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 June 30, 2001

                                       OR

     |_|  Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the transition period from _____ to _____

                                     0-19263
                              (Commission File No.)

                            SUPREMA SPECIALTIES, INC.
             (Exact name of registrant as specified in its charter)

             New York                                             11-2662625
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                510 East 35th Street, Paterson, New Jersey 07543
          (Address of principal executive offices including zip code)

Registrant's Telephone Number, including area code: (973) 684-2900

Securities registered pursuant to Section 12(b) of the Act: None

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

                          Common Stock, $.01 par value
                          Common Stock Purchase Rights
<PAGE>

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

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

The aggregate market value of the registrant's Common Stock held by
non-affiliates of the registrant as of September 24, 2001 was $51,134,538.

As of September 24, 2001, there were 5,735,112 shares of the registrant's Common
Stock outstanding.

Documents Incorporated by Reference:

     None.

<PAGE>

PART I

Item 1. Business

General

          Suprema Specialties, Inc. and its wholly owned subsidiaries
(hereinafter referred to collectively as "we", "us" or the "Company")
manufacture and market gourmet all natural Italian cheeses. Our product lines
consist primarily, of mozzarella, ricotta, parmesan, romano and provolone
cheeses which we produce domestically, as well as parmesan and pecorino romano
cheeses, which we import. Certain of our domestically produced cheeses include
"lite" and lower fat versions containing less fat and fewer calories.

          We sell our cheeses through three channels of distribution in the food
industry: foodservice, food ingredient and retail. Over 95% of our revenue is
derived from the foodservice channel, where we market and sell our bulk cheeses
under the Suprema brand name, as well as under private label, to national and
regional foodservice distributors, which in turn sell our cheeses to
restaurants, hotels, caterers and others. We sell our cheeses to food
manufacturers in the food ingredient channel, who use our cheeses as ingredients
in prepared foods, such as frozen pizza and various pasta dishes. In the retail
distribution channel, we sell our cheeses principally in the Northeast and
Mid-Atlantic regional markets, as well as Florida and the Chicago metropolitan
area, primarily to supermarket chains, grocery stores, delicatessens and gourmet
shops, including Food Town, Shaw's, Giant, King Kullen, Stop'N Shop and Krogers.

          We market our cheeses under the Suprema and Suprema Di Avellino(R)
brand names, and are increasing our efforts to build Suprema as a recognized
cheese brand by, among other things, increasing our use of promotional
materials, participating in trade shows and entering into certain co-branding
relationships.

Products, Production Process and Packaging

          We domestically produce mozzarella, ricotta, provolone and grated and
shredded parmesan and romano cheeses including "lite" and lower fat versions of
certain of these products which


                                      -1-
<PAGE>

contain less fat and fewer calories. We also import parmesan and
pecorino(sheep's milk) romano cheeses for production and resale. Foreign
producers, located principally in Europe and South America, supplied us with 25%
of our bulk cheese requirements in each of fiscal year 2000 and fiscal year
2001. Our cheeses are natural, and do not contain any preservatives, additives,
sweeteners, dehydrated fillers or artificial flavorings. Our cheese products are
premium quality all natural cheeses that meet or exceed all federal and industry
standards for purity, freshness, taste, appearance and texture.

          We offer many of our products to the foodservice and food ingredient
groups in shrink-wrapped plastic packaging and in pillow packs which ensure
continued freshness and gourmet quality. In addition to standard sizes, we also
package our products in customized sizes, which can range from five pound to
forty pound blocks, in order to meet the specific needs of our foodservice
distributors and food manufacturer customers. We market and sell our products to
the foodservice and food ingredient groups under the Suprema brand name as well
as under private label.

          We offer most of our retail products in convenient, resealable,
tamper-resistant, clear plastic cups and shakers, in order to maximize both
freshness and taste as well as to promote visual appeal. We believe that our
packaging enhances the gourmet quality and image of our cheeses. We offer our
cheeses in a wide variety of retail package sizes ranging from six ounces to
three pounds. We market and sell our products to retail groups under the Suprema
Di Avellino brand name as well as under private label.

Production Facilities

          We manufacture our all natural cheeses at our West Coast facility in
Manteca, California, our Northeast facility in Ogdensburg, New York and our
facility in Blackfoot Idaho.

          At our Manteca facility, raw milk is purchased from milk cooperatives
and, through our state-of-the-art equipment and our proprietary techniques,
produced into cheese. The Manteca facility, which has shredding capabilities,
whey processing equipment and storage and shipping facilities,


                                      -2-
<PAGE>

manufactures the full line of our products, including mozzarella, provolone,
ricotta and domestic parmesan and romano.

          Our Ogdensburg facility contains a cheese manufacturing operation as
well as storage and shipping facilities and whey processing equipment. We
manufacture mozzarella and provolone cheeses at this facility.

          We purchased our Blackfoot Idaho facility in December 2000. This
facility contains a cheese manufacturing operation, as well as storage and
shipping facilities and whey processing equipment. We manufacture mozzarella,
monterey jack and cheddar cheese at this facility.

          We also maintain an East Coast facility in Paterson, New Jersey, which
we own, subject to a mortgage. This facility contains production, storage and
shipping facilities, including state-of-the-art equipment for grating,
shredding, and packaging our products, and has been further expanded to include
a refrigerated/freezer storage facility. At this facility, bulk cheese from our
three manufacturing facilities, as well as imported bulk cheese, is shredded or
grated, packaged and distributed. Our Paterson facility also serves as our
corporate headquarters.

          Each of our facilities serves as a distribution point for various
geographic markets throughout the United States. Our Manteca and Ogdensburg
facilities are operating at 80% of production capacity. Our Paterson facility is
operating at approximately 67% of production capacity and our Blackfoot facility
is operating at approximately 20% of capacity.

          We employ a Director of Operations at each facility who makes
pre-production inspections and monitors critical manufacturing and processing
functions. We also employ a Director of Quality Control who oversees the Quality
Control Departments at each of our facilities. Our Quality Control Departments
are responsible for testing raw ingredients to ensure that they are free of
contaminants, inspecting production equipment and testing finished products to
ensure both quality compliance with customer specifications. In addition, we
regularly send random samples of each product to outside laboratories, which
perform routine physical, chemical and micro-biological tests.


                                      -3-
<PAGE>

Suppliers

          Our principal ingredient is raw milk. We have a supplier agreement
with Allied Federated Cooperatives, Inc. that runs through 2017, which provides
that, subject to specified minimum amounts, we will purchase from them all of
our milk requirements used in the manufacture of cheese products at our
Ogdensburg, New York facility. We are also dependent on a limited number of
other suppliers for all of our requirements of raw materials, primarily milk
used in the manufacture of cheese at our Manteca, California facility. We
believe that there are numerous alternative sources of supply available to us,
including for raw milk which is currently provided by our suppliers. For our
fiscal year 2000 and fiscal year 2001, our three largest suppliers accounted
for, in the aggregate, approximately 34% and 36%, respectively, of our product
requirements, with one milk supplier accounting for 14% and 12%, respectively,
of our requirements. Other than our agreement with Allied Federated Cooperatives
Inc., we generally purchase raw milk from dairy cooperatives and other dairy
vendors under one-year purchase agreements.


                                      -4-
<PAGE>

          Our purchase of bulk cheese are made pursuant to purchase orders
placed in the ordinary course of business. We import certain of our bulk cheeses
directly from Europe and, to a lesser extent, South America. We purchase cheese
supplies in large quantities in order to obtain volume discounts and place
orders for imported bulk cheese approximately four to six months in advance of
anticipated production requirements. For fiscal years ended June 30, 1999, 2000,
and 2001,approximately 18%, 25% and 25%, respectively, of our supply
requirements were imported.

Sales and Marketing

          We employ regional sales representatives to market our products as
well as a national account representative who is responsible for our sales to
our customers who have national operations. Senior management is responsible for
planning and coordinating our marketing programs and maintains a hands-on
relationship with select key accounts. In addition, we engage independent
commissioned food brokers throughout the United States for marketing to our
customers. To achieve greater market penetration, we intend to continue to
strengthen and expand our sales force and food broker network.

          We believe that product recognition by customers, consumers and food
brokers is an important factor in the marketing of our products. We market our
products and brand name by participating in trade shows, establishing
co-branding relationships, through the use of promotional materials, including
full color product brochures, circulars, free standing product displays,
newspaper inserts and through various co-op advertisement programs. Our Vice
President of Sales is responsible for overseeing our marketing efforts and for
managing and coordinating our sales efforts and supervising our regional sales
representatives brokers.

Customers

          We sell our cheeses nationally to foodservice industry distributors
and food manufacturers, principally in bulk. For the years ended June 30, 1999,
2000, and 2001, sales of cheese products to foodservice distributors accounted
for approximately 91%, 91%, and 97%, respectively, of our net sales. Sales to
food manufacturers accounted for approximately 6%, 7%, and 2%, respectively, of
our net sales.


                                      -5-
<PAGE>

          Our retail products are sold to supermarket chains, grocery stores,
delicatessens and gourmet shops. Our customers include well known chain stores,
such as Food Town, Shaw's, Giant, King Kullen, Stop'N Shop and Krogers. For the
years ended June 30, 1999, 2000, and 2001, sales of cheese products to retailers
accounted for approximately 3%, 2% and 1%, respectively, of our net sales.

          We generally sell our cheeses upon receipt of customer purchase orders
and fill orders within approximately seven days. Other than our agreement with
Sbarro's, Inc., we generally do not have long term purchase agreements with our
customers. For the fiscal year ended June 30, 2000, A&J Foods, Inc., Tricon
Commodities International, Inc. and Noble J.G. Cheese Company accounted for 15%,
13% and 12%, respectively, of our net sales. For the fiscal year ended June 30,
2001, Tricon Commodities, A&J Foods, Inc., Battaglia and Company, Noble J.G.
Cheese Company and California Goldfield Cheese Traders accounted for
approximately 17%, 15%, 12%, 10% and 10%, respectively, of our net sales.

Trademarks

          In September, 1992, we registered the name Suprema Di Avellino(R) with
the United States Patent and Trademark Office. We have received Notices of
Allowance from the United States Patent Office with respect to the trademarks
"Chez" and "Pizza Chez."

Government Regulation

          We are subject to extensive regulation by the United States Food and
Drug Administration (the "FDA"), the United States Department of Agriculture,
and other state and local authorities in jurisdictions in which our products are
manufactured, processed or sold, regarding the importation, manufacturing,
processing, packaging, storage, distribution and labeling of our products.
Applicable statutes and regulations governing cheese products include "standards
of identity" for the content of specific types of cheese; nutritional labeling
and serving size requirements as well as general "Good Manufacturing Practices"
with respect to manufacturing and production processes. Our manufacturing and
processing


                                      -6-
<PAGE>

facilities and products are subject to compliance with federal and state
regulations regarding work safety and environmental matters. Our manufacturing
and processing facilities and products are subject to periodic inspection by
federal, state and local authorities. We believe that we are currently in
substantial compliance with all material governmental laws and regulations and
maintain all material permits and licenses relating to our operations.
Amendments to existing statutes and regulations, adoption of new statutes and
regulations as well as our expansion into new operations and jurisdictions will
require us to obtain additional licenses and permits and could require us to
adapt or alter methods of operations at costs which could be substantial.

          Advertising relating to our products is subject to review of the
Federal Trade Commission and state agencies to monitor and prevent unfair or
deceptive trade practices.

Competition

          We face significant competition in the marketing and sales of our
products. Our foodservice and food ingredient products compete on the basis of
price, quality and service with products of companies such as Dairy Farmers of
America, Beatrice Cheese Company and Stella Foods. Our retail products compete
for brand recognition and shelf space with products of companies that have
achieved significant consumer loyalty, such as Kraft, Sorrento and Sargento, as
well as private label. Many of these companies have greater financial and other
resources than we do which enables them to procure supermarket shelf space and
to implement extensive advertising and promotional programs. We also compete in
all three distribution channels with importers of foreign cheese and companies
manufacturing substitute cheese products.

          We believe the principal competitive factors in the marketing of
cheese products are price, quality, freshness, brand recognition and packaging
convenience. Because our current products are positioned as all natural and
gourmet, we generally price them at a premium to certain competitive products.

          We are subject to evolving consumer preferences, nutritional and
health-related concerns. We believe that the absence of preservatives,
additives, sweeteners, dehydrated


                                      -7-
<PAGE>

fillers or artificial flavorings increases the appeal of our products to
consumers. In addition, in response to certain consumer concerns, we have
certain all natural "lite" and lower fat cheese products which contain less fat
and fewer calories. We expect to see increased competition from other companies
whose products or marketing strategies address these consumer concerns.

Employees

          As of September 24, 2001, we had 286 full-time employees, of which 16
are employed in executive capacities and management positions, 28 are engaged in
sales and marketing and administrative capacities and 242 are engaged in
production and operations. Approximately 62% of our total workforce is
represented by a union. We have a contract with our union employees in Manteca,
California and Ogdensburg, New York which expire in December 2004 and November
2003, respectively. We consider our relations with our employees to be
satisfactory.

Item 2. Properties

          Our Manteca facility, consists of approximately 110,000 square feet,
which we operate pursuant to a ten year lease that expires in August 2005 and
that may be extended at our option for two additional five year periods. The
basic annual rental (exclusive of insurance and taxes) is $576,000, subject to
adjustment for increases in the Consumer Price Index during the renewal term.
The rent is based on a formula relating to the Landlord's cost of construction
of the additional space.

          Our Ogdensburg facility consists of an aggregate of 72,000 square feet
and contains a cheese manufacturing operation as well as storage and shipping
facilities and whey processing equipment. We lease this facility pursuant to a
lease which expires in July 2017, which we may elect to terminate on each fifth
year anniversary of its commencement. Minimum monthly base rental is $4,000 plus
a fee of $.06 per hundred weight of whole milk sold and delivered, provided that
in no event shall the minimum monthly rent exceed $8,000.


                                      -8-
<PAGE>

          We purchased our Blackfoot Idaho facility in December 2000. This
facility consists of approximately 37,000 square feet and contains a cheese
manufacturing operation, as well as storage and shipping facilities and whey
processing equipment. The acquisition cost was $6 million and was financed
through a leasing transaction.

          We also maintain an East Coast facility in Paterson, New Jersey, which
we own, subject to a mortgage, and which consists of approximately 32,000 square
feet. On March 29, 1996, we purchased our Paterson production facility which we
previously had leased. The purchase was financed through a mortgage on the
property. Proceeds of the loan were $1,050,000 of which approximately $686,250
was used to pay the remaining obligation to the landlord. In March 1999, we
refinanced our mortgage on the Paterson facility with Fleet Bank for a principal
amount of $929,573. The seven year note bears interest of 8.51% per annum, is
being amortized at a fifteen year rate and requires a balloon payment at the end
of year seven of approximately $500,000.

          We believe that our current facilities are adequate to handle our
current sales volume and subsequent growth.

Item 3. Legal Proceedings

          We are a party to certain litigation arising in the ordinary course of
business. While any litigation has an element of uncertainty, we believe that
the final resolution of any of these matters will not have a material effect on
our operations.

Item 4. Submission of Matters to a Vote of Security Holders

          A Special Meeting of Shareholders was held on May 2, 2001 at which our
shareholders approved a proposal to increase our authorized shares of Common
Stock to 50,000,000 shares. There were 4,031,214 votes in favor of the proposal;
1,384,775 votes against the proposal and 5,520 absentions. There were no broker
non-votes.


                                      -9-
<PAGE>

                                     PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
        Matters

          Our Common Stock has been traded in the over-the-counter market and
quoted on the NASDAQ System under the symbol "CHEZ" since April 25, 1991. On
March 22, 1993, our Common Stock commenced trading on the NASDAQ National Market
System. The following table sets forth the high and low sale prices of our
Common Stock for the periods indicated below.

                                                       Common Stock
                                                       ------------
                                                      High       Low
                                                      ----       ---

Fiscal Year ending June 30, 2000
--------------------------------
         First Quarter                                9.125     6.875
         Second Quarter                               9.750     7.000
         Third Quarter                               10.500     7.750
         Fourth Quarter                              10.500     7.938

Fiscal Year ending June 30, 2001
--------------------------------
         First Quarter                               10.625     7.688
         Second Quarter                               8.563     7.375
         Third Quarter                               10.250     7.500
         Fourth Quarter                              14.990     8.063

          As of September 24, 2001, the number of record holders of our Common
Stock was 67. We believe that this number does not include an estimated 1,000
beneficial owners of our Common Stock who currently hold such securities in the
name of depository institutions.

          We have neither paid nor declared any cash dividends on our shares of
Common Stock. Our Board of Directors do not presently anticipate that cash
dividends will be paid on our shares of Common Stock in the foreseeable future.
In addition, our agreement with our lending institutions prohibits the payment
of cash


                                      -10-
<PAGE>

dividends, other than dividends on shares of preferred stock whose issuance is
permitted under the loan agreement. We anticipate that any funds derived from
operations in the foreseeable future will be required to be devoted to the
development of our business.


                                      -11-
<PAGE>

Item 6. Selected Financial Data

          The following selected consolidated financial information is derived
from, and should be read in connection with, the consolidated financial
statements of the Company contained elsewhere herein.

                                            Years Ended June 30,
                              ------------------------------------------------
                              2001       2000       1999       1998       1997
                              ----       ----       ----       ----       ----
                                   (In thousands, except per share data)
Earnings Statement Data:

 Net Sales                  $420,363   $278,482   $176,281   $108,140   $ 88,311

 Earnings before
   Cumulative Effect
   of Accounting Change
   and Extraordinary loss
   on extinguishment of
   debt                        8,874      6,385      4,208      2,417        121

 Net Earnings                  8,874      6,385      4,208      1,406        121

 Earnings Per Share
   before Cumulative
   Effect of Accounting
   Change and
   extraordinary loss
   on extinguishment
   of debt (Basic)              1.63       1.44        .93        .53        .03

 Earnings Per Share
   before Cumulative
   Effect of Accounting
   Change and
   extraordinary loss
   on extinguishment
   of debt (Diluted)            1.41       1.23        .86        .51        .02


                                      -12-
<PAGE>


 Net earnings per Share
   (Basic)                      1.63       1.44        .93        .31        .03

 Net earnings per Share
   (Diluted)                    1.41       1.23        .86        .30        .02

 Weighed Average Common
   Shares Outstanding
   (Basic)(1)                  5,429      4,432      4,537      4,563      4,552

 Weighed Average Common
   Shares Outstanding
   (Diluted)(2)                6,294      5,186      4,884      4,745      5,040

                                                  June 30,
                              ------------------------------------------------
                              2001       2000       1999       1998       1997
                              ----       ----       ----       ----       ----
                                               (In thousands)
Balance Sheet Data:

Cash and cash equivalents        610        950        358        490        480

 Total Assets               $190,412   $124,960   $ 81,999   $ 62,081   $ 47,043

 Working Capital             143,990     95,816     56,266     43,872     32,546

 Long Term Obligations
   (including capital
   lease obligations
   and current portion)      111,686     78,971     44,125     35,494     23,772

 Total Liabilities           147,584     98,992     61,488     45,387     31,754

 Stockholders' Equity         42,828     25,968     20,511     16,695     15,289

----------

(1) See Footnote 11 to Notes to Consolidated Financial Statements.
(2) See Footnote 11 to Notes to Consolidated Financial Statements.


                                      -13-
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:

Certain information included in this report on Form 10-K that are not historical
facts contain forward looking statements that involve a number of known and
unknown risks, uncertainties and other factors that could cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievement expressed or implied by such forward looking
statements. These risks and uncertainties include, but are not limited to, our
dependence on several principal customers, competition, the impact of supply
constraints or difficulties, the amount of our secured indebtedness, our
dependence on key personnel, the possibility of product liability claims,
government regulation of our business, and other risks detailed in our other
Securities and Exchange Commission filings. The words "believe", "expect",
"anticipate" and "seek" and similar expressions identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the statement was
made.


                                      -14-
<PAGE>

Overview:

          We manufacture and market gourmet all natural Italian cheeses. Our
product lines consist primarily of mozzarella, ricotta, parmesan, romano and
provolone cheeses, which we produce domestically, as well as parmesan and
pecorino romano cheeses, which we import. Certain of our domestically produced
cheeses include "lite" and lower fat versions containing less fat and fewer
calories. In the fiscal years 1999, 2000, and 2001, aggregate sales of parmesan
and romano cheese, which are classified as "hard" cheese, accounted for 37%, 52%
and 62%, respectively, of our revenue. For the fiscal years 1999, 2000 and 2001,
sales of mozzarella cheese which is classified as "soft" cheese, accounted for
approximately 48%, 29% and 22%, respectively, of our revenue.

          We sell our cheeses through three channels of distribution in the food
industry: foodservice, food ingredient and retail. For the fiscal years 1999,
2000 and 2001, sales of our cheeses to foodservice companies accounted for
approximately 91%, 91% and 97%, respectively, of our revenues; sales of our
cheeses to food ingredient companies accounted for approximately 6%, 7% and 2%,
respectively, of our revenue; and sales of our cheeses to retailers accounted
for 3%, 2% and 1%, respectively, of our revenue.

          We maintain four facilities located in Manteca, California,
Ogdensburg, New York, Blackfoot, Idaho and Patterson, New Jersey. Our cheese
production facilities are located in key milk shed regions, allowing us to
minimize transportation costs for our raw milk supplies and maintain a low cost
infrastructure. Historically, a majority of our cost of goods sold has consisted
of the price we pay for raw milk. We generally purchase raw milk from dairy
cooperatives and other dairy vendors under one-year purchase arrangements. The
price we pay for raw milk under these arrangements is indexed to the CME Block
Cheddar Market, the commodity index on which our bulk cheese prices are based.
As a result, our gross profit margin is largely insulated from fluctuations in
the price of raw milk. However, as the CME Block Cheddar Market index decreases,
reducing the price we receive for our products, our gross margin also decreases
due to the proportionately larger impact of those elements of our cost of goods
sold, the prices of which are fixed or relatively fixed in nature. Conversely,
as the CME Block Cheddar Market increases, our gross margin increases. Over the
past three years ended June 30, 2001, our gross margin

                                      -15-
<PAGE>

as a percentage of sales had decreased from approximately 17.0% to 15.0%.

          We record revenue when our products are shipped to customers. Our
customers generally do not have the right to return products that have been
shipped.

Results of Operations

          The following table sets forth, for the periods indicated, the
percentage of revenue represented by certain items reflected in our Statements
of Earnings.

                                              Percentage of Revenue
                                              ---------------------
                                          Year         Year         Year
                                         Ended        Ended        Ended
                                        June 30,     June 30,     June 30,
                                          2001         2000         1999
                                         ------       ------       ------
Net sales .........................       100.0%       100.0%       100.0%
Cost of sales .....................        84.5         83.6         83.0
                                         ------       ------       ------
Gross margin ......................        15.5         16.4         17.0
Selling and shipping
Expenses ..........................         7.5          7.9          8.0
General and administrative expenses         2.1          2.5          2.5
                                         ------       ------       ------
Income from operations ............         5.9          6.0          6.5
Interest expense, net .............         2.4          2.1          2.5
                                         ------       ------       ------

Earnings before income taxes ......         3.5          3.9          4.0

Income taxes ......................         1.4          1.6          1.6
                                         ------       ------       ------

Net earnings ......................         2.1%         2.3%         2.4%
                                         ======       ======       ======


                                      -16-
<PAGE>

Fiscal Year Ended June 30, 2001 Compared to Fiscal Year Ended June 30, 2000.

          Net sales for the fiscal year ended June 30, 2001 were approximately
$420,363,000, as compared to approximately $278,482,000 for the fiscal year
ended June 30, 2000, an increase of approximately $141,881,000, or 50.9%. This
increase reflects an increase primarily in sales volume for food service
products manufactured by us, most of which represented sales to existing
customers, partially offset by the lower average selling price for cheese to our
customers, as a result of the lower average CME Block Cheddar Market.

          Our gross margin increased by approximately $19,404,000, from
approximately $45,549,000 for the fiscal year ended June 30, 2000 to
approximately $64,953,000 for the fiscal year ended June 30, 2001, primarily as
a result of the increase in sales volume.

          Our gross margin as a percentage of sales decreased from 16.4% in the
fiscal year ended June 30, 2000 to 15.5% in the fiscal year ended June 30, 2001.
The decrease in gross margin as a percentage of net sales was primarily due to
the lower average selling price for cheese to our customers (as a result of the
lower average CME Block Cheddar Market) during the fiscal year ended June 30,
2001, and to a lesser extent, the shift toward lower margin sales associated
with the food service markets.

          Selling and shipping expenses increased by approximately $9,467,000
from approximately $21,893,000 for the fiscal year ended June 30, 2000 to
approximately $31,360,000 for the fiscal year ended June 30, 2001. The increase
in selling and shipping expenses was primarily due to increases in advertising
and shipping expenses in support of our revenue growth. As a percentage of
sales, selling and shipping expenses decreased from 7.9% for the fiscal year
ended June 30, 2000 to 7.5% in the fiscal year ended June 30, 2001. The decrease
in selling and shipping expenses as a percentage of sales principally reflects
economies of scale realized with additional sales volume, partially offset by
the increases in advertising, commission expenses and shipping expenses in
support of the our revenue growth.

          General and administrative expenses increased by approximately
$1,857,000, from approximately $6,914,000 for the fiscal year ended June 30,
2000 to approximately $8,771,000 for the fiscal year ended June 30, 2001. The
increase in general


                                      -17-
<PAGE>

and administrative expenses is primarily a result of an increase in personnel
and other administrative expenses associated with our revenue growth. As a
percentage of sales, general and administrative expenses decreased to 2.1% for
the fiscal year ended June 30, 2001 from 2.5% for the fiscal year ended June 30,
2000, primarily due to the increase in our revenue which was partially offset by
an increase in personnel and other administrative expenses associated with our
revenue growth.

          Net interest expense increased to approximately $10,033,000 for the
fiscal year ended June 30, 2001 from approximately $5,921,000 for the fiscal
year ended June 30, 2000. The increase in interest expense was primarily the
result of our expanded borrowing requirements necessary for working capital
needs.

          The provision for income taxes for the fiscal year ended June 30, 2001
increased by approximately $1,479,000 as compared to the fiscal year ended June
30, 2000 primarily as a result of increased taxable income.

          Net earnings increased by approximately $2,489,000 to approximately
$8,874,000 for the fiscal year ended June 30, 2001 from approximately $6,385,000
for the fiscal year ended June 30, 2000, due to the reasons discussed above.

Fiscal Year Ended June 30, 2000 Compared to Fiscal Year Ended June 30, 1999.

          Net sales for the fiscal year ended June 30, 2000 were approximately
$278,482,000, as compared to approximately $176,281,000 for the fiscal year
ended June 30, 1999, an increase of approximately $102,201,000, or 58.0%. This
increase reflects an increase primarily in sales volume for foodservice products
manufactured by us, most of which represented sales to existing customers.

          Our gross margin increased by approximately $15,620,000, from
approximately $29,929,000 for the fiscal year ended June 30, 1999 to
approximately $45,549,000 for the fiscal year ended June 30, 2000, primarily as
a result of the increased sales volume. Our gross margin as a percentage of
sales decreased slightly from 17.0% in the fiscal year ended June 30, 1999 to
16.4% in the fiscal year ended June 30, 2000. The decrease in gross margin as a
percentage of net sales was primarily due to the lower average selling price for
cheese to


                                      -18-
<PAGE>

our customers (as a result of the lower average CME Block Cheddar Market) during
the fiscal year ended June 30, 2000, and to a lesser extent, the shift toward
lower margin sales associated with the food service markets.

          Selling and shipping expenses increased by approximately $7,847,000
from approximately $14,046,000 during the fiscal year ended June 30, 1999 to
approximately $21,893,000 during the fiscal year ended June 30, 2000. The
increase in selling and shipping expenses was primarily due to increases in
advertising, commission expense and shipping expenses in support of our revenue
growth. As a percentage of sales, selling and shipping expenses decreased
slightly from 8.0% for the fiscal year ended June 30, 1999 to 7.9% for the
fiscal year ended June 30, 2000. The decrease in selling and shipping expenses
as a percentage of sales was primarily due to the increase in our revenue
growth, which was partially offset by the increases in advertising and
promotional allowances, commission expense and shipping expenses in support of
our revenue growth.

          General and administrative expenses increased by approximately
$2,493,000, from approximately $4,421,000 for the fiscal year ended June 30,
1999 to approximately $6,914,000 for the fiscal year ended June 30, 2000. The
increase in general and administrative expenses was primarily due to an increase
in personnel and other administrative expenses associated with our revenue
growth. As a percentage of sales, general and administrative expenses remained
constant at 2.5% for both the fiscal year ended June 30, 1999 and June 30, 2000.

          Net interest expense increased to approximately $5,921,000 for the
fiscal year ended June 30, 2000 from approximately $4,329,000 for the fiscal
year ended June 30, 1999. The increase in interest expense was primarily the
result of our expanded borrowing requirements necessary to finance working
capital needs.

          The provision for income taxes for the fiscal year ended June 30, 2000
increased by approximately $1,511,000 compared to fiscal year ended June 30,
1999 primarily as a result of increased taxable income.

          Net earnings increased by approximately $2,177,000 to approximately
$6,385,000 in the fiscal year ended June 30, 2000 from approximately $4,208,000
in the fiscal year ended June 30, 1999 due to the reasons discussed above.


                                      -19-
<PAGE>

Liquidity and Capital Resources

          At June 30, 2001, we had working capital of approximately $143,990,000
as compared to approximately $95,816,000 at June 30, 2000, an increase of
approximately $48,004,000. The increase in working capital is primarily due to
our improved operating results as well as the proceeds from long term borrowings
of approximately $33,378,000 used to support our increased accounts receivable
and inventory levels in support of our increased sales volume.

          Net cash used in operating activities for the fiscal year ended June
30, 2001 was approximately $36,617,000, as compared with approximately
$32,649,000 in the fiscal year ended June 30, 2000 and $7,704,000 in the fiscal
year ended June 30, 1999. The increase in the use of cash in operations was
primarily the result of increases in accounts receivable and inventories in
support of our increased sales volume, as well as increases in prepaid expenses
and other current assets, partially offset by net earnings and, for the period
ended June 30, 2001, increases in accounts payable. The percentage increase of
our accounts receivable was greater than the percentage increase of our revenue
primarily as a result of extended payment terms that we grant to certain of our
significant customers to which sales increased at a greater rate than our
aggregate sales. We have not, however, experienced any material bad debt
write-offs and we do not, generally, issue our customers a right of a return
with respect to delivered products. The percentage increase in our inventory,
which increased primarily as a result of our increase in sales volume, was less
than the percentage increase in our revenue. The cash used in operations was
financed through cash flow and from financing activities, primarily proceeds
from existing credit facilities and, for the period ended June 30, 2001, our
underwritten public offering which we completed in August and September 2000.
Net cash used in investing activities for the year ended June 30, 2001 was
approximately $4,084,000 as compared with $677,000 in the fiscal year ended June
30,2000 and $667,000 in the fiscal year ended June 30, 1999. Our investing
activities during the fiscal year ended June 30,2001 related to


                                      -20-
<PAGE>

continued expenditures for fixed assets including the purchase from Snake River
Cheese, L.L.C. of land and building located in Blackfoot, Idaho, and capital
equipment utilized in our California and New York manufacturing facilities.
Investing activities during the fiscal year ended June 30, 2000 related to
continued expenditures for fixed assets including capital equipment for our
Manteca and Ogdensburg manufacturing facilities. We intend to finance any
additional significant capital expenditures through operating leases. As a
result, at June 30, 2001, we had cash of approximately $610,000, as compared to
approximately $950,000 at June 30, 2000 and $358,000 at June 30, 1999.

          In May, 1999, our Board of Directors approved a stock repurchase
program to acquire up to $3,200,000 of our common stock. As of June 30, 2001, we
have repurchased 224,877 shares of our common stock for a cost of approximately
$1,548,000.

          We have a revolving credit facility with several commercial banks. In
September 2001, the line of credit under this facility was increased to
$130,000,000 through February 15, 2004. The rate of interest on amounts borrowed
under the revolving credit facility is the adjusted LIBOR plus 175 basis points.
The interest rate as of June 30, 2001 was 7.5% per annum. The facility is
collateralized by substantially all existing and acquired assets as defined in
the credit facility, and is guaranteed by our subsidiaries and the pledge of all
of the stock of our subsidiaries. Advances under this credit facility are
limited to 85.0% of eligible accounts receivable, and 60.0% of most inventory,
as defined in the agreement. The credit facility agreement contains restrictive
covenants, including the maintenance of consolidated net worth and the
maintenance of leverage and fixed charge ratios, as defined in the agreement,
and a restriction on dividends to common shareholders. As of June 30, 2001, we
were in compliance with these covenants. The credit facility agreement further
provides that the loss of services of Mark Cocchiola may be deemed an event of
default upon which the principal amount borrowed under the facility together
with accrued interest and all other payment obligations may become immediately
due and payable. At June 30, 2001, our total outstanding debt to the banks was
approximately $99,265,000.

          In August 2000, we completed an underwritten public offering for
shares of our common stock of which 1,100,000 shares were sold by us and 100,000
shares were sold by certain selling shareholders at a public offering price of
$8.00 per share. Gross proceeds of the shares sold by us were $8,800,000 and we
received net proceeds of approximately $7,404,000. We received no proceeds from
the shares sold by the selling shareholders. In addition, in association with
the public offering, the underwriters were granted an option to purchase up


                                      -21-
<PAGE>

to an additional 80,000 shares of common stock from us and 100,000 shares of
common stock from the selling shareholders to cover over-allotments.

          On September 15, 2000 the underwriters exercised the over-allotment
option. Gross proceeds of the over-allotment shares sold by us were $640,000 and
we received net proceeds of $570,000. We received no proceeds from the shares
sold by the selling shareholders.

          In March 1998, we entered into a Loan and Security Agreement with
Albion Alliance Mezzanine Fund, L.P. and the Equitable Life Assurance Society of
the United States as the lenders, pursuant to which $10,500,000 was loaned to
us. The loan is unsecured and is subordinated to the revolving credit facility
discussed above. The loan bears interest at 16.5% per annum. Interest is payable
monthly at a rate of 12.0% with the balance deferred until February 1, 2003 when
it is due in full. The loan is payable in three installments of the principal
amount of $3,500,000, together with accrued and unpaid interest thereon, on each
March 1, beginning in the year 2004. The Loan and Security Agreement provides
that upon our loss of the services of Mark Cocchiola, the lenders could require
us to repurchase the principal amount of the subordinated loan. In addition, in
connection with the execution and delivery of the Loan and Security Agreement,
we delivered to the lender a warrant to purchase 105,000 shares of our common
stock at $4.125 per share, the market price at the date of the agreement. The
warrant is exercisable until March 1, 2008. The warrant was exercised pursuant
to a cashless exercise in July 2001.

          In March, 1996, we purchased our Paterson, New Jersey production
facility which we previously had leased. The purchase was financed through a
mortgage on the property. Proceeds of the loan were $1,050,000, of which
$686,250 was used to pay the purchase price for the facility. The balance of the
proceeds was used to complete the expansion of a 7,800 square foot refrigerated
storage facility. The five year note which bore interest at 8.51% per annum was
being amortized at a fifteen year rate and required a balloon payment at the end
of year five of approximately $840,000. On March 29, 1999 we refinanced the
mortgage on our Paterson facility for the principal amount of $929,573. The
seven year note which bears interest at 7.85% per annum is being amortized at a
fifteen year rate and requires a balloon payment at the end of year seven of
approximately $501,000. At June 30, 2001, we had an outstanding obligations


                                      -22-
<PAGE>

of approximately $815,000 under the mortgage for the Paterson facility.

          We believe that cash flows from operating activities and borrowings
available under our revolving credit facility will be sufficient to meet our
anticipated cash needs for working capital and capital expenditures until at
least June 30, 2002. Thereafter, we may need to raise additional funds to fund
our operations and potential acquisitions, if any. Any such additional
financing, if needed, might not be available on reasonable terms or at all.

Foreign Currency

          We are subject to various risks inherent in dependence on foreign
sources of supply, including economic or political instability, shipping delays,
fluctuations in foreign currency exchange rates, custom duties and import quotas
and other trade restrictions, all of which could have a significant impact on
our ability to obtain supplies and deliver finished products on a timely and
competitive basis. We have no material hedged monetary assets, liabilities or
commitments denominated in currencies other than the United States dollar.

Effect of New Accounting Pronouncements

          In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) 133, "Accounting for
Derivative Instruments and Hedging Activities. SFAS 133 standardizes accounting
and reporting for derivative instruments and for hedging activities. This
statement was adopted for our 2001 fiscal year. SFAS 133 did not have any
significant effect on our financial statements.

          In July 2001, SFAS 141, Business Combinations, and SFAS 142, Goodwill
and other Intangible Assets, were issued. SFAS 142 addresses financial
accounting and reporting for acquired goodwill and other intangible assets. SFAS
142 requires, among other things, that companies no longer amortize goodwill,
but instead test goodwill for impairment at least annually. SFAS 142 is required
to be applied for fiscal years beginning after December 15, 2001. Currently, we
have not recorded any goodwill and we intend to assess how the adoption of SFAS
141 and SFAS 142 will impact our financial position and results of operations
with respect to any future acquisition we may make.


                                      -23-
<PAGE>

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

          The carrying amounts of financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities,
approximate fair value because of the current nature of these instruments. The
carrying amounts reported for revolving credit and long-term debt approximate
fair value because the interest rates on these instruments are subject to
changes with market interest rates.

Item 8. Financial Statements and Supplementary Data

          The Financial Statements and Supplementary Data of the Company are
included following Part IV of this report.

Item 9. Changes in and Disclosure with Accountants on Accounting and Financial
        Disclosure

          None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

     Our current directors and executive officers are as follows:

Name                      Age   Position with Company
----                      ---   ---------------------
Mark Cocchiola             44   Chairman of the Board, Chief Executive Officer
                                and President
Steven Venechanos          41   Chief Financial Officer, Secretary and Director
Thomas Egan                59   Senior Vice President
Anthony Distinti           81   Vice President
Marco Cocchiola            76   Director


                                      -24-
<PAGE>

Dr. Rudolph Acosta, Jr.    45   Director
Paul DeSocio               58   Director
Barry S. Rutcofsky         43   Director

     Mark Cocchiola has been President and a director of Suprema Specialties,
Inc. since our inception in 1983 and Chairman of the Board and Chief Executive
Officer since February 1991. Mark Cocchiola is the son of Marco Cocchiola.

     Steven Venechanos has been employed by Suprema since April 1994 and became
Chief Financial Officer and Secretary of Suprema Specialties, Inc. in April
1995. He was appointed a director of Suprema Specialties, Inc. in September
2001. From June 1990 until joining Suprema, he was employed in a variety of
positions at Breed Technologies, a manufacturer of airbag sensors.

     Thomas Egan has been Vice President of Suprema Specialties, Inc. since May
1993 and Senior Vice President since June 1995. From May 1992 through May 1993,
he was Sales Manager of Blue Ridge Farms, a salad manufacturer. From October
1990 through May 1992, Mr. Egan was President of TEF Sales Corp., a sales and
marketing consulting firm specializing in the cheese importing business.

     Anthony Distinti has been Vice President of Human Resources of Suprema
Specialties, Inc. since November 1997. Mr. Distinti has been employed in the
food industry most of his life in various capacities and has more than forty
years experience in human resources.

     Marco Cocchiola has been a director of Suprema Specialties, Inc. since
February 1991 and Operations Manager since our inception in 1983. Mr. Cocchiola
was Secretary of Suprema from February 1991 to June 1993. Marco Cocchiola is the
father of Mark Cocchiola.

     Rudolph Acosta, Jr., M.D. has been a director of Suprema Specialties, Inc.
since August 1993. He has been engaged in the private practice of medicine since
August 1986.

     Paul DeSocio has been a director of Suprema Specialties, Inc. since August
1993. He has been the President and a director of Autoprod, Inc., a manufacturer
of food packaging machinery since May 1989. From 1980 through May 1989, Mr.
DeSocio was a Vice President of Autoprod, Inc.


                                      -25-
<PAGE>

     Barry S. Rutcofsky has been a director of Suprema Specialties, Inc. since
February 2001. He has served as an Executive Vice President of Take-Two
Interactive Software, Inc., a developer, publisher and distributor of
interactive software games since May 2001. He was Co-Chairman of the Board of
Take Two Interactive, Inc. from July 2000 to May 2001 and was President of
Take-Two Interactive from August 1999 to July 2000. Prior to joining Take-Two,
Mr. Rutcofsky was a partner of the New York law firm of Tenzer Greenblatt LLP
(now known as Blank Rome Tenzer Greenblatt LLP). Mr. Rutcofsky joined Tenzer
Greenblatt LLP in April 1987.

     Paul Lauriero, a director and Executive Vice President and a co-founder of
Suprema Specialties, Inc. passed away on August 27, 2001. Mr. Lauriero was
primarily responsible for overseeing the procurement of raw materials for
production and the general operations of our facilities. Mark Cocchiola has
assumed these responsibilities on an interim basis. We cannot, at this time,
determine the impact of the loss of Mr. Lauriero's services on our operations.
We are the beneficiary of a key-man life insurance policy we had obtained on the
life of Mr. Lauriero in the amount of $1.0 million, and we anticipate receiving
the proceeds from this policy.

     Our directors are elected at the annual meeting of shareholders to hold
office until the annual meeting of shareholders for the ensuing year or until
their successors have been duly elected and qualified.

     Officers are elected annually by our directors and serve at the discretion
of the Board.

Compensation of Directors

     Non-employee directors receive compensation in the amount of $500 for each
meeting attended in person and $250 for each meeting attended by telephone
conference call for serving on the Board. Directors are reimbursed for all
out-of-pocket expenses incurred in attending Board meetings.

     In addition, under our 1991 and 1998 stock option plans and 1999 stock
incentive plan, non-employee directors, other than directors who become members
of a stock option committee appointed by our Board pursuant to a stock option or
incentive plan, are eligible to be granted non-qualified stock options.
Directors who are employees, and are not members of a stock option committee,
are eligible to be granted incentive stock


                                      -26-
<PAGE>

options and non-qualified stock options under our stock option plans. Our Board
or the compensation committee of the Board has discretion to determine the
number of shares subject to each incentive stock option, the exercise price and
other terms and conditions thereof, but their discretion as to the exercise
price, the term of each incentive stock option and the number of incentive stock
options that may vest in any year, is limited by the terms of the stock option
or incentive plans and the Internal Revenue Code of 1986, as amended. In
addition, the 1999 stock incentive plan provides for the grant of other
stock-based awards as may be determined by our Board or the compensation
committee.

Board Committees

     We have established a compensation committee that is currently composed of
Dr. Rudolph Acosta and Mr. Paul DeSocio. The function of the compensation
committee is to evaluate and determine the compensation of our executive
officers pursuant to recommendations made by Mark Cocchiola, our Chief Executive
Officer.

     We have established an audit committee that is currently composed of
Messrs. DeSocio and Rutcofsky and Dr. Acosta. The function of the audit
committee is to review and monitor our corporate financial reporting, external
audits, internal control functions and compliance with laws and regulations that
could have a significant effect on our financial condition or results of
operations. In addition, the audit committee has the responsibility to consider
and recommend the appointment of, and to review fee arrangements with, our
independent auditors.


                                      -27-
<PAGE>

Item 11. Executive Compensation

     Summary Compensation. The following table discloses compensation awarded by
Suprema for the fiscal years ended June 30, 2001, 2000 and 1999, to our Chief
Executive Officer, Executive Vice President, Senior Vice President, Chief
Financial Officer and Vice President, the "Named Executives," who are the only
executive officers whose salary and bonus exceeded $100,000 during the fiscal
year ended June 30, 2001.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                Annual Compensation                Long Term
                                        -----------------------------------      Compensation
                                                                                 ------------
                                                                                   Number of
                                                                                   Securities
                                                                                   Underlying        All Other
Name and Principal Position             Year        Salary          Bonus           Options        Compensation(1)
---------------------------             ----        ------          -----           -------        ---------------
<S>                                     <C>        <C>             <C>               <C>               <C>
Mark Cocchiola, Chairman of the         2001       $250,000        $706,984          100,000           $17,716
Board, Chief Executive Officer and      2000        250,000         508,594          100,000            15,615
President                               1999        252,700         324,201           50,000            15,010

Paul Lauriero, Executive Vice           2001        250,000         706,984          100,000            16,616
President(2)                            2000        250,000         508,594          100,000            13,679
                                        1999        252,700         324,201           50,000            12,648

Thomas Egan, Senior Vice President      2001        164,903              --           10,000             6,000
                                        2000        153,750              --           15,000             9,196
                                        1999        133,077              --           30,000             6,000

Steven Venechanos, Chief Financial      2001        154,807          60,000           92,000             6,000
Officer and Secretary                   2000        153,750              --           25,000            13,500
                                        1999        120,000              --           30,000             6,000

Anthony Distini, Vice President         2001        125,000          20,000               --                --
                                        2000        119,731              --               --                --
                                        1999         96,500              --               --                --
</TABLE>

----------

(1)  Consists of automobile allowance, medical insurance premium reimbursement
     and compensation paid in lieu of vacation.

(2)  Mr. Lauriero passed away on August 27, 2001. Mark Cocchiola has assumed the
     duties previously performed by Mr. Lauriero on an interim basis.


                                      -28-
<PAGE>

     Option Grants in Last Fiscal Year. The following table discloses
information concerning options granted in fiscal year 2001 to the Named
Executives. The options granted to Mark Cocchiola and Mr. Lauriero were
exercisable in full from the date of grant. The options granted to Mr. Egan and
Mr. Venechanos vest in three annual installments commencing one year from the
original date of grant of the options.

<TABLE>
<CAPTION>
                                                      Individual Grants
                               ----------------------------------------------------------------
                                                  Percent of
                               Number of          Total Options                                      Potential Realizable
                               Securities         Granted to       Exercise                         Value At Assumed Annual
                               Underlying         Employees in      Price                            Rates of Stock Price
Name                           Options Granted    Fiscal Year       ($/Sh)      Expiration Date  Appreciation for Option Term
----                           ---------------    -----------       ------      ---------------  ----------------------------
                                                                                                       5%             10%
                                                                                                 -------------   ------------
<S>                                <C>                 <C>           <C>            <C>   <C>       <C>           <C>
Mark Cocchiola                     100,000             25.2%         $7.50          01/02/11        $471,671      $1,195,307
Paul Lauriero                      100,000             25.2           7.50          01/02/11         471,671       1,195,307
Thomas Egan                         10,000              2.6           7.50          01/02/11          47,167         119,531
Steven Venechanos                   92,000             23.2           7.50          01/02/11         198,101       1,099,685
Anthony Distinti                        --               --             --                --              --              --
</TABLE>

     Amounts reported in the "potential realizable value" columns above are
hypothetical values that may be realized upon exercise of the options
immediately prior to the expiration of their term, calculated assuming
appreciation at the indicated annual rate compounded annually for the entire
term of the option (ten years). The 5% and 10% assumed rates of appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our future common stock price. The gains
shown are net of the option exercise price, but do not include deductions for
taxes or other expenses associated with the exercise of the option or the sale
of the underlying shares.

     Aggregated Option Exercises and Fiscal Year-End Option Values. The
following table sets forth information concerning the number of options owned by
the Named Executives and the value of unexercised stock options held by the
Named Executives as of June 30, 2001. No stock options were exercised by the
Named Executives during fiscal year 2001. The year-end values in the table
represents the difference between the exercise


                                      -29-
<PAGE>

price of such options and the fiscal year-end fair market value of our common
stock. The last sale price, or fair market value, of our common stock on June
29, 2001, the last trading day prior to June 30, 2001, was $14.75 per share.

<TABLE>
<CAPTION>
                                                                  Number of Securities             Value of Unexercised
                                                             Underlying Unexercised Options        In-the-Money Options
                                                                    at June 30, 2001              at June 30, 2001($)
                                                             ----------------------------      ----------------------------
                              Shares
                              Acquired on     Value
Name                          Exercise (#)    Realized ($)   Exercisable    Unexercisable      Exercisable    Unexercisable
----                          ------------    ------------   -----------    -------------      -----------    -------------
<S>                                  <C>             <C>       <C>             <C>             <C>              <C>
Mark Cocchiola                       --              --        475,000              --          4,603,853              --
Paul Lauriero                        --              --        455,000              --          4,373,313              --
Thomas Egan                          --              --         90,000          30,000          1,005,760         331,631
Steven Venechanos                    --              --        131,334         118,666          1,466,663       1,082,140
Anthony Distinti                     --              --         10,000              --            115,000              --
</TABLE>

Employment Agreements

Mark Cocchiola has entered into an employment agreement with us that currently
expires in May 2006 and which may be automatically extended for one-year periods
after the initial term. The agreement provides for the full-time employment of
Mr. Cocchiola at an annual salary of $250,000 and an annual bonus equal to 5% of
our pre-tax profits in excess of $650,000 for the preceding year. Mr. Cocchiola
received a bonus of $324,201 in fiscal year 1999, $508,574 in fiscal year 2000
and $706,984 in fiscal year 2001. The agreement provides that Mr. Cocchiola will
not compete with Suprema during the term of his employment and for a period of
one year following termination by either us or Mr. Cocchiola for any reason. The
agreement also provides that if Mr. Cocchiola's employment is terminated under
certain circumstances, including a "change of control," he will be entitled to
receive severance pay equal to the higher of (i) $1,250,000 or (ii) five times
the total compensation paid to him by Suprema (including salary, bonus,
perquisites and the value of options granted to Mr. Cocchiola) during the 12
month period prior to the date of termination.


                                      -30-
<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

          The following table sets forth certain information as of September 24,
2001, based on information obtained from the persons named below, with respect
to the beneficial ownership of shares of Common Stock by (i) each person known
by the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock, (ii) each of the Named Executives, (iii)
each of the Company's directors and (iv) all executive officers and directors of
the Company as a group:

                                           Amount and Nature     Percentage of
         Name and Address of                 of Beneficial        Outstanding
         Beneficial Owner (1)                Ownership (2)      Shares Owned (3)
         --------------------                -------------      ----------------

Mark Cocchiola                               1,100,635(4)             17.4
Steven Venechanos                              138,000(5)              2.4
Thomas Egan                                     96,666(5)              1.7
Anthony Distinti                                10,000(5)                *
Marco Cocchiola                                 56,666(6)                *
Dr. Rudolph Acosta                               5,000(5)(9)             *
Paul DeSocio                                     5,000(5)                *
Barry S. Rutcofsky                                  --                  --
Estate of Paul Lauriero(7)                     675,619(8)             10.9
FMR Corp                                       506,100(10)             8.8
Wellington Management Company, LLP             417,500(11)             7.3
Oberweis Asset Management, Inc.
   James D. Oberweis                           316,000(12)             5.5
Special Situations Fund III, L.P.
   Special Situations Cayman Fund, L.P.
   Austin W. Marxe and
   David Greenhouse                            371,451(13)             6.5
All executive officers and directors
as a group (eight persons)                   1,411,967(14)            21.3

---------------

*    Less than one percent.

(1)  Unless otherwise noted, the address of each beneficial owner is in care of
     Suprema Specialties, Inc., 510 East 35th Street, Paterson, New Jersey
     07543.


                                      -31-
<PAGE>

(2)  Unless otherwise noted, we believe that all persons referred to in the
     table have sole voting and investment power with respect to all shares of
     our Common Stock reflected as beneficially owned by them.

(3)  Options to purchase our Common Stock which are currently exercisable or
     become exercisable by the listed person within 60 days are included in the
     number of shares beneficially owned by the listed person and that person's
     percentage ownership calculation.

(4)  Includes (i) 575,000 shares that may be purchased upon exercise of
     exercisable options owned by Mr. Cocchiola, (ii) 8,333 shares that may be
     purchased upon exercise of exercisable options owned by Mr. Cocchiola's
     wife and (iii) 2,000 shares held of record by Mr. Cocchiola's wife.

(5)  Represents shares that may be purchased upon exercise of exercisable
     options.

(6)  Includes 50,000 shares that may be purchased upon exercise of exercisable
     options.

(7)  Paul Lauriero, formerly an officer and director of Suprema passed away on
     August 27, 2001. The shares of our common stock previously beneficially
     owned by Mr. Lauriero are currently owned and administered by his estate.

(8)  Includes (i) 455,000 shares that may be purchased upon the exercise of
     exercisable options, (ii) 22,539 shares held of record by Mr. Lauriero's
     wife and (iii) 45,079 shares held of record by Mr. Lauriero's children.

(9)  Does not include 800 shares owned by Dr. Acosta's children, with respect to
     which Dr. Acosta disclaims any beneficial interest.

(10) According to a Schedule 13G filed with the Securities and Exchange
     Commission, the shares are owned by Fidelity Low Priced Stock Fund, an
     investment company registered under the Investment Company Act of 1940
     ("Fidelity Fund"). Fidelity Management Research Company ("Fidelity
     Management"), a wholly owned subsidiary of FMR Corp. is the investment
     adviser to Fidelity Fund. Edward C. Johnson 3d the Chairman of FMR Corp.,
     FMR Corp. through its control of Fidelity Management and Fidelity
     Management each has sole investment power over the shares. The address for
     each of FMR Corp., Fidelity Management and Mr. Johnson is 82 Devonshire
     Street, Boston, Massachusetts 02109.


                                      -32-
<PAGE>

(11) According to a Schedule 13G filed with the Securities and Exchange
     Commission, the shares were acquired by and held for the accounts of
     Wellington Trust Company, NA, a wholly owned subsidiary of Wellington
     Management Company, LLP ("Wellington"). Wellington has shared investment
     power with respect to 417,000 shares and shared voting power with respect
     to 360,100 shares. The address for Wellington is 75 State Street, Boston,
     Massachusetts 02109.

(12) According to a Schedule 13G filed with the Securities and Exchange
     Commission, the shares are held by The Oberweis Fund for which Oberweis
     Asset Management, Inc. ("OAM"), an investment adviser registered under
     Section 203 of the Investment Advisors Act of 1940, acts as investment
     advisor. The Oberweis Fund has delegated shared voting and investment power
     over the shares to OAM. James D. Oberweis is the principal shareholder of
     OAM. The address for OAM and Mr. Oberweis is 951 Ice Cream Drive, Suite
     200, North Aurora, Illinois 60542.

(13) According to a Schedule 13G filed with the Securities and Exchange
     Commission, 283,451 shares are owned by Special Situations Fund III, L.P.,
     a Delaware limited partnership ("Special Fund III") and 88,000 shares are
     owned by Special Situations Cayman Fund, L.P., a Cayman Islands limited
     partnership ("Special Cayman Fund"). August W. Marxe and David Greenhouse
     serve as officers, directors and members or principal shareholders of (i)
     MGP Advisers Limited Partnership, a Delaware limited partnership ("MGP")
     and the general partner and investment to Special Fund III, and (ii) AWM
     Investment Company, Inc., a Delaware corporation, the general partner of
     MGP and the general partner and investment advisor to Special Cayman Fund.
     Messrs. Marxe and Greenhouse share voting and investment power over the
     shares held by each of Special Fund III and Special Cayman Fund. Their
     address is 153 East 53rd Street, New York, New York 10022.

(14) Includes an aggregate of 887,999 shares issuable upon exercise of options
     beneficially owned by the Company's executive officers and directors.

Item 13. Certain Relationships and Related Transactions

          Not Applicable.


                                      -33-
<PAGE>

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  1.   Financial Statements                                              Page
                                                                            ----

     Index to Financial Statements                                           F-1

     Report of Independent Certified Public Accountants                      F-2

     Consolidated Balance Sheets - June 30, 2001 and 2000                    F-3

     Consolidated Statements of Earnings - For the
          Years Ended June 30, 2001, 2000 and 1999                           F-4

     Consolidated Statements of Stockholders' Equity -
          For the Years Ended June 30, 2001, 2000
          and 1999                                                           F-5

     Consolidated Statements of Cash Flows - For the
          Years Ended June 30, 2001, 2000 and 1999                           F-6

     Notes to Consolidated Financial Statements                       F-7 - F-19

(a)  2.   Financial Statement Schedules

     Report of Independent Certified Public Accountants
          on Supplemental Schedules                                         F-20

     Schedule II - Valuation and Qualifying Accounts
          and Reserves - For the Years Ended June 30,
          2001, 2000 and 1999                                               F-21


                                      -34-
<PAGE>

Exhibits

3.1    Certificate of Incorporation as amended in February 1991. (1)

3.2    Amendment to Certificate of Incorporation. (6)

3.3    Amendment to Certificate of Incorporation. (16)

3.4    Amended and Restated By-Laws. (16)

4.1    Rights Agreement dated as of March 6, 1996, between the Company and
       Continental Stock Transfer & Trust Company. (7)

10.1   1991 Stock Option Plan. (1)+

10.2   Amended and Restated Employment Agreement by and between the Company and
       Mark Cocchiola. (16)+

10.3   Revolving Loan, Guaranty and Security Agreement by and among the Company,
       Suprema Specialties West, Inc. and National Westminster Bank NJ dated as
       of February 15, 1994, as amended. (9)

10.4   Lease between DeGroot & Sons, a California partnership and the Company
       dated as of December 13, 1994.(17)

10.5   Lease between Cape Vincent Milk Producers Cooperative, Inc., Marble City
       Bulk Milk Producers Cooperative, Inc., Northern New York Bulk Milk
       Producers Cooperative, Inc., Seaway Bulk Milk Producers Cooperative Inc.,
       and the Company, dated May 21, 1996. (5)

10.6   Master Equipment Lease Agreement No. 32399 between Fleet Capital
       Corporation and the Company dated May 29, 1997. (4)

10.7   Securities Purchase Agreement, dated as of March 9, 1998, between the
       Company and Alliance Capital Management, L.P. (without exhibits). (3)

10.8   Note Agreement, dated as of March 9, 1998, between the Company and each
       of Albion Alliance Mezzanine Fund, L.P. and The Equitable Life Assurance
       Society of the United States. (3)

10.9   Warrant Agreement, dated as of March 9, 1998, between the Company and
       Albion Alliance Mezzanine Fund, L.P. and the Equitable Life Assurance
       Society of the United States. (3)

10.10  Second Amended and Restated Revolving Loan, Guaranty and Security
       Agreement among the Company, Fleet Bank, N.A. (as successor to Natwest
       Bank N.A. and National Westminster Bank, NJ), Sovereign Bank, Suprema
       Specialties West, Inc. and Suprema Northeast, Inc., dated as of December
       16, 1998. (2)

10.11  Mortgage and Security Agreement by the Company to Fleet Bank, N.A., as
       agent, dated December 16, 1998. (2)

10.12  Third Modification Agreement between the Company and Fleet Bank, N.A.
       (formerly known as Natwest Bank N.A.), dated December 16, 1998. (2)


                                      -35-
<PAGE>

10.13  First Amendment to the Second Amended and Restated Revolving Loan,
       Guaranty and Security Agreement between the Company, Fleet Bank, N.A.,
       Sovereign Bank, Suprema Specialties West, Inc. and Suprema Specialties
       Northeast, Inc., dated May 28, 1999. (2)

10.14  Second Amendment to the Second Amended and Restated Revolving Loan,
       Guaranty and Security Agreement between the Company, Fleet Bank, N.A.,
       Sovereign Bank, Suprema Specialties West, Inc. and Suprema Specialties
       Northeast, Inc., dated June 30, 1999. (2)

10.15  Third Amendment to the Second Amended and Restated Revolving Loan,
       Guaranty and Security Agreement between the Company, Fleet Bank, N.A.,
       Sovereign Bank, Suprema Specialties West, Inc. and Suprema Specialties
       Northeast, Inc., dated July 22, 1999. (2)

10.16  Third Amended and Restated Revolving Loan, Guaranty and Security
       Agreement among the Company, Fleet Bank, N.A. (as successor to Natwest
       Bank N.A. and National Westminster Bank NJ), Sovereign Bank, Mellon Bank,
       N.A., Suprema Specialties West, Inc., and Suprema Specialties Northeast,
       Inc., dated as of September 23, 1999. (11)

10.17  Amendment No. 1 and Assignment Agreement dated as of March 10, 2000 to
       Third Amended and Restated Revolving Loan, Guaranty and Security
       Agreement among Fleet Bank, National Association, Sovereign Bank, Mellon
       Bank, N.A., European American Bank, PNC Bank, National Association,
       National City Bank, Suprema Specialties, Inc., Suprema Specialties West,
       Inc. and Suprema Specialties Northeast, Inc. (10)

10.18  1998 Stock Option Plan. (13)+

10.19  1999 Stock Incentive Plan. (14)+

10.20  Pledge Agreement between the Company and Fleet Bank, N.A. dated May 31,
       2000. (15)

10.21  Increase Supplement dated as of February 15, 2001 to Third Amended and
       Restated Revolving Loan, Guaranty and Security Agreement among Fleet
       Bank, N.A., Sovereign Bank, Mellon Bank, N.A., European American Bank,
       N.A., PNC Bank, N.A., National City Bank, Suprema Specialties Northeast,
       Inc., and Suprema Specialties Northwest, Inc. (8)

10.22  Amendment No. 2 to Third Amendment and Restated Revolving Loan, Guaranty
       and Security Agreement among Fleet Bank, N.A., Sovereign Bank, Mellon
       Bank, N.A., European American Bank, N.A., PNC Bank, N.A., National City
       Bank, Suprema Specialties Northeast, Inc., and Suprema Specialties
       Northwest, Inc. (9)

10.23  Asset Purchase Agreement dated as of November 27, 2000 by and among Snake
       River Cheese, L.L.C. and Suprema Specialties Northwest, Inc. (9)

10.24  Master Lease Agreement dated December 28, 2000 by and between PNC Leasing
       and Suprema Specialties Northwest, Inc. and supplement. (9)


                                      -36-
<PAGE>

21   Subsidiaries of the Company. (16)

23   Consent of BDO Seidman, LLP.

-----------------

(1)  Incorporated by reference to the exhibit filed with the Company's
     registration statement on Form S-18, SEC File No. 33-39076-NY.

(2)  Incorporated by reference to the exhibit filed with the Company's Annual
     Report on Form 10-K for the year ended June 30, 1999.

(3)  Incorporated by reference to the exhibit filed with the Company's Annual
     Report on Form 10-K, as amended, for the year ended June 30, 1998.

(4)  Incorporated by reference to the exhibit filed with the Company's Annual
     Report on Form 10-K for the year ended June 30, 1997.

(5)  Incorporated by reference to the exhibit filed with the Company's Annual
     Report on Form 10-K for the fiscal year ended June 30, 1996.

(6)  Incorporated by reference to the exhibit filed with the Company's Annual
     Report on Form 10-K for the year ended June 30, 1994.

(7)  Incorporated by reference to the exhibit filed with the Company's
     registration Current Report on Form 8-K dated March 18, 1996.

(8)  Incorporated by reference to the exhibit files with the Company's Quarterly
     Report on Form 10-Q for the quarter ended March 31, 2001.

(9)  Incorporated by reference to the exhibit filed with the Company's Quarterly
     Report on Form 10-Q for the quarter ended December 31, 2000.

(10) Incorporated by reference to the exhibit filed with the Company's Quarterly
     Report on Form 10-Q for the quarter ended March 31, 2000.

(11) Incorporated by reference to the exhibit filed with the Company's Quarterly
     Report on Form 10-Q for the quarter ended September 30, 1999.

(12) Incorporated by reference to the exhibit filed with the Company's Quarterly
     Report on Form 10-Q for the quarter ended December 31, 1995.

(13) Incorporated by reference to Exhibit A filed with the Company's Definitive
     Proxy Statement dated December 30, 1998.

(14) Incorporated by reference to Exhibit A filed with the Company's Definitive
     Proxy Statement dated October 22, 1999.

(15) Incorporated by reference to the exhibit filed with the Company's
     Registration Statement on Form S-2, SEC File no. 333-36716.

(16) Incorporated by reference to the exhibit filed with the Company's
     Registration Statement on Form S-2, SEC file no. 333-69514


                                      -37-
<PAGE>

(17) Incorporated by reference to the exhibit filed with the Company's
     Registration Statement on Form S-2, SEC file no. 333-3862

+    Denotes management contract, plan or arrangement.

(b)  Report on Form 8-K.

     No reports on Form 8-K were filed by the Company during its fiscal quarter
ended June 30, 2001.


                                      -38-
<PAGE>

                                     PART IV

               Suprema Specialties, Inc. and Subsidiaries Index to
                        Consolidated Financial Statements

        Report of Independent Certified Public Accountants                   F-2

        Consolidated Balance Sheets as of June 30, 2000 and 2001             F-3

        Consolidated Statements of Earnings for the Fiscal Years
            Ended June 30, 1999, 2000 and 2001                               F-4

        Consolidated Statements of Shareholders' Equity for the
            Fiscal Years Ended June 30, 1999, 2000 and 2001                  F-5

        Consolidated Statements of Cash Flows for the Fiscal Years
            Ended June 30, 1999, 2000 and 2001                               F-6

        Notes to Consolidated Financial Statements                      F-7-F-19


                                                                             F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Suprema Specialties, Inc.
Paterson, New Jersey

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Suprema
Specialties,  Inc.  and  Subsidiaries,  as of June 30,  2000 and  2001,  and the
related consolidated statements of earnings, shareholders' equity and cash flows
for each of the three years in the period ended June 30, 2001.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Suprema Specialties,
Inc.  and  Subsidiaries  as of June 30, 2000 and 2001,  and the results of their
operations  and their cash flows for each of the three years in the period ended
June 30, 2001, in conformity with accounting  principles  generally  accepted in
the United States of America.

/s/ BDO Seidman, LLP

BDO Seidman, LLP


Woodbridge, New Jersey

August 7, 2001


                                                                             F-2
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
      ===================================================================

<TABLE>
<CAPTION>
                                                                                 June 30,
                                                                      ------------------------------
                                                                           2000             2001
                                                                      -------------    -------------
<S>                                                                   <C>              <C>
                                   ASSETS
Current:
   Cash                                                               $     950,121    $     609,527
   Accounts receivable, net of allowances of $770,290 at
      June 30, 2000 and 2001, respectively                               62,326,908      101,882,264
   Inventories                                                           51,630,343       74,514,662
   Prepaid expenses and other current assets                                755,067          985,627
   Deferred income taxes                                                     89,000          308,000
                                                                      -------------    -------------
              TOTAL CURRENT ASSETS                                      115,751,439      178,300,080

PROPERTY, PLANT AND EQUIPMENT, net                                        7,181,208       10,560,513

OTHER ASSETS                                                              2,027,069        1,551,696
                                                                      -------------    -------------
                                                                      $ 124,959,716    $ 190,412,289
                                                                      =============    =============
                    LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
   Accounts payable                                                   $  13,989,065    $  26,434,121
   Current portion of capital leases                                        609,690          510,155
   Mortgage payable - current                                                53,574           57,785
   Income taxes payable                                                   1,539,000        2,587,759
   Accrued expenses and other current liabilities                         3,743,917        4,720,335
                                                                      -------------    -------------
              TOTAL CURRENT LIABILITIES                                  19,935,246       34,310,155

DEFERRED INCOME TAXES                                                       749,000          780,900

REVOLVING CREDIT LOAN                                                    65,887,000       99,265,262

SUBORDINATED DEBT                                                        10,500,000       10,500,000

LONG-TERM CAPITAL LEASES                                                  1,105,637          595,481

MORTGAGE PAYABLE                                                            814,920          757,661

OTHER LIABILITIES                                                                --        1,375,001
                                                                      -------------    -------------
                                                                         98,991,803      147,584,460
                                                                      -------------    -------------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
   Preferred stock, $.01 par value, 2,500,000 shares authorized:
     Series A redeemable convertible preferred stock;
     500,000 shares designated; none
     issued and outstanding at June 30, 2000 and 2001                            --               --
   Common stock $.01 par value; 50,000,000 shares authorized;
     4,655,564 and 5,867,920 shares issued and outstanding at
     June 30, 2000 and 2001, respectively                                    46,555           58,679
   Additional paid-in capital                                            11,365,207       19,444,319
   Retained earnings                                                     15,998,771       24,872,451
   Treasury stock at cost, 213,370 at June 30, 2000 and 224,877
     shares at June 30, 2001                                             (1,442,620)      (1,547,620)
                                                                      -------------    -------------
              TOTAL SHAREHOLDERS' EQUITY                                 25,967,913       42,827,829
                                                                      -------------    -------------
              TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              $ 124,959,716    $ 190,412,289
                                                                      =============    =============
</TABLE>


          See accompanying notes to consolidated financial statements.       F-3
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
      ===================================================================

<TABLE>
<CAPTION>
                                                            Years Ended June 30,
                                              -----------------------------------------------
                                                   1999             2000             2001
                                              -------------    -------------    -------------
<S>                                           <C>              <C>              <C>
Net sales                                     $ 176,281,035    $ 278,481,969    $ 420,363,142
Cost of sales                                   146,351,545      232,932,864      355,409,651
                                              -------------    -------------    -------------
              Gross margin                       29,929,490       45,549,105       64,953,491
                                              -------------    -------------    -------------
Expenses:
   Selling and shipping expenses                 14,045,503       21,892,885       31,360,045
   General and administrative expenses            4,421,124        6,913,721        8,770,662
                                              -------------    -------------    -------------
                                                 18,466,627       28,806,606       40,130,707
                                              -------------    -------------    -------------

Income from operations                           11,462,863       16,742,499       24,822,784
   Interest - net                                (4,328,838)      (5,920,618)     (10,033,104)
                                              -------------    -------------    -------------
Earnings before income taxes                      7,134,025       10,821,881       14,789,680
Income taxes                                      2,926,000        4,437,000        5,916,000
                                              -------------    -------------    -------------

Net earnings                                  $   4,208,025    $   6,384,881    $   8,873,680
                                              =============    =============    =============

Basic earnings per share                      $        0.93    $        1.44    $        1.63
                                              =============    =============    =============

Diluted earnings per share                    $        0.86    $        1.23    $        1.41
                                              =============    =============    =============

Basic weighted average shares outstanding         4,536,605        4,431,850        5,429,122
                                              =============    =============    =============

Diluted weighted average shares outstanding       4,883,685        5,185,809        6,294,250
                                              =============    =============    =============
</TABLE>


          See accompanying notes to consolidated financial statements.       F-4
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
   =========================================================================

<TABLE>
<CAPTION>
                                                Common stock            Additional           Treasury stock
                                         ---------------------------     paid-in       ---------------------------      Retained
                                            Shares         Amount        capital          Shares         Amount         earnings
                                         ------------   ------------   ------------    ------------   ------------    ------------
<S>                                         <C>         <C>            <C>                  <C>       <C>             <C>
Balance, June 30, 1998                      4,562,800   $     45,628   $ 11,243,347          78,370   $   (396,370)   $  5,405,865
Exercise of stock options and warrants          1,667             16          4,151              --             --
Exercise of warrants                           34,430            344           (344)             --             --              --
Net earnings                                       --             --             --              --             --       4,208,025
Acquisition of treasury stock                      --             --             --          78,370       (396,370)             --
                                         ------------   ------------   ------------    ------------   ------------    ------------
Balance, June 30, 1999                      4,598,897         45,988     11,247,154          78,370       (396,370)      9,613,890
Exercise of stock options and warrants         26,667            267        118,353              --             --              --
Exercise of warrants                           30,000            300           (300)             --             --              --
Net earnings                                       --             --             --              --             --       6,384,881
Acquisition of treasury stock                      --             --             --         135,000     (1,046,250)             --
                                         ------------   ------------   ------------    ------------   ------------    ------------
Balance, June 30, 2000                      4,655,564         46,555     11,365,207         213,370     (1,442,620)     15,998,771
Public offering of common stock             1,200,000         12,000      7,962,161              --             --              --
Exercise of stock options and warrants         12,356            124        116,951              --             --              --
Net earnings                                       --             --             --              --             --       8,873,680
Acquisition of treasury stock                      --             --             --          11,507       (105,000)             --
                                         ------------   ------------   ------------    ------------   ------------    ------------
Balance, June 30, 2001                      5,867,920   $     58,679   $ 19,444,319         224,877   $ (1,547,620)   $ 24,872,451
                                         ============   ============   ============    ============   ============    ============
</TABLE>


          See accompanying notes to consolidated financial statements.       F-5
<PAGE>

            SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS
===================================================================

<TABLE>
<CAPTION>
                                                                      Years Ended June 30,
                                                         -----------------------------------------------
                                                              1999             2000             2001
                                                         -------------    -------------    -------------
<S>                                                      <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings                                           $   4,208,025    $   6,384,881    $   8,873,680
  Adjustments to reconcile net earnings to net cash
    used in operating activities:
      Depreciation and amortization                            876,875        1,431,340        1,330,042
      Provision for doubtful accounts                          100,000          200,000               --
      Deferred income tax provision (recovery)                 122,000         (232,000)        (187,100)
   Changes in operating assets and liabilities:
        Accounts receivable                                (12,867,732)     (26,519,366)     (39,555,356)
        Inventories                                         (7,406,790)     (15,711,623)     (22,884,319)
        Prepaid expenses and other current assets               92,094         (159,044)        (230,560)
        Prepaid income taxes                                   235,348               --               --
        Other assets                                          (371,770)      (1,072,541)        (149,627)
        Accounts payable                                     4,653,677        1,865,966       12,445,056
        Income taxes payable                                 1,710,000         (171,000)       1,048,759
        Accrued expenses and other current liabilities         944,619        1,334,078          976,418
        Other liability                                             --               --        1,375,001
                                                         -------------    -------------    -------------
           Net cash used in operating activities            (7,703,654)     (32,649,309)     (36,958,006)
                                                         -------------    -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Payments for purchase of property and equipment             (667,270)        (676,600)      (4,084,347)
                                                         -------------    -------------    -------------
           Net cash used in investing activities              (667,270)        (676,600)      (4,084,347)
                                                         -------------    -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from revolving credit loan                       54,302,599       85,920,000      144,934,999
  Repayment of revolving credit loan                       (45,123,000)     (50,474,599)    (111,556,737)
  Principal payments of mortgage                               (47,182)         (49,194)         (53,048)
  Principal payments of capital leases                        (500,966)        (550,761)        (609,691)
  Proceeds from public offering (net)                               --               --        7,974,161
  Proceeds from exercise of stock options                        4,167          118,620          117,075
  Acquisition of treasury stock                               (396,370)      (1,046,250)        (105,000)
                                                         -------------    -------------    -------------
           Net cash provided by financing activities         8,239,248       33,917,816       40,701,759
                                                         -------------    -------------    -------------
NET INCREASE (DECREASE) IN CASH                               (131,676)         591,907         (340,594)
CASH, beginning of year                                        489,890          358,214          950,121
                                                         -------------    -------------    -------------
CASH, end of year                                        $     358,214    $     950,121    $     609,527
                                                         =============    =============    =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the year for:
      Interest                                           $   3,774,024    $   5,413,000    $   9,501,000
                                                         =============    =============    =============
      Income taxes                                       $     830,000    $   4,858,000    $   5,054,000
                                                         =============    =============    =============
</TABLE>


          See accompanying notes to consolidated financial statements.       F-6
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND BUSINESS DESCRIPTION

Suprema  Specialties,  Inc., a New York  corporation  incorporated on August 15,
1983,   and  its   wholly-owned   subsidiaries   ("Suprema"  or  the  "Company")
manufacture,  process and market a variety of premium,  gourmet  natural Italian
cheese products.  The Company operates in a single business segment. The Company
sells its  product  to food  service,  food  service  manufacturers,  and retail
customers. Sales to food service customers accounted for approximately 91%, 91%,
and 97% of the Company's  sales for the year ended June 30, 1999, 2000 and 2001,
respectively.  Sales to food  manufacturers  accounted for approximately 6%, 7%,
and 2% for the year ended June 30, 1999, 2000, and 2001, respectively.  Sales to
retail  customers  accounted for 3%, 2%, and 1% of net sales for the years ended
June 30, 1999, 2000, and 2001, respectively.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Consolidation Policy

The  consolidated  financial  statements  include the  financial  statements  of
Suprema Specialties, Inc. and its wholly-owned subsidiaries, Suprema Specialties
West, Inc.  ("West"),  Suprema  Specialties  Northeast,  Inc.  ("Northeast") and
Suprema Specialties Northwest, Inc. ("Northwest"). All intercompany transactions
and balances have been eliminated in consolidation.

Inventory

Inventories  are  valued  at the  lower  of cost  (determined  by the  first-in,
first-out method) or market.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is being provided
by use of the  straight-line  method  over  the  estimated  useful  lives of the
related  assets.  Leasehold  improvements  are amortized over the shorter of the
term of the lease,  including renewal options that are probable of exercise,  or
the useful  lives of the assets.  Equipment  under  capitalized  leases is being
amortized over the useful lives of the assets.

Long-Lived Assets

Long-lived  assets,  such as property,  plant and  equipment,  are evaluated for
impairment  when events or changes in  circumstances  indicate that the carrying
amount of the assets may not be recoverable  through the estimated  undiscounted
future cash flows from the use of these assets. When such impairment exists, the
related  assets will be written down to fair value.  No  impairment  losses have
been recorded in each of the three years in the period ended June 30, 2001.

Financing Costs

The Company  amortizes the deferred  financing costs incurred in connection with
the Company's borrowings over the life of the related indebtedness (3-10 years).
Such net costs  amounted to $1,734,494 and $1,209,000 at June 30, 2000 and 2001,
respectively.  These  amounts  are  included in other  current  assets and other
assets.

Revenue Recognition

The Company records revenues when products are shipped.  Customers  generally do
not have the right to return products shipped.


                                                                             F-7
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company  adopted  Emerging  Issue Task Force (EITF)  00-25,  "Vendor  Income
Statement  Characterization  of Consideration  from a Vendor to a Retailer." The
impact of adopting  this policy had an  immaterial  effect on the  Company's net
sales.

Shipping and Handling Costs

During  fiscal  year 2001,  the Company  adopted  EITF  00-10,  "Accounting  for
Shipping and Handling  Fees and Costs."  Shipping and handling  costs charged to
customers  are  included in the  Company's  net sales.  All other  shipping  and
handling  costs,  which  approximated  $3,000,000,  were  charged to selling and
shipping expenses.

Advertising Costs

The Company expenses advertising costs as incurred.

Stock-Based Compensation

The  Company  accounts  for its  stock  option  awards  to  employees  under the
intrinsic value based method of accounting  prescribed by Accounting  Principles
Board  Opinion No. 25,  "Accounting  for Stock Issued to  Employees."  Under the
intrinsic value based method,  compensation  cost is the excess,  if any, of the
quoted  market price of the stock at grant date or other  measurement  date over
the amount an employee must pay to acquire the stock.  The Company  provides pro
forma  disclosures of earnings and earnings per share as if the fair value based
method of  accounting  had been  applied as required by  Statement  of Financial
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-Based
Compensation".

Income Taxes

Income taxes are recorded using the liability method, which requires recognition
of deferred tax liabilities and assets for the expected future tax  consequences
of events that have been  included in the  financial  statements or tax returns.
Under this method,  deferred tax liabilities and assets are determined  based on
the  difference  between  the  financial  statement  and tax basis of assets and
liabilities  using  enacted  tax  rates in  effect  for the  year in  which  the
differences are expected to reverse.

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.

Financial Instruments

The  carrying  amounts  of  financial  instruments,   including  cash,  accounts
receivable,  accounts  payable and accrued  liabilities,  approximate fair value
because  of the  current  nature  of these  instruments.  The  carrying  amounts
reported for revolving  credit and long-term debt approximate fair value because
the  interest  rates on these  instruments  are  subject to changes  with market
interest rates or approximate rates for loans with similar terms and maturities.


                                                                             F-8
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Computation of Earnings Per Share

Basic earnings per share has been computed using the weighted  average number of
shares of common stock  outstanding.  Diluted  earnings  per share  includes the
assumed  exercise of stock options and warrants  using the treasury stock method
that could potentially dilute earnings per share.

Effect of New Accounting Pronouncements

In June 1998,  SFAS 133,  "Accounting  for  Derivative  Instruments  and Hedging
Activities,"  was issued.  SFAS 133, as amended by SFAS 137, was adopted for the
Company's  2001 fiscal year. The adoption of SFAS 133 did not have any effect on
the Company's financial statements.

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards (SFAS) No. 141. Business  Combinations and SFAS
No. 142,  Goodwill and Other  Intangible  Assets.  SFAS 142 addresses  financial
accounting and reporting for acquired goodwill and other intangible assets. This
SFAS requires,  among other things,  that companies no longer amortize goodwill,
but instead test goodwill for impairment at least annually. SFAS 142 is required
to be applied for fiscal years beginning after December 15, 2001. Currently, the
Company has not  recorded  any goodwill and will assess how the adoption of SFAS
141 and SFAS 142 will impact its financial position and results of operations in
any future acquisitions.

NOTE 3 - INVENTORIES

Inventories consist of the following:

                                                               June 30,
                                                       ------------------------
                                                           2000         2001
                                                       -----------  -----------
Raw materials                                          $11,872,836  $23,879,855
Finished goods                                          38,430,322   48,986,084
Packaging                                                1,327,185    1,648,723
                                                       -----------  -----------
                                                       $51,630,343  $74,514,662
                                                       ===========  ===========

NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

                                                               June 30,
                                                       ------------------------
                                                           2000         2001
                                                       -----------  -----------
Property and plant                                     $ 1,577,696  $ 3,220,497
Equipment                                                5,857,907    7,491,653
Leasehold improvements                                   1,102,952    1,951,592
Furniture and fixtures                                     215,015      227,832
Delivery equipment                                           2,739        2,639
Construction in progress                                   700,537      646,982
                                                       -----------  -----------
                                                         9,456,846   13,541,195
Less: Accumulated depreciation and amortization          2,275,638    2,980,682
                                                       -----------  -----------
                                                       $ 7,181,208  $10,560,513
                                                       ===========  ===========


                                                                             F-9
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

In May 1997, the Company entered into a sale-leaseback transaction whereby fixed
assets with a net book value of $10,824,082  were sold for $9,565,000 and leased
back under operating leases. In connection with this transaction,  $4,847,382 of
capital  leases were paid in full.  The  Company  incurred  costs of  $1,088,436
primarily  related to prepayment  penalties on the capital leases.  These direct
costs have been  included  in other  assets and are being  amortized  over eight
years, the life of the operating lease.

In December 2000, the Company entered into a sale-leaseback  transaction whereby
production  equipment  related to the Blackfoot  Idaho  facility with a net book
value of $4,500,000  was sold for  $6,000,000 and leased back under an operating
lease.  This  transaction  resulted  in a  gain  of  $1,500,000  which  will  be
recognized to income in proportion to rental  expense over 7 years,  the life of
the operating  lease.  The deferred gain as of June 30, 2001, of $1,375,001,  is
included in other liabilities.

Included in property, plant and equipment are plant and equipment acquired under
capital leases with an initial cost of $3,419,067 and  accumulated  amortization
of $1,125,654 and $1,466,274 as of June 30, 2000 and 2001, respectively.

NOTE 5 - INCOME TAXES

The provision for income taxes consists of the following:

                                              Fiscal Years Ended June 30,
                                         ------------------------------------
                                            1999         2000         2001
                                         ----------   ----------   ----------
Current:
   Federal                               $2,243,000   $3,735,000   $4,883,100
   State                                    561,000      934,000    1,220,000
                                         ----------   ----------   ----------
                                          2,804,000    4,669,000    6,103,100
                                         ----------   ----------   ----------
Deferred:
   Federal                                  104,000     (213,000)    (172,000)
   State                                     18,000      (19,000)     (15,100)
                                         ----------   ----------   ----------
                                            122,000     (232,000)    (187,100)
                                         ----------   ----------   ----------
Provision for income taxes               $2,926,000   $4,437,000   $5,916,000
                                         ==========   ==========   ==========

The  following  reconciles  income  taxes  at the  U.S.  statutory  rate  to the
provision for income taxes:

                                              Fiscal Years Ended June 30,
                                         ------------------------------------
                                               1999         2000         2001
                                         ----------   ----------   ----------
Computed tax expense at statutory rates  $2,425,600   $3,679,000   $5,029,000
State taxes, net of federal tax benefit     382,100      555,000      776,000
Travel and entertainment expenses not
   deductible                                34,000       43,000       34,000
Officers life insurance not deductible        5,500        7,000        8,000
Other, net                                   78,800      153,000       69,000
                                         ----------   ----------   ----------
                                         $2,926,000   $4,437,000   $5,916,000
                                         ==========   ==========   ==========


                                                                            F-10
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Significant  components of the Company's deferred tax assets and liabilities are
as follows:

                                                                June 30,
                                                       ------------------------
Deferred tax liabilities:                                 2000           2001
                                                       ---------      ---------

Depreciation                                           $ 240,000      $ 225,000
Product introduction costs                                46,000             --
Deferred sale leaseback costs                            286,000        186,000
Financing fees                                           396,000        369,900
                                                       ---------      ---------
        Total deferred tax liabilities:                  968,000        780,900
                                                       ---------      ---------
Deferred tax assets:
Accounts receivable reserve                             (308,000)      (308,000)
                                                       ---------      ---------
                                                       $ 660,000      $ 472,900
                                                       =========      =========

NOTE 6 - LONG-TERM DEBT

Revolving Credit Loan

In January  2001,  the long-term  revolving  credit  facility  (the  "Facility")
between the Company and its commercial bank was amended to increase the Facility
to  $125,000,000.  The commitment for the revolving  credit  facility is through
February 15, 2004.  The rate of interest on amounts  borrowed under the Facility
is the adjusted  LIBOR rate, as defined,  plus 175 basis points (7.50% per annum
at June 30, 2001). The Facility is  collateralized  by all existing and acquired
assets of the Company, as defined in the Facility  agreement,  and is guaranteed
by all of the Company's  subsidiaries.  Advances under this Facility are limited
to 85.0% of  eligible  accounts  receivable  and 60.0% of all  inventory  except
packaging material, as defined in the Facility agreement. The Facility agreement
contains  restrictive   financial   covenants,   including  the  maintenance  of
consolidated net worth, and the maintenance of leverage and fixed charge ratios,
as  defined  in  the  agreement,  and  a  restriction  on  dividends  to  common
shareholders.  As of June 30,  2001,  the  Company  was in  compliance  with the
covenants  under the  Facility  agreement.  Borrowings  under the  facility  are
required to be used for working capital purposes.

At June 30,  2001,  the  Company had  approximately  $25,700,000  available  for
additional borrowings under the Facility.

Subordinated Debt Facility

In March 1998,  the Company  entered  into a Loan and  Security  Agreement  with
Albion Alliance Mezzanine Fund, L.P. and The Equitable Life Assurance Society of
the United States (collectively, the "Funds") pursuant to which the Funds loaned
$10,500,000  to the Company.  The loan is unsecured and is  subordinated  to the
loan of the  Company's  senior  lender.  The loan bears  interest  at 16.50% per
annum.  Interest  is  payable  monthly  at the rate of 12.0% per annum  with the
balance  deferred  until  February  1, 2003 when it is due in full.  The loan is
payable in three  installments  of the principal  amount of $3,500,000  together
with accrued and unpaid interest  thereon on each March 1, beginning in the year
2004.  In addition,  in  connection  with the execution and delivery of the Loan
Agreement,  the Company  delivered to the Funds,  a warrant to purchase  105,000
shares of the Company's common stock  exercisable at $4.125 (the market price at
the date of the agreement).  In July 2001, the warrant was exercised. The values
ascribed  to such  warrants  and  the  related  amortization  expense  were  not
material. The warrant is exercisable through March 1, 2008.


                                                                            F-11
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Mortgage Payable

On March 29, 1996,  the Company  purchased its Paterson,  New Jersey  production
facility  which it previously  had leased.  The purchase was financed  through a
mortgage  on the  property.  Proceeds  of the  loan  were  $1,050,000,  of which
$686,250 was used to pay the remaining  obligation to the landlord.  The balance
of the  proceeds  was used to  complete  the  expansion  of a 7,800  square foot
refrigerated  storage  facility.  The five year note bore  interest at 8.51% per
annum. On March 29, 1999, the Company  refinanced the mortgage for the principal
amount of $929,573. The seven year note, which bears interest at 7.85% per annum
is being  amortized at a fifteen year rate and requires a balloon payment at the
end of year seven of approximately $501,000.

Debt Maturities

Principal payments on long-term debt over the next five years ended June 30, and
thereafter are as follows:

     2001                                                      $     57,785
     2002                                                            62,650
     2003                                                            67,748
     2004                                                       102,837,587
     2005                                                         4,053,070
     Thereafter                                                   3,500,000

NOTE 7 - CAPITAL LEASES

There are various  equipment and furniture and fixtures  financed  under capital
leases. These leases have interest rates ranging from 6.70% to 11.50% per annum.
At June 30, 2001,  the Company's  future  minimum lease  payments  under capital
leases are as follows:

     2002                                                      $    642,431
     2003                                                           590,629
     2004                                                            91,701
                                                               ------------
     Total minimum lease payments                                 1,324,761
     Less: amount representing interest                             219,125
                                                               ------------
     Present value of minimum lease payments                      1,105,636
     Less: current portion                                          510,155
                                                               ------------
     Long-term portion of capital leases                       $    595,481
                                                               ============

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Leases

The Company  rents  certain  production  facilities  and  equipment  under lease
arrangements  classified  as  operating  leases.  The lease  for the  production
facilities in Manteca,  California,  which was renewed in December 1994, expires
ten years from the date of  completion  of  construction  of each segment of the
facility  with two five year  renewal  options.  The  Company  also  leases  its
Blackfoot,  Idaho  facility.  The lease is for five  years  with three five year
renewals at the Company's  option.  The Company also leases its Ogdensburg,  New
York  facility.  The lease is for 17 years with options to  terminate  the lease
each  five  years  at the  Company's  option.  Rent  expense  was  approximately
$2,971,000,  $4,107,000 and  $5,182,000 for the years ended June 30, 1999,  2000
and 2001,  respectively.  Future  minimum rental  payments under  non-cancelable
operating leases are approximately: 2002 - $5,792,000; 2003 - $5,792,000; 2004 -
$5,792,000; 2005 - $4,857,000; 2006 - $3,410,000 and thereafter $3,415,000.


                                                                            F-12
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Employment Agreements

The Company has entered into an employment  agreement with Mark  Cocchiola,  its
President and CEO, that currently  expires in May 2006.  The agreement  provides
for the full-time  employment of Mr.  Cocchiola at an annual salary of $250,000,
and an annual bonus equal to 5% of pre-tax  profits in excess of  $650,000.  The
agreement  also  provides  that  if  employment  is  terminated   under  certain
circumstances,  including a "change of  control," he will be entitled to receive
severance pay equal to the higher of (i) $1,250,000 or (ii) five times the total
compensation paid to him by the Company (including salary,  bonus,  perquisities
and the value of options  granted to Mr.  Cocchiola)  during the 12 month period
prior to the date of termination.

Contingencies

On or about  April 26,  2001,  an  employee  at the  Manteca  facility  filed an
Application  before the  Workers'  Compensation  Appeals  Board for the State of
California against the Company alleging "serious and willful  misconduct" on the
Company's part in its alleged failure to accommodate his limited ability to work
as a result of his alleged injury arising out of employment.  Thereafter,  on or
about  August 2,  2001,  a second  employee  at the  Manteca  facility  filed an
Application  before the same  Workers'  Compensation  Appeals  Board against the
Company claiming injuries sustained while employed.  The second employee alleges
"serious  and willful  misconduct"  while  employed.  If the  Application's  are
granted,   the  employees  will  be  entitled  to  receive  additional  benefits
consisting  of  one-half of the  compensation  otherwise  recoverable  under the
Workers'  Compensation laws.  Management  believes that it has valid defenses to
the Applications and will vigorously defend the claims made by the employees.

The  Company is a party to legal  proceedings  arising in the normal  conduct of
business.  Management  believes  that the  final  outcome  of these  proceedings
including the proceedings  discussed in the paragraph immediately above will not
have a material adverse effect on the Company's financial  position,  results of
operations, and cash flows.

NOTE 9 - SHAREHOLDERS' EQUITY

Stock Offering

In August 2000, the Company  completed a public offering for 1,200,000 shares of
its $.01 par value  common  stock of which  1,100,000  shares were issued by the
Company and 10,000 shares were offered by selling  shareholders.  Gross proceeds
from the  offering  were  approximately  $8,000,000.  The  Company  received  no
proceeds from the shares issued during the offering from those shares offered by
the selling shareholders.

Stock Option Plan

On February  11,  1991,  the  Company  adopted the 1991 Stock  Option  Plan.  In
December 1998, the Company adopted the 1998 Stock Option Plan. In February 2001,
the Company  adopted the 1999 stock  option plan  (collectively,  the  "Plans").
Under the Plans,  officers,  directors  and key  employees  of the  Company  are
eligible  to  receive up to  900,000,  500,000,  and  500,000  incentive  and/or
non-qualified stock options,  respectively.  The Plans, which expire in February
2001,  November 2008, and February 2011,  respectively,  are administered by the
board  of  directors.  The  selection  of  participants,  allotment  of  shares,
determination  of  price  and  other  conditions  of the  grant of  options  are
determined by the board of directors at its sole  discretion in order to attract
and retain persons  instrumental to the success of the Company.  Incentive stock
options  granted  under the Plans vest evenly over the first three years and are
exercisable for a period of up to ten years from the date of grant at an


                                                                            F-13
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

exercise price which is not less than the fair market value of the common stock
on the date of grant, except that the term of an incentive stock option granted
under the Plan to a shareholder owning more than 10% of the outstanding common
stock may not exceed five years and its exercise price may not be less than 110%
of the fair market value of the common stock on the date of the grant.

Stock option transactions under the Plan are summarized as follows:

                                              Weighted
                                               Average               1991
                                               Exercise              Plan
                                          Price Per Share ($)        Shares
                                          -------------------        ------
     Outstanding at June 30, 1998               $3.58                751,500
        Granted                                  3.17                134,250
        Exercised or forfeited                   2.50                 (1,667)
                                                -----               --------
     Outstanding at June 30, 1999                3.52                884,083
        Granted                                  7.66                     --
        Exercised or forfeited                   5.46                (26,917)
                                                -----               --------
     Outstanding at June 30, 2000                4.97                857,166
                                                =====
        Granted                                    --                     --
        Exercised or forfeited                   7.50                (30,000)
                                                                    --------
     Outstanding at June 30, 2001                3.25                827,166
                                                =====               ========
--------------------------------------------------------------------------------

                                              Weighted
                                               Average               1998
                                               Exercise              Plan
                                          Price Per Share ($)        Shares
                                          -------------------        ------
     Outstanding at June 30, 1998               $  --                     --
        Granted                                  4.63                143,000
        Exercised or forfeited                     --                     --
                                                -----               --------
     Outstanding at June 30, 1999                4.63                143,000
        Granted                                    --                356,000
        Exercised or forfeited                     --                     --
                                                -----               --------
     Outstanding at June 30, 2000                4.63                499,000
                                                =====
        Granted                                  7.50                 30,000
        Exercised or forfeited                   4.63                (31,833)
                                                -----               --------
     Outstanding at June 30, 2001                6.68                497,167
                                                =====               ========
--------------------------------------------------------------------------------

                                              Weighted
                                               Average               1999
                                               Exercise              Plan
                                          Price Per Share ($)        Shares
                                          -------------------        ------
     Outstanding at June 30, 1998                  --                     --
        Granted                                    --                     --
        Exercised or forfeited                     --                     --
                                                -----               --------
     Outstanding at June 30, 1999                  --                     --
        Granted                                    --                     --
        Exercised or forfeited                     --                     --
                                                -----               --------
     Outstanding at June 30, 2000                  --                     --
                                                =====
        Granted                                  7.50                367,000
        Exercised or forfeited                   7.50                     --
                                                -----               --------
     Outstanding at June 30, 2001                7.50                367,000
                                                =====               ========
--------------------------------------------------------------------------------


                                                                            F-14
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

The weighted average fair value of options granted under all plans during:

                                1999       $1.79

                                2000        4.39

                                2001        4.71


                                                                            F-15
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

The following table summarizes  information  about stock options  outstanding at
June 30, 2001:

<TABLE>
<CAPTION>
                             Options Outstanding                   Options Exercisable
                 ------------------------------------------     ------------------------
                                  Weighted-
                                   Average        Weighted-                    Weighted-
  Range of        Number of       Remaining        Average                      Average
  Exercise         Options       Contractual      Exercise        Number       Exercise
 Prices ($)      Outstanding     Life (Years)     Price ($)     Exercisable      price
----------------------------------------------------------------------------------------
<S>                <C>            <C>               <C>           <C>            <C>
1991 Plan:
 2.50 to 3.50      827,166        5.40 years        $3.21         787,206        $3.22

1998 Plan:
 4.63 to 7.00      111,000        7.75 years        $5.96          74,037        $5.96
 7.00 to 9.00      386,167        8.50 years        $7.64         121,097        $7.66
----------------------------------------------------------------------------------------
 4.63 to 9.00      497,167        8.30 years        $6.68         195,134        $7.01

1999 Plan:
 7.50              367,000        9.50 years        $7.50         200,000        $7.50
----------------------------------------------------------------------------------------
</TABLE>

Under the  accounting  provisions  of SFAS 123, the  Company's  net earnings and
earnings per share would have been:

                                         Fiscal Years Ended June 30,
                                -------------------------------------------
                                       1999            2000            2001
                                       ----            ----            ----

Earnings:
   - as reported                $ 4,208,025     $ 6,384,881     $ 8,873,680
   - pro forma                    3,999,219       5,997,267       8,378,291
Basic earnings per share:
   - as reported                $      0.93     $      1.44     $      1.63
   - pro forma                         0.88            1.35            1.54
Diluted earnings per share:
   - as reported                $      0.86     $      1.23     $      1.41
   - pro forma                         0.82            1.16            1.33

The pro forma  effect on net  earnings  and  earnings per share for fiscal years
2001, 2000 and 1999 may not be  representative of the pro forma effect in future
years because it includes  compensation  cost on a straight-line  basis over the
vesting periods of the grants and does not take into consideration the pro forma
compensation  costs for grants made prior to 1996. The fair market 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:
expected  volatility  of 44% in 2001,  46% in 2000 and 44% in  1999;  risk  free
interest rate of 5.2% in 2001, 6.4% in 2000 and 5.0% in 1999;  expected lives of
10 years; and no dividend yield.

Warrants

In connection  with the Company's 1999 public  offering,  the Company issued the
underwriter  warrants to purchase  150,000  shares of common  stock  exercisable
until September 30, 2001 at an exercise price of $6.875 per share. In connection
with  the  Company's  public  offering,  the  Company  granted  warrants  to the
underwriters  of such  offering  to  purchase  120,000  shares of common  stock;
exercisable  at $11.20 per share through August 2010. In March 2001, the Company
issued  warrants  to  purchase  10,000  shares  of  common  stock to its  public
relations firm, at an exercise price of $8.25 per share,  exercisable from March
2002 through March 2011. The exercise price of all of the foregoing warrants was
no less  than the fair  market  value of the  common  stock on the date of their
respective issuance.


                                                                            F-16
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

Stock Repurchase Program

In May 1999,  the Board of  Directors  approved  a stock  repurchase  program to
acquire up to $3,200,000 of the Company's common stock. As of June 30, 2001, the
Company  has  repurchased  224,877  shares  of its  common  stock  for a cost of
approximately $1,548,000.

Treasury Stock

During the fiscal years ended June 30, 2001 and 2000, the Company, pursuant with
its stock  repurchase  plan,  purchased  11,507 and 135,000 shares of its common
stock at a cost of $105,000 and $1,046,250, respectively.

NOTE 10 - EARNINGS PER SHARE

Basic and diluted  earnings per share for each of the three years ended June 30,
1999, 2000 and 2001 are calculated as follows:

<TABLE>
<CAPTION>
                                                     Net Earnings      Shares     Per share
                                                     (Numerator)   (Denominator)    Amount
                                                     ----------------------------------------
<S>                                                   <C>             <C>              <C>
For the year ended June 30, 1999:
   Basic earnings per share                           $4,208,025      4,536,605        $0.93
   Effect of assumed conversion of employee stock
      options                                                 --        347,080        (0.07)
                                                     ----------------------------------------
   Diluted earnings per share                         $4,208,025      4,883,685         $.86
                                                     ========================================
For the year ended June 30, 2000:
   Basic earnings per share                           $6,384,881      4,431,850        $1.44
   Effect of assumed conversion of employee stock
      options and warrants                                    --        753,959        (0.21)
                                                     ----------------------------------------
   Diluted earnings per share                         $6,384,881      5,185,809        $1.23
                                                     ========================================
For the year ended June 30, 2001:
   Basic earnings per share                           $8,873,680      5,429,122        $1.63
   Effect of assumed conversion of employee stock
      options and warrants                                    --        865,128        (0.22)
                                                     ----------------------------------------
   Diluted earnings per share                         $8,873,680      6,294,250        $1.41
                                                     ========================================
</TABLE>

NOTE 11 - CONCENTRATION OF CREDIT RISK

The Company  provides credit to customers on an unsecured basis after evaluating
customer  creditworthiness.  The Company  grants  extended  payment terms to its
largest customers.

The Company  also  provides an allowance  for bad debts for accounts  receivable
where there is a possibility for loss.

The Company  maintains  demand  deposits with major banks.  At June 30, 2000 and
2001, all of the Company's cash was held with these major banks.

NOTE 12 - MAJOR CUSTOMERS

During the fiscal year ended June 30, 1999,  the Company had sales to A&J Foods,
Inc. representing approximately 18% of net sales.


                                                                            F-17
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

During the fiscal year ended June 30, 2000,  the Company had sales to A&J Foods,
Inc.,  Tricon  Commodities  International,  Inc. and Noble J.G.  Cheese  Company
representing approximately 15%, 13% and 12% of net sales, respectively.

During the fiscal year ended June 30, 2001,  the Company had sales to A&J Foods,
Inc., Tricon Commodities International,  Inc., Battaglia and Company, Noble J.G.
Cheese Company,  and California  Goldfield Cheese Traders of approximately  17%,
15%, 12%, 10%, and 10% of net sales, respectively.  At June 30, 2001, these five
customers  represented  20%, 20%,  15%, 13% and 13% of net accounts  receivable,
respectively.

NOTE 13 - EMPLOYEE BENEFITS

In July 1998, the Company instituted a 401(k) plan for all employees who are not
covered under the collective bargaining  agreement.  Under the plan, the Company
matches each eligible employees'  contribution up to 25% of the employee's first
8% of contributions.  Contributions made by the Company during the year amounted
to  approximately  $40,000 for each of the years ended June 30,  1999,  2000 and
2001.

NOTE 14 - SUBSEQUENT EVENT

In August 2001, the Company's  Executive Vice President passed away. The Company
has not  been  able to  determine  the  impact  of the loss of his  services  on
operations.  The  Company  is the  beneficiary  of a  $1,000,000  key  man  life
insurance  policy  on the  life  of the  former  Executive  Vice  President  and
anticipates receiving the proceeds from this policy.


                                                                            F-18
<PAGE>

                   SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (continued)

NOTE 15- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of quarterly  results of operations  for the 2001 and
2000 fiscal years (in thousands of dollars except per share data):

<TABLE>
<CAPTION>
2000                          First Quarter   Second Quarter   Third Quarter   Fourth Quarter
<S>                                 <C>              <C>             <C>              <C>
Net sales                           $61,381          $65,323         $75,564          $76,214
Gross profit                          9,984           11,171          12,092           12,302
Income from operations                3,613            4,005           4,336            4,788
Net earnings                          1,413            1,504           1,622            1,846
Basic earnings per share               0.31             0.34            0.37             0.42
Diluted earnings per share             0.27             0.29            0.31             0.35
==============================================================================================
2001
----------------------------------------------------------------------------------------------
Net sales                           $88,948          $92,742        $108,636         $130,038
Gross profit                         14,028           14,369          16,638           19,918
Income from operations                5,573            5,758           5,893            7,598
Net earnings                          1,987            2,068           2,196            2,623
Basic earnings per share               0.41             0.37            0.39             0.46
Diluted earnings per share             0.36             0.33            0.34             0.38
==============================================================================================
</TABLE>


                                                                            F-19
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Suprema Specialties, Inc.
Paterson, New Jersey

The audits referred to in our report dated August 7, 2001 relating to the
accompanying consolidated financial statements of Suprema Specialties, Inc. and
Subsidiaries, which are contained in Item 8 of this Form 10-K, included the
audits of the June 30, 1999, 2000 and 2001 financial statement schedule listed
in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statement schedule based upon our audits.

In our opinion,  such  financial  statement  schedule  presents  fairly,  in all
material respects, the information set forth therein.


/s/ BDO Seidman, LLP

BDO Seidman, LLP

Woodbridge, New Jersey

August 7, 2001


                                                                            F-20
<PAGE>

                                                                     Schedule II

SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED JUNE 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                       Balance at    Charged to    Charged to
                                      Beginning of    Costs and      Other                        Balance at
          Description                    Period      Expenses (1)   Accounts    Deductions (2)   End of Period
--------------------------------      ------------   ------------  ----------   --------------   -------------
<S>                                      <C>            <C>           <C>            <C>             <C>
FISCAL YEAR ENDED JUNE 30, 1999
   Accounts receivable allowance         $470,290       $100,000      $   --         $   --          $570,290
                                       ==========     ==========    ========       ========        ==========
FISCAL YEAR ENDED JUNE 30, 2000
   Accounts receivable allowance         $570,290       $200,000      $   --         $   --          $770,290
                                       ==========     ==========    ========       ========        ==========
 FISCAL YEAR ENDED JUNE 30, 2001
   Accounts receivable allowance         $770,290       $     --      $   --         $   --          $770,290
                                       ==========     ==========    ========       ========        ==========
</TABLE>

(1) To increase accounts receivable allowance.

(2) Uncollectible accounts written off, net of recoveries.


                                                                            F-21
<PAGE>

                                   SIGNATURES

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

                                                SUPREMA SPECIALTIES, INC.

                                                By: /s/ Mark Cocchiola
                                                    --------------------------
                                                    Mark Cocchiola, President

Dated: September 23 , 2001

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

Name                            Title                                  Date
----                            -----                                  ----

/s/ Mark Cocchiola              Chairman of the Board,            Sept. 23, 2001
------------------              President, Chief
Mark Cocchiola                  Executive Officer and
                                Director (Principal
                                Executive Officer)

/s/ Steven Venechanos           Chief Financial                   Sept. 23, 2001
---------------------           Officer, Secretary and Director
Steven Venechanos               (Principal Financial and
                                Accounting Officer)

/s/ Marco Cocchiola             Director                          Sept. 23, 2001
----------------------
Marco Cocchiola

/s/ Rudolph Acosta              Director                          Sept. 23, 2001
----------------------
Rudolph Acosta

/s/ Paul DeSocio                Director                          Sept. 23, 2001
----------------------
Paul DeSocio

/s/ Barry Rutcofsky             Director                          Sept. 23, 2001
--------------------
Barry Rutcofsky