<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D C. 20549

                                  __________

                                  FORM 10-K/A
                                AMENDMENT NO. 1

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the fiscal year ended September 30, 2001

                                      OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from __________ to _________

                       Commission file number 000-21093

                          INTERFOODS OF AMERICA, INC.
            (Exact Name of Registrant as Specified in Its Charter)

                 Nevada                                59-3356-011
    (State or Other Jurisdiction of       (I.R.S. Employer Identification No.)
     Incorporation or Organization)

        9400 South Dadeland Boulevard, Suite 720, Miami, Florida  33156
                (Address of Principal Executive Offices)   (Zip code)

      Registrant's telephone number, including area code: (305) 670-0746

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

          Securities registered pursuant to Section 12(g) of the Act:
                         COMMON STOCK, $.001 PAR VALUE

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of 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. [_]

     The aggregate market value of the registrant's common stock held by non-
affiliates of the registrant as of November 20, 2001 was approximately
$1,503,206. Solely for purposes of the foregoing calculation, all of the
registrant's directors and officers are deemed to be affiliates.

     There were 5,012,099 shares of the registrant's common stock outstanding as
of November 20, 2001.
<PAGE>

                               EXPLANATORY NOTE

     Part I, Item 1; Part II, Item 6, Item 7 and Item 8; Part III, Item 11, Item
12 and Item 13; and Part IV, Item 14 of Interfoods of America, Inc.'s Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
December 18, 2001 for the fiscal year ended September 31, 2001 are hereby
amended in their entirety as follows:

                                    PART  I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

     Interfoods of America, Inc., a Nevada corporation (the "Company"),
incorporated May 13, 1994, is through its wholly-owned subsidiary, Sailormen,
Inc., a Florida corporation ("Sailormen"), a franchisee and operator of
Popeye's/registered trademark /Chicken and Biscuits ("Popeye's") restaurants.
Pursuant to franchise agreements with AFC Enterprises, Inc. (the "Franchisor"),
the Company currently operates 165 Popeye's restaurants located in Florida,
Alabama, Illinois, Georgia, Mississippi, Louisiana and Missouri.

     The Company's headquarters are located at 9400 South Dadeland Boulevard,
Suite 720, Miami, Florida 33156. Its telephone number is (305) 670-0746.

HISTORY

     Until September 1996, the Company was known as Sobik's Subs, Inc. ("Sobik's
Subs").  In May 1996, the Company acquired Sailormen from the Company's current
Chief Executive Officer, Robert S. Berg, and President, Steven M. Wemple, for a
total of 2,500,000 shares of the Company's common stock.  At the time of the
acquisition, Sailormen operated 11 Popeye's restaurants.

     Until December 1997, the Company operated two wholly-owned subsidiaries in
addition to Sailormen: (1) SBK Franchise Systems, Inc., which, through an
exclusive master license with Sobik's Sandwich Shops, Inc., the Franchisor of
Sobik's Subs restaurants, developed, franchised and serviced Sobik's Subs
franchises; and (2) Sobik's Restaurant Corp., which established, owned and
operated Sobik's Subs Shops.  Sobik's Sub Shops offered a menu of submarine
(sub) style sandwiches (also referred to as hoagies or heroes).

     In December, 1997, the Company sold Sobik's Restaurant Corp and SBK
Franchise Systems, Inc. for total consideration valued at $1,100,000.  Such
consideration consisted of cash, a note and stock of the purchaser, JRECK Subs
Group, Inc ("JRECK").  These divestitures were made by the Company to streamline
its business operations and to focus its efforts on the expansion and
development of its Popeye's franchises.

     Consistent with its decision to concentrate on the ownership and operation
of its Popeye's restaurants, the Company consummated several acquisitions during
Fiscal 1997.  In October

                                       1
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1996, the Company acquired four existing Popeye's restaurants in the Birmingham,
Alabama market for consideration valued at $450,000, of which $50,000 was paid
in cash and 228,640 shares of the Company's mandatory redeemable restricted
Class A Preferred Stock valued at $400,000. In September 1997, the Company
acquired an existing Popeye's restaurant in Ft. Pierce, Florida for 338,983
shares of the Company's common stock valued at $400,000 and opened a new
Popeye's restaurant in Homestead, Florida.

     In December 1997 (Fiscal 1998), the Company acquired eight Popeye's
restaurants in the Baton Rouge, Louisiana market, for approximately $3.7 million
in cash.  On July 6, 1998, the Company acquired five Popeye's restaurants in
Pensacola, Florida for consideration valued at $1.8 million.  Such consideration
consisted of cash, newly issued restricted common stock and assumed liabilities.

     In March 1999, the Company acquired in two separate transactions, nineteen
Popeye's restaurants in the St Louis, Missouri area and the Baton Rouge,
Louisiana area, for approximately $19.9 million which was financed with $8
million of debt and $11.9 million of the Company's cash.  The Company also
opened five new Popeye's restaurants in Fiscal 1999 within its existing markets.

     In January 2000, the Company, through an Asset Purchase Agreement, acquired
37 Popeye's restaurants located in Mississippi and Louisiana for approximately
$34.6 million in cash, which was financed with $35.7 million of additional debt.

     In July 2000, pursuant to an Asset Purchase Agreement, the Company acquired
the assets of four Popeye's restaurants in Illinois and the West Coast of
Florida for approximately $3.9 million cash.  The Company financed the
acquisition with $3.4 million of additional debt.

     On September 14, 2000, the Company acquired 71 additional Popeye's
restaurants located in Central and Northern Florida and in Southern Georgia for
approximately $46.2 million.  The Company financed the acquisition with $45.5
million of debt.

OPERATIONS

     The Popeye's menu features unique spicy fried chicken, which each
restaurant prepares daily on premises along with biscuits, which are served with
the chicken entrees.  In addition to its spicy fried chicken, the Popeye's menu
contains up to 20-25 other items, including seasonal entrees, such as seafood
dishes, and side items, such as red beans and rice, french fries, mashed
potatoes with gravy, coleslaw, and Cajun rice.  Similar to the chicken entrees,
virtually all of these items are prepared fresh daily on the premises of each
restaurant.  The Popeye's menu is designed to appeal to a large cross-section of
the population with particular concentration on the 18-49 age group.  The
Company's restaurants are generally open seven days a week, from 10:00 am to
midnight, and serve lunch and dinner.

     A typical Popeye's restaurant operated by the Company employs two full time
managers and at least one additional supervisory employee.  Typically, all
restaurant managers (and other employees of the Company) are required to attend,
at the Company's expense, training courses

                                       2
<PAGE>

conducted by the Franchisor. This training program involves on-the-job training
and an instructional class. Other restaurant employees are trained by the
restaurant manager in accordance with the Company's and the Franchisor's
guidelines.

