1999.

                                       8
<PAGE>

     Pursuant to the  Reorganization  Plan (i) all of the Company's  outstanding
Convertible  Notes in the  aggregate  principal  amount of $175  million will be
exchanged for  approximately  $45 million in cash and  approximately  96% of the
outstanding  new  common  stock of the  reorganized  Company  (the  "New  Common
Stock");  (ii) holders of general  unsecured  claims will be paid in full; (iii)
all holders of rescission and damage claims against the Company  relating to the
Convertible  Notes  (including all such claims  asserted in pending  litigation)
(the "Debenture Rescission Claims") will receive in satisfaction of their claims
a ratable share of an interest in a litigation trust, 3% of the New Common Stock
and  warrants  to  purchase  750,000  shares of New Common  Stock;  and (iv) all
holders of  rescission  and damage  claims  against the Company  relating to the
Common Stock  (including all such claims  asserted in pending  litigation)  (the
"Statutorily  Subordinated Claims") and all holders of Common Stock will receive
in  satisfaction  of their  claims and equity  interests  a ratable  share of an
interest in the  litigation  trust,  1% of the New Common  Stock and warrants to
purchase 250,000 shares of New Common Stock. No distribution,  however,  will be
made under the  Reorganization  Plan to holders of Debenture  Rescission  Claims
unless the class of Convertible Notes under the Reorganization  Plan accepts the
Reorganization  Plan.  Additionally,  no  distribution  will be made  under  the
Reorganization  Plan to holders of  Statutorily  Subordinated  Claims and Common
Stock  unless all other  classes  under the  Reorganization  Plan  accept or are
deemed to accept the Reorganization  Plan. Pursuant to the Reorganization  Plan,
all Common Stock and all options (and existing plans  providing for the issuance
of  options)   relating  thereto  will  be  cancelled.   Implementation  of  the
Reorganization  Plan is subject to  confirmation  thereof in accordance with the
provisions of the Bankruptcy Code.

     The Company is involved in certain  other legal  proceedings  incidental to
the normal  conduct of its  business.  The  Company  does not  believe  that any
liabilities  relating to such other legal proceedings to which it is a party are
likely to be,  individually  or in the aggregate,  material to its  consolidated
financial  position,  results of  operations  or cash flows.  Each of such other
proceedings  has been stayed as against  the Company by reason of the  automatic
stay provided in section 362 of the Bankruptcy Code.



ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
     Not applicable.





























                                       9

<PAGE>


PART II
-------

ITEM 5 -  MARKET  FOR THE  COMPANY'S  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS
--------------------------------------------------------------------------------

Market Information

     The Common Stock was quoted on the NASDAQ  National Market under the symbol
"FINE" from the initial  public  offering on June 19, 1996 through July 8, 1998.
Since July 9, 1998,  the Common Stock has been traded on the OTC Bulletin  Board
under the same symbol.

     The  following  table sets forth the high and low sale prices of the Common
Stock on the NASDAQ  National  Market or the OTC Bulletin  Board, as applicable,
for the periods indicated.

                                               High       Low
   Fiscal Year Ended December 30, 1998:        -----    -----
   First Quarter*                             $7.125    $2.56
   Second Quarter                              6.188     2.00
   Third Quarter                               2.344     0.72
   Fourth Quarter                              1.937     0.41

                                               High       Low
   Fiscal Year Ended December 31, 1997:        -----    -----
   First Quarter                              $28.50   $18.25
   Second Quarter                              33.00    22.75
   Third Quarter                               38.75    29.00
   Fourth Quarter*                             43.00     9.75

*The closing price on December 12, 1997, when NASDAQ suspended trading in shares
of the Company's Common Stock, was $10.125.  On March 3, 1998, NASDAQ lifted the
trading halt.

Number of Stockholders

     As of March 19, 1999, there were approximately 127 holders of record of the
Company's Common Stock.

Dividend Policy

     The Company has never paid cash  dividends on its Common Stock and does not
intend to declare  any cash  dividends  on the Common  Stock in the  foreseeable
future. Also, as discussed in Item 3 - Legal Proceedings,  the Company has filed
for protection  under Chapter 11 of the Bankruptcy Code and accordingly will not
be paying dividends on its Common Stock.

















                                       10

<PAGE>
<TABLE>


<CAPTION>

     ITEM 6 -    SELECTED FINANCIAL DATA
     -----------------------------------
                                                                         Fiscal Years (1)
------------------------------------------------------------------------------------------------------------------
                                                    1998       1997(2)        1996(2)         1995          1994
    <S>                                           <C>         <C>           <C>            <C>           <C>    
     
     Statement of Operations Data:                 
     Net sales                                    $327,121    $275,068       $144,400       $107,859      $104,068
     Gross profit                                   24,578      15,889         11,821          8,956         7,983
     (Loss) income from operations                 (32,266)    (27,508)        (3,683)        (1,585)           27
     Net loss                                     $(38,100)   $(23,821)      $ (4,441)       $(2,709)      $(1,213)
     Basic and diluted loss per share of
       Common Stock (3)                             $(4.21)     $(2.74)       $ (1.39)       $ (1.76)       $ (.71)
     Average number of shares of Common
       Stock outstanding                             9,052       8,683          4,137          2,048         2,048
     Selected Cash Flows Data:
     Net cash (used in) provided by
       operating activities                       $(27,515)   $(23,908)       $(7,655)         $(907)       $2,509
     Net cash used in investing activities         (12,036)    (58,071)       (18,117)        (4,246)       (8,985)
     Net cash (used in) provided by
       financing activities                         (2,993)    186,954         29,885          4,255         7,632
     Balance Sheet Data (at end of period):
     Working capital (deficit)                     $75,052    $103,662        $(3,753)       $(7,744)      $(5,533)
     Total assets                                  243,123     290,178         95,993         48,988        47,266
     Total debt                                    180,427     183,444         40,573         28,931        25,518
     Stockholders' equity                           27,364      65,464         28,544            907         3,016
<FN>

     (1) The Company's fiscal year ends on the last Wednesday of December.
     The 1997 fiscal year was a 53 week period.

     (2) Significant acquisitions were made in these years.

     (3) Basic and diluted loss per share for fiscal years 1998 and 1997 is
     calculated  based upon net loss, and for the fiscal years 1994 through 1996
     it is  calculated  based upon the net  loss/income  less  accretion  to the
     redemption value of warrants issued in fiscal 1994. Accretion to redemption
     value of warrants was $1,300 ($0.31 per share),  $900 ($0.44 per share) and
     $250 ($0.12 per share) for fiscal 1996, 1995 and 1994, respectively.

</FN>
</TABLE>
















                                     11


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
         RESULTS OF OPERATION  
         --------------------
         
     From  time  to  time  the  Company  and  its  representatives  may  provide
information,  whether orally or in writing, including certain statements in this
Form 10-K under this Item  which are deemed to be  "forward-looking"  within the
meaning of the Private  Securities  Litigation  Reform Act of 1995  ("Litigation
Reform Act"). These forward-looking statements and other information relating to
the Company are based on the beliefs of management as well as  assumptions  made
by and information currently available to management.

     The words "anticipate,"  "believe,"  "estimate," expect," "intend," "will,"
and  similar  expressions,  as  they  relate  to the  Company  or the  Company's
management, are intended to identify forward-looking statements. Such statements
reflect the current  views of the Company with respect to future  events and are
subject  to  certain  risks,  uncertainties  and  assumptions.  These  risks and
uncertainties  include,  but are not limited to, the  Company's  emergence  from
bankruptcy  proceedings;  successful  execution of internal  performance  plans;
retention of key personnel;  availability of labor;  performance issues with key
suppliers,  subcontractors  and business  partners;  legal  proceedings;  market
acceptance risks; the effect of economic conditions;  the impact of competition;
Year 2000 compliance;  legislative or regulatory actions; and contract retention
and continuation and future contract awards. Should one or more of these risk or
uncertainties  materialize,  or should  underlying  assumptions prove incorrect,
actual results may vary materially  from those described  herein as anticipated,
believed, and estimated or expected.

     In  accordance  with the  Litigation  Reform  Act,  the  Company  is making
investors aware that such "forward looking"  statements,  because they relate to
future events,  are by their very nature subject to many important factors which
could  cause  actual  results to vary  materially  from those  contained  in the
"forward-looking"  statements.  These  factors are detailed from time to time in
the Company's filings with the Securities and Exchange Commission.

Overview

     The Company is a contract food service management  company,  providing food
and beverage concession,  catering and other ancillary services at approximately
900 facilities located in 43 states, primarily through multi-year contracts. The
Company  targets  three  distinct  markets  within  the  contract  food  service
industry: the recreation and leisure market ("Recreation and Leisure"),  serving
arenas,  stadiums,  amphitheaters,  civic centers, other recreational facilities
and convention centers;  the education and business  restaurants market ("EBR"),
serving  colleges,  universities,  elementary and secondary  schools,  corporate
cafeterias,  office complexes and manufacturing  plants;  and the healthcare and
corrections  market  ("Healthcare  and  Corrections"),  serving  long-term  care
facilities, hospitals, prisons and jails). The Company is the exclusive provider
of food and beverage services at substantially all of the facilities it serves.

     A significant portion of the Company's growth to date has been derived from
acquisitions.  In the 1996 fiscal year, the Company acquired four companies. The
Company  acquired Sun West  Services,  Inc.  ("Sun  West"),  serving the EBR and
Healthcare and Corrections  markets,  in March 1996; Ideal Management  Services,
Inc.  ("Ideal"),  serving the EBR market, in July 1996; PCS Holding  Corporation
(formerly known as HCS Management Corporation) ("PCS"),  serving the EBR market,
in November 1996; and Republic  Management Corp. of Massachusetts  ("Republic"),
serving the EBR market,  in December  1996. In the 1997 fiscal year, the Company
acquired five  companies.  Commencing  in December  1996,  the Company  acquired
Service  Dynamics  Corp.  ("Service  Dynamics"),  serving the EBR market,  for a
purchase  price of  approximately  $3.0 million.  In January  1997,  the Company
acquired  Serv-Rite  Corporation  ("Serv-Rite"),  serving the EBR market,  for a
purchase  price of  approximately  $8.0  million.  In August  1997,  the Company
acquired Statewide  Industrial  Catering,  Inc.  ("Statewide"),  serving the EBR
market,  for  approximately  $3.2 million,  and Best, Inc.  ("Best"),  primarily
serving the Healthcare and Corrections markets, for approximately $26.0 million.
On October 3, 1997,  the Company  acquired  Total Food Service  Direction,  Inc.
("Total"),  serving the EBR market, for approximately $4.9 million. The purchase
price  for each of the  foregoing  acquisitions  includes  debt  assumed  by the
Company as part of the acquisition.

                                       12

<PAGE>


Results of Operations

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
financial data as a percentage of the Company's net sales:
<TABLE>
<CAPTION>
                                                           Fiscal Years 
                                                      ----------------------
                                                      1998     1997     1996
                                                      ----     ----     ----
    <S>                                             <C>      <C>      <C>    
     Net sales                                       100.0%   100.0%   100.0%
     Cost of sales                                    92.5     94.2     91.8                                                        
                                                     -----    -----    -----  
     Gross profit                                      7.5      5.8      8.2
     General and administrative expenses              10.4     11.9     10.7
     Special and restructuring charges                 3.6      1.4       -
     Provision for asset impairment and disposal       3.4      2.5       -  
                                                     -----    -----    -----
     Loss from operations                             (9.9)   (10.0)    (2.5)
     Interest expense, net                             1.6      1.1      1.8
                                                     -----    -----    -----
     Loss before income taxes                        (11.5)   (11.1)    (4.3)
     Income tax expense (benefit)                      0.2     (2.5)    (1.3)
                                                     -----    -----    -----
     Net loss (before warrant accretion in 1996)     (11.7)%   (8.6)%   (3.0)%
                                                     =====    =====    =====
</TABLE>


     Net sales  attributable  to the  Company's  principal  operating  segments,
expressed in dollars (in thousands) and as a percentage of total net sales were:
<TABLE>
<CAPTION>
                                                             Fiscal Years
                                           -----------------------------------------------
                                             1998             1997            1996
                                             ----             ----            ----
    <S>                                   <C>     <C>       <C>     <C>     <C>     <C>

     Recreation and Leisure              $ 119,722  36.6%  $ 117,323  42.7% $ 98,836  68.5%
     Education and Business Restaurants    147,381  45.0     129,865  47.1    40,193  27.8
     Healthcare and Corrections             56,141  17.2      23,302   8.5     4,874   3.4
     Other                                   3,877   1.2       4,578   1.7       497   0.3                                          
                                           ------- -----     ------- -----   ------- -----                                          
     Total                               $ 327,121 100.0%  $ 275,068 100.0% $144,400 100.0%                                      
                                           ======= =====     ======= =====   ======= =====
</TABLE>
Fiscal 1998 Compared to Fiscal 1997

     Net Sales.  The Company's net sales  increased to $327.1  million in fiscal
1998 from $275.1 million in fiscal 1997.  Net sales  increased in fiscal 1998 in
all market areas.  Recreation  and Leisure net sales  increased  $2.4 million or
2.0%.  The increase in Recreation and Leisure net sales is  attributable  to new
contracts  with  the  Tampa  Bay  Buccaneers  and the  Baltimore  Ravens.  These
increases were offset by lower  attendance at Pro Player  Stadium,  which hosted
the Divisional Playoffs, League Championship Series and World Series in 1997 and
from the expiration of the Company's  contract with the Orange County Convention
Center in Orlando,  Florida.  Net sales in EBR increased $17.5 million or 13.5%.
Net sales increased by $26 million  relating to the timing of the acquisition of
Total,  Best, and Statewide in 1997 as well as from new business.  This increase
was offset by the sale of some Business Restaurants  contracts at Northwest Food
Service,  Inc., Republic, and Creative Food Management,  Inc.  subsidiaries,  as
well as the Company's  decision to exit the hospital gift shop market. The $32.8
million growth in net sales in Healthcare and  Corrections,  is directly related
to the August 1997  acquisition  of Best,  which added  approximately  50 and 70
contracts to these market areas,  respectively.  (See Note 6 to the Consolidated
Financial Statements).

     Gross Profit.  Gross profit as a percentage of net sales  increased to 7.5%
in fiscal 1998 from 5.8% in fiscal 1997.  Gross profit increased in all three of
the Company's  business  segments.  Recreation and Leisure benefited from higher
margins at many of its units  through  improved  management  of other  operating
expenses.  EBR benefited from exiting unprofitable  businesses.  Corrections and
Healthcare improved its margins through purchasing efficiencies.


                                       13
<PAGE>


     General and Administrative  Expenses.  General and administrative  expenses
increased  to $33.9  million  (or 10.4% of net sales) in fiscal  1998 from $32.8
million  (or 11.9% of net sales) in fiscal  1997.  The  acquisition  of Best and
Total  added  $4.9  million  which was  offset by a $1.5  million  reduction  in
expenses  from sold and closed  units from 1997 to 1998.  Although  the  Company
incurred certain additional expenses  consolidating the accounting operations at
acquired  companies,  productivity  initiatives  and  expense  controls  reduced
general and administrative expenses by another $2.3 million.

     Special and Restructuring Charges. In connection with the Restatement,  the
Company incurred costs of $7.6 million in 1998, of which $7.0 million related to
legal,  accounting,  financial  advisors  and  management  consulting  fees  and
severance payments.  The additional $0.6 million was attributable to the cost of
rescinding a 10 year lease that was signed in October 1997 for the relocation of
the  Company's  corporate  headquarters.   Restructuring  charges  totaled  $4.1
million,  primarily  representing  professional  fees,  employee  severance  and
retention bonuses related to the implementation of the Reorganization  Plan. The
Company incurred costs of  approximately  $3.8 million (or 1.4% of net sales) in
1997 to cover the write-off of $2.2 million of deferred debt costs in connection
with the Company's  then-existing credit facility and approximately $1.6 million
for the costs of legal, accounting and management consulting fees.

     Loss on Asset Impairment and Disposal.  During 1998, the Company  completed
the disposition of certain EBR and Recreation and Leisure contracts. The loss on
the  disposition  of the  assets  related  to these  contracts,  which  included
inventory,  real  property,  fixtures and equipment  and allocated  goodwill and
contract  rights,  totaled $5.7 million.  In addition,  the Company  recorded an
impairment  loss of $5.5 million  primarily  relating to a write off of tangible
and intangible  assets on contracts in 1998. The prior year provision  pertained
to the write down of contract loans related to a Recreation and Leisure contract
and an EBR  contract.  The Company  recorded  charges of $6.8 million in 1997 to
reflect  the loss on sale of assets  and the write down to fair value of certain
long-lived  assets,  held for sale and in use. The assets  written down included
excess of cost over net  assets  acquired,  contract  rights  and  fixtures  and
equipment. These assets were primarily in the EBR segment.

     Operating  Loss. The operating loss increased $4.8 million to $32.3 million
in fiscal  1998.  Excluding  the Special and  Restructuring  Charges and Loss on
Asset  Impairment and Disposal,  the 1998 operating loss was $9.4 million versus
$17.0  million in 1997 and is  primarily  due to an  increase  in gross  profit,
offset  slightly  by an  increase  in general  and  administrative  expenses  as
discussed above.

     Interest Expense, Net. The Company has invested the remaining proceeds from
the  issuance in October  1997 of the  Convertible  Notes,  which has  generated
interest  income that partially  offset the interest  expense on the Convertible
Notes,  resulting  in an increase  in net  interest  expense of $1.9  million in
fiscal 1998 as compared to fiscal 1997.


















                                       14


<PAGE>



Fiscal 1997 Compared to Fiscal 1996

     Net Sales. The Company's net sales approximately  doubled to $275.1 million
in fiscal 1997 from $144.4 million in fiscal 1996. Net sales increased in fiscal
1997 in all market  areas.  Recreation  and  Leisure net sales  increased  $18.5
million  or  18.7%.  The  increase  in  Recreation  and  Leisure  net  sales  is
attributable  to:  increased  sales of $15.5  million  from  existing  accounts,
including $6.2 million  related to Pro Player Stadium in Miami,  Florida,  which
hosted  the 1997  Divisional  Playoffs,  League  Championship  Series  and World
Series,  and a $4.7 million  increase  from the contract  with the Orange County
Convention Center in Orlando,  Florida which nearly tripled its facility size in
1997;  and net  sales of $5.8  million  from ten new  contracts,  including  the
University of Georgia in Athens which  contributed $1.1 million and $3.1 million
from the Tulsa Exposition Center in Tulsa, Oklahoma. These increases were offset
by decreased net sales of approximately  $1.3 million due to the absence in 1997
of a one time special event,  Super Bowl 1996, and $1.5 million from  terminated
contracts. Net sales in EBR increased 223% in 1997, or $89.7 million,  primarily
as a result of 1997 acquisitions and the full year impact of 1996  acquisitions.
The $18.4 million growth in net sales in Healthcare and Corrections, or 378%, is
directly   related  to  the  August  1997   acquisition  of  Best,  which  added
approximately  120  contracts  to this  operating  segment.  (See  Note 6 to the
Consolidated Financial Statements.)

     Gross Profit.  Gross profit as a percentage of net sales  decreased to 5.8%
in fiscal 1997 from 8.2% in fiscal 1996.  Reductions  in the  carrying  value of
certain assets,  primarily accounts receivable and fixtures and equipment,  were
$4.3  million  in 1997 as  compared  to $1.3  million in 1996.  Excluding  these
write-downs,  the gross  profit  percentage  was 7.3% and 9.1% in 1997 and 1996,
respectively.  The decline in gross profit  excluding  write-downs was primarily
related  to the  increased  business  in  the  lower  margined  EBR  segment  in
connection  with  recent  acquisitions  and a  decrease  in  margins  at several
recreation  and leisure and  convention  center  units  including  the Coral Sky
Amphitheater,  Concord  Pavilion,  Dayton  Convention  Center  and  the  Bayside
Exposition Center.

     General and Administrative  Expenses.  General and administrative  expenses
increased  to $32.8  million  (or 11.9% of net sales) in fiscal  1997 from $15.5
million (or 10.7% of net sales) in fiscal  1996.  This  increase  was  primarily
attributable to the Company's investment in regional and accounting  management,
training and human resource  support,  additional  sales  personnel and regional
office  facilities  to support the current  growth of the Company.  In addition,
there  were  significant  expenses  related  to  the  performance  of  duplicate
functions by personnel at the following  acquired  companies:  Service Dynamics,
Serv-Rite, Statewide, Best and Total.

     Special and Restructuring Charges. In connection with the Restatement,  the
Company incurred costs of  approximately  $3.8 million (or 1.4% of net sales) in
the fourth  quarter of 1997 to cover the  write-off  of $2.2 million of deferred
debt costs in connection  with the Company's  then-existing  credit facility and
approximately  $1.6 million for the costs of legal,  accounting  and  management
consulting fees.

     Loss on Asset  Impairment  and Disposal.  The Company  recorded a charge of
$6.8 million in 1997 to reflect the loss on sale of assets and the write down to
fair value of certain  long-lived  assets,  held for sale and in use. The assets
written down included excess of cost over net assets  acquired,  contract rights
and fixtures and equipment. These assets were primarily in the EBR segment.

     Operating  Loss.  Operating loss increased from $3.7 million in fiscal 1996
to $27.5 million in fiscal 1997. Excluding the Special and Restructuring Charges
and Loss on Asset  Impairment  and Disposal,  the 1997  operating loss was $16.9
million and is primarily due to a decline in gross profit and increased  general
and administrative expenses as discussed above.

     Interest Expense,  Net. During 1997, the Company repaid certain obligations
under its then-existing credit facility with the net proceeds from the follow-on
public  offering  completed  in February and  issuance of  Convertible  Notes in
October.  The Company has invested the  remaining  proceeds from the issuance of
the Convertible Notes, which has generated interest income that partially offset
the  interest  expense  on the  Convertible  Notes.  The  combination  of  these
activities  has resulted in an increase in net interest  expense of $0.5 million
in fiscal 1997 as compared to fiscal 1996.




                                       15

<PAGE>


Liquidity and Capital Resources

     At December 30, 1998, the Company had cash and cash equivalent  balances of
$67.2  million and the  Company's  current  assets of $113 million  exceeded its
current liabilities of $38 million, resulting in working capital of $75 million.
The cash balances are primarily  attributable  to the proceeds from the issuance
of the Convertible Notes.

     The Company has funded its capital  requirements from a combination of debt
and equity financing.  Net cash used in operating  activities was $27.5 million,
$23.9 million and $7.7 million in fiscal 1998, 1997 and 1996, respectively,  and
is primarily attributable to net losses incurred in each fiscal year.

     Net cash flows used in investing activities was $12 million,  $58.1 million
and $18.1  million in fiscal 1998,  1997 and 1996,  respectively,  the principal
components of which are acquisitions of businesses,  loans to clients, purchases
of equipment and direct payments associated with acquiring individual contracts,
as  further  described  below.  In 1998,  and to a lesser  extent in 1997,  such
outflows  were  partially  offset by  proceeds  from the sale of  equipment  and
collections  of notes  receivable.  The decrease in total cash used in investing
activities  from  1997  to  1998  is  primarily  attributable  to  the  lack  of
acquisitions in 1998.

     The Company is often required to provide a capital commitment in its bid to
win a new facility  contract.  This  commitment  most often takes the form of an
investment in food service equipment and leasehold improvements,  which upgrades
the  facility  itself and can  increase  the returns to both the Company and the
facility owner by generating  increased sales.  Occasionally,  the Company makes
loans or advances to the client,  the  proceeds of which are  generally  used to
improve an existing  facility or to  complete a new  facility.  When the Company
makes an investment,  loan or advance to a facility under certain contracts, the
amount of the commitment,  together,  in certain cases, with interest, is repaid
to the Company out of the revenues  generated  by the food service  operation in
accordance with an amortization schedule set forth in the contract.

     A significant portion of the Company's growth to date has been derived from
acquisitions.  From April 1993 through  October  1997,  the Company  acquired 12
companies.  Of the 12  acquisitions  since April 1993,  five were  completed  in
fiscal 1997 for an aggregate  purchase  price of  approximately  $45.1  million,
which  includes  $9.5 million of debt assumed by the Company.  The Company is in
the process of eliminating  certain  redundant  operations  through  closings of
offices and termination of excess personnel from certain of the companies.

     In October 1997, the Company issued,  through a private placement  pursuant
to  Rule  144A  under  the  Securities  Act  of  1933,  Convertible  Notes.  The
Convertible  Notes are unsecured  obligations of the Company and are convertible
into common stock at a conversion price of $44.50 per share. The net proceeds of
$169.1 million,  after deducting  underwriting  discounts and certain  expenses,
were used to repay  approximately  $50.0 million in  outstanding  debt under the
Company's  then-existing  credit  facility.  The  remaining  net  proceeds  were
invested in  short-term  investments.  In  connection  with the  offering of the
Convertible  Notes,  the  Company  had  agreed  to  file  a  shelf  registration
statement,  which would cause the Convertible  Notes to be freely tradable.  The
Company  did not  file a shelf  registration  statement  and will not do so as a
consequence of the  commencement  of the Chapter 11 case, and therefore has been
obligated to pay liquidated  damages on the  Convertible  Notes from January 25,
1998,  in the  amount of $.05 per week per  thousand  dollar  principal  amount,
subject to  increase  every  quarter up to a maximum of  approximately  1.3% per
annum.

     Throughout  1998,   management  negotiated  with  certain  holders  of  the
Company's Convertible Notes, who had formed (the Ad Hoc Committee ) comprised of
the three largest  Noteholders,  holding in excess of 92% of the aggregate  $175
million  of  Convertible  Notes  issued  in  October  1997.  As a result of such
negotiations,  on January 7, 1999,  the Company  filed a voluntary  petition for
reorganization  under the Bankruptcy Code in the Bankruptcy Court. At that time,
the  Company  filed the  Reorganization  Plan  which  embodies  the terms of the
restructuring agreed upon by the Ad Hoc Committee.

     Pursuant to the  Reorganization  Plan (i) all of the Company's  outstanding
Convertible  Notes in the  aggregate  principal  amount of $175  million will be
exchanged for  approximately  $45 million in cash and  approximately  96% of the
outstanding  common stock of the  reorganized  Company (the "New Common Stock");
(ii) holders of general unsecured claims will be paid in full; (iii) all holders
of rescission and damage claims against the Company  relating to the Convertible
Notes (including all such claims asserted in pending litigation) will receive in

                                       16

<PAGE>

satisfaction  of their  claims a ratable  share of an interest  in a  litigation
trust, 3% of the New Common Stock and warrants to purchase 750,000 shares of New
Common Stock;  and (iv) all holders of rescission  and damage claims against the
Company  relating to the Common  Stock  (including  all such claims  asserted in
pending litigation) and all holders of Common Stock will receive in satisfaction
of their  claims and equity  interests  a ratable  share of an  interest  in the
litigation  trust,  1% of the New Common Stock and warrants to purchase  250,000
shares of New Common Stock.  No  distribution,  however,  will be made under the
Reorganization  Plan to holders of Common Stock unless all other  classes  under
the Reorganization Plan accept or are deemed to accept the Reorganization  Plan.
Pursuant to the  Reorganization  Plan,  all Common  Stock and all  options  (and
existing plans providing for the issuance of options)  relating  thereto will be
cancelled. (See Note 2 to the Consolidated Financial Statements.)

     Management  believes that the Company's  cash position at December 30, 1998
will be sufficient to satisfy the Company's cash  requirements  for at least the
next twelve months. Accordingly, management believes it is unlikely that in 1999
cash  flow  demands  will be made  upon the  Company  which it will be unable to
satisfy from its present cash position and operations.  The Company is presently
engaged in negotiations with certain lenders for a credit facility,  which would
be available to the Company  following the  confirmation  of the  Reorganization
Plan.  There can be no assurance,  however,  that such a credit facility will be
obtained.  The shareholder  and/or bondholder  litigation  described in Item 3 -
Legal  Proceedings  is  automatically  stayed as  provided in Section 362 of the
Bankruptcy Code.  However,  if the Reorganization  Plan is not confirmed and the
plaintiffs prevail in the shareholder and/or bondholder litigation,  the outcome
could  have a  material  adverse  effect on the  Company's  financial  position,
results of operations and cash flows.  Capital to meet these potential cash flow
demands may not be available to the Company when required.  Management considers
it  unlikely  that the  Reorganization  Plan  will not be  confirmed,  given the
support of the Ad Hoc Committee.

Year 2000 Compliance

     The year 2000 ("Y2K") problem stems from computer programs written in a way
that differentiates  calendar years by utilizing two rather than four digits. As
a result,  many  information  systems  may be unable to properly  recognize  and
process date  sensitive  information  beyond  December 31, 1999.  The Company is
addressing  the Y2K  situation by  establishing  processes  for  evaluating  and
managing the risks associated with this issue.

     The Company is currently  replacing or  upgrading  its computer  systems to
make them Y2K compliant,  and expects to have remediation completed by the first
half of 1999 for all  significant  computer  systems.  Testing  is  expected  to
continue  throughout  1999.  The new  information  systems are estimated to cost
approximately  $3.0 million  ($500,000  expended  through  December 30, 1998), a
substantial  portion of which will be capitalized.  Spending for the Y2K project
is not expected to have a material impact on the Company's results of operations
or  cash  flows.  Although  the  Company  does  not  currently  have a  complete
contingency  plan for Y2K  compliance,  it intends to develop one during  fiscal
year 1999.

     While the Company believes all necessary work will be completed on a timely
basis,  there can be no guarantee  that all systems  will be fully  compliant by
December  31,  1999.  Estimated  time and  costs may  vary,  particularly  where
external systems of other companies and government agencies on which the Company
relies must be converted in a timely manner.

     The  Company  is in the  process of  evaluating  the Y2K  readiness  of all
internally  engineered  systems and all types of purchased hardware and software
systems used within the enterprise and is obtaining, where feasible, contractual
warranties  from  system  vendors  that  their  products  (i) are or will be Y2K
compliant by December 31, 1999, or (ii) will be replaced or updated by a product
with similar or improved  functional  characteristics  that are  compliant.  The
Company requires Y2K contractual warranties from all vendors of new software and
hardware.  In  addition,  the  Company is testing  newly  purchased  significant
hardware and software systems in an effort to ensure their Y2K compliance.






                                       17



     The Company has entered formal  communications  with most of its suppliers,
banks and other business partners or vendors seeking assurances they will be Y2K
compliant.   Although  no  method  exists  for  achieving   certainty  that  any
significant  business  partners will function without  disruption after December
31,  1999,  the  Company's  goal is to obtain as much  detailed  information  as
possible about its significant  partners' Y2K plans.  This process should assist
in identifying  those  companies  that  potentially  pose a significant  risk of
failure  to  perform  their  obligations  to the  Company as a result of the Y2K
problem. The Company is planning, where appropriate,  to review such significant
partners throughout 1999 to confirm their level of preparedness for 2000, and to
make  adjustments  where  necessary to avoid  utilization  of those partners who
present an unacceptable level of risk.

     The Company  currently is not  dependent on a single  source for any of its
products  or  services.  In the  event a  significant  supplier,  bank or  other
business partner or vendor were unable to provide services to the Company due to
a Y2K failure, the Company believes it would have adequate alternate sources for
such products or services.  There can be no guarantee,  however, that similar or
identical  products  or  services  would  be  available  on the same  terms  and
conditions or that the Company would not  experience  some adverse  effects as a
result of switching to such alternate sources.

     Like most  business  enterprises,  the  Company is  dependent  upon its own
internal computer  technology and relies upon timely performance by its business
partners.  A large-scale Y2K program failure could impair the Company's  ability
to timely deliver food service or administer its accounts  payable or receivable
functions,  resulting  in  potential  lost sales  opportunities  and  additional
expenses. The Company's Y2K program seeks to identify and minimize this risk and
includes testing of its internally engineered systems and purchased hardware and
software,  to  ensure,  to the extent  feasible,  all such  systems  will be Y2K
compliant. The Company is continually refining its understanding of the risk the
Y2K situation poses to its significant  business partners based upon information
obtained through surveys and interviews. The refinement will continue throughout
1999.

New Accounting Pronouncements

     In June 1997, the FASB issued SFAS No. 131,  "Disclosures about Segments of
an Enterprise and Related  Information." SFAS 131 superceded SFAS 14, "Financial
Reporting  for  Segments  of a Business  Enterprise,"  replacing  the  "industry
segment"  approach  with the  "management"  approach.  The  management  approach
designates  the  internal  organization  that is used by  management  for making
operating  decisions  and assessing  performance  as the source of the Company's
reportable  segment.  SFAS 131 also  requires  disclosures  about  products  and
services, geographic areas, and major customers. The adoption of SFAS 131 by the
Company in  December  1998 did not affect  results of  operations  or  financial
position but did affect the  disclosure of segment  information.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging  Activities."  SFAS No. 133  establishes  accounting and
reporting standards for derivative instruments and hedging activities.  SFAS No.
133 is effective for all fiscal  quarters of fiscal years  beginning  after June
15, 1999. The adoption of SFAS No. 133 is not expected to have a material impact
on the Company.
Inflation

     The Company  believes that  inflation has not had a material  effect on its
results of operations.

Seasonality

     The Company's  business is seasonal in nature.  Many Recreation and Leisure
facilities experience slack periods in April, May and June due to fewer sporting
events in these months and convention  centers  generally host fewer conventions
from May through September.  In addition,  many Education  facilities are closed
during the summer  months.  Among other  things,  the Company  adjusts its labor
scheduling and staffing to compensate for these fluctuations.



                                       18

<PAGE>



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

     Financial   instruments  which   potentially   subject  the  Company  to  a
concentration of credit risk principally  consist of cash and cash  equivalents,
trade  accounts  receivable and payable,  contract  loans and notes  receivable,
long-term obligations, convertible subordinated notes and subordinated debt.

     The Company  invests  its excess  cash  primarily  in money  market  funds,
commercial  paper  and  certain  U.S.  Government  securities  with an  original
maturity  of  three  months  or  less  which  are  deposited  with a  number  of
institutions with high credit ratings.

     Concentration of credit risk with respect to accounts receivable is limited
due to the large number of customers  that make up the Company's  customer base,
thus spreading trade credit risk. The Company  maintains  reserves for potential
credit  losses,   which,  in  the  aggregate,   have  not  exceeded   management
expectations.

     The carrying amounts reflected in the consolidated  balance sheets for cash
and cash equivalents,  accounts receivable and payable,  and the current portion
of long-term obligations and subordinated debt approximate fair value due to the
short maturities of these instruments.

     Substantially all of the contract loans to clients are subject to immediate
and full  repayment  under the terms of related  concession  agreements  and are
carried  at fixed  rates,  either  through  the  terms of the  notes or  through
discounting. One loan with a ten-year term has an interest rate tied into the 30
day LIBOR rate.

     The Company's  long-term  obligations  consist of capital lease obligations
carried  at  effective  interest  rates of 5.2% to 12%,  Convertible  Notes  and
subordinated  debt,  a  substantial  portion of which are carried at  discounted
rates ranging from 10% to 12.5%. If the Reorganization  Plan is confirmed by the
Bankruptcy  Court  and  implemented,  holders  of  the  Convertible  Notes  will
surrender them in exchange for approximately 96% of the outstanding common stock
of reorganized  Fine Host and  approximately  $45 million in cash.  (See Part I,
Item 3 - Legal  Proceedings.)  The Convertible  Notes are carried at face value,
and given the Company's  current  situation,  it is not  practicable to estimate
their fair value.

     The Company's  foreign currency rate exposure is not  significant.  Certain
raw materials used primarily in food and beverage  products are subject to price
volatility  caused by  weather  and other  factors.  Commodity  activity  is not
material  to  the  Company's   consolidated   financial  position,   results  of
operations,  or cash flows. In addition, the Company has entered into purchasing
agreements with various  national and regional  suppliers  pursuant to which the
Company  agreed to purchase  its  requirements  of  products  (as defined in the
agreements).   If  the  Company  exceeds  the  agreed-upon   purchasing  levels,
additional  rebates and promotional  allowances may be payable by the suppliers.
If the Company fails to meet  agreed-upon  purchasing  levels during the term of
the agreements,  the suppliers may elect to extend the term of the agreements by
one year, or a longer  period,  if necessary,  to reach  agreed-upon  purchasing
levels.




ITEM 8  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
---------------------------------------------------

     See index to the financial statements included in Item 14.


ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-----------------------------------------------------------------------
        FINANCIAL DISCLOSURE
        --------------------
     As  previously  reported by the  Company in its Current  Report on Form 8-K
filed on February 12, 1998.





                                       19



PART III
--------

ITEM  10  -  DIRECTORS   AND   EXECUTIVE   OFFICERS   OF  THE  COMPANY   
----------------------------------------------------------------------

Executive Officers and Directors of the Company

Class I Directors'  terms expire at 2000 Annual Meeting or when their successors
are chosen.  Class II  Directors'  terms  expire at 2001 Annual  Meeting or when
their  successors are chosen.  Class III Directors'  terms expire at 1999 Annual
Meeting or when their successors are chosen.

The executive officers and directors of the Company are as follows:

Name                       Age   Position
                           ---   --------

William D. Forrest (1)     38    Chief Executive Officer, President and Director

Gerald P. Buccino (2)      60    Chairman of the Board

Randall K. Ziegler         56    Executive Vice President - Business Development

Chris S. Verros            40    Group President - Recreation and Leisure

Mark Simkiss               47    Group President - Education and Business Dining

Perry M. Rynders           40    Group President - Healthcare
                                                 - Corrections

Richard L. Hall            45    Senior Vice President, Chief Accounting Officer
                                 and Treasurer

Ellen Keats                42    Senior Vice President, General Counsel and
                                 Secretary

Ronald E. Blaylock (1)(4)  39    Director

J. Michael Chu (3)(4)      40    Director

Norman B. Habermann (3)(4) 65    Director

Jack H. Nusbaum (2)        58    Director

(1) Class II Director
(2) Class I Director
(3) Class III Director
(4) Member of Compensation Committee

     William D.  Forrest has been  President of the Company  since  December 14,
1998, and Chief  Executive  Officer since January 1, 1999.  Prior to joining the
Company, Mr. Forrest was actively involved with the Company as part of Buccino &
Associates,  Inc.,  the  crisis  management  firm  retained  by the  Company  in
December, 1997. Mr. Forrest is owner and President of Forrest Advisory Services,
a management consulting firm specializing in turnaround situations. From 1989 to
1996 he was  owner and  President  of  Forrest  Associates,  another  turnaround
consulting firm. Mr. Forrest has been a director since January, 1999.


                                       20


<PAGE>


     Gerald P. Buccino was Chief  Executive  Officer from March 10, 1998 through
December  31,  1998 and  President  of the Company  from March 10, 1998  through
December 14, 1998. He was elected as a director on July 1, 1998. Mr. Buccino was
appointed  Chairman  of the Board on  December  14,  1998.  His firm,  Buccino &
Associates,  Inc.,  was retained by the Company in December  1997 to oversee the
management of the Company.  Since 1981,  Mr. Buccino has been Chairman and Chief
Executive  Officer of Buccino & Associates,  Inc.;  Mr. Buccino is President and
Chairman of the Board of the Buccino Foundation, a charitable organization.  Mr.
Buccino is also a member of the Board of Regents of Seton Hall University.

     Randall K. Ziegler  resigned as Executive Vice President of the Company and
as a director and officer effective January 15, 1999, and became a consultant to
the Company.  From May 1998 through  January 15, 1999 Mr.  Ziegler was Executive
Vice-President  -  Business  Development.  Mr.  Zeigler  was Group  President  -
Recreation  and Leisure from June 1997 to May 1998,  and he was President of the
Company's  Food  Services  Division  from 1990 to 1995.  Mr.  Ziegler had been a
director since 1994.

     Chris S. Verros has been Group  President -  Recreation  and Leisure  since
December  1998.  Prior to that time, he served as Senior Vice  President - North
from 1996 to 1998.  From 1994 to 1996,  Mr.  Verros was Vice  President - North.
Prior to joining the Company, he was Vice President of Fanfare, Inc., a contract
food service provider acquired by the Company in 1994.

     Mark Simkiss has been Group President - Education and Business  Restaurants
since July 1998. Mr.  Simkiss was Group  President - School  Nutrition  Services
from June 1997 until July 1998.  From February 1997 until June 1997, Mr. Simkiss
was Senior Vice President - School Nutrition at the Company. From September 1995
until February  1997, Mr. Simkiss was Director of Business  Development - School
Nutrition at Aramark Corp., a food service  company  ("Aramark").  For more than
five years prior to September 1995, Mr. Simkiss was a Regional Vice President of
Aramark.

     Perry M. Rynders has been Group  President - Healthcare and Group President
- Corrections  since August 1997.  For more than five years prior to joining the
Company,  Mr. Rynders served as President of Best,  Inc.,  which was acquired by
the Company in August 1997. Mr. Rynders also served as Chief  Financial  Officer
of Best from 1994 to 1997.

     Richard L. Hall has been Senior Vice President,  Chief  Accounting  Officer
and Treasurer of the Company since  September 1998. From November 1997 to August
1998 Mr. Hall was Chief Financial  Officer of Century Data Systems Inc., a point
of sale systems  integrator.  From June 1990 to July 1997 he was Executive  Vice
President  and Chief  Financial  Officer of Hardee's  Food Systems  Inc., a food
service retailer.

     Ellen  Keats has been Vice  President  and  General  Counsel of the Company
since  December  1996.  Ms. Keats became  Secretary in June 1997 and Senior Vice
President in May 1998. She previously served as Corporate Counsel of the Company
from 1994 to 1996.  Prior to joining the Company,  from 1993 to 1994,  Ms. Keats
was  General  Counsel  of EIS  International,  Inc.,  a  telecommunications  and
software company in Stamford, Connecticut.

     Ronald E.  Blaylock has been a director of the Company  since shortly after
the Initial Public  Offering in June 1996.  Mr.  Blaylock has been President and
Chief  Executive  Officer of Blaylock & Partners,  L.P.,  an  investment-banking
firm,  since he founded the firm in September 1993. Mr. Blaylock is a trustee of
Georgetown  University,  where he was a member of a NCAA Final  Four  basketball
team,  and also serves as a director of  Harbourton  Mortgage  Corp.,  Advantica
Restaurant Group, Inc. and Covenant House.

     J. Michael Chu has been a director of the Company since April 1997. Mr. Chu
has been the Managing Director of Catterton-Simon  Partners  ("Catterton") since
1989.  Catterton is a private equity  investment  firm focusing on the consumer,
food and  beverage  industries.  Mr. Chu is a member of the Board of Trustees of
Bates College.

     Norman N.  Habermann  has been a director of the Company since August 1998.
Mr. Habermann has been President of Scobrett Associates, Inc., a venture capital
and  consulting  firm  since  1994.  Mr.  Habermann  is a member of the Board of
Trustees of the University of California - Santa Barbara.
                                       
                                       21


<PAGE>


     Jack H. Nusbaum has been a director of the Company  since shortly after the
Company's  Initial Public  Offering in June 1996. Mr. Nusbaum is the Chairman of
the New York law firm of Willkie Farr &  Gallagher,  where he has been a partner
for more than the past  twenty-five  years.  He is also a  director  of  Pioneer
Companies,  Inc.,  W.R.  Berkley  Corporation,   Strategic  Distribution,  Prime
Hospitality  Corp. and The Topps Company,  Inc. Mr. Nusbaum is also a trustee of
Prep for Prep and the Joseph Collins Foundation.


             Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's officers and directors,  and persons who own more than ten percent
of a registered  class of the  Company's  equity  securities  to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the  Securities  and
Exchange   Commission.   Officers,   directors  and  greater  than  ten  percent
stockholders are required by the Commission's  regulation to furnish the Company
with copies of all Forms 3, 4 and 5 they file.

     Based  solely on the  Company's  review of the  copies of such forms it has
received,  the Company believes that all of its officers,  directors and greater
than  ten  percent  beneficial  owners  complied  with all  filing  requirements
applicable to them with respect to transactions during fiscal 1998.


ITEM 11 -      EXECUTIVE COMPENSATION
-------------------------------------

     The following table sets forth  information  regarding the  compensation of
the Company's Chief Executive Officer and the four other most highly compensated
executive  officers  (collectively,  the "Executive  Officer  Group") during the
fiscal years ended December 30, 1998, December 31, 1997 and December 25, 1996.

                         Summary Compensation Table (1)

                                                                                
<TABLE>
<CAPTION> 
                                                                    Long Term   
                                                                  Compensation
                                                  Annual             Awards
Name and Principal                 Fiscal      Compensation   Securities Underlying     All Other
Position                            Year      Salary   Bonus      Options/SARs       Compensation(2) 
-----------------------------      ------     ------   -----  ---------------------  ---------------
<S>                                <C>    <C>         <C>           <C>                 <C>    
Gerald P. Buccino (3)               1998   $1,000,000  $  -            -                 $ 2,457
        Chairman, President and
        CEO

Mark Simkiss (4)                    1998      170,417  71,250          -                   2,964
        Group President             1997      128,638  56,250        27,500                  442

Randall K. Ziegler (5)              1998      171,980  35,410          -                   5,853
        Group President             1997      193,500  35,410        22,500                4,083
                                    1996      193,500  71,750        15,000               28,602

Catherine B. James (6)              1998      149,521  50,000          -                 271,914
        Chief Financial Officer     1997      138,006     -          67,500                  345

Perry M. Rynders (7)                1998      174,569  20,000          -                   1,342
        Group President             1997       55,010     -          20,000                   69

Chris S. Verros (8)                 1998      134,408  51,500          -                   2,553
        Group President

<FN>
 
(1) Other annual  compensation  in the form of  perquisites  and other  personal
benefits has been omitted for certain executive officers as the aggregate amount
of such perquisites and other personal  benefits was less than the lesser of 10%
of their salary and bonus or $50,000.

                                       22
<PAGE>

(2) Represents  premiums paid by the Company for excess group life insurance for
fiscal 1998 (Mr.  Buccino $2,457;  Mr. Simkiss $1,114;  Mr. Ziegler $2,520;  Ms.
James $914; Mr. Rynders $142; Mr. Verros $592),  contributions by the Company to
a 401(k) savings plan on account of each executive  officer for fiscal 1998 (Mr.
Simkiss $1,850;  Mr. Ziegler $3,333;  Ms. James $1,000;  Mr. Rynders $1,200; Mr.
Verros $1,961) and severance pay (Ms. James $270,000).

(3) Mr. Buccino's employment with the Company as President ended on December 14,
1998, and his term as Chief  Executive  Officer expired on December 31, 1998. He
was appointed Chairman of the Board on December 14, 1998. He has agreed to serve
as a  consultant  to the  Company.  See  "Executive  Compensation  -  Settlement
Agreement with Gerald P. Buccino."

(4) Mr. Simkiss became an Executive Officer of the Company in February 1997.

(5) Mr. Ziegler  resigned from the Company  effective as of January 15, 1999. He
has agreed to serve as a consultant to the Company. See "Executive  Compensation
- Separation and Consulting Agreement with Randall K. Ziegler."

(6) Ms. James resigned from the Company  effective as of September 30, 1998. See
"Executive Compensation - Separation Agreement with Catherine B. James."

(7) Mr. Rynders became an Executive Officer of the Company in August 1997.

(8) Mr. Verros became an Executive Officer of the Company in December 1998.
</FN>
</TABLE>

                     Stock Option Grants in Last Fiscal Year

     There were no options  granted to the  Executive  Officer  Group during the
fiscal year ended December 30, 1998.


     The following table sets forth  information  regarding options exercised by
the Executive Officer Group during the fiscal year ended December 30, 1998.

         Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
                                Option/SAR Values

                                                   Number Of
                                                  Securities        Value Of 
                                                  Underlying      Unexercised
                                                 Unexercised     In-the-Money   
                                                 Options/SARs    Options/SARs
                                                  At Fiscal        At Fiscal
                                                  Year-End         Year-End
                         Shares                      (#)             ($) 
                      Acquired On     Value      Exercisable/    Exercisable/
Name                  Exercise (#) Realized ($) Unexercisable   Unexercisable
----                  -----------  -----------  -------------   -------------

Perry M. Rynders           0           0             0/20,000         0/0
Mark Simkiss               0           0         1,500/26,000         0/0
Chris S. Verros            0           0         3,000/24,500         0/0
Randall K. Ziegler (1)     0           0        15,250/31,000         0/0

     (1) Mr. Ziegler resigned from the Company effective as of January 15, 1999.
He  has  agreed  to  serve  as a  consultant  to  the  Company.  See  "Executive
Compensation - Separation and Consulting Agreement with Randall K. Ziegler."

                                       23

<PAGE>


Long-Term Incentive Plans - Awards In Last Fiscal Year

     There were no awards  under the  Company's  Long-Term  Incentive  Plan (the
"LTIP")  granted to the  Executive  Officer  Group  during the fiscal year ended
December 30, 1998. On April 7, 1998, the Compensation  Committee  terminated the
Long-Term Incentive Plan.

Employment Agreement with William D. Forrest

     Effective as of December  14, 1998,  Mr.  Forrest  became  President of the
Company,  and effective  January 1, 1999 he became Chief Executive Officer and a
director of the Company.  Pursuant to an Employment Agreement,  Mr. Forrest will
serve  through the earlier of (1) the  Effective  Date or (2) December 14, 1999,
unless earlier terminated,  at a salary of $400,000 per annum plus an additional
$60,000 which was paid in December,  1998.  The Agreement also provides that Mr.
Forrest  will  receive a bonus of  $300,000 if the  Effective  Date occurs on or
before May 5, 1999,  $200,000 if the Effective Date occurs after May 5, 1999 but
on or before June 5, 1999, or $150,000 if the  Effective  Date occurs after June
5, 1999 but prior to January 5, 2000. In the event of termination of employment,
the Company shall pay to Mr.  Forrest all amounts  accrued but unpaid in respect
of salary or unreimbursed  expenses.  In the event Mr.  Forrest's  employment is
terminated without cause prior to his entitlement to the bonus payment described
above,  he shall be paid a  termination  fee ("Fee") in lieu of any and all such
bonus payments. If such termination is prior to the expiration of 120 days after
January 7, 1999, the commencement date of the Company's Chapter 11 case, the Fee
shall be $300,000;  if the  termination  is more than 120 but less than 151 days
after January 7, 1999, the Fee shall be $200,000; and if the termination is more
than 150 days after January 7, 1999, the Fee shall be $150,000. In addition, the
Company has agreed to  indemnify  Mr.  Forrest to the fullest  extent  permitted
under Section 145 of the Delaware General Corporation Law.

Agreement with Gerald P. Buccino

     Effective  December  14,  1998,  Mr.  Buccino  resigned as President of the
Company and effective  December 31, 1998,  his term as Chief  Executive  Officer
expired. Mr. Buccino is also Chairman and CEO of Buccino & Associates.  Pursuant
to an Agreement, the Company agreed to pay Mr. Buccino the sum of $500,000, with
$200,000  payable on the date the  agreement  was signed  (December  14,  1998),
$200,000 payable on January 5, 1999 and $100,000 payable as a success fee within
five business days of the Effective  Date. The Agreement  also contains  certain
provisions for settling any outstanding invoices with Buccino & Associates.  The
Agreement  also provides that if requested to by the Company,  Mr.  Buccino will
continue to provide  certain  services  upon  reasonable  advance  notice by the
Company,  including,  without limitation,  contacts with customers,  vendors and
performance  bond companies,  for  compensation of $5,000 per day after December
31,  1998 plus  reimbursement  of  reasonable  travel and  related out of pocket
expenses.  Mr. Buccino also agreed to work each business day in the week leading
up to and the week of the Company's filing of the  Reorganization  Plan, without
any additional compensation.  The Agreement provides that Mr. Buccino shall also
be  paid  $425  per  hour  for  certain  additional  services.  Pursuant  to the
Agreement,  Buccino & Associates  consented to the employment of Mr. Forrest and
another  former  Buccino &  Associates  employee  by the  Company  and agreed to
terminate  their  consulting  relationships  with the Company.  The parties also
exchanged mutual releases as part of the Agreement.

Separation and Consulting Agreement with Randall K. Ziegler

     Effective  January  15,  1999,  Mr.  Ziegler  resigned  as  Executive  Vice
President  and as a  director  of the  Company.  Pursuant  to a  Separation  and
Consulting  Agreement,  the Company  retained Mr.  Ziegler as a consultant for a
period of nine months at a fee of $13,750 per month, and agreed to pay severance
to Mr.  Ziegler  in an amount  equal to  $13,750  per month for a period of nine
months  following the consulting term, or in a lump sum if Mr. Ziegler so elects
prior to the  expiration of the  consulting  term. The Company agreed to provide
medical  benefits to Mr. Ziegler  comparable to his existing  benefits and a car
during the consulting and severance periods, subject to offset to the extent Mr.
Ziegler  obtains  full-time  employment  during such periods.  In addition,  the
Company agreed to pay Mr. Ziegler an incentive  bonus of $35,000 at such time as
other  employees are paid their bonuses in accordance with Company policy and to

                                       24

<PAGE>

pay Mr.  Ziegler up to $20,000 for  outplacement  services  at his request  upon
presentation of appropriate  documentation  therefor.  In addition,  the Company
agreed  to pay Mr.  Ziegler  additional  bonuses  totaling  $50,000  if  certain
accounts were awarded to the Company  during the  consulting  period and he used
his reasonable best efforts, if requested by the Company, in helping the Company
to be awarded those accounts. Mutual releases were also exchanged as part of the
agreement.  In  addition,  the Company  agreed to indemnify  Mr.  Ziegler to the
fullest extent permitted under Section 145 of the Delaware  General  Corporation
Law.

Separation Agreement with Catherine B. James

     Effective  as of  September  30,  1998,  Catherine  B.  James  resigned  as
director, Executive Vice President, Chief Financial Officer and Treasurer of the
Company.  Pursuant to a letter  agreement  dated September 15, 1998, the Company
paid Ms. James  $270,000 in exchange for a release of the Company.  In addition,
the Company  agreed to indemnify  Ms.  James,  and to advance  expenses,  to the
fullest extent permitted under Section 145 of the Delaware  General  Corporation
Law.

Directors' Compensation

     Directors'  Compensation:  Members  of the Board of  Directors  who are not
officers or employees of the Company  ("Non-Employee  Directors") receive $2,500
per Board meeting and committee meeting and participate in the 1996 Non-Employee
Director Stock Plan (the "Directors Plan"). Pursuant to the Directors Plan, each
Non-Employee  Director will, on the date of each Annual Meeting of Stockholders,
be automatically  granted,  without further action by the Board of Directors,  a
number of shares of Common  Stock  equal to $15,000  divided by the Fair  Market
Value (as  defined in the  Directors  Plan) of one share of Common  Stock on the
date of grant. There was no such grant made in 1998.

     Common  Stock  granted  under  the   Directors   Plan  is  restricted   and
nontransferable  until the first  Annual  Meeting  of  Stockholders  immediately
following  the date of the  grant  unless  otherwise  provided  by the  Board of
Directors.  In the event that a Non-Employee  Director  ceases to be a member of
the Board of Directors, other than because of his or her death or Disability (as
defined in the Directors Plan), all shares of Common Stock granted to him or her
pursuant  to the  Directors  Plan whose  restrictions  have not lapsed  shall be
forfeited  back  to  the  Company.  Upon  a  Non-Employee  Director's  death  or
Disability all restrictions on shares of Common Stock granted to him pursuant to
the  Directors  Plan  shall  lapse  and all  such  shares  shall  become  freely
transferable.  In the event of a Change in Control (as defined in the  Directors
Plan),  all  restrictions  with  respect  to shares of Common  Stock  previously
granted  pursuant  to the  Directors  Plan will  immediately  lapse and all such
shares will become immediately transferable.

Special Committee

     On December 19, 1997, the Board of Directors  appointed a Special Committee
comprised  of Messrs.  Blaylock,  Chu and  Nusbaum.  The Special  Committee  was
authorized  to conduct an inquiry with respect to all  financial,  transactional
and other matters as it deemed necessary or appropriate, to retain professionals
and to  otherwise  exercise  all of the powers of the Board of  Directors in the
management  of the  business  and  affairs of the  Company,  subject to Delaware
General  Corporation Law. In view of the broad  responsibilities  of the Special
Committee, the members of the Special Committee received $2,500 per meeting. The
Special  Committee was disbanded in July 1998. Its function was taken over by an
Audit  Committee  consisting  of  all  directors,   who  receive  no  additional
compensation for their membership.

Compensation Committee Interlocks and Insider Participation

     As of December 18, 1997, the  Compensation  Committee  consisted of Messrs.
Chu and Blaylock. Mr. Habermann joined the committee following his election as a
director on August 4, 1998.  The committee  members are paid $2,000 per meeting,
and  Mr.  Chu is  paid a  $10,000  a year  retainer  to act as  Chairman  of the
Compensation Committee.

               The Company knows of no executive officer-director  interlocks or
reportable transactions by present members of the Compensation Committee.

                                       25

<PAGE>

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------ 

     Except as noted below,  the following table sets forth certain  information
with regard to the beneficial ownership of the Common Stock as of March 19, 1999
by each  person  known by the  Company to own  beneficially  more than 5% of the
outstanding  shares of Common Stock.  This  information has been obtained by the
Company  from either  Schedule 13G or Schedule  13G/A,  based on the most recent
filing  by  such  Reporting  Persons.  Except  as  otherwise  noted,  the  named
beneficial  owner has sole  power to vote or direct  the vote and sole  power to
dispose or to direct the disposition of the securities reported for it.

   
                                                  Beneficial Ownership (1)
   Name and Address                               -----------------------
   of Beneficial Owner                             Shares(2)  Percentage
   -------------------                             ---------  ----------
      Angelo, Gordon & Co., L.P. (3)               1,357,978     10.5%
         245 Park Ave.
         New York, NY 10167
      Franklin Mutual Advisors, Inc. (4)             902,171      7.0%
         51 John F. Kennedy Parkway
         Short Hills, NJ 07078
      Oaktree Capital Management, LLC (5)            798,651      6.1%
         550 S. Hope St., 22nd Floor
         Los Angeles, CA 90017
      Citigroup Inc.(6)                              742,296      5.7%
         153 East 53rd Street
         New York, NY 10043
      Wellington Management Company, LLP (7)         656,600      5.1%
         75 State St.
         Boston, MA 02109

     (1) Under the rules of the Securities and Exchange  Commission,  shares are
deemed  to be  "beneficially  owned"  by a person  if such  person  directly  or
indirectly  has or  shares  (i) the  power to vote or  dispose  of such  shares,
whether or not such person has any  pecuniary  interest in such shares,  or (ii)
the right to acquire the power to vote or dispose of such shares within 60 days,
including  any right to acquire  through the exercise of any option,  warrant or
right. Calculations are based on shares outstanding,  including 3,932,584 shares
issuable upon conversion of the Convertible Notes.

     (2)  Includes  shares of  Common  Stock  issuable  upon  conversion  of the
Convertible Notes.

     (3) Angelo, Gordon & Co., L.P. ("Angelo, Gordon" ) had beneficial ownership
of  notes  convertible  into  57,708  shares  for  its  own  account  and  notes
convertible into 1,300,270 shares for the account of 16 private investment funds
for which it acts as general partner and/or  discretionary  investment  advisor.
John M. Angelo, in his capacities as a general partner of AG Partners,  L.P. the
sole  general  partner of Angelo,  Gordon,  and the chief  executive  officer of
Angelo,  Gordon and Michael L. Gordon, in his capacities as a general partner of
AG  Partners,  L.P. the sole general  partner of Angelo,  Gordon,  and the chief
operating officer of Angelo,  Gordon, may be considered beneficial owners of the
1,357,978 shares.  Neither Angelo, Gordon nor Mr. Angelo nor Mr. Gordon has sole
or shared voting or dispositive  power.  The business address for Mr. Angelo and
Mr. Gordon is also 245 Park Avenue,  New York, NY 10167.  Information  regarding
Angelo,  Gordon has been obtained by the Company from a Schedule  13G/A filed by
Angelo,  Gordon with the Securities and Exchange Commission on or about February
11, 1999 reporting beneficial ownership of Common Stock as of December 31, 1998.

                                       26


<PAGE>


     (4) Information regarding Franklin Mutual Advisors,  Inc. ("FMAI") has been
obtained by the Company  from a Schedule  13G filed by FMAI with the  Securities
and  Exchange  Commission  on or about  February 9, 1999,  reporting  beneficial
ownership of Common Stock as of December 31, 1998.  The  securities  reported on
herein are beneficially  owned by one or more open-end  investment  companies or
other managed  accounts which,  pursuant to advisory  contracts,  are advised by
FMAI, a direct subsidiary of Franklin  Resources,  Inc.  ("FRI").  Such advisory
contracts  grant to FMAI all  investment  and voting  power over the  securities
owned by such advisory  clients.  Charles B. Johnson and Rupert H. Johnson,  Jr.
(the  "Principal  Shareholders")  each own in excess  of 10% of the  outstanding
common stock of FRI and are the principal shareholders of FRI.

     (5) Oaktree Capital Management, LLC, a California limited liability company
("Oaktree"),  serves in the following  capacities (i) as the General  Partner of
the  OCM  Opportunities   Fund,  L.P.,  a  Delaware  limited   partnership  (the
"Opportunities  Fund"), (ii) as investment manager of the OCM Convertible Trust,
and (iii) as investment manager for certain third party accounts which invest in
similar  securities as the Opportunities  Fund or the OCM Convertible  Trust. In
such  capacities,  Oaktree may be deemed to be the  beneficial  owner of 798,651
shares of the Company's  Common Stock.  Information  regarding  Oaktree has been
obtained by the Company from a Schedule 13G filed by Oaktree with the Securities
and  Exchange  Commission  on or about  February 12, 1998  reporting  beneficial
ownership of Common Stock as of December 31, 1997.

     (6) Information regarding Citigroup Inc. ("Citigroup") has been obtained by
the Company  from a Schedule  13G/A filed by  Citigroup  for  Citigroup  and its
wholly-owned  subsidiaries  Salomon  Brothers Asset  Management  Inc.  ("SBAM"),
Salomon  Brothers  Holding Co. Inc.  ("SBHC") and Salomon Smith Barney Holdings,
Inc.  ("SSB") with the  Securities  Exchange  Commission on or about January 22,
1999  reporting  beneficial  ownership  of Common Stock as of December 31, 1998.
Citigroup,  SBAM, SBHC and SSB report having shared voting and investment  power
over the securities. The business address of SBAM, SBHC and SSB is 388 Greenwich
Street, New York, NY 10013.

     (7) Information  regarding  Wellington  Management Company, LLP ("WMC") has
been  obtained  by the  Company  from a  Schedule  13G  filed  by WMC  with  the
Securities  and Exchange  Commission  on or about  January 13,  1998,  reporting
beneficial ownership of Common Stock as of December 31, 1997. WMC reports having
shared  voting  power over  195,000  shares and  shared  dispositive  power over
656,600 shares.

     The  following  table sets forth  certain  information  with  regard to the
beneficial  ownership  of the  Common  Stock  as of March  19,  1999 by (i) each
director of the Company and each  executive  officer  group of the Company,  and
(ii) all directors  and officers of the Company as a group.  Except as otherwise
noted, the named beneficial owner has sole voting and dispositive power.

                                       27


<PAGE>


Name of Beneficial Owner                        Beneficial Ownership (1)
------------------------                        -----------------------
                                                   Shares   Percentage
                                                   ------   ----------  
   Randall K. Ziegler (2)                          55,250        *
   Perry M. Rynders                                 5,000        *
   Mark Simkiss (3)                                 1,500        *
   Chris S. Verros (3)                              3,000        *
   Ronald E. Blaylock                               1,799        *
   J. Michael Chu                                     549        *
   Jack H. Nusbaum                                  1,799        *
   All directors and executive officers as
     a group (8 persons) (4)                       70,897        *
   
   * Less than 1%.

     (1) Under the rules of the Securities and Exchange  Commission,  shares are
deemed  to be  "beneficially  owned"  by a person  if such  person  directly  or
indirectly  has or  shares  (i) the  power to vote or  dispose  of such  shares,
whether or not such person has any  pecuniary  interest in such shares,  or (ii)
the right to acquire the power to vote or dispose of such shares within 60 days,
including  any right to acquire  through the exercise of any option,  warrant or
right.  Percentage calculations are based on shares outstanding including 21,750
shares issuable upon exercise of stock options.

     (2) Includes  15,250 shares of Common Stock issuable upon exercise of stock
options.

     (3)Consists  entirely of shares of Common Stock  issuable  upon exercise of
stock options.

     (4) Includes  21,750 shares of Common Stock issuable upon exercise of stock
options beneficially owned by directors and executive officers of the Company.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

Buccino & Associates, Inc.

     Buccino & Associates acted as the Company's management consulting firm from
December 15, 1997 to December  14,  1998.  Gerald P. Buccino is the Chairman and
Chief Executive Officer of Buccino & Associates. Mr. Buccino served as President
of the Company from March 10, 1998 through December 14, 1998 and Chief Executive
Officer of the Company  from March 10,  1998  through  December  31,  1998.  Mr.
Buccino  continues  to serve the  Company as  Chairman  of the Board.  Buccino &
Associates  billed the Company in accordance  with its standard hourly rates for
services rendered, which amounted to $2,212,000 and $157,000 in the fiscal years
1998 and 1997,  respectively.  The Company's present Chief Executive Officer and
President,  William  D.  Forrest,  was also  previously  retained  by  Buccino &
Associates while on assignment at the Company.

Other

     See "Item 11 -  Executive  Compensation  Committee  Interlocks  and Insider
Participation."

     The law firm of Willkie  Farr & Gallagher  was  retained  as the  Company's
legal counsel until March 11, 1999 with respect to certain matters. Mr. Nusbaum,
a director of the Company, is the Chairman of Willkie Farr & Gallagher.

     The  Company  believes  that all  transactions  between the Company and its
officers,  directors and principal  stockholders or affiliates thereof, in light
of the circumstances of the transactions, have been and will in the future be on
terms no less favorable to the Company than could be obtained from  unaffiliated
third parties.  Such  transactions  are subject to the approval of a majority of
the disinterested directors of the Company.


                                       28

<PAGE>

PART IV
-------

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

     (a)(1) Financial Statements

<TABLE>
<CAPTION>

                          INDEX TO FINANCIAL STATEMENTS

                                                                                                       Page
                                                                                                       ----  
    <S>                                                                                            <C>    

     Reports of Independent Accountants F-2 and F-3                                                 F-2 and F-3

     Consolidated  Balance  Sheets as of December 30, 1998 and December 31, 1997                        F-4

     Consolidated  Statements of Operations  for the fiscal years ended December 30, 1998,
        December 31, 1997 and December 25, 1996                                                         F-5

     Consolidated Statements of Stockholders' Equity for the fiscal years ended December 30,
        1998, December 31, 1997 and December 25, 1996                                                   F-6

     Consolidated Statements of Cash Flows for the fiscal years ended December 30, 1998,
        December 31, 1997 and December 25, 1996                                                         F-7

     Notes to Consolidated Financial Statements                                                         F-8



</TABLE>






























                                      F- 1


<PAGE>


                        Report of Independent Accountants


To the Board of Directors and Stockholders
of Fine Host Corporation

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material  respects,  the financial  position of Fine Host
Corporation  and its  subsidiaries  (the  "Company")  at  December  30, 1998 and
December 31, 1997, and the results of their  operations and their cash flows for
the fiscal years then ended 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  audits 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.

The accompanying  consolidated  financial statements have been prepared assuming
the Company  will  continue as a going  concern.  As  discussed in Note 2 to the
consolidated  financial statements,  Fine Host Corporation,  the parent company,
filed a plan of reorganization  under Chapter 11 of the U.S.  Bankruptcy Code on
January 7, 1999.  The financial  circumstances  of the Company  arising from the
bankruptcy  filing and recurring losses from operations raise  substantial doubt
about the Company's ability to continue as a going concern.  Management's  plans
in  regard  to these  matters  are also  discussed  in Note 2. The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of these uncertainties.






PricewaterhouseCoopers LLP
Stamford, Connecticut
March 22, 1999














                                       F-2

<PAGE>
  
         Independent Auditors' Report


         To the Board of Directors and Stockholders of
         FINE HOST CORPORATION

         We have audited the accompanying consolidated statements of operations,
         stockholders'  equity  and cash  flows  of Fine  Host  Corporation  and
         subsidiaries  (the  "Company")  for the year ended  December  25, 1996.
         These consolidated  financial  statements are the responsibility of the
         Company's  management.  Our  responsibility is to express an opinion on
         these consolidated financial statements based on our audit.

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

         In our opinion,  such  consolidated  financial  statements of Fine Host
         Corporation and subsidiaries  present fairly, in all material respects,
         the results of their operations and their cash flows for the year ended
         December 25, 1996 in  conformity  with  generally  accepted  accounting
         principles.


         Deloitte & Touche LLP
         New York, New York
         February 28, 1997,  except for Note 26, as to which the date is January
         28, 1998 and except for Note 3 - Basic and Diluted Loss Per Share as to
         which the date is April 7, 1998


























                                       F-3



<PAGE>

<TABLE>
<CAPTION>
                     FINE HOST CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                  (amounts in thousands, except per share data)

                                                   December 30, 1998   December 31, 1997
                                                   -----------------   -----------------                                            
                             ASSETS
<S>                                                    <C>                 <C>    
 
Current assets:
  Cash and cash equivalents                              $67,178            $109,722
  Accounts receivable, net                                37,090              29,712
  Inventories                                              6,197               6,241
  Prepaid expenses and other current assets                2,541               1,940
                                                         -------             -------
        Total current assets                             113,006             147,615

 Contract rights, net                                     30,530              36,152
 Fixtures and equipment, net                              20,563              24,269
 Excess of cost over net assets
   acquired, net                                          48,144              55,551
 Contract loans and notes receivable                      24,178              15,481
 Other assets                                              6,702              11,110
                                                         -------             -------

          Total assets                                  $243,123            $290,178
                                                         =======             =======

   LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
 Accounts payable and accrued expenses                  $ 35,332            $ 41,270
 Current portion of long-term obligations                    306                 464
 Current portion of subordinated debt                      2,316               2,219
                                                         -------             -------
        Total current liabilities                         37,954              43,953

 Convertible subordinated notes                          175,000             175,000
 Long-term obligations                                       266                 574
 Subordinated debt                                         2,539               5,187
                                                         -------             -------
        Total liabilities                                215,759             224,714

 Commitments and contingencies

 Stockholders' equity:
 Common Stock, $.01 par value, 25,000 shares
    authorized, 9,060 issued                                  91                  91
 Treasury stock, 12 shares at December 30, 1998              (74)                  -
 Additional paid-in-capital                              102,949             102,949
 Accumulated deficit                                     (75,520)            (37,420)
 Receivables from stockholders for purchase of
   Common Stock                                              (82)               (156)
                                                         -------             -------
         Total stockholders' equity                       27,364              65,464
                                                         -------             -------

         Total liabilities and stockholders' equity     $243,123            $290,178
                                                         =======             =======
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       F-4



   <PAGE>

   <TABLE>
   <CAPTION>

                     FINE HOST CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (amounts in thousands, except per share data)

                                                                         Fiscal Years Ended
                                                             -------------------------------------------
                                                             December 30,    December 31,    December 25,
                                                                 1998           1997             1996
                                                             -----------     -----------     -----------  
        <S>                                                   <C>             <C>             <C> 
         
         Net sales                                             $327,121        $275,068        $144,400
         Cost of sales                                          302,543         259,179         132,579                            
                                                                -------         -------         -------
         Gross profit                                            24,578          15,889          11,821

         General and administrative expenses                     33,935          32,815          15,504
         Special and restructuring charges                       11,702           3,784             -
         Loss on asset impairment and disposal                   11,207           6,798             -
                                                                 ------         -------         -------
         Loss from operations                                   (32,266)        (27,508)         (3,683)

         Interest expense                                        11,351           5,080           3,157
         Interest income                                          6,274           1,965             539                             
                                                                 ------         -------         -------
         Loss before income taxes                               (37,343)        (30,623)         (6,301)

         Income tax expense (benefit)                               757          (6,802)         (1,860)                            
                                                                 ------         -------         ------- 
         Net loss                                               (38,100)        (23,821)         (4,441)
         Accretion to redemption value of warrants                  -               -            (1,300)
                                                                 ------         -------         -------                         
         Net loss attributable to Common Stockholders          $(38,100)       $(23,821)       $ (5,741)
                                                                =======         =======         =======

         Basic and diluted loss per share of Common Stock      $  (4.21)       $  (2.74)       $  (1.39)
                                                                =======         =======         =======                  
         Average number of shares of Common Stock
            outstanding                                           9,052           8,683           4,137                             
                                                                =======         =======         =======

</TABLE>







                    See accompanying notes to consolidated financial statements.















                                       F-5


<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    (amounts in thousands, except share data)

           
<TABLE>
<CAPTION>

                                                                                                       Receivables      
                                                                                                           From
                                                                                                       Stockholders
                                    Convertible                                                            For                      
                                  Preferred Stock  Common Stock   Treasury Stock Additional             Purchase of     Total
                                  ---------------  ------------   --------------  Paid in   Accumulated   Common     Stockholders'  
                                    Shares Amount  Shares  Amount Shares Amount   Capital     Deficit      Stock        Equity
                                    ------ ------  ------  ------ ------ ------   -------    -------       -----        ------
<S>                                <C>      <C>  <C>       <C>   <C>     <C>     <C>        <C>          <C>          <C>   

Balance, December 27, 1995          134,171  $1   2,048,200 $20      -    $ -     $ 8,933    $(7,858)     $(189)       $   907
   Net loss                             -     -         -     -      -      -         -       (4,441)        -          (4,441)
   Stock warrant accretion              -     -         -     -      -      -         -       (1,300)        -          (1,300)
   Shares issued in connection
      with acquisition                  -     -      25,900   1      -      -         369        -           -             370
   Shares issued in connection
      with initial public offering      -     -   3,064,718  30      -      -      32,459        -           -          32,489
   Conversion of Preferred Stock   (134,171) (1)    939,197   9      -      -          (8)       -           -             -
   Warrants exercised                   -     -     123,585   1      -      -         608        -           -             609
   Warrants redeemed                    -     -         -     -      -      -        (200)       -           -            (200)
   Other                                -     -      10,416   1      -      -         109        -           -             110      
                                    ------- ---   ---------  --   ------    ----  -------    -------        ---         ------  

Balance, December 25, 1996              -     -   6,212,016  62      -      -      42,270    (13,599)      (189)        28,544
   Net loss                             -     -         -     -      -      -         -      (23,821)        -         (23,821)
   Shares issued in connection
      with follow-on public offering    -     -   2,689,000  27      -      -      58,906        -           33         58,966
   Conversion of convertible notes      -     -      76,332   1      -      -       1,144        -           -           1,145
   Stock options exercised              -     -      80,299   1      -      -         569        -           -             570
   Stock issued to non-employee
         directors                      -     -       2,196   -      -      -          60        -           -              60      
                                    ------- ---   ---------  --   ------    ----  -------    -------        ---         ------  

Balance, December 31, 1997              -     -   9,059,843  91      -      -     102,949    (37,420)      (156)        65,464
   Net loss                             -     -         -     -      -      -         -      (38,100)        -         (38,100)
   Subscriptions paid off               -     -         -     -      -      -         -          -           74             74
   Treasury shares acquired             -     -         -     -  (11,873)   (74)      -          -           -             (74) 
                                    ------- ---   ---------  --   ------    ----  -------    -------        ---         ------  

Balance, December 30, 1998              -  $  -   9,059,843 $91  (11,873)  $(74) $102,949   $(75,520)      $(82)       $27,364
                                    ======= ===   =========  ==  =======    ====  =======    =======        ===         ======

</TABLE>

          See accompanying notes to consolidated financial statements.
                                  
                                       F-6


<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  (amounts in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                      Fiscal Years Ended
                                                        ---------------------------------------------    
                                                        December 30,     December 31,     December 25,
                                                            1998             1997             1996
                                                        -----------      -----------      -----------  
<S>                                                     <C>              <C>              <C>    

Cash flows from operating activities:
  Net loss                                               $(38,100)        $(23,821)         $(4,441)
Adjustments to reconcile net loss to net
  cash used by operating activities:
  Depreciation and amortization                            10,954           10,292            3,573
  Deferred income tax benefit                                 -             (6,998)          (1,940)
  Loss on asset impairment and disposal                     5,742            6,798              -
  Loss on disposition of businesses                         5,768              -                -
  Provision for doubtful accounts                             927              950               66
  Changes in operating assets and  liabilities,  net
    of effects from acquisition of businesses:
      Accounts receivable                                  (8,103)          (7,503)          (1,417)
      Inventories                                            (635)            (795)            (366)
      Prepaid expenses and other current assets              (643)             544            1,060
      Accounts payable and accrued expenses                (6,095)          (2,048)          (4,154)
  Other assets                                              2,670           (1,327)             (36)
                                                           ------           ------           ------
        Net cash used in operating activities             (27,515)         (23,908)          (7,655)
                                                           ------           ------           ------

Cash flows from investing activities:
   Direct payments to acquire contracts                      (612)          (5,875)          (5,754)
   Purchases of fixtures and equipment                     (4,679)          (8,187)          (3,534)
   Proceeds from sales of businesses or assets              3,349            1,151               64
   Acquisition of businesses, net of cash acquired            -            (33,225)          (9,387)
   Collection of notes receivable                           2,479            1,092              494
   Issuance of loans and notes receivable                 (12,573)         (13,027)             - 
                                                           ------           ------           ------
        Net cash used in investing activities             (12,036)         (58,071)         (18,117)
                                                           ------           ------           ------

Cash flows from financing activities:
   Proceeds from issuance of common stock                     -             58,966           32,489
   Proceeds from issuance of convertible
     subordinated notes                                       -            169,486              -
   Borrowings under long-term debt agreement                  -             70,761           27,844
   Payment of long-term obligations                          (442)        (110,876)         (22,461)
   Payment of subordinated debt                            (2,551)          (1,953)          (8,396)
   Redemption of warrants                                     -                -               (200)
   Proceeds from exercise of stock options
       and warrants                                           -                570              609
                                                           ------          -------           ------
  Net cash (used in) provided by financing activities      (2,993)         186,954           29,885
                                                           ------          -------           ------
  (Decrease) increase in cash                             (42,544)         104,975            4,113
  Cash, beginning of year                                 109,722            4,747              634
                                                          -------          -------           ------
  Cash, end of year                                      $ 67,178         $109,722           $4,747
                                                          =======          =======           ======
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       F-7



<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

1. Description of Business

     Fine Host Corporation and its subsidiaries (the "Company") provide contract
food service  management  to three  distinct  markets  within the contract  food
service  industry:   the  recreation  and  leisure  market  (arenas,   stadiums,
amphitheaters,  civic  centers  other  recreational  facilities  and  convention
centers); the education and business restaurants market (colleges, universities,
elementary and secondary  schools,  corporate  cafeterias,  office complexes and
manufacturing plants); and the healthcare and corrections market (long term care
facilities, hospitals, prisons and jails).

2. Chapter 11 Filing and Plan of Reorganization

     On  January  7,  1999  the   Company   filed  a  voluntary   petition   for
reorganization  under  Chapter  11 of Title 11 of the  United  States  Code (the
"Bankruptcy  Code") in the United  States  Bankruptcy  Court for the District of
Delaware  (the  "Bankruptcy   Court").   The  Company's   chapter  11  case  was
precipitated by the discovery of certain accounting  irregularities in December,
1997. As a result of these accounting  irregularities,  on February 6, 1998, the
Company  announced  that it was restating its  financial  statements  for fiscal
years 1994  through  1996,  and for the nine  months  ended  September  24, 1997
(collectively,  the  "Restatement").  In  connection  with the  discovery of the
accounting  irregularities,  certain  officers and directors of the Company were
immediately terminated.  In addition, a special committee of the Company's Board
of Directors  retained  the law firm of Schulte,  Roth & Zabel LLP to conduct an
investigation  in order to  determine  the nature  and extent of the  accounting
irregularities and to identify the persons who were responsible for the improper
activity.  This  investigation  resulted in a  comprehensive  report prepared by
Schulte Roth & Zabel LLP. All of the Company's officers, directors and employees
in any way  implicated  in the  accounting  irregularities  were  terminated  or
resigned  well  prior to the  commencement  of the  Company's  chapter  11 case.
Between  December 15, 1997 and March 20, 1998,  various lawsuits were instituted
against the Company seeking rescission and damages arising from the purchase and
sale  of  the  Company's  5%  Convertible   Subordinated  Notes  due  2004  (the
"Convertible Notes") and common stock ("Common Stock"). Commencing in May, 1998,
the  Company  initiated  a  dialogue  with  an ad hoc  committee  (the  "Ad  Hoc
Committee") of holders of the Convertible Notes for the purpose of formulating a
restructuring  of the  Convertible  Notes and resolving the pending  litigation.
After extensive  negotiations,  the Company and the Ad Hoc Committee agreed to a
financial restructuring which is embodied in the proposed plan of reorganization
(the   "Reorganization   Plan")  and  accompanying   disclosure  statement  (the
"Disclosure  Statement").  By order dated January 7, 1999, the Bankruptcy  Court
fixed  February  25, 1999 as the date and time for the  hearing to consider  the
adequacy of the Disclosure Statement. On February 19, 1999, the Company filed an
amended Disclosure Statement (the "Amended Disclosure  Statement").  As a result
of  the  modifications  set  forth  in the  Amended  Disclosure  Statement,  the
Bankruptcy  Court  continued  the  hearing  to  consider  the  adequacy  of  the
Disclosure  Statement  until March 17, 1999. On March 17, 1999,  the  Bankruptcy
Court stated that it would approve the Amended  Disclosure  Statement subject to
certain  modifications  which now have been incorporated  therein . As a result,
the  Amended  Disclosure  Statement  and ballots to vote to accept or reject the
Reorganization Plan are expected to be mailed on April 5, 1999. The deadline for
returning  the completed  ballots is expected to be May 7, 1999.  The hearing to
consider confirmation of the Reorganization Plan is scheduled for May 18, 1999.

     Pursuant to the  Reorganization  Plan (i) all of the Company's  outstanding
Convertible  Notes in the  aggregate  principal  amount of $175  million will be
exchanged for  approximately  $45 million in cash and  approximately  96% of the
outstanding  new  common  stock of the  reorganized  Company  (the  "New  Common
Stock");  (ii) holders of general  unsecured  claims will be paid in full; (iii)
all holders of rescission and damage claims against the Company  relating to the
Convertible  Notes  (including all such claims  asserted in pending  litigation)
(the "Debenture Rescission Claims") will receive in satisfaction of their claims
a ratable share of an interest in a litigation trust, 3% of the New Common Stock
and  warrants  to  purchase  750,000  shares of New Common  Stock;  and (iv) all
holders of  rescission  and damage  claims  against the Company  relating to the
Common Stock  (including all such claims  asserted in pending  litigation)  (the
"Statutorily  Subordinated Claims") and all holders of Common Stock will receive
in  satisfaction  of their  claims and equity  interests  a ratable  share of an
interest in the  litigation  trust,  1% of the New Common  Stock and warrants to
purchase 250,000 shares of New Common Stock. No distribution,  however,  will be
made under the  Reorganization  Plan to holders of Debenture  Rescission  Claims
unless the class of Convertible Notes under the Reorganization  Plan accepts the
Reorganization  Plan.  Additionally,  no  distribution  will be made  under  the
Reorganization  Plan to holders of  Statutorily  Subordinated  Claims and Common
Stock  unless all other  classes  under the  Reorganization  Plan  accept or are
deemed to accept the Reorganization  Plan. Pursuant to the Reorganization  Plan,
all Common Stock and all options (and existing plans  providing for the issuance
of  options)   relating  thereto  will  be  cancelled.   Implementation  of  the
Reorganization  Plan is subject to  confirmation  thereof in accordance with the
provisions of the Bankruptcy Code.
                    
                                       F-8


<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)



3. Summary of Significant Accounting Policies

     Basis of Presentation - The consolidated  financial  statements include the
accounts of the  Company  and its  wholly-owned  subsidiaries.  All  significant
intercompany transactions and accounts 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  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements,  and the  reported  amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

     Concentration  Of  Credit  Risk - The  Company  primarily  competes  in one
business market, the contract food service industry,  and encounters significant
competition  in each  business  segment of the contract  food service  market in
which it  operates.  The length of  contracts  varies  depending  on the type of
facility,  type of contract and financial  investment.  Contracts for recreation
and leisure  facilities  typically  include  significant  capital outlays by the
Company  and  generally  have a  term  of  three  to ten  years.  Contracts  for
convention  centers  generally  have a term of  three to five  years.  Education
contracts generally have a term of one to five years.  Business dining accounts,
which  generally  require  the  smallest  capital  investment  by  the  Company,
typically have a shorter term, and generally contain a provision allowing either
party to  terminate  for  convenience  after a short  notice  period,  typically
ranging from 30 to 90 days. The Company's  remaining  contracts generally have a
fixed term and in any fiscal year a number of these  contracts  either expire or
come up for renewal.

     Concentration of credit risk with respect to accounts receivable is limited
due to the large number of customers  that make up the Company's  customer base,
thus spreading trade credit risk. The Company  maintains  reserves for potential
uncollectible  amounts,  which, in the aggregate,  have not exceeded  management
expectations.

     Impairment  of  Long-Lived  Assets - Under the  provisions  of Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed  Of",  the Company
evaluates  its  fixtures  and  equipment,   identifiable  intangibles  (acquired
contract  rights)  and  excess of cost over net  assets  acquired  (collectively
referred  to as  "long-lived  assets")  for  impairment  as events or changes in
circumstances  indicate  that the  carrying  amount  of such  assets  may not be
recoverable.  Generally,  the  evaluation is performed in  conjunction  with the
Company's  annual planning and strategic  review process,  unless  circumstances
indicate otherwise.

     The Company evaluates the  recoverability of long-lived assets by measuring
the carrying  amount of the assets against the estimated  non-discounted  future
cash flows  associated with the use of the long-lived  assets.  At the time such
evaluations  indicate  that the  future  non-discounted  cash  flows of  certain
long-lived  assets are not  sufficient  to recover  the  carrying  value of such
assets,  the assets are written down to their fair values. For long-lived assets
expected to be held and used, fair value is generally  calculated by discounting
estimated  future cash flows  expected to be  generated by those assets at rates
that market  participants  would use to  determine  fair value.  For  long-lived
assets  expected to be disposed  of, the fair value is  determined  by estimated
selling price less costs to sell.

     Cash and Cash Equivalents - Cash and cash  equivalents  include cash, money
market funds,  commercial paper and certain U.S.  Government  securities with an
original  maturity of three  months or less and are  deposited  with a number of
institutions  with high  credit  ratings.  The  Company  does not  believe it is
exposed to any significant credit risk related to cash and cash equivalents.




                                       F-9




                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

     Accounts  Receivable  -  Accounts  receivable  are  net  of  allowance  for
uncollectible  accounts  of $1,999 and  $1,072  for fiscal  years 1998 and 1997,
respectively.

     Inventories - Inventories are stated at the lower of cost,  determined on a
first-in, first-out (FIFO) basis, or market.

     Contract  Rights -  Contract  rights are  composed  of direct  payments  to
clients  to  acquire  contracts  and  costs of  licenses  and  permits  ("direct
payments") as well as the value of contracts  acquired  through  acquisitions of
businesses.  Direct  payments are being amortized over a range of 1 to 10 years.
The value of contract  rights  acquired  through  acquisitions of businesses has
been  determined  through  independent  valuation  based on projected cash flows
discounted at a rate that market  participants would use to determine fair value
and is being  amortized  over the  projected  lives as  determined  through  the
valuation  process,  with an  average  amortization  period  of 10  years  as of
December 30, 1998.

     Fixtures  and  Equipment -  Acquisitions  of  fixtures  and  equipment  are
recorded at cost and are depreciated using the straight-line method over periods
ranging from 3 to 20 years.

     Excess  of Cost  Over Net  Assets  Acquired  - The  excess of cost over net
assets acquired is amortized using the straight-line method over periods ranging
from 20 to 30 years.

     Treasury Stock - Treasury stock is recorded at cost.

     Revenue  Recognition  and Cost of Sales - Sales from all food and  beverage
concession  and catering  contract food services are  recognized in net sales as
the services are provided. Net sales include reimbursements for food and payroll
costs  incurred  on behalf of  customers  under  contracts  in which the Company
manages food service programs for a fee.

     The Company  enters into one of the  following  types of contracts  for its
food services:  profit and loss contracts ("P&Ls"), profit sharing contracts and
a limited  number of management  fee contracts with a fixed minimum fee, some of
which provide for an  additional  incentive fee based upon a percentage of sales
over a base threshold level. In certain P&Ls the Company is required to bear all
the  expenses  of the  operation,  including  rent  paid to the  client  usually
calculated as a fixed percentage of various  categories of sales. In other P&Ls,
net sales include  reimbursements  for operating  expenses incurred on behalf of
customers,  as well as revenues  generated  at the facility  under  contracts in
which the Company manages the food service  contract for a management fee. Under
the profit  sharing  contracts,  the Company  receives a  percentage  of profits
earned at the facility after the payment of all expenses of the operation plus a
fixed fee or percentage of sales as an administrative  fee. For a limited number
of the Company's management fee contracts with a fixed minimum fee, the revenues
generated at the location are used to pay for all expenses incurred in providing
food and beverage services,  and the excess of revenues over management fees and
operating expenses are distributed to the client.

Cost of sales is composed of the following:
  
                                     Fiscal  Years  Ended    
                                  -----------------------------                 
                                    1998      1997        1996
                                  -------    ------      ------
Wages and benefits               $117,650  $ 90,690    $ 44,464
Food and beverages                106,380    94,057      42,250
Rent paid to clients               40,925    40,586      28,181
Other operating expenses           27,531    24,463      14,095
Depreciation and amortization      10,057     9,383       3,589
                                  -------   -------     -------                 
                                 $302,543  $259,179    $132,579
                                  =======   =======     =======         

     Income Taxes - Deferred tax assets and  liabilities  are recognized for the
estimated future tax effects attributable to temporary differences,  principally
depreciation, amortization of contract rights and operating loss carry forwards.
A temporary  difference is the  difference  between the tax basis of an asset or
liability and its reported  amount in the financial  statements  using currently
enacted tax rates.

                                      F-10

<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

     Stock  Option  Plan  -  Stock  options  are  recorded  in  accordance  with
Accounting  Principles Board Opinion ("APB") No. 25, with pro forma  disclosures
of net income/(loss) and  earnings/(loss) per share as if Statement of Financial
Accounting Standards ("SFAS") No. 123 had been applied.

     Segment  Information  - In December  1998,  the Company  adopted  SFAS 131,
"Disclosures about Segments of an Enterprise and Related  Information." SFAS 131
superceded SFAS 14, "Financial Reporting for Segments of a Business Enterprise,"
replacing the "industry  segment" approach with the "management"  approach.  The
management  approach  designates  the  internal  organization  that  is  used by
management  for making  operating  decisions  and assessing  performance  as the
source of the Company's reportable segments.  SFAS 131 also requires disclosures
about products and services, geographic areas, and major customers. The adoption
of SFAS 131 did not affect  results of operations or financial  position but did
affect the disclosure of segment  information  (see Note 24 to the  Consolidated
Financial Statements).

     Basic and Diluted Loss Per Share - In December  1997,  the Company  adopted
SFAS No. 128, "Earnings per Share." Under SFAS No. 128, basic earnings per share
is based on the weighted average number of common shares  outstanding during the
year,  whereas  diluted  earnings  per share also gives  effect to all  dilutive
potential  common  shares  that were  outstanding  during the  period.  Dilutive
potential  common shares include  preferred stock,  stock options,  warrants and
convertible  notes (see Note 19). In  calculating  loss per share,  net loss has
been increased for the accretion to the  redemption  value of warrants by $1,300
in fiscal 1996 (see Note 16).

     Fiscal  Year - The  Company's  fiscal  year ends on the last  Wednesday  in
December.  The 1998 and 1996 fiscal years were 52-week periods.  The 1997 fiscal
year was a 53-week period.

     Reclassification  - Certain  prior  year  amounts  and  balances  have been
reclassified to conform to the current presentation.

4. Special and Restructuring Charges

     In  connection  with the  Restatement  described  in Note 26,  the  Company
incurred  costs in 1998 of  $11.7  million  representing  the  costs  of  legal,
accounting, financial advisors, management consulting fees, severance, retention
bonuses and the cost of rescinding  the 10 year lease that was signed in October
1997 for the relocation of its corporate  headquarters.  In connection  with the
Company's Chapter 11 Filing and Reorganization  Plan as discussed in Note 2, the
Company anticipates that it will incur additional legal,  accounting,  financial
advisor and management consulting fees during the first half of 1999.

     In addition, also in connection with the Restatement,  the Company incurred
costs of  approximately  $3.8 million in the fourth quarter of 1997 to cover the
write-off  of $2.2  million  of  deferred  debt  costs  in  connection  with the
Company's then-existing credit facility and $1.6 million for the costs of legal,
accounting and management consulting fees.

5. Loss on Asset Impairment and Disposal

     Loss on asset impairment and disposal consists of the following:

                                                        Fiscal Years Ended
                                                        ------------------
                                                         1998        1997
                                                        ------      ------ 
        Loss on sale of assets                         $ 5,723      $  823
        Provision for impairment on assets to be sold      -         1,194
        Impairment losses on terminated contracts,
           business shutdowns and under-performing
           contracts                                     5,484       4,781
                                                        ------       -----      
        Total                                          $11,207      $6,798
                                                        ======       =====

                                      F-11
<PAGE>

                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

6. Acquisitions

     In 1997,  the  Company  acquired  100% of the stock of four  companies  for
approximately $42,100,  consisting of cash, subordinated promissory notes to the
sellers and assumed debt. The acquired  companies provide contract food services
to Healthcare and Corrections and Education and Business  Restaurant  clients in
Minnesota,  Wisconsin,  North Dakota,  South Dakota,  Illinois,  Iowa, New York,
Pennsylvania, and Southern Florida.

     In 1996,  the  Company  acquired  100% of the stock of five  companies  for
approximately $26,000,  consisting of cash, subordinated promissory notes to the
sellers and assumed  debt. In addition,  25,900  shares of the Company's  Common
Stock were issued.

     The aforementioned  acquisitions have been accounted for under the purchase
method of accounting and, accordingly,  the accompanying  consolidated financial
statements  reflect  the fair  values of the  assets  acquired  and  liabilities
assumed or incurred as of the effective date of the acquisitions. The results of
operations  of  the  acquired   companies  are  included  in  the   accompanying
consolidated financial statements since their respective dates of acquisition.

     The following table  summarizes pro forma  information  with respect to the
income  statement data for fiscal years 1997 and 1996 as if each acquisition had
been  completed as of the  beginning of the fiscal year in which the  respective
acquisition  occurred.  No adjustments for acquisition  synergies (i.e. overhead
reductions) have been reflected.

                                                         Fiscal Years Ended
                                                   --------------------------
                                                   December 31,   December 25,
Summary statement of operations data (unaudited):      1997           1996
                                                   -----------    -----------

     Net sales                                       $323,516       $254,028
                                                      =======        ======= 
     Loss from operations                            $(28,701)      $ (6,435)
                                                      =======        =======
     Loss before warrant accretion                   $(28,290)      $ (8,044)
                                                      =======        =======
     Basic and diluted loss per share of common
        stock before warrant accretion               $  (3.26)      $  (1.94)
                                                      =======        =======

     The above pro forma  information  is provided  for  informational  purposes
only. It is based on historical information and does not necessarily reflect the
actual  results that would have  occurred nor is it  necessarily  indicative  of
future results of operations of the combined enterprise.

7. Inventories

     The components of inventories are as follows:
                                                   December 30,   December 31,
                                                      1998           1997
                                                   -----------    -----------   
          Food                                       $4,206         $4,676
          Beverage                                    1,205            956
          Other                                         786            609
                                                      -----          -----      
               Total                                 $6,197         $6,241
                                                      =====          =====  



                                      F- 12



<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)



8. Contract Rights and Excess of Costs Over Net Assets Acquired

                                                  December 30,  December 31,
     Contract Rights                                  1998          1997
     ---------------                              -----------   -----------
 
Acquired contract rights                            $30,029       $31,443
Less: accumulated amortization                        7,762         4,989
                                                     ------        ------
     Net acquired contract rights                    22,267        26,454       
                                                     ------        ------  

Direct payments, licenses and permits                11,766        12,936
Less: accumulated amortization                        3,503         3,238
                                                     ------        ------
Net direct payments, licenses and permits             8,263         9,698
                                                     ------        ------       
     Contract rights, net                           $30,530       $36,152
                                                     ======        ======

     Amortization  expense of contract  rights was $4,186,  $3,026,  and $559 in
1998, 1997 and 1996, respectively.

                                                  December 30,  December 31,
     Excess of Costs Over Net Assets Acquired         1998          1997
     ----------------------------------------     -----------   -----------

Gross excess of costs over net assets acquired      $55,724       $61,802
Less: accumulated amortization                        7,580         6,251
                                                     ------        ------
     Net excess of costs over net assets acquired   $48,144       $55,551
                                                     ======        ======

     Amortization  expense  of  excess of costs  over net  assets  acquired  was
$1,854, $1,634, and $817 in 1998, 1997 and 1996, respectively.

9. Fixtures and Equipment

     Fixtures and equipment consists of the following:
               
                                                  December 30,  December 31,
                                                      1998          1997
                                                  -----------   -----------

          Furniture and fixtures                    $16,124       $19,083
          Office equipment                            5,096         4,109
          Vending equipment                           4,113         5,327
          Leasehold improvements                      3,112         3,015
          Smallwares                                  2,427         2,556
          Other                                       2,083         1,710
                                                     ------        ------       
                                                     32,955        35,800
          Less: accumulated depreciation             12,392        11,531
                                                     ------        ------

               Fixtures and equipment, net          $20,563       $24,269
                                                     ======        ======

     The Company  invests in fixtures and equipment at various  locations.  Upon
termination  of a  concession  agreement,  the client is  generally  required to
purchase  the  assets  from the  Company  for an amount  equal to their net book
value.

     All fixtures and equipment are  depreciated  over periods ranging from 3 to
20 years, except smallwares which are depreciated over periods ranging from 3 to
5 years.  Depreciation expense was $4,638,  $5,367, and $2,327 in 1998, 1997 and
1996, respectively.

                                      F-13

<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

10. Contract Loans and Notes Receivable

     From time to time the Company  loans funds to its clients to assist them in
funding  construction and for working capital needs.  Substantially all of these
loans are subject to  immediate  and full  repayment  under the terms of related
concession  agreements.  Included  among the loans  and  notes the  Company  has
outstanding are the following:

o Loans made in December 1997 and May 1998 to a client in the  aggregate  amount
of $20  million.  The loans are to be repaid as provided  for in the  Concession
Management  Agreement with the client (the "Agreement").  Generally,  the client
will pay the Company $800 each June 1 beginning in 1998 through 2014,  provided,
however,  that  repayment  amounts  per year  would be reduced in the event that
aggregate loan repayments of up to $6 million are made.  Other provisions of the
Agreement  provide  for full or  partial  loan  payments.  Interest  of 6.62% is
calculated  on the  outstanding  principal  balance.  If  after  year  17 of the
Agreement,  a loan  balance  remains,  an  amount  will  be  deducted  from  the
commission payable to the client during years 18 to 25 of the Agreement to repay
the balance of the loan to the Company.  The balance of the loan at December 30,
1998 and December 31, 1997 is $19.7  million and $10 million,  respectively,  of
which $18.9 million and $10 million, respectively, is classified as long-term.

o A  non-interest  bearing  loan  made  in  September  1997 to a  client  in the
aggregate amount of $3.5 million. The loan was discounted at a rate of 8% and is
repayable at the end of the initial  term of the client  agreement in June 2008,
provided  that the  agreement  is not  renewed  pursuant  to its  terms.  If the
agreement is renewed,  the loan shall be repaid over the 10-year renewal term at
$350 per year.  The balance of the loan at December  30, 1998 and  December  31,
1997 (net of  discounts  of $1,770  and  $1,903,  respectively)  was  $1,730 and
$1,597, respectively, all of which is classified as long-term.

o A non-interest bearing loan made in February 1996 to a client in the aggregate
amount of $900.  The loan was discounted at a rate of 8%, and is repayable in 10
annual  installments  of $90.  The balance of the loan at December  30, 1998 and
December 31, 1997 (net of discounts of $174 and $217, respectively) was $546 and
$593, respectively.  The portion classified as long-term at fiscal year-end 1998
and 1997 was $496 and $593, respectively.

     Various  other loans to clients with an  aggregate  balance at December 30,
1998 and December 31, 1997 of $4.0 million and $4.1  million,  respectively,  of
which $3.1 million and $3.3 million,  respectively,  is classified as long-term.
These  loans bear  interest  at rates  ranging  from  8.5-12% and are payable in
various amounts through 2025.

11. Accounts Payable and Accrued Expenses

     Accounts payable and accrued expenses consist of the following:


                                        December 30,     December 31,
                                            1998             1997
                                        -----------      -----------

          Accounts payable                $ 9,178          $11,794
          Accrued wages and benefits        8,927            8,275
          Accrued rent to clients           5,463            4,070
          Severance, fees and other
             liabilities relating
             to acquisition of businesses   1,137            4,325
          Deferred income                   2,373            2,875
          Professional fees                 1,178            1,075
          Accrued interest                  1,870            1,836
          Accrued other                     5,206            7,020
                                           ------           ------  
               Total                      $35,332          $41,270
                                           ======           ======  

                                      F-14


<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)


12. Long-Term Obligations

     Long-term obligations consist of the following:

                                              December 30,   December 31,
                                                  1998           1997
                                              -----------    -----------
     Capital lease obligations, effective 
        interest rates of 5.2%, to 12.0%          $572          $1,038
     Less: current portion                         306             464    
                                                   ---           -----
          Total                                   $266          $  574
                                                   ===           =====    

     The Company's capital leases are for equipment and vehicles with a net book
value of $1,186 at December 30, 1998.

     Long-term obligations at December 30, 1998 are payable as follows:

          Year Ending                 Amount
          -----------                 ------

          December 29, 1999            $328
          December 27, 2000             273
                                        ---
               Total                    601
          Less portion of lease 
             payments representing
             interest                    29
                                        ---
               Total                   $572
                                        ===

13. Convertible Subordinated Notes

     On October 27, 1997,  the Company  issued $175.0  million of 5% Convertible
Subordinated  Notes due 2004 (the  "Convertible  Notes") in a private  placement
under  Rule  144A of the  Securities  Act of 1933.  The  Convertible  Notes  are
unsecured obligations of the Company and were convertible into Common Stock at a
conversion price of $44.50 per share. The net proceeds of $169.1 million,  after
deducting discounts and certain expenses, were used to repay approximately $50.0
million in  outstanding  obligations  under the Company's  then-existing  credit
facility.  The remaining  proceeds were  invested in short-term  investments  in
accordance  with  the  Company's  investment  policy.  In  connection  with  the
Company's  private offering of the Convertible  Notes, the Company had agreed to
file a shelf Registration Statement,  which would cause the Convertible Notes to
be freely tradable.  The Company has not filed the shelf Registration  Statement
and is therefore  obligated to pay liquidated  damages on the Convertible  Notes
from  January  25,  1998,  in the  amount of $.05 per week per  thousand  dollar
principal  amount,  subject  to  increase  each  quarter  up  to  a  maximum  of
approximately  1.3% per annum.  In 1998 the Company  paid $8,750 of interest and
$720 in liquidated  damages due and owing on the Convertible  Notes. At December
30, 1998, the interest rate including  liquidated damages was 6.04%. No payments
have been made with respect to the Convertible Notes since the Company's Chapter
11 filing.

     As further  described in Note 20, on or about January 30, 1998, the Company
was named as a defendant  in an action  arising out of the  issuance and sale of
the Convertible Notes. See also Note 2.

     Given the Company's  current  situation,  it is not practicable to estimate
the fair value of the Convertible Notes.

14. Subordinated Debt

     In  October  1997,  as part  of the  acquisition  of  Total  Food  Services
Distribution,  Inc.  ("Total"),  the Company issued to the stockholders of Total
subordinated  promissory  notes with a face value of $1,000 at 9.0% interest per
annum,  due 1999. The notes were discounted to present value using a market rate
of 11% per annum. The balances at December 30, 1998 aggregated $491.

                                      F-15

<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

     In  August  1997,  as  part  of the  acquisition  of  Statewide  Industrial
Catering,  Inc.  ("Statewide"),  the  Company  issued  to  the  stockholders  of
Statewide  a  subordinated  promissory  note  with a face  value of $1,600 at 7%
interest per annum,  due 2001.  The note was  discounted  using a market rate of
11%, per annum and had a balance of $1,113 at December  30, 1998,  of which $744
was classified as long-term.

     In connection with the 1997 acquisitions of Serv-Rite  Corporation and Best
Inc. the Company  acquired  other notes payable with interest rates ranging from
8% to 10% per annum.  Other notes  payable  total $757 at December 30, 1998,  of
which $610 was classified as long-term.

     In  December  1996,  as  part of the  acquisition  of  Republic  Management
Corp.("Republic"),   the  Company   issued  to  a  stockholder   of  Republic  a
subordinated  promissory  note with a face value of $1,000 at 8.75% interest per
annum,  payable in quarterly  installments.  The note was  discounted to present
value using a market rate of 11% per annum and had a balance of $310 at December
30, 1998, all of which was classified as current.

     In July 1996, as part of the acquisition of Ideal Management Services, Inc.
("Ideal"),  the  Company  issued to the  stockholders  of Ideal two  convertible
subordinated  promissory notes each with a face value of $710 at 7 1/4% interest
per annum, payable in quarterly installments.  At the option of the noteholders,
the outstanding principal balance of the notes was convertible into Common Stock
at a  conversion  price  of $15 per  share.  On July  30,  1997,  the  aggregate
outstanding  principal  balances  were  converted  into 76,332  shares of Common
Stock.

     In March 1996, as part of the acquisition of Sun West Services,  Inc. ("Sun
West"), the Company issued to the stockholders of Sun West the following:  (1) a
subordinated  promissory  note with a face  value of $1,350 at 7%  interest  per
annum,  payable  in  four  annual  installments  beginning  in  1998;  and (2) a
subordinated promissory note with a face value of $638 at 7% interest per annum,
payable  in three  annual  installments  which  began in 1997.  The  notes  were
discounted to present value using a market rate of 10% per annum. The respective
balances at December 30, 1998 were $1,042 and $97, of which $717 and $0 were
classified as long-term.

     In July 1995,  as part of the  purchase  price of Northwest  Food  Service,
Inc.,  the Company  issued a $1,350 note to the seller at 7% interest per annum.
The note was  discounted to present value using a market rate of 12.5% per annum
and had a balance at December 30, 1998 of $764 of which $468 was  classified  as
long-term.

     In July 1994, as part of the acquisition of Creative Food Management,  Inc.
("Creative"),  the Company issued to the stockholders of Creative the following:
(1) a non-interest  bearing  subordinated  promissory  note with a face value of
$1,440,   payable  in  monthly  installments   beginning  in  1996;  and  (2)  a
non-interest  bearing  subordinated  promissory  note with a face value of $756,
payable in monthly  installments  beginning in 1995, which was satisfied in full
during 1998.  The notes were  discounted to present value using a market rate of
10% per annum. The balance of the former note at December 30, 1998 was $280, all
of which was classified as current.

     In April 1993, the Company entered into a subordinated  loan agreement,  as
amended (the "Subordinated Loan Agreement"),  pursuant to which the Company sold
$8,500 of its variable rate subordinated notes (the "1993 Notes"), together with
detachable  warrants to  purchase a maximum of 867,230  shares of a new class of
Non-Voting  Common Stock.  The proceeds from the issuance of the 1993 Notes were
used to repay existing indebtedness.  A portion of the net proceeds from the IPO
(see Note 12) was used to repay the 1993 Notes.

     The estimated fair value  approximated  the carrying amount of subordinated
debt at December 30, 1998 and December 31, 1997.






                                      F-16

<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (amounts in thousands, except share and per share data)


          Subordinated debt at December 30, 1998 is payable as follows:

               Year Ending              Amount
               -----------              ------
               December 29, 1999        $2,520
               December 27, 2000         1,192
               December 26, 2001         1,108
               December 25, 2002            63
               December 31, 2003            69
               Thereafter                  290
                                         -----
                                         5,242
               Less: discount on 
                  subordinated note        387
                                         -----
                    Total               $4,855
                                         =====

15. Stockholders' Equity

     Common  Stock - Holders of Common  Stock are entitled to one vote per share
in all matters to be voted on by the  stockholders  of the  Company.  Subject to
preferences  that may be applicable to any Preferred  Stock  outstanding  at the
time, holders of Common Stock are entitled to receive ratably such dividends, if
any,  as may be  declared  from  time to time by the Board of  Directors  out of
legally available funds.

     On  February  7, 1997,  the  Company  conducted  a  follow-on  offering  as
authorized by its Board of  Directors,  selling  2,689,000  shares of its Common
Stock at a price of $23.50 per share, generating net proceeds (including the net
proceeds received by the Company upon the exercise of certain stock options held
by senior  executives of the Company in connection with the Follow-On  Offering)
of approximately  $58.9 million,  after deducting the underwriting  discount and
offering  expenses  paid by the  Company.  The net  proceeds  were used to repay
obligations  under the Company's then existing credit facility and the remainder
of the net proceeds were invested in short term  investments in accordance  with
the Company's investment policy.

     On June  19,  1996,  the  effective  date of the  initial  public  offering
("IPO"),  as authorized by the Board of  Directors,  the Company sold  3,064,718
shares at a price of $12.00 per share,  generating  net proceeds  (including the
net proceeds  received by the Company upon the exercise of certain  warrants and
options) of  approximately  $32.5  million,  after  deducting  the  underwriting
discount and offering  expenses paid by the Company.  The net proceeds were used
to repay obligations under the Company's then-existing credit facility in effect
prior  to the IPO and  subordinated  notes,  as  well as to  repurchase  certain
warrants, and the remainder was used for general corporate purposes.

     See Note 2 for information regarding the Company's proposed  Reorganization
Plan and its effect on Common Stock if confirmed and implemented.

     Preferred  Stock - Holders of the Series A Convertible  Preferred Stock are
entitled  to  receive,  when  and as  declared,  out of the net  profits  of the
Company,  dividends  in an amount  per share  equal to the  aggregate  per share
amount of all cash  dividends  declared on the Common  Stock  multiplied  by the
number  of shares of Common  Stock  into  which a share of Series A  Convertible
Preferred  Stock is convertible on the date on which such dividend is to be paid
in full. All dividends declared upon Series A Convertible  Preferred Stock shall
be declared pro rata per share.  In the event of any  voluntary  or  involuntary
liquidation, dissolution or winding up of the Company, the holders of the shares
of Series A Convertible  Preferred Stock then  outstanding  shall be entitled to
share ratably with holders of the shares of Common Stock in any  distribution of
the  assets  and  funds  of the  Company.  Each  share of  Series A  Convertible
Preferred  Stock is  convertible  into seven shares of Common Stock,  subject to
certain  adjustments.  In conjunction  with the IPO all of the then  outstanding
Convertible Preferred Stock was converted into 939,197 shares of Common Stock.

                                      F- 17

<PAGE>

                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)


     1996  Non-Employee  Director  Stock Plan - The 1996  Non-Employee  Director
Stock Plan (the  "Directors'  Plan")  authorizes  the grant of an  aggregate  of
50,000 shares of Common Stock. Common Stock is granted pursuant to the Directors
Plan only to members of the Board of Directors who are not officers or employees
of the Company ("Non-Employee"). If he or she remains a director of the Company,
on the  date of each of the  Company's  Annual  Meeting  of  Stockholders,  each
Non-Employee will be automatically granted,  without further action by the Board
of  Directors,  a number of shares of Common  Stock  equal to $15 divided by the
fair  market  value (as defined in the  Directors'  Plan) of one share of Common
Stock on the date of grant.  No shares  were  granted  under  this plan in 1998.
Pursuant to the Reorganization Plan, the Directors' Plan will be cancelled.  See
Note 2.


16. Stock Options

     Stock  Options - The 1994 Stock Option Plan provides for granting of either
incentive  stock options or  non-qualified  options to purchase shares of Common
Stock.  The plan provides that (i) the option price of an incentive stock option
may not be less than the fair  market  value of the Common  Stock on the date of
grant and (ii) the option  price of an option  which is not an  incentive  stock
option  shall not be less than 85% of the fair  value.  Generally,  for  options
granted prior to September 1997, the options become  exercisable  after one year
in 20% increments per year. Generally, for options granted in September 1997 and
later,  the options  become  exercisable  after 3 years in 33.3%  increments per
year.  Most option grants  expire ten years from the date of grant.  The Company
has reserved  1,566,084  shares for  distribution  under the plan.  In addition,
included in the table below are 27,944  options  issued in  connection  with the
Fanfare  acquisition  in 1993. As a result of the Chapter 11 filing,  no further
options with respect to Common Stock will be issued,  and if the  Reorganization
Plan is confirmed and implemented,  all such options will be cancelled. See Note
2.

     A summary of the status of the  Company's  stock option plan as of December
30, 1998,  December 31, 1997 and December 25, 1996 and changes  during the years
ending on those dates is presented below:
<TABLE>
<CAPTION>
                                      1998                      1997                      1996
                             ------------------------  ------------------------  ------------------------
                                     Weighted-Average          Weighted-Average          Weighted-Average
                             Shares   Exercise Price   Shares   Exercise Price   Shares   Exercise Price
                             ------   --------------   ------   --------------   ------   --------------
<S>                         <C>          <C>          <C>           <C>         <C>           <C>
Outstanding at
   beginning of year         857,845      $22.95       491,194       $11.03      143,444       $6.19
Granted                          -            -        813,500        28.50      380,750       12.82
Exercised                        -            -         80,299         7.13        2,916        6.43
Cancelled                    206,100       27.13       366,550        22.76       30,084       10.92
                             -------                   -------                   -------
Outstanding at end
   of year                   651,745       21.64       857,845        22.95      491,194       11.03
                             =======                   =======                   =======
Options exercisable at
   year-end                  243,445       16.48        92,996         9.64       88,204        6.20
                             =======                   =======                   =======
Options available for
   grant at end of year      861,984                   736,183                   102,834
                             =======                   =======                   =======

</TABLE>






                                      F-18

<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

     The following table summarizes  information about stock options outstanding
at December 30, 1998:
<TABLE>
<CAPTION>
                                                Options Outstanding                  Options Exercisable
                      ----------------------------------------------------      -----------------------------   
                         Number       Weighted-Average                            Number
    Range Of          Outstanding  Remaining Contractual  Weighted-Average      Exercisable  Weighted-Average
Exercise Prices       At 12/30/98     Life (in years)      Exercise Price       at 12/30/98   Exercise Price
---------------       -----------     ---------------      --------------       -----------   --------------
<S>                    <C>                 <C>                <C>                <C>              <C>
$ 4.93 - $ 7.14          54,245             4.5                $ 6.29              54,245          $6.29  
$12.00 - $15.62         225,000             6.9                 12.97              99,300          12.84   
$20.75 - $37.94         372,500             6.6                 29.11              89,900          26.64
                        -------                                                    ------
                        651,745             6.5                 21.64             243,445          16.48
                        =======                                                   =======
</TABLE>

     If the  fair  value  based  accounting  method  was  used  to  account  for
stock-based compensation costs, pro forma net loss would have been unchanged for
the fiscal year ended  December 30, 1998 and would have been  $25,967,  or $2.99
pro forma basic loss per share for the fiscal year ended  December 31, 1997. 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;  no dividend yield;
expected volatility of 100% and 41-43%; risk-free interest rate of 4.54% and 6%;
and an expected lives of 7.6 years and 8.6 years. There were no grants in 1998.

Holders of Subordinated Notes -

     In conjunction with the Ideal Management  Services,  Inc. acquisition (Note
6) convertible subordinated notes were issued. At the option of the note holders
the  outstanding  principal  balance  is  convertible  into  Common  Stock  at a
conversion  price of $15 per share. On June 30, 1997, the aggregate  outstanding
principal balances were converted into 76,332 shares of Common Stock.

     Pursuant  to the  issuance  and sale of the 1993 Notes  (see Note 14),  the
purchaser received warrants to purchase 733,467 and 133,763 shares of Non-Voting
Common Stock at exercise prices of $4.93 a share (the "$4.93 Warrants") and $.01
a share (the "$.01 Warrants"), respectively. The warrants were valued at $230.

     The $4.93 and the $.01  Warrants  were  exercisable  from the date of issue
through the periods ended April 29, 2001 and April 29, 2003, respectively.  Both
the number of shares and exercise price were subject to adjustment under various
antidilution provisions.

     Upon  achieving  specified  levels of  earnings  in each of fiscal 1993 and
1994,  the Company had the right to earn back, in respect of each such year, the
portion  of the  $4.93  Warrants  issued  to the  purchaser  of the  1993  Notes
representing  the right to acquire 1% of the fully  diluted  Common  Stock.  The
Company originally reported earnings sufficient to achieve the required earnings
levels  specified for those fiscal years.  Accordingly,  in each of May 1994 and
June 1995,  the Company  canceled $4.93 Warrants to acquire the equivalent of 1%
of the fully  diluted  Common  Stock,  or  approximately  43,365 shares (in each
year).  Based on restated results of operations,  the Company would not have had
the  right to  cancel  the  warrants  and  accordingly,  they  would  have  been
outstanding  at the end of each year. As a result of the  refinancing  completed
prior to the IPO,  the  Company  redeemed  an  additional  amount  of the  $4.93
Warrants equal to 2% of the fully diluted Common Stock, or 86,730 shares.






                                      F-19




<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

     Upon achieving  specified  levels of earnings in each of fiscal 1993, 1994,
1995 and  1996,  the  Company  had the  right to earn back the total of the $.01
Warrants  issued  (133,763)  to the  noteholder.  Since the  Company  originally
reported  earnings  sufficient to achieve the required  earnings level specified
for fiscal 1993,  1994 and 1995, the Company,  in each of fiscal 1994,  1995 and
1996 earned back and cancelled 33,439 of the $.01 Warrants held by the purchaser
of the 1993 Notes,  respectively.  Based on restated results of operations,  the
Company  would not have had the right to cancel the  warrants  and  accordingly,
they would have been outstanding at the end of each year.

     During a specified repurchase period, the Company was obligated, subject to
certain  conditions,  to repurchase (the "Put  Repurchase")  all or a designated
portion of the issuable  warrant shares within 120 days after  notification of a
put option exercise. The Put Repurchase period began on the earlier of (i) April
29, 1997,  (ii) the  prepayment of 50% of the original  principal  amount of the
Notes  issued  under  the  Subordinated  Loan  Agreement,  or (iii) a Change  of
Control, as defined, of the Company. The Put Repurchase price was based upon the
greater of the  Appraised  Value (as  defined in the warrant  agreement)  of the
Common  Stock,  and the result  obtained by dividing a multiple of the Company's
adjusted earnings,  as defined,  by the number of fully diluted shares of Common
Stock. The Put Repurchase was accreted to its highest  redemption price based on
the IPO  offering  price.  Upon the  closing of the IPO,  holders of Warrants to
acquire an aggregate of 296,726.5  additional  shares of Common Stock (280,003.5
at $4.93 per share and 16,723 at $.01 per share)  were  obligated  to sell these
warrants to the Company at a price equal to $2,180.

     In March  1996,  the  holder  of the 1993  Notes  sold the 1993  Notes to a
non-affiliate of the Company. The purchaser also acquired 280,003.5 of the $4.93
Warrants and 16,723 of the $.01 Warrants.  In connection with this  transaction,
the purchaser  granted the Company an option to purchase all of the warrants for
prices  ranging  from  $500 to $1500 in the  event  the 1993  Notes  were  fully
redeemed  before  various  dates from June 30, 1996 to December 31, 1996. In the
event the Company increased its bank borrowings in excess of $32,500, the option
price would increase by $200 for each additional  $2,500 of borrowings,  subject
to a maximum  increase in the option price of $600. Upon the closing of the IPO,
the Company  repurchased  these  warrants for an aggregate  repurchase  price of
$700.

Holders of Series A Convertible Preferred Stock -

     In  connection  with the sale in fiscal 1993 by the Company of the Series A
Convertible  Preferred Stock to an investor and one of its directors  (described
in Note 13),  each  purchaser  received  $4.93  warrants  and $.01  warrants  to
purchase Common Stock.  The investor  received 118,307 of the $4.93 Warrants and
the  director  received  21,294 of the $4.93  Warrants.  The  investor  received
453,432  of the $.01  Warrants  and the  director  received  81,613  of the $.01
Warrants.  Both the  number of shares  and the  exercise  price are  subject  to
adjustment under various antidilution provisions.

     The $4.93  Warrants  issued by the Company to the investor and the director
(139,601 in total) were subject to  cancellation  to the extent that the Company
earned  back  $4.93  Warrants  issued to the  purchaser  of its 1993  Notes (see
above). Since the Company originally reported earnings sufficient to achieve the
earnings level specified for fiscal 1993 and 1994 required under the 1993 Notes,
8,253 of these $4.93  Warrants,  the maximum  allowed  during the 1993 reduction
period, were canceled in June 1994, and an additional 7,763, the maximum allowed
during the 1994  reduction  period,  were canceled in June 1995. In  conjunction
with the IPO,  these holders of $4.93 Warrants  exercised the remaining  123,585
$4.93 Warrants and sold such shares in the IPO.

     Upon achieving  specified levels of earnings in fiscal 1993, 1994, 1995 and
1996,  the  Company  had the right to earn  back the total of the $.01  Warrants
(535,045 in the  aggregate)  issued to the  holders of the Series A  Convertible
Preferred Stock.  Since the Company originally  reported earnings  sufficient to
achieve the required  earnings level specified for each of fiscal 1993, 1994 and
1995, the Company,  in 1994, 1995 and 1996,  respectively,  cancelled 133,763 of
these warrants,  representing  113,358  warrants for the investor and 20,405 for
the director. Based on restated results of operations the Company would not have
had the right to cancel  the  warrants  and  accordingly,  they  would have been
outstanding at the end of each year.



                                      F-20

<PAGE>

                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)


17. Commitments and Contingencies

     The Company  operates  principally  at its  clients'  premises  pursuant to
written contracts ("Client Contracts"). The length of Client Contracts generally
ranges  from one to ten years with  options  to renew for  periods of one to ten
years.  Certain of these Client  Contracts  provide for base rent and contingent
rent.  Aggregate rent expense under these  agreements for fiscal 1998,  1997 and
1996 was $40,925, $40,586 and $28,181, respectively.

     Future minimum  commitments as of December 30, 1998 for all  non-cancelable
operating leases and client contracts are as follows:

                    Year          Amount
                    ----          ------
                    1999         $ 3,405
                    2000           2,582
                    2001           2,146
                    2002           1,602
                    2003           1,401
                    Thereafter     2,058
                                  ------
                    Total        $13,194
                                  ====== 

     Pursuant to its contracts with various clients, the Company is committed to
spend approximately $3,682 for equipment and capital improvements as of December
30,  1998.  At  December  30,  1998,  the Company  was  contingently  liable for
performance bonds in the aggregate amount of $8,328.

     Effective  as of  September 3, 1998,  the Company  retained BT Alex.  Brown
Incorporated ("BT Alex. Brown") as financial advisor to provide the Company with
restructuring  advice.  The Company  committed to pay BT Alex. Brown an advisory
fee of $75 per month  (the  "Advisory  Fees") for up to eight (8)  months.  Upon
completion of the  restructuring,  BT Alex.  Brown will be entitled to a success
fee of $1.3 million less the aggregate Advisory Fees received.

     The Company has entered into purchasing  agreements  with various  national
and  regional  suppliers  pursuant to which the Company  agreed to purchase  its
requirements of products (as defined in the agreements).  If the Company exceeds
the agreed-upon purchasing levels, additional rebates and promotional allowances
may be  payable  by the  suppliers.  If the  Company  fails to meet  agreed-upon
purchasing levels during the term of the agreements,  the suppliers may elect to
extend the term of the agreements by one year, or a longer period, if necessary,
to reach agreed-upon purchasing levels.

18. Income Taxes

     The income tax provision (benefit) consists of the following:

                                             Fiscal Years Ended
                                 -----------------------------------------  
                                 December 30,   December 31,   December 25,
                                     1998           1997           1996
                                 -----------    -----------    -----------
          Current:
          State and local           $ 757        $   197        $     80
                                      ---         ------           -----

          Deferred:
          Federal                      -          (5,728)         (1,588)
          State and local              -          (1,271)           (352)       
                                      ---         ------           -----
          Total deferred               -          (6,999)         (1,940)    
                                      ---         ------           -----
         
               Total                $ 757        $(6,802)        $(1,860)
                                      ===         ======           =====

                                      F-21
<PAGE>

                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

     The tax  effects of  temporary  differences  that give rise to  significant
portions of the deferred tax assets and liabilities are presented below:

                                                   December 30,     December 31,
                                                       1998             1997
                                                   -----------      -----------
     Deferred tax assets:
       Net operating loss carryovers                 $20,157          $11,863
       Accrued compensation / marketing incentives     2,495            1,191
       Other                                           1,242              437   
                                                      ------           ------
          Total deferred tax assets                   23,894           13,491
                                                      ------           ------

     Deferred tax liabilities:
       Tax in excess of book depreciation                427            1,273
       Excess tax deduction attributable to
         contract rights                               8,883            9,211
       Other                                             554              379
          Total deferred tax liabilities               9,864           10,863
                                                      ------           ------
            Subtotal                                 (14,030)          (2,628)
          Valuation allowance                         14,030            2,628
                                                      ------           ------
               Total                                 $   -            $   - 
                                                      ======           ======

     The Company's effective income tax (benefit) rate differed from the Federal
statutory rate as follows:

<TABLE>
<CAPTION>
                                                                Fiscal Years Ended
                                                  -----------------------------------------------
                                                  December 30,      December 31,      December 25,
                                                      1998              1997              1996                       
                                                  -----------       -----------       -----------
    <S>                                            <C>               <C>               <C>
     Federal statutory rate                         (34.0)%           (34.0)%           (34.0)%
     Excess of cost over net assets acquired          7.4               5.2               4.4
     State & local taxes net of Federal
        tax benefits                                 (1.3)             (2.3)             (4.6)
     Valuation allowance                             30.5               8.6                -
     Other, net                                      (0.6)              0.3               4.7
                                                     ----              ----              ----              
     Effective income tax (benefit) rate              2.0%            (22.2)%           (29.5)%
                                                     ====              ====              ====
</TABLE>


     At December 30, 1998,  the Company had, for Federal  income tax  reporting,
estimated loss carryovers of approximately $52 million that will begin to expire
in 2008.

     The  Company's  loss  carryovers  for federal  income tax  purposes  may be
significantly  reduced in 1999 due to the  discharge of  indebtedness  under the
Reorganization Plan as described in Note 2. Under the Internal Revenue Code, the
substantial  changes in the Company's ownership typically will also result in an
annual  limitation on the amount of the  remaining  net  operating  loss and tax
credit carryovers which can be utilized in future years.

     Deferred tax  liabilities  result  primarily  from book tax  differences in
contract  rights  acquired  through  stock  acquisitions.   These  deferred  tax
liabilities  are  provided  as an  increase  to excess  of cost over net  assets
acquired and will reverse over an average period of ten years.

     The Company  believes that it is more likely than not that net deferred tax
assets  will  not  be  utilized  in  the  future.  Therefore,  the  Company  has
established a full valuation allowance against the net deferred tax asset.

                                      F-22
<PAGE>

                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

19. Loss Per Share

     SFAS 128 requires the disclosure of a reconciliation  of the numerators and
denominators of the basic and diluted per share  computations  for  income/loss.
Since  the  inclusion  of  dilutive  potential  common  shares  (stock  options,
preferred stock, warrants and convertible notes) would be antidilutive,  meaning
inclusion  of these  potential  common  shares  would  decrease  loss per  share
amounts,  the Company's  calculation of basic and diluted  earnings per share is
the same.

                                                1998        1997       1996
                                               ------      ------     ------

          Net loss                           $(38,100)   $(23,821)   $(4,441)
          Accretion to redemption value of
            warrants                              -           -       (1,300)
                                               ------      ------      -----
          Basic and diluted loss             $(38,100)   $(23,821)   $(5,741)
                                               ======      ======      =====

          Basic and diluted shares          9,051,591   8,683,156  4,137,361
                                            =========   =========  =========
          Basic and diluted loss per share     $(4.21)     $(2.74)    $(1.39)
                                               ======      ======      =====


20. Litigation

     In January 1996,  the Company was served with a complaint  naming it as one
of five defendants in a lawsuit  brought by multiple  plaintiffs in the New York
State Supreme Court  alleging  damages  arising out of the Woodstock II Festival
held in August 1994 in  Saugerties,  New York.  The  promoter of the festival is
also a defendant.  According to the complaint,  the plaintiffs were hired by the
Company (which had a concession  agreement with the promoter of the festival) as
subcontractors of food, beverage and/or merchandise.  In their complaint,  which
seeks  approximately  $5.9 million in damages,  the  plaintiffs  allege  damages
arising  primarily  from the failure to provide  adequate  security  and prevent
festival  attendees  from  bringing food and  beverages  into the festival.  The
Company and the promoter have made  cross-demands  for  indemnification  against
each other under applicable provisions of their concession  agreement.  On April
4, 1996,  the other  defendants  named in the suit  answered the  complaint  and
asserted cross-claims for contribution and indemnification  against the Company.
Thereafter,  the Company  answered the complaint and asserted a cross-claim  for
indemnification  against the promoter and a cross-claim for contribution against
all of its codefendants.

     The Company has also sued a former client in the Jefferson Circuit Court of
the Commonwealth of Kentucky for certain amounts owed by the former client under
the food service contract between the parties, and the former client has filed a
counterclaim  against the Company seeking  unspecified damages for the Company's
alleged tortuous interference with a prospective  contractual  relationship with
another food service provider.

     The foregoing  legal  proceedings  have been stayed as a consequence of the
commencement of the Company's Chapter 11 case. The Company does not believe that
any liabilities  relating to the foregoing  legal  proceedings are likely to be,
individually  or in  the  aggregate,  material  to  its  consolidated  financial
position, results of operations or cash flows.

     Between  December  15, 1997 and March 25, 1998,  13 purported  class action
lawsuits  were filed in the United  States  District  Court for the  District of
Connecticut (the "Court") against the Company and certain of its officers and/or
directors (the "Shareholder  Litigation").  The complaints assert various claims
against the Company,  including claims alleging violations of Sections 10(b) and
20(a) of the Securities  Exchange Act of 1934 and/or  violations of Sections 11,
12(2)  and 15 of the  Securities  Act of  1933  and  various  rules  promulgated
thereunder,  as well as fraud and negligent  misrepresentation.  On February 13,
1998,  the  plaintiffs in the actions filed a Motion for  Consolidation  and for
Appointment  as Lead  Plaintiffs and for Approval of A Selection of Lead Counsel
(the "Motion"). On March 25, 1998, the Motion was granted. Lead Plaintiffs filed
a Consolidated  Amended Complaint on May 14, 1998. On June 29, 1998, the Company
and certain of the  individual  defendants  moved to dismiss the claim  asserted

                                      F-23
<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)


under Section 11 of the Securities Act of 1933. The other individual  defendants
moved to dismiss the complaint in its entirety.  On October 22, 1998,  the Court
granted  the motion to dismiss  the entire  complaint  as to certain  individual
defendants  and denied the Company's  motion to dismiss the claim asserted under
Section 11 of the  Securities  Act of 1933. On December 9, 1998,  the plaintiffs
amended the complaint to add Deloitte & Touche LLP as a defendant.  On March 10,
1999,  the plaintiffs  further  amended the complaint to add William R. Berkley,
former  director  and  Chairman  of the Board of the  Company,  Joshua A. Polan,
former  director of the  Company,  NationsBanc  Montgomery  Securities  and CIBC
Oppenheimer  defendants.  The Company has not yet answered  the  complaint as so
amended  and,  by reason of the  automatic  stay  provided by Section 362 of the
Bankruptcy Code, the foregoing litigation is stayed against the Company, and all
claims  asserted  therein  will be  addressed  in the  context of the  Company's
Chapter 11 case.

     On or about  January 30, 1998,  the Company and certain  other  individuals
were named as  defendants  in an action  arising out of the issuance and sale in
October 1997 of $175 million in the aggregate  principal amount of the Company's
5% Convertible  Notes (the "Bondholder  Litigation").  The plaintiffs  allegedly
purchased  the  Convertible  Notes in the  aggregate  principal  amount  of $7.5
million.  The Amended Complaint in the action,  filed on or about April 22, 1998
in the United  States  District  Court for the  Southern  District  of New York,
alleges,  among  other  things,  that the  Offering  Memorandum  prepared by the
Company in connection with the offering contained  materially false information.
The complaint  asserts  various  claims  against the Company,  including  claims
alleging  violations  of  Sections  10(b),  18(a)  and  20(a) of the  Securities
Exchange Act of 1934 and various rules promulgated thereunder,  as well as fraud
and negligent  misrepresentation.  The relief sought by the plaintiffs  includes
compensatory  damages of $1.5 million plus  interest,  punitive  damages of $0.5
million,  costs and  disbursements,  and attorneys'  fees. On July 10, 1998, the
plaintiffs filed a Second Amended Complaint.

     On July 29, 1998,  the Company moved to dismiss the Section 10(b) fraud and
negligent  misrepresentation  counts of the Second Amended Complaint.  The other
individual  defendants  moved to dismiss  the Second  Amended  Complaint  in its
entirety.  On August 7, 1998,  the Judicial  Panel on  Multidistrict  Litigation
ordered  that the  Bondholder  Litigation  be  transferred  to the  District  of
Connecticut  and,  with the  consent of that  court,  be  assigned  to the judge
presiding  over the  Shareholder  Litigation  for  coordinated  or  consolidated
pretrial proceedings with the Shareholder  Litigation.  On October 22, 1998, the
Court in the District of Connecticut  dismissed the negligent  misrepresentation
count of the Second  Amended  Complaint,  and otherwise  denied the  defendants'
motions to dismiss the complaint.  On November 30, 1998, the defendants answered
the Second Amended Complaint.  This action is also stayed as against the Company
by reason of the automatic stay provided in Section 362 of the Bankruptcy  Code.
All claims  asserted  against the Company in the Bondholder  Litigation  will be
addressed in the context of the Company's Chapter 11 case. (See Note 2.)

     On December 12, 1997,  the Company issued a press release  announcing  that
the Audit  Committee  of its Board of  Directors  (the  "Audit  Committee")  had
instructed the Company's  auditors to conduct an inquiry into certain accounting
practices,  including  the  capitalization  of  certain  expenses,  and that the
auditors  advised the Audit  Committee on December  12,  1997,  based upon their
preliminary inquiry, that certain expenses incurred during 1997 were incorrectly
capitalized rather than expensed in the period in which they were incurred.  The
Company  stated that it believed the amounts would be material and that earnings
for each of the first  three  quarters  of 1997  would need to be  restated.  On
December  15,  1997,  the  Company  issued  a  press  release   announcing  that
preliminary  indications  were that the accounting  problems were not limited to
the incorrect  capitalization  of the  expenses,  and that periods prior to 1997
would also need to be restated.  The press  release also stated that the outside
directors of the  Company's  Board of Directors  (the "Outside  Directors")  had
terminated the employment of Richard E. Kerley,  Chairman of the Board and Chief
Executive Officer, and Nelson A. Barber, Senior Vice President and Treasurer. On
February 19, 1998, the Securities and Exchange  Commission issued a formal order
of  investigation  into the events  relating  to the  December  12 and 15,  1997
announcements relating to accounting irregularities.

     On  January  7,  1999  the   Company   filed  a  voluntary   petition   for
reorganization  under  Chapter  11 of Title 11 of the  United  States  Code (the
"Bankruptcy  Code") in the United  States  Bankruptcy  Court for the District of
Delaware  (the  "Bankruptcy   Court").   The  Company's   chapter  11  case  was
precipitated by the discovery of certain accounting  irregularities in December,
1997. As a result of these accounting  irregularities,  on February 6, 1998, the
Company  announced  that it was restating its  financial  statements  for fiscal
years 1994  through  1996,  and for the nine  months  ended  September  24, 1997
(collectively,  the  "Restatement").  In  connection  with the  discovery of the

                                      F-24
 
<PAGE>

                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)


accounting  irregularities,  certain  officers and directors of the Company were
immediately terminated.  In addition, a special committee of the Company's Board
of Directors  retained  the law firm of Schulte,  Roth & Zabel LLP to conduct an
investigation  in order to  determine  the nature  and extent of the  accounting
irregularities and to identify the persons who were responsible for the improper
activity.  This  investigation  resulted in a  comprehensive  report prepared by
Schulte Roth & Zabel LLP. All of the Company's officers, directors and employees
in any way  implicated  in the  accounting  irregularities  were  terminated  or
resigned  well  prior to the  commencement  of the  Company's  chapter  11 case.
Between  December 15, 1997 and March 20, 1998,  various lawsuits were instituted
against the Company seeking rescission and damages arising from the purchase and
sale  of  the  Company's  5%  Convertible   Subordinated  Notes  due  2004  (the
"Convertible Notes") and common stock ("Common Stock"). Commencing in May, 1998,
the  Company  initiated  a  dialogue  with  an ad hoc  committee  (the  "Ad  Hoc
Committee") of holders of the Convertible Notes for the purpose of formulating a
restructuring  of the  Convertible  Notes and resolving the pending  litigation.
After extensive  negotiations,  the Company and the Ad Hoc Committee agreed to a
financial restructuring which is embodied in the proposed plan of reorganization
(the   "Reorganization   Plan")  and  accompanying   disclosure  statement  (the
"Disclosure  Statement").  By order dated January 7, 1999, the Bankruptcy  Court
fixed  February  25, 1999 as the date and time for the  hearing to consider  the
adequacy of the Disclosure Statement. On February 19, 1999, the Company filed an
amended Disclosure Statement (the "Amended Disclosure  Statement").  As a result
of  the  modifications  set  forth  in the  Amended  Disclosure  Statement,  the
Bankruptcy  Court  continued  the  hearing  to  consider  the  adequacy  of  the
Disclosure  Statement  until March 17, 1999. On March 17, 1999,  the  Bankruptcy
Court stated that it would approve the Amended  Disclosure  Statement subject to
certain  modifications  which now have been incorporated  therein . As a result,
the  Amended  Disclosure  Statement  and ballots to vote to accept or reject the
Reorganization Plan are expected to be mailed on April 5, 1999. The deadline for
returning  the completed  ballots is expected to be May 7, 1999.  The hearing to
consider confirmation of the Reorganization Plan is scheduled for May 18, 1999.

     Pursuant to the  Reorganization  Plan (i) all of the Company's  outstanding
Convertible  Notes in the  aggregate  principal  amount of $175  million will be
exchanged for  approximately  $45 million in cash and  approximately  96% of the
outstanding  new  common  stock of the  reorganized  Company  (the  "New  Common
Stock");  (ii) holders of general  unsecured  claims will be paid in full; (iii)
all holders of rescission and damage claims against the Company  relating to the
Convertible  Notes  (including all such claims  asserted in pending  litigation)
(the "Debenture Rescission Claims") will receive in satisfaction of their claims
a ratable share of an interest in a litigation trust, 3% of the New Common Stock
and  warrants  to  purchase  750,000  shares of New Common  Stock;  and (iv) all
holders of  rescission  and damage  claims  against the Company  relating to the
Common Stock  (including all such claims  asserted in pending  litigation)  (the
"Statutorily  Subordinated Claims") and all holders of Common Stock will receive
in  satisfaction  of their  claims and equity  interests  a ratable  share of an
interest in the  litigation  trust,  1% of the New Common  Stock and warrants to
purchase 250,000 shares of New Common Stock. No distribution,  however,  will be
made under the  Reorganization  Plan to holders of Debenture  Rescission  Claims
unless the class of Convertible Notes under the Reorganization  Plan accepts the
Reorganization  Plan.  Additionally,  no  distribution  will be made  under  the
Reorganization  Plan to holders of  Statutorily  Subordinated  Claims and Common
Stock  unless all other  classes  under the  Reorganization  Plan  accept or are
deemed to accept the Reorganization  Plan. Pursuant to the Reorganization  Plan,
all Common Stock and all options (and existing plans  providing for the issuance
of  options)   relating  thereto  will  be  cancelled.   Implementation  of  the
Reorganization  Plan is subject to  confirmation  thereof in accordance with the
provisions of the Bankruptcy Code.

     The Company is involved in certain  other legal  proceedings  incidental to
the normal  conduct of its  business.  The  Company  does not  believe  that any
liabilities  relating to such other legal proceedings to which it is a party are
likely to be,  individually  or in the aggregate,  material to its  consolidated
financial  position,  results of  operations  or cash flows.  Each of such other
proceedings  has been stayed as against  the Company by reason of the  automatic
stay provided in section 362 of the Bankruptcy Code.

21. Related Party Transactions

     For each of fiscal  1997 and 1996,  the Company  incurred  $150 in advisory
fees with a  company  whose  sole  owner  was the  Chairman  of the Board of the
Company until April 1997.  The Company  incurred  $2,212 and $157 in fiscal 1998
and 1997,  respectively,  in consulting  fees with Buccino &  Associates,  whose
Chairman and Chief Executive  Officer was Chief Executive Officer of the Company
from March 10, 1998 through December 31, 1998, and President of the Company from
March 10, 1998 through December 14, 1998.



                                      F-25


<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)


22. Major Client

     During fiscal 1998 and 1997 no client represented 10% or more of net sales,
and during fiscal 1996 one client represented 10.0% of net sales.


23. Quarterly Results (Unaudited)

     The  following  summary  shows the  quarterly  results of operations of the
Company for fiscal 1998 and 1997:
   
<TABLE>
<CAPTION>
                                                              Fiscal Quarters
                                                   -------------------------------------
                                                   First     Second     Third     Fourth (1)
                                                   -----     ------     -----     ------    
         <S>                                     <C>       <C>        <C>       <C>          
          1998:
          Net sales                               $84,996   $74,273    $77,737   $90,115
          Gross profit                              7,017     4,650      6,856     6,055
          Net loss                                 (7,730)  (13,783)    (5,398)  (11,189)
          Net loss per share of Common Stock        $(.85)   $(1.52)    $ (.60)   $(1.24)

          1997:
          Net sales                               $54,333   $57,231    $68,134   $95,370
          Gross profit                              4,849     2,966      4,135     3,939
          Net loss                                 (2,478)   (3,580)    (2,658)  (15,105)
          Net loss per share of Common Stock        $(.32)    $(.40)     $(.30)   $(1.68)
<FN>

     (1) Fourth  quarter  1998 and 1997  include  special  charges of $2,442 and
$3,784, respectively (see Note 4) and losses on asset impairment and disposal of
$2,626 and $6,798 (see Note 5).
</FN>
</TABLE>






















                                      F-26



<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

24. Segment Information

     In 1998, the Company  adopted SFAS 131. Under SFAS 131, the Company's three
reportable  segments  are:  Recreation  and  Leisure,   Education  and  Business
Restaurants  and Healthcare  and  Corrections.  The  accounting  policies of the
segments  are  the  same as  those  described  in the  "Summary  of  Significant
Accounting  Policies"  (Note 3).  Descriptions  of the  reportable  segments are
contained  in  "Description  of  Business"  (Note 1). The other  sales and other
operating  income in the  reconciliations  consists  principally  of  janitorial
services.


     The table below presents information about reported segments for the fiscal
years ended:

<TABLE>
<CAPTION>
                                             Education &
                              Recreation &     Business    Healthcare &
                                Leisure      Restaurants   Corrections      Total
                             ------------   -----------   ------------   --------
    <S>                        <C>            <C>            <C>          <C>    
     1998:         
          Sales                $119,722       $147,381       $56,141      $323,244
                                =======        =======        ======       =======

          Operating income       $5,909         $4,954        $3,039       $13,902
                                  =====          =====         =====        ======

          Depreciation and
             amortization        $2,349         $1,597          $544        $4,490
                                  =====          =====           ===         =====

     1997:
          Sales                $117,323       $129,865       $23,302      $270,490
                                =======        =======        ======       =======

          Operating income       $4,352         $3,740          $695        $8,787
                                  =====          =====           ===         =====

          Depreciation and
             amortization        $3,916         $2,658          $203        $6,777
                                  =====          =====           ===         =====

     1996:
          Sales                 $98,836        $40,193        $4,874      $143,903
                                 ======         ======         =====       =======

          Operating income       $4,193          ($175)         $546        $4,564
                                  =====            ===           ===         =====

          Depreciation and
             amortization        $2,301           $509          $ -         $2,810
                                  =====            ===           ===         =====
</TABLE>


     A reconciliation  of total sales for the fiscal years ended 1998, 1997, and
1996 is as follows:

<TABLE>
<CAPTION>
                                                  1998          1997          1996
                                                  ----          ----          ----
         <S>                                  <C>           <C>           <C>    
          Sales:

          Sales for reportable segments        $323,244      $270,490      $143,903
          Other sales                             3,877         4,578           497
                                                -------       -------       -------
               Net sales                       $327,121      $275,068      $144,400
                                                =======       =======       =======
</TABLE>


                                      F-27


<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             (amounts in thousands, except share and per share data)

<TABLE>
<CAPTION>

     A  reconciliation  of total segment  operating income to loss before income
taxes for the fiscal years ended 1998, 1997, and 1996 is as follows:

                                                1998          1997            1996 
                                                ----          ----            ----
        <S>                                 <C>            <C>             <C>
         Operating income (loss):

         Operating income for reportable
            segments                         $ 13,902       $ 8,787         $ 4,564
         Other operating income (loss)            195          (163)           (715)
         Corporate general and 
            administrative expenses           (23,454)      (25,550)         (7,532)
         Special and restructuring charges    (11,702)       (3,784)            -
         Loss on asset impairment and
            disposal                          (11,207)       (6,798)            -
         Interest expense, net                 (5,077)       (3,115)         (2,618)
                                               ------        ------           -----
              Loss before income taxes       $(37,343)     $(30,623)        $(6,301)
                                               ======        ======           =====
</TABLE>
                                                                                

The Company's foreign sales and assets are not significant.



25. Information on Supplemental Cash Flows

                                                     1998      1997      1996   
                                                     ----      ----      ----
          Cash paid during the year for:
             Interest                              $11,317    $1,991    $2,575
                                                    ======     =====     =====
             Income taxes                             $495      $226       $80
                                                      ====       ===        ==

          Non-cash investing and financing
             activities:
                Common Stock issued upon
                   debt conversion                            $1,145     $  -  
                                                               =====      ====  
                Stock warrant accretion                          -       1,300
                                                               =====     =====  
                Subordinated notes issued in    
                   conjunction with acquisitions               2,445     3,896
                                                               =====     =====
                Capital lease obligation incurred                -       1,159
                                                               =====     =====

          Details of acquisitions (Note 6):
                Fair value of assets acquired                $71,648   $39,271
                Liabilities assumed                           36,547    28,870
                Common Stock issued                              -         370
                                                              ------    ------
                   Cash paid                                  35,101    10,031
                Less: cash acquired                            1,876       644
                    Net cash paid for acquisitions           $33,225   $ 9,387
                                                              ======     =====


26. Restatement of Financial Statements

     Subsequent to the issuance of the  Company's  1996  Consolidated  Financial
Statements,  the  Company's  management  determined  that (i)  certain  overhead
expenses  had  been  improperly  capitalized;  (ii)  insufficient  reserves  and
accruals  had  been  recorded;   (iii)  inappropriate   charges  to  acquisition
liabilities had been recorded;  (iv) certain  non-performing assets had not been
written-off;  (v)  improper  revenue  recognition  had been used in  regards  to
certain  contracts and  agreements;  and (vi)  adjustments for the settlement of
certain terminated contracts were not recorded.


                                      F-28
<PAGE>

     The Company  filed a Current  Report on Form 8-K on  February  6, 1998,  in
which the Company's financial  statements for the years ended December 25, 1996,
December  27,  1995 and  December  28,  1994  were  restated  from  the  amounts
previously   reported  to  (i)  reflect  certain  items  previously   improperly
capitalized  as period  costs;  (ii) adjust  previously  recorded  reserves  and
accruals for certain items; (iii) expense items that had previously been charged
to inappropriately  established acquisition liabilities;  (iv) write-off certain
non-performing  assets;  (v)  properly  recognize  revenue  related  to  certain
contracts and  agreements;  and (vi) record  adjustments  for the  settlement of
certain terminated contracts.

     As further  described in Note 20, the Company has been named as a defendant
in various lawsuits arising out of the Restatement.

27. Subsequent Events

     See Note 2  regarding  the  Company's  filing of a voluntary  petition  for
reorganization  under Chapter 11 of the United States Bankruptcy Code on January
7, 1999.








































                                      F-29


<PAGE>


(a)(2) Financial Statement Schedules

         None.

  (a)(3) Exhibits

         Exhibit No.  Description
         ----------   -----------
  
               2      Proposed Second Amended Plan of Reorganization for Debtor
                      Pursuant to Chapter 11 of the United  States Bankruptcy
                      Code, dated as of March 17, 1999 and related Second
                      Amended Disclosure Statement.
         ** 3.1       Restated Certificate of Incorporation
         ** 3.2       Restated By-Laws
         ** 4.1       Specimen of Registrant's Common Stock certificate
         ***4.2       Indenture between the  Company and The Bank  of  New
                      York, dated as of  October 27, 1997, with respect to
                      $175,000,000 5% Convertible Subordinated Notes due 2004.
         ***4.3       Registration Rights Agreement, by and among the Company
                      and Donaldson, Lufkin & Jenrette Securities Corporation,
                      Nations bank Montgomery Securities, Inc., Smith Barney,
                      Inc. and Piper Jeffrey, Inc. dated as of October 27, 1997.
            10.1      Employment Agreement, dated as of December 14, 1998, by
                      and among the Company and William D. Forrest.
            10.2      Settlement Agreement, dated as of December 14, 1998, by
                      and among the Company and Gerald P. Buccino.
            10.3      Separation and Consulting Agreement, dated as of January
                      15, 1999, by and among the Company and Randall K. Ziegler.
     ++++   10.4      Separation Agreement, dated as of September 15, 1998, by
                      and among the Company and Catherine B. James.
         ++ 10.5      Form of Amended and Restated 1994 Stock Option Plan
           +10.6      Form of Amended and Restated 1996 Non-Employee Director
                      Stock Plan
         ++ 10.7      Form of 1998 Annual Incentive Compensation Plan
         ** 10.7(a)   Employment Agreement, dated as of June 30, 1995, by and
                      among the Company, Northwest Food Service, Inc. and
                      Robert F. Barney.
            10.7(b)   First Amendment to Employment Agreement, dated as of
                      July 1, 1996 by and among the Company, Northwest Food 
                      Service,Inc. and Robert F. Barney.
           +10.7(c)   Second Amendment to Employment Agreement, dated as of
                      March 17, 1997 by and among the Company, Northwest Food
                      Service, Inc. and Robert F. Barney.
         #  10.7(c)   Third Amendment to Employment Agreement, dated as of
                      May 28, 1998 by and among the Company, Northwest Food
                      Service, Inc. and Robert F. Barney.
         ** 10.8      Form of Promissory Note from Richard E. Kerley to the
                      Company.
         ** 10.9      Form of Promissory Note from Randy B. Spector to the
                      Company.
         ** 10.10     Form of Promissory Note from Douglas M. Stabler to
                      Interlaken Capital Partners Limited Partnership.
         ** 10.11     Form of Registration Rights Agreement by and among the
                      Company and Messrs. Kerley, Spector, Ziegler and Stabler.
            21        Subsidiaries
            23.1      Consent of PricewaterhouseCoopers LLP
            23.2      Consent of Deloitte & Touche LLP
            27        Financial Data Schedule



         *            Incorporated by reference to the Company's  Current Report
                      on  Form  8-K  filed  with  the  Securities  and  Exchange
                      Commission  (the  "Commission")  on or about  September 5,
                      1997.

        **            Incorporated by reference to the Registrant's
                      Registration Statement on Form S-1 (File No. 333-2906),
                      as amended,  originally filed with the Commission on
                      March 29, 1996.


                                       30
<PAGE>
    
        ***           Incorporated by reference to the Registrant's Quarterly
                      Report on Form 10-Q for the quarterly period ended
                      September 24, 1997.

          +           Incorporated by reference to the Registrant's Quarterly
                      Report on Form 10-Q for the quarterly period ended
                      March 26, 1997.
         ++           Incorporated by reference to the Registrant's Registration
                      Statement on Form S-1 (File No. 333-19909), as amended,
                      originally filed with the Commission on May 12, 1997.
        +++           Incorporated by reference to the Registrants Annual
                      Report on Form 10-K for the fiscal year ended December 25,
                      1996.
       ++++           Incorporated by reference to the Registrant's Quarterly
                      Report on Form 10-Q for the quarterly period ended 
                      September 30, 1998.
          #           Incorporated by reference to the Registrant's Quarterly
                      Report on Form 10-Q for the quarterly period ended July 1,
                      1998.

     Certain instruments defining the rights of holders of long-term debt of the
Company have not been filed in accordance with Item 601(b)(4)(iii) of Regulation
8-K under the  Securities  Act. The Company  hereby  agrees to furnish a copy of
such instruments to the Commission upon request.

(b) Reports on Form 8-K

     1.  There  were no  reports  on Form 8-K filed for the three  months  ended
December 30, 1998.

     2. The Company filed a report on Form 8-K on January 7, 1999, under Item 5,
Other  Events,  stating  that  it had  reached  an  agreement  with a  committee
representing its noteholders on a financial  restructuring  of the Company.  The
Company also  announced  that, in order to implement the  restructuring,  it had
filed a petition for  reorganization  under  Chapter 11 of the  Bankruptcy  Code
together  with  a  plan  of  reorganization  which  embodies  the  terms  of the
restructuring and which is supported by the noteholders' committee.


























                                       31


<PAGE>






SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized in New York, New York on March 29, 1999.
                                
                                 FINE HOST CORPORATION

                                 By: /s/ William D. Forrest
                                     ----------------------                     
                                     Name: William D. Forrest
                                 Title: President and Chief Executive Officer
                                 Date: March 29, 1999

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

         Signature                Title                            Date
-------------------------    ----------------------------     -------------  

  /s/ Gerald P. Buccino      Chairman of the Board            March 29, 1999
-------------------------
      Gerald P. Buccino

  /s/ William D. Forrest     President and Chief Executive    March 29, 1999
-------------------------    Officer and Director
      William D. Forrest                                                        

  /s/ Richard L. Hall        Senior Vice President and        March 29, 1999
-------------------------    Chief Accounting Officer and 
      Richard L. Hall        Treasurer                                          
                             (Principal Financial Officer)

  /s/ Ronald E. Blaylock     Director                         March 29, 1999
------------------------- 
      Ronald E. Blaylock

  /s/ J. Michael Chu         Director                         March 29, 1999   
-------------------------         
      J. Michael Chu

  /s/ Norman N. Habermann    Director                         March 29, 1999
-------------------------
      Norman N. Habermann

  /s/ Jack H. Nusbaum        Director                         March 29, 1999
-------------------------
      Jack H. Nusbaum











                                       32


<PAGE>