     In 2001, there were 1,540 Popeye's restaurants in operations worldwide, of
which 1,248 were located in the United States.  Popeye's ranks third worldwide
in the number of fast food fried chicken restaurants behind only KFC/registered
trademark/and Church's.  Average sales per restaurant for Popeye's/registered
trademark/ located in the United States are estimated to be $832,979 annually.
The Company's restaurants averaged annual sales of approximately $ 921,000 per
unit. The Company has 81 of its 165 restaurants in the state of Florida from
which it derived approximately 56% of its revenue in Fiscal 2001.

SEASONALITY

     The Company's sales volumes fluctuate seasonally.  During fiscal years 2001
and 2000, the Company's sales were highest in the spring and summer, and lowest
in the fall.  Severe weather, storms and similar conditions may impact sales
volumes seasonally in some operating regions.

BUSINESS STRATEGY

     The Company's business strategy is (1) to increase the level of sales at
its currently owned Popeye's restaurants; and (2) to expand by (a) locating and
acquiring, at advantageous prices, existing Popeye's restaurants, which
management believes are under performing and (b) developing new Popeye's
restaurants in the Southeastern United States.  There can be no assurance that
the Company will be able to achieve all or any part of its business strategy
(see "Risk Factors").  The Company is a restaurant operating company and will
own real estate only as it relates to stores which may be acquired or built by
the Company.

FRANCHISE AGREEMENT

     The Company franchises its Popeye's restaurants from the Franchisor.  The
Franchisor maintains its principal place of business at Six Concourse Parkway,
Atlanta, Georgia, 30328, and does business under its corporate name and under
the trade names and service marks "Popeye's" and "Popeye's Chicken and
Biscuits".

     Each of the Company's Popeye's restaurants is operated under a separate
franchise agreement from the Franchisor.  Retention of these franchise
agreements is important to the success of the Company.  The Company believes
that its relationship with the Franchisor is satisfactory.  The franchise
agreements are for an initial term of 20 years and are renewable for additional
ten-year terms upon the payment of one-half of the then-applicable franchise
fee, which is currently $25,000, and the execution of a renewal franchise
agreement.  The renewal franchise agreement may provide for increased royalties
and advertising contributions, and may require the Company to remodel or re-
equip its restaurants to meet the then current standards of the Franchisor.  The
Company is required to pay the Franchisor a royalty fee equal to 5% of the gross
sales of each franchise restaurant.  The franchise agreements require the
Company to

                                       3
<PAGE>

construct and operate its Popeye's restaurants in accordance with the detailed
requirements of the Popeye's system.

SUPPLY AGREEMENTS

     The Franchisor has entered into a long-term agreement with Diversified
Foods and Seasoning, Inc., ("Diversified") under which they have designated
Diversified as the sole supplier of certain proprietary products for the Popeyes
system. Diversified sells these products to approved distributors, who in turn
sell them to our restaurants. The Company has various distribution agreements
with some of these approved distributors for the supply of food products, dry
goods and related supplies. Most agreements with the distributors continue until
either party elects to terminate, which shall require thirty (30) days prior
written notice to the other party.

     The principal raw material for our restaurants is fresh chicken.  Our
restaurants purchase fresh chicken from approximately 5 suppliers.  In Fiscal
2001, one vendor, Bud's Poultry of Plant City, Florida, represented
approximately 55% of the chicken purchases.

     In Fiscal 2001 and Fiscal 2000, approximately 38% of the cost of sales were
attributable to the purchase of chicken.  The Company's cost of sales is
significantly affected by increases in the cost of chicken, which can result
from a number of factors, including seasonality, increases in the cost of grain,
disease and other factors that affect availability.  In order to ensure
favorable pricing for our chicken purchases in the future, reduce volatility in
chicken prices, and maintain an adequate supply of fresh chicken, the Franchisor
set up a purchasing cooperative for the benefit of the franchisees, including
the Company.  The purchasing cooperative has entered into two types of chicken
purchasing contracts with chicken suppliers.  The first is a grain-based "cost-
plus" pricing contract that utilizes prices that are based upon the cost of feed
grains, such as corn and soybean meal, plus certain agreed upon non-feed and
processing costs.  The other is a market-priced formula contract based on the
"Georgia whole bird market value".  Under this contract, the Company pays the
market price plus a premium for the cut specifications for our restaurants.  The
market-priced contracts have maximum and minimum prices that the Company will
pay for chicken during the term of the contract.  The contracts have terms
ranging from three to five years with provisions for certain annual price
adjustments.  The Company utilizes both contracts to ensure favorable chicken
prices.

     The Company's ability to maintain consistent quality depends in part upon
its ability to acquire food products from reliable sources in accordance with
the Franchisor's specifications.  While the Company has not experienced any
problems to date in acquiring such food products, there can be no assurance that
such food products will be available in the future on terms acceptable to the
Company.

MARKETING AND ADVERTISING

     All Popeye's restaurants are required to contribute 3% of their weekly net
sales to the Popeye's Chicken & Biscuit Advertising Fund (the "Popeye's
Advertising Fund") for regional and local advertising conducted by the
Franchisor.  The terms of the Popeye's Advertising Fund require that all
contributions to the fund and earnings of the fund are utilized by the
Franchisor

                                       4
<PAGE>

exclusively for advertising and promotional activities for Popeye's restaurants.
In most of its markets, the Company voluntarily contributes amounts in excess of
the required 3% for additional advertising in the respective areas.

GOVERNMENT REGULATION

     Each of the Company's restaurants is subject to licensing and regulation by
a number of governmental authorities, which may include health, sanitation,
safety, fire, building and other agencies in the state and/or municipality in
which the restaurant is located.  Difficulties in obtaining or failure to obtain
the required licenses could delay or prevent the development of a new restaurant
in a particular area.

     The Company also is subject to federal and state environmental regulations.
Requirements of local governmental bodies with respect to zoning, land use, and
environmental factors could delay or prevent the development of a new restaurant
in a particular area.

     The Company is also subject to state and federal labor laws that govern its
relationship with its employees.  These laws govern minimum wage requirements,
overtime, working conditions and citizenship requirements.

COMPETITION

     The Company's restaurants face intense competition from quick-and full-
service restaurants and, in particular, from chains with operating concepts
similar to those of the Company.  Management believes that its primary
competitors are other national fried chicken chains, including KFC/registered
trademark/, Church's Fried Chicken/registered trademark/ and Pollo
Tropical/registered trademark/.  The franchisor of Popeye's Chicken, AFC
Enterprises Inc., is also the franchisor of Church's Chicken, a direct
competitor of the Company's restaurants.  In general, the restaurant industry is
highly competitive and can be significantly affected by many factors, including
changes in local, regional or national economic conditions, changes in consumer
tastes, consumer concerns about the nutritional quality of food and increases in
the number of, and particular locations of, competing restaurants.  Factors such
as inflation, increases in food, labor and energy costs and the availability of
an adequate number of hourly-paid employees also affect the restaurant industry.
Major chains, which have financial resources substantially greater than the
Company and operating histories longer than the Company, dominate the restaurant
industry.  There can be no assurance that consumers will regard the Company's
menu items as significantly distinguishable from competitive products, that
substantially equivalent products will not be introduced by the Company's
competitors or that the Company will be able to compete successfully in any
given market.

     The Company is required to respond to various factors affecting the
restaurant industry, including changes in consumer preferences, tastes, eating
habits, demographic trends and traffic patterns, increases in food and labor
costs and national, regional and local economic conditions.  A number of fast
food restaurant companies have recently experienced flattening growth rates and
declines in average sales per restaurant, in response to which certain of such
companies have adopted discount pricing strategies such as "value meals" and
other marketing strategies.  Such

                                       5
<PAGE>

strategies could have an adverse effect upon the Company and could also
negatively impact the Company's operating margins, should the Company elect to
match competitors' price reductions. The principal bases of competition in the
industry are food quality, speed of service, and price; but advertising,
location, and attractiveness of facilities are also important. Popeye's competes
with other national fried chicken chains such as KFC and Church's, as well as
with all other national and regional quick-service restaurant chains. Some of
these competitors have greater financial resources, larger advertising budgets
and more national recognition than those of Popeye's.

     As a result of a national trend in increased chicken consumption, many
quick-service restaurant chains that are not identified with chicken, have added
a variety of chicken items to their menus.  While the Company believes that its
spicy fried chicken is distinguished from the chicken offered by its competitors
by unique seasonings and tastes, product quality, and freshness, there can be no
assurances that consumers will not choose its competitors' chicken products over
those sold in the Company's restaurants.

EMPLOYEES

     As of September 30, 2001, the Company employed approximately 3,576 people,
on a full-time and part-time basis.  Of these employees, 690 were employed as
field management personnel and 38 were in corporate management and
administration.  None of the Company's employees belong to a union and the
Company has not experienced any work stoppages.  The Company believes that its
labor relations are satisfactory.

                                       6
<PAGE>

                                    PART II

ITEM 6. SELECTED FINANCIAL DATA

     The following table should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
                                                    Year Ended September 30,
                                   ------------------------------------------------------------------------
                                            (Amounts in thousands, except share data)
                                                  2001         2000         1999         1998         1997
                                            ----------   ----------   ----------   ----------   ----------
<S>                                         <C>          <C>          <C>          <C>          <C>
Income Statement Data:
----------------------

Revenues                                    $  152,088   $   77,589   $   37,796   $   18,345   $   14,092
Costs and operating expenses:
 Cost of restaurant operations:
  Cost of sales                                 48,521       24,781       12,131        5,741        4,624
  Restaurant wages and related benefits         40,263       20,545        9,834        4,820        3,735
  Occupancy and other operating expenses        34,520       17,186        9,774        4,881        3,825
                                            ----------   ----------   ----------   ----------   ----------
Total cost of restaurant operations            123,304       62,512       31,739       15,442       12,184

 General and administrative expenses            12,420        7,193        3,992        2,647        1,575
 Depreciation and amortization                   4,878        2,188          778          278          188
                                            ----------   ----------   ----------   ----------   ----------

 Total operating costs and expenses            140,602       71,893       36,509       18,367       13,947
                                            ----------   ----------   ----------   ----------   ----------

  Income (loss) from operations                 11,486        5,696        1,287          (22)         145
                                            ----------   ----------   ----------   ----------   ----------

Other income (expense)
 Interest expense                              (10,136)      (4,440)        (893)        (199)         (54)
 (Loss) gain on investment in JRECK                 --          (94)        (183)         536           --
 Interest and other income (expense)               459         (565)        (227)        (357)          63
                                            ----------   ----------   ----------   ----------   ----------
Income (loss) before income tax                  1,809          597          (16)         (42)         154
Income tax (provision) benefit                    (808)        (216)        (130)        (114)         165
                                            ----------   ----------   ----------   ----------   ----------

Net income (loss) before preferred
stock dividend                                   1,001          381         (146)        (156)         319
Preferred stock dividend                            --           --           (1)         (10)         (21)
                                            ----------   ----------   ----------   ----------   ----------

Net income (loss)                                1,001          381         (147)        (166)         298
                                            ----------   ----------                ----------   ----------
Basic and Diluted earnings
(loss) per share                            $     0.20   $     0.07   $    (0.03)  $    (0.03)  $     0.05
                                            ----------   ----------   ----------   ----------   ----------

Weighted average shares outstanding          5,133,377    5,468,503    5,713,658    5,597,366    6,585,953
                                            ----------   ----------   ----------   ----------   ----------

Ratio of earnings to Fixed Charges (1)            1.15         1.11          .99          .93         1.39
</TABLE>

                                  (Continued)

                                       7
<PAGE>

                                  (Continued)
<TABLE>
<CAPTION>
                                          2001        2000       1999       1998     1997
                                          ----        ----       ----       ----     ----
<S>                                   <C>         <C>         <C>        <C>        <C>
Balance Sheet Data
------------------

Working capital deficiency            $(10,065)   $(12,175)   $(3,256)   $(1,312)  $ (947)

Total Assets                           117,028     115,653     20,388     11,358    7,139
Long-term debt, redeemable
Preferred stock and capital lease
obligations.                            91,724      90,680     12,329      4,108    1,958

Stockholders' equity                     3,838       2,936      3,236      3,356    3,398
</TABLE>

----------
     (1)  For purposes of these computations, earnings consist of pre-tax income
          plus fixed charges and preferred dividends.  Fixed charges and
          preferred dividends consist of interest expense, capitalized interest,
          amortization of deferred financing cost, and preferred dividends paid
          to preferred shareholders during the year.  The deficit of earnings to
          fixed charges and preferred dividends were $17 and $52 for 1999 and
          1998 respectively.

     See Item 1 "History" for information regarding Company acquisitions, which
has contributed to the increased business commencing primarily in fiscal 1999.

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

     The continuation of the economic slowdown, which was further compounded by
the events of September 11, could continue to adversely effect consumer spending
during the upcoming year, which could have a negative impact on the Company's
operations.

     The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto, appearing elsewhere in this report.

FOR THE YEAR ENDED SEPTEMBER 30, 2001 COMPARED TO YEAR ENDED SEPTEMBER 30, 2000

     For the year ended September 30, 2001 ("Fiscal 2001"), the Company had
total revenues of $152,088,594 compared to total revenues of $77,589,129 for the
year ended September 30, 2000 ("Fiscal 2000").  The increase in revenues was
primarily attributable to the full year sales generated from the Company's
acquisition of 73 restaurants in Central and Northern Florida on September 14,
2000 and 37 restaurants in Mississippi and Louisiana on January 11, 2000.  Same
store restaurant revenues reflect an increase in comparable sales of 3.9% for
the year.

     Cost of restaurant operations for the Fiscal 2001 were $123,304,366 or
81.1% of revenues compared to $62,512,104 or 80.6% of revenues for Fiscal 2000.
The dollar increase is attributable to the full year of expenses generated from
the two fiscal 2000 acquisitions.  The increase as a percentage of revenues is
due to additional expenses that were incurred to integrate

                                       8
<PAGE>

the Company's procedures and systems into the restaurants acquired in January
2000 and September 2000.

     General and administrative expenses for Fiscal 2001 were $12,419,692 or
8.2% of revenues as compared to $7,192,666 or 9.3% of revenues for Fiscal 2000.
The dollar increase is primarily attributable to the costs of additional
personnel hired to support the Company's current growth.  The decrease as a
percentage of revenues was due to the efficiencies obtained through additional
sales volume.

     Depreciation and amortization for Fiscal 2001 were $4,878,386 as compared
to $2,188,118 for Fiscal 2000.  The increase was primarily attributable to the
full year of depreciation expense related to the fixed assets obtained through
the acquisition of additional restaurants in January 2000 and September 2000.
In addition, Fiscal 2001 represents a full year of amortization related to
goodwill obtained through the fiscal 2000 acquisitions.

     Operating income of the Company was $11,486,150 for Fiscal 2001 as compared
to $5,696,241 for Fiscal 2000.  The increase in operating income is attributable
to the increase in the number of restaurants described above and the increase in
existing restaurant level profits resulting from the favorable comparable sales.

     Interest expense increased in Fiscal 2001 to $10,135,891 as compared to
$4,439,756 for Fiscal 2000.  The increase was due to higher average debt
outstanding in Fiscal 2001 compared to Fiscal 2000 which was attributable to
additional borrowings made by the Company in connection with its acquisition of
the additional restaurants described above.

     The Company recorded an income tax provision of $808,109 during Fiscal 2001
compared to $216,029 in Fiscal 2000.  The increase was primarily attributable to
the future taxable income and tax liabilities arising primarily from the result
of higher 2001 pre-tax income.  The effective tax rate for fiscal 2001 is 44.7
%, as compared to the fiscal 2000 effective tax rate of 36.7%.  The increased
effective tax rate is due primarily to certain expenses incurred in Fiscal 2001
related to the Company's new deferred compensation plan that are not deductible
for Federal Income tax purposes.

YEAR ENDED SEPTEMBER 30, 2000 COMPARED TO YEAR ENDED SEPTEMBER 30, 1999

     The Company made four acquisitions during Fiscal 2000. The restaurant base
went from 54 restaurants at the beginning of  Fiscal 1999 to 167 restaurants at
the end of Fiscal 2000.

     For the year ended September 30, 2000 ("Fiscal 2000"), the Company had
total revenues of $77,589,129 compared to total revenues of $37,796,392 for the
year ended September 30, 1999 ("Fiscal 1999").  The increase in revenues was
primarily attributable to the sales generated from the Company's acquisition of
73 restaurants in Central and Northern Florida on September 14, 2000 and 37
restaurants in Mississippi and Louisiana on January 11, 2000.  Additionally,
sales for Fiscal 2000 included a full year of sales of ten restaurants in Baton
Rouge, Louisiana, acquired on March 8, 1999 and nine stores in St. Louis,
Missouri, acquired on March 22, 1999.  The remaining sales increase was due to
an increase in same store restaurant revenues of 10.4%

                                       9
<PAGE>

for the year.

     Cost of restaurant operations for the Fiscal 2000 were $62,512,104 or 80.6%
of sales compared to $31,738,872 or 84% of sales for Fiscal 1999.  The dollar
increase is attributable to the number of restaurants and the additional
expenses that were incurred to integrate the Company's procedures and systems
into the acquired restaurants.  The decrease as a percentage of sales is due to
lower food cost obtained through additional volume.

     General and administrative expenses for Fiscal 2000 were $7,192,666 or 9.3%
of sales as compared to $3,992,330 or 10.6% of sales for Fiscal 1999.  The
dollar increase is primarily attributable to the expenses related to the
indirect costs of 1999 and 2000 acquisition of restaurants and the costs of
additional personnel hired to support the Company's current growth.  The
decrease as a percentage of sales is due to the efficiencies obtained through
additional volume.

     Depreciation and amortization for Fiscal 2000 were $2,188,118 as compared
to $778,051 for Fiscal 1999.  The increase was primarily attributable to the
acquisition of additional restaurants.  Depreciation related to new restaurants
was $903,442 of the $2,188,118 in Fiscal 2000.

     Operating income of the Company was $5,696,241 for Fiscal 2000 as compared
to $1,287,139 for Fiscal 1999.  The increase in operating income is attributable
to the increase in number of restaurants and increase in existing restaurant
level profits resulting from the favorable comparable sales.

     Interest expense increased in Fiscal 2000 to $4,439,756 as compared to
$892,906 for Fiscal 1999.  The increase was due to higher average debt
outstanding in Fiscal 2000 compared to Fiscal 1999 and this was attributable to
additional borrowings made under the Company's acquisition program.  Interest
expense in Fiscal 2000 relating only to new debt acquired in Fiscal 2000 was
$2,779,046.

     The loss on investment in JRECK stock was $93,691 for Fiscal 2000 as
compared to a loss of $182,809 in Fiscal 1999. The loss was a result of the
Company selling all of its shares of stock in JRECK.

     The gain (loss) on investment in JRECK was a loss of $182,809 for Fiscal
1999 as compared to a gain of $536,237 for Fiscal 1998. In the prior year, the
sale of one of the Company's subsidiaries, SBK Franchise Systems, Inc. for $1.1
million resulted in a gain of $1,036,237 for Fiscal 1998, but this was
subsequently reduced by a reserve of $500,000 on the promissory note received by
the Company in the sale. In Fiscal 1999, a new agreement was reached whereby the
Company received 700,187 additional shares of JRECK stock. As a result of a
decline in the market value of the JRECK stock in Fiscal 1999, the Company
expensed the JRECK stock to net realizable value. The loss reflects the decrease
in stock market price in Fiscal 1999 versus the put option value in Fiscal 1998.

     Other expense for Fiscal 2000 was $565,631 as compared to $227,378 for
Fiscal 1999.

                                      10
<PAGE>

The increase in other expenses in Fiscal 2000 was primarily attributable to the
indirect acquisition costs related with the purchase during Fiscal 2000 of the
restaurants in Central and Northern Florida, Mississippi and Louisiana and the
lease termination payments relating to a closed store.

     The Company recorded an income tax provision of $216,029 during Fiscal 2000
compared to $130,370 in Fiscal 1999.  The increase was primarily attributable to
the future taxable income and tax liabilities arising from the differences in
depreciation and amortization.

LIQUIDITY AND CAPITAL RESOURCES

     See Item 12 for information regarding a proposal made to the Company by
Robert S. Berg and Steven M. Wemple for a going private transaction.

     Net cash provided by operations for Fiscal 2001 was $ 7,317,871 as compared
to $ 10,802,056 for Fiscal 2000.  The decrease in operating cash flow for Fiscal
2001 was primarily attributable to the receipt of $3,710,264 of advanced vendor
rebates during the Fiscal 2000.

     At September 30, 2001, the Company had current assets of  $ 7,377,973 and
total assets of  $117,028,224 compared to current assets of approximately
$6,678,902 and total assets of approximately $115,652,962 at September 30, 2000.
The increase in total assets was primarily attributable to an increase in net
property and equipment of $1,848,746.

     Net cash used in investing activities was $5,777,454 for Fiscal 2001 as
compared to $92,071,177 for Fiscal 2000.  The substantial decrease in cash used
is primarily due to the Fiscal 2000 period having the acquisition of 37
restaurants in January 2000 and 73 restaurants in September 2000.

     Net cash used in financing activities was $1,541,750 for Fiscal 2001 as
compared to net cash provided by financing activities for Fiscal 2000 of
$83,272,576.  The decrease resulted primarily from the Fiscal 2000 period having
additional proceeds for the financing of the acquisition of 37 restaurants in
January 2000 and 73 restaurants in September 2000.

     As of September 30, 2001, the Company had total outstanding debt of
approximately $ 97.8 million, of which approximately $ 6.1 million represents
the current portion.  The Company expects to pay its current portion of debt
with cash flow generated from operations.  As of September 30, 2001, the average
interest rate on the debt was 10.1%.  The debt is secured by substantially all
of the assets of the Company and availability of amounts for borrowing is
subject to certain limitations and restrictions.  In Fiscal 2001, the Company
had cash provided by operating activities of $7,317,871 as compared to
$10,802,056 in Fiscal 2000.

     The Company's ability to make scheduled payments of principal of, or to pay
the interest on, or to refinance, its indebtedness, or to fund planned capital
expenditures, will depend on its future performance.  Based upon the current
level of operations and anticipated revenue growth and cost savings, management
believes that cash flow from operations and available cash from its existing
line of credit, and refinancing capabilities, will be adequate to meet the
Company's

                                      11
<PAGE>

future liquidity needs. However, there can be no assurance that the Company's
business will generate sufficient cash flow from operations, that anticipated
revenue growth and operating improvements will be realized or that future
borrowings will be available in an amount sufficient to enable the Company to
service its indebtedness or to fund its other liquidity needs. In addition,
there can be no assurance that the Company will be able to effect any needed
refinancing on reasonable terms or at all. At the present time, there are no
plans for significant capital expenditures during Fiscal 2002.

     The inflationary factors that have historically affected our results of
operations include increases in food and paper costs, labor and other operating
expenses.  Wages paid in our restaurants are impacted by changes in the Federal
or State hourly minimum wage rates.  Accordingly, changes in the Federal or
State hourly wage rates directly affect our labor cost.  We and the restaurant
industry typically attempt to offset the effect of inflation, through periodic
menu increases and various cost reduction programs.  However, no assurance can
be given that we will be able to offset such inflationary cost increases in the
future.

     Several of the Company's notes payable and leases include certain
restrictive covenants, including maintenance of certain prescribed debt and
fixed charge coverage ratios and a limitation on the incurrence of additional
indebtedness without prior written consent. As of September 30, 2001, management
believes that the Company was in violation of its fixed charge coverage ratio
for certain leases. Accordingly, the Company is in technical default on certain
of its leases. To cure the default, the Company will be required to accelerate
payment due under the agreements of approximately $1,000,000 of additional
principal on the leases. In February 2002, the landlord on these leases agreed
to forbear from exercising its remedies provided in the leases in return for the
Company satisfying certain future obligations.

     In addition to the covenants noted above, the Company's debentures to be
issued as part of the merger with Interfoods Acquisition Corp. also contain
covenants including, among other things, the maintenance of a fixed charge
coverage ratio, as defined in the indenture agreement, of not less than 1.10 to
1.00 for the life of the debentures.  The Company's fixed charge coverage ratio
for the twelve months ended September 30, 2001 and the three months ended
December 31, 2001 was 1.36 to 1.00.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board approved the
issuance of SFAS 141, "Business Combinations" and SFAS 142, "Goodwill and Other
Intangible Assets". SFAS 141 requires that all business combinations initiated
after June 30, 2001 must be accounted for under the purchase method. In
addition, SFAS 142 requires that all intangible assets acquired that are
obtained through contractual or legal right, or are capable of being separately
sold, transferred, licensed, rented or exchanged shall be recognized as an asset
apart from goodwill. Goodwill and intangibles with indefinite lives will no
longer be subject to amortization, but will be subject to at least an annual
assessment for impairment by applying a fair value based test. SFAS 142 is
required to be applied starting with fiscal years beginning after December
15,2001, with early adoption permitted in certain circumstances. The Company may
elect to adopt SFAS 142 effective October 1,2001 or October 1,2002. This
election must be made prior to the

                                      12
<PAGE>

issuance of its financial statements for the quarter ended December 31, 2001.
Due to the complexity of this new standard and its recent issuance, the Company
is continuing to evaluate whether it will adopt SFAS 142 effective October
1,2001. The Company continued to amortize goodwill under its current method
through September 30,2001. Once the standard is adopted, annual goodwill
amortization of approximately $ 822,000, respectively, will no longer be
recognized.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     From time to time, including herein, the Company may disclose "forward-
looking" statements within the meaning of Section 27A of the Securities Act of
1933, as amended and Section 21E of the Securities Exchange Act of 1934, as
amended.  Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," or variations of such words and similar
expressions are intended to identify such forward-looking statements.  These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions.  Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such forward-looking
statements.  The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.

     In addition to factors discussed in this Form 10-K, among the other factors
that could cause the Company's results to differ materially are: general
economic and business conditions; the impact of competitive products and
pricing; success of operating initiatives; development and operating costs;
advertising and promotional efforts; adverse publicity; acceptance of new
product offerings; consumer trial and frequency; changes in business strategy or
development plans; quality of management; availability, terms, and deployment of
capital; the results of financing efforts; business abilities and judgment of
personnel; availability of qualified personnel; food, labor, and employee
benefit costs; changes in, or the failure to comply with, government
regulations; weather conditions and construction schedules; and risks that sales
growth resulting from the Company's current and future remodeling can be
sustained at the current levels.

     For a further discussion of some of these factors that could cause actual
results to differ materially from such forward-looking statements, see "Risk
Factors" below.

RISK FACTORS

     RECENT EVENTS. Uncertainties regarding the impact of the recent terrorist
activities may have a negative impact on the economy and the public's confidence
in general, which could have an adverse effect on our business

     DEPENDENCE ON EXECUTIVE OFFICERS. The Company is dependent upon the efforts
and abilities of Robert Berg, its Chief Executive Officer, Chairman of the
Board, and Steven Wemple, its President and Chief Operating Officer. The loss of
the services of either Messrs. Berg or Wemple would have a material adverse
effect upon the Company's business and future prospects. In addition, in order
to successfully implement its proposed expansion and

                                      13
<PAGE>

manage anticipated growth, the Company will be dependent upon its ability to
retain existing and hire additional qualified management and other personnel,
including certain executive officers. The competition for qualified management
and other personnel in the restaurant industry is intense and, accordingly,
there can be no assurance that the Company will be able to retain or hire the
necessary personnel. The Company will also be dependent on its ability to hire
and train hourly employees. In recent years, the restaurant industry has
experienced a shortage in the availability of qualified restaurant personnel,
which could have an adverse effect on the Company.

     INCREASES IN OPERATING AND FOOD COSTS; AVAILABILITY OF SUPPLIES. An
increase in operating costs could adversely affect the profitability of the
Company. Factors such as inflation, increased utility, labor and employee
benefit costs are beyond the Company's control and may adversely affect the
restaurant industry in general and the Company's restaurants in particular. In
connection with any further expansion of the Company, of which there can be no
assurance, the Company's general and administrative costs likely would increase
as a percentage of revenues as the Company adds administrative staff, systems,
and other infrastructure to support these costs. A majority of the Company's
revenues and food costs are derived from the sale and purchase of chicken. The
cost of fresh chicken fluctuates from time to time depending on a variety of
factors beyond the control of the Company, such as weather conditions and
seasonal demand. There can be no assurance that fluctuations in the cost of
chicken or the price of other supplies will not adversely affect the Company's
results of operations. In addition, the Company is dependent on daily deliveries
of food supplies, such as chicken, produce, baked goods and other products. Any
delays or stoppages in such deliveries, as a result of, among other things,
labor unrest or adverse weather conditions, could subject the Company's
restaurants to shortages or interruptions which could materially adversely
affect the Company.

     LIMITED MENU; UNCERTAINTY OF MARKET ACCEPTANCE. The Company's Popeye's
restaurants menu is comprised primarily of fried chicken and accompanying side
dishes.  Achieving consumer awareness and market acceptance of the Company's
concepts, particularly as the Company seeks to open and expand into new markets,
will require substantial effort and expenditures by the Company.  A general
decline in the sale of chicken products due to industry trends, change in
consumer preferences, increased prices or other reasons would adversely impact
the Company.

     The Company's future expansion plans are based upon Management's belief
that the Popeye's concept will have significant market appeal in the markets in
which the Company expects to enter. In the event the anticipated consumer
acceptance of the Popeye's concept in these markets is not realized, the Company
would be subject to a material adverse effect.

CERTAIN FACTORS AFFECTING THE QUICK-SERVICE RESTAURANT INDUSTRY.

     The Company is required to respond to various consumer preferences, tastes
and eating habits; demographic trends and traffic patterns; increases in food
and labor costs; and national, regional and local economic conditions. In the
past, several quick-service restaurant companies have experienced flat growth
rates and declines in average sales per restaurant, in response to which certain
of such companies have adopted "discount-pricing" strategies. Such strategies

                                      14
<PAGE>

could have the effect of drawing customers away from companies that do not
engage in discount pricing and could also negatively impact the operating
margins of competitors that do attempt to match competitors' price reductions.
Continuing or sustained price discounting in the fast food industry could have
an adverse affect on the Company.

     The Company's profits are dependent on discretionary spending by consumers,
particularly by consumers living in the communities in which the Company's
restaurants are located.  Currently, the Company has locations in Florida,
Alabama, Illinois, Georgia, Mississippi, Missouri, and Louisiana.  A significant
weakening in any of the local economies in which the Company operates may cause
the residents of such communities to curtail discretionary spending which, in
turn, could materially adversely affect the profitability of the entire Company.

     IMPORTANCE OF TRADEMARKS.  The Company believes that its use of various
trademarks and service marks obtained pursuant to its franchise agreements with
the Franchisor are valuable to the marketing of its restaurants.  There can be
no assurance that the Company's use of such marks does not or will not violate
the proprietary rights of others, that the Company's rights to utilize such
marks will be upheld if challenged, or that the Company will not be prevented
from using the marks, any of which could materially adversely affect on the
Company.

     GOVERNMENT REGULATION. The restaurant business is subject to extensive
federal, state and local regulation relating to the development and operation of
restaurants, including regulations relating to building and zoning requirements,
franchising, preparation  and sale of food, and laws governing the Company's
relationship with its employees, including minimum wage requirements,
unemployment taxes and sales taxes, overtime and working conditions and
citizenship requirements.  The failure to obtain or retain required licenses, or
a substantial increase in the minimum wage rate, could adversely affect the
quick service operations of the Company.  The restaurant business in these
markets is subject to extensive regulation relating to the development and
operation of restaurants, including regulations relating to building
requirements, preparation and sale of quick service, and laws governing the
Company's relationship with its employees.  Compliance with such regulations may
result in the Company incurring significant expenses.  Failure to obtain
required licenses or to comply with applicable laws and regulations in such
jurisdictions could adversely affect the operations of the Company's restaurants
in such jurisdictions.

     EXPANSION PLANS; CAPITAL RESOURCE REQUIREMENTS.  There can be no assurance
that the Company will achieve its growth objectives or that new restaurants will
be profitable.  The success of the Company's planned expansion will be dependent
upon numerous factors, many of which are beyond the Company's control, including
the identification of suitable markets, the availability and leasing or purchase
of suitable sites on acceptable terms, the hiring, training and retention of
qualified management and other restaurant personnel, the ability to obtain
necessary governmental permits and approvals, the availability of appropriate
financing and general economic conditions.

     DEPENDENCE ON CONCEPTS.  Because the Company develops and operates Popeye's
restaurants, a failure of the Popeye's concept to compete successfully in the
quick

                                      15
<PAGE>

service restaurant industry in the areas in which the Company operates Popeye's
restaurants or in which the Company intends to develop new restaurants or
acquire existing restaurants would have a material adverse effect on the
Company.

ITEM 8. FINANCIAL STATEMENTS

     See the Financial Statements of the Company, which are attached hereto.

                                      16
<PAGE>

                                   PART III

ITEM 11. EXECUTIVE COMPENSATION

CASH COMPENSATION

     The following table shows, for the three-year period ended September 30,
2001, cash and other compensation paid to the Chief Executive Officer of the
Company and the Company's four most highly compensated executive officers of the
Company other than the Chief Executive Officer, each of whom received a total
annual salary and bonus in excess of $100,000 for the fiscal year ended
September 30, 2001.

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                               LONG-TERM COMPENSATION
                                                                               ----------------------
                                                       ANNUAL COMPENSATION     AWARDS                       PAYOUTS
                                                       -------------------     ------------------------------------
                                                                   OTHER                       SECURITIES               ALL
                                                                   ANNUAL       RESTRICTED     UNDERLY-     OTHER       OTHER
                                                                   COMPEN-      STOCK          ING          LTIP        COMPEN-
NAME AND                             FISCAL    SALARY   BONUS      SATION       AWARD(S)       OPTIONS/     PAYOUTS     SATION
PRINCIPAL POSITION                   YEAR       ($)      ($)        ($)           ($)          SARS (#)       ($)       ($)
------------------                   ------    ------   -----      -------      ----------     ----------   -------     -------
<S>                                  <C>      <C>       <C>        <C>          <C>            <C>          <C>         <C>
Robert S. Berg                       2001     768,043   10,000      5,212 (1)       0              0            0        46,519 (2)
  Chairman of the Board              2000     452,043  300,000      4,322 (1)       0              0            0             0
  Chief Executive Officer            1999     328,580        0      4,165 (1)       0              0            0             0

Steve M. Wemple                      2001     718,326   10,000      5,212 (1)       0              0            0        46,663 (3)
  President, Chief Operating         2000     422,326  300,000      4,322 (1)       0              0            0
  Officer, Treasurer,                1999     298,863        0      4,316 (1)       0              0            0             0
  Secretary and Director

Francis X. Maloney                   2001     132,980    5,000      5,212 (1)       0              0            0        22,656 (4)
  Chief Financial Officer            2000     100,000    1,200      4,322 (1)       0              0            0             0
                                     1999      71,587        0      3,601 (1)       0              0            0             0
</TABLE>

     __________________________

      (1) Represents premiums for health insurance paid by the Company.
      (2) Represents $30,167 in premiums for life insurance on the named
          executive officers purchased by the Company under the Executive
          Retention Plan and $16,352 in premiums for life insurance on the named
          executive officers purchased by the Company under the Stock Redemption
          Agreement.
      (3) Represents $30,167 in premiums for life insurance on the named
          executive officers purchased by the Company under the Executive
          Retention Plan and $16,496 in premiums for life insurance on the named
          executive officers purchased by the Company under Stock Redemption
          Agreement.
      (4) Represents $22,656 in premiums for life insurance on the named
          executive officers purchased by the Company under Executive Retention
          Plan.

                                      17
<PAGE>

SALARY CONTINUATION-EXECUTIVE RETENTION PLAN

     On January 15, 2001, Sailormen adopted a Salary Continuation-Executive
Retention Plan for certain of its key employees.  Under the terms of the Plan,
each participant who has participated in the Plan for at least 10 years (unless
waived by Sailormen) receives either a lump sum payment or equal monthly
payments for a period of 10 years on the employee's normal retirement date which
is at age 65.  If a participant dies prior to his or her normal retirement date,
the beneficiary will receive the lump sum payment or equal monthly payments for
10 years.  If a participant dies after his or her normal retirement date, the
participant's beneficiary will receive the remainder of the equal monthly
payments.  Sailormen selects employees allowed to participate in the Plan and
determines the total benefit to be received by each participant and whether the
benefit is paid in a lump sum or equal monthly payments.  If a participant
voluntarily resigns his or her employment with Sailormen or is terminated by
Sailormen for cause as determined by Sailormen, the participant forfeits all
benefits under the Plan.  Thirteen employees of Sailormen participate in the
Plan, including the three executive officers named in the compensation table.
Sailormen has purchased life insurance policies on each participant to fund the
payment of the benefits under the Plan.

DIRECTOR COMPENSATION

     Generally, Directors of the Company are not compensated for their services
to the Company.

     On October 23, 2001, the Company announced that it had received a proposal
from Robert S. Berg and Steven M. Wemple for a going private transaction.  See
Item 12 below.  In connection with that proposal, the Board of Directors
appointed Marshal E. Rosenberg, Ph.D., the sole director of the Company other
than Messrs. Berg and Wemple, as a Special Committee to review the proposed
transaction.  Mr. Rosenberg receives $1,000 for each month or portion of a month
during which he serves on the Special Committee.

REPORT ON EXECTIVE COMPENSATION

     The Company has not established a separate compensation committee.
Instead, the Board of Directors of the Company is responsible for setting the
compensation of the Company's executive officers, developing executive benefit
plans and establishing other employee benefit plans or programs for the benefit
of the Company's executive officers.

     During Fiscal 2001, Robert S. Berg and Steven M. Wemple were the Company's
only Directors until the appointment of Marshal E. Rosenberg, Ph.D. to the Board
of Directors in June, 2001.  Additionally, during Fiscal 2001 Messrs. Berg and
Wemple were two of the three executive officers of the Company.

     Determination by the Board of the salaries and bonuses for its executive
officers are primarily made on the basis of industry and peer group standards
and regional and national economic considerations.

                                      18
<PAGE>

     The Company's executive compensation program has two components: salary and
bonus.  Currently, the program emphasizes salary with slight emphasis placed on
bonus.

     The Board sets the base salary for its chief executive officer at levels
equal to the top levels of competitive peer companies.  Base salary is reviewed
annually and is subject to adjustment based upon individual performance.  The
chief executive officer's salary is related to the Company's performance and
growth.  Based upon the Company's revenue growth of approximately 100% per year
for the last four years, and accomplishing certain profitability goals, the
Board established the base salary of Robert S. Berg, chairman of the Board and
chief executive officer of the Company, at $768,043 effective October 1, 2000.

     Section 162(m) of the Internal Revenue Code of 1986, as amended, limits to
$1,000,000 in a taxable year the deduction a company may claim for compensation
paid to each of its chief executive officer and four other highest paid
officers, unless certain performance-based conditions are met.  The Board has
reviewed this provision and does not anticipate the payment of any compensation
to an executive officer that would be affected by the limit.

     The Board believes that base salary levels and other incentives are
reasonable and sufficiently competitive.

     Marshal E. Rosenberg Ph.D. was not a director of the Company until June,
2001.  As a result, this report is presented by the members of the Board of
Directors of the Company in office at the time that the compensation decisions
were reached:

     Robert S. Berg
     Steven M. Wemple

                                      19
<PAGE>

PERFORMANCE GRAPH

     The performance graph set forth below compares the cumulative total
shareholder return on the Company's Common Stock with the Nasdaq Composite Index
and the Russell 2000 Index for the period from October 1, 1997 through September
30, 2001. The Company currently trades its common stock on the Nasdaq over-the-
counter bulletin board quotation system under the symbol "IFDA.OB". The graph
assumes $100 invested on October 1, 1997 in the Common's common stock, the
stocks of the Nasdaq Composite Index and the Russell 2000 Index.  Historical
results are not necessarily indicative of future performance.

            COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE COMPANY
               NASDAQ COMPOSITE INDEX AND THE RUSSELL 2000 INDEX

                                    [GRAPH]

                               1997   1998   1999   2000   2001
                              -----  -----  -----  -----  -----

Interfoods of America         100.0  102.0   55.0   94.1  124.2
Nasdaq Composite Index (a)    100.0  100.5  162.9  217.9   88.9
Russell 2000 Index (b)        100.0   80.1   94.2  114.9   89.2

_________________

     (a). The Nasdaq Composite Index comprises all Nasdaq domestic and
          international based company stocks listed on The Nasdaq Stock Market.

     (b)  The Russell 2000 Index measures the performance of the 2,000 smallest
          companies in the Russell 3000 Index, which is approximately 8% of the
          total market capitalization of the Russell 3000 Index.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information regarding beneficial ownership
of the Company's Common Stock as of October 31, 2001 (a) by each person known to
the Company to own beneficially more than 5% of any class of the Company's
securities and (b) by each of the Company's executive officers and directors and
by all executive officers and directors of the Company as a group.  As of
October 31, 2001, there were 5,012,099 shares of Common Stock of

                                      20
<PAGE>

the Company outstanding. The address of each of the individuals described below
is 9400 S. Dadeland Boulevard, Suite 720, Miami, Florida 33156.

<TABLE>
<CAPTION>
NAME OF BENEFICIAL                     AMOUNT AND NATURE OF          PERCENT
OWNER                                  BENEFICIAL OWNERSHIP (1)      OF CLASS
------------------                     ------------------------      --------
<S>                                    <C>                           <C>
Robert S. Berg                               1,673,219 (2)            33.3% (2)
Chairman of the Board,
Chief Executive Officer

Steven M. Wemple                               882,352                17.6%
President, Chief Operating
Officer, Treasurer, Secretary,
and Director

Francis X. Maloney                                 256                   *
Chief Financial Officer

Andrew J. Nichols                              732,867                14.6% (3)

Kenneth Cramer                                 338,983                 6.8%

All Executive Officers and Directors
as a Group (3 persons)                       2,555,827                51.0% (2)
                                             =========                ====
</TABLE>

* less than 1% of outstanding shares.

_________________

     (1)  Except as provided in these footnotes, the persons named in the table
          have sole voting and investment power with respect to all shares of
          common stock shown as beneficially owned by them. The Company has no
          outstanding options, warrants or other rights to purchase its common
          stock.
     (2)  The amount shown in the table includes 1,477,219 shares owned of
          record by Robert S. Berg over which he exercises sole voting and
          investment power. The amount shown in the table also includes 188,000
          shares owned of record by Lourdes T. Berg, the former wife of Robert
          S. Berg, over which Robert S. Berg exercises sole voting power and
          Lourdes T. Berg exercises sole investment power and 8,000 shares owned
          of record by Robert J. Berg over which Robert S. Berg exercises shared
          voting and investment power. Pursuant to Rule 13d-4 of the Securities
          Exchange Act of 1934, as amended, Robert S. Berg disclaims beneficial
          ownership of the 188,000 shares owned of record by Lourdes T. Berg and
          the 8,000 shares owned by Robert J. Berg. The amount in the table also
          includes 100,000 shares that Robert S. Berg may acquire at any time
          from Lourdes T. Berg pursuant to an option granted by Lourdes T. Berg
          to Robert S. Berg.
     (3)  The amount shown in the table includes 361,300 shares owned of record
          by the individual retirement account of Andrew J. Nichols and 44,200
          shares owned of record by the individual retirement account of Shirley
          Nichols, the wife of Andrew J. Nichols. Mr. Nichols shares voting and
          investment power with Shirley Nichols as to the 732,867 shares of
          common stock. This information is based on the Schedule 13D dated
          February 26, 2002 of Andrew J. Nichols and Shirley Nichols.

                                      21
<PAGE>

     On October 23, 2001, the Company announced that it had received a proposal
from Robert S. Berg and Steven M. Wemple for a going private transaction. The
proposed transaction, which would effect a change in control of the Company,
would be in the form of a merger with a corporation wholly-owned by Mr. Berg and
Mr. Wemple.  Pursuant to the terms of the proposal of October 23, 2001, the
Company's shareholders (other than Mr. Berg and Mr. Wemple) would receive
unsecured, subordinated notes of the Company, in exchange for the principal
amount of $1.20 per share of the Company's Common Stock.

     The terms of the proposal of October 23rd provided that the notes to be
issued by the Company in the transaction would bear interest at the rate of 5%
per annum.  Interest would be payable semi-annually, with principal becoming due
and payable in a single payment at maturity, which would be the third
anniversary of the date of issuance.  The notes would be subordinated to all
senior debt of the Company and would be issued in minimum principal amounts of
$100 and thereafter in multiples of $25.  Company shareholders would receive the
cash equivalent in lieu of any fractional notes.

     On October 23, 2001, the Board of Directors appointed Marshal E. Rosenberg,
Ph.D., the sole director of the Company other than Messrs. Berg and Wemple, to
head an Independent Committee to review the proposed transaction.  The
Independent Committee retained an independent financial advisor and legal
counsel for purposes of evaluating the proposal.

     From November 5, 2001 to December 14, 2001, the Independent Committee's
financial adviser conducted a due diligence investigation of the Company, which
included discussions with the Company's management and analysis of the Company's
financial situation and projections.  From late November until December 19,
2001, the Independent Committee negotiated with Messrs. Berg and Wemple the
terms of the proposed transaction.

     As a result of the negotiations between Messrs. Berg and Wemple, on the one
hand, and the Independent Committee, on the other hand, the Company entered into
an Agreement and Plan of Merger on December 21, 2001 with Interfoods Acquisition
Corp., a corporation wholly-owned by Mr. Berg and Mr. Wemple.  Under the terms
of the Agreement and Plan of Merger, Interfoods Acquisition Corp. will merge
with the Company which will be the entity surviving the merger.  The
stockholders of the Company (other than Messrs. Berg and Wemple, Interfoods
Acquisition Corp. and stockholders of the Company who exercise their dissenters'
rights under Nevada law) will receive unsecured, subordinated notes of the
Company in the principal amount of $1.45 per share of Company common stock.

     The debentures to be issued by the Company in the transaction will bear
interest at the rate of 10% per annum.  Interest will be payable semi-annually
on each June 30 and December 31.  The principal of the debentures will be
payable as follows:  20% on the second anniversary of the date of issuance of
the debentures and the remainder on the third anniversary of the date of
issuance of the debentures.  The notes will be subordinated to all senior debt
of the Company and will be issued in minimum principal amounts of $100 and
thereafter in multiples of $25.  Company shareholders will receive a cash
payment in lieu of any fractional notes.

                                      22
<PAGE>

     The changes in the terms of the proposed transaction from those previously
proposed by Mr. Berg and Mr. Wemple on October 23, 2001 result from negotiations
among Messrs. Berg and Wemple; the Independent Committee; and the Independent
Committee's legal counsel and financial advisor.

     The proposed transaction would result in the acquisition of all of the
outstanding shares of common stock of the Company (other than the shares by
Messrs. Berg and Wemple and Interfoods Acquisition Corp.).  If the proposed
transaction is completed, the Company will no longer be a public reporting
entity and its stock will not be publicly traded.  The proposed acquisition is
subject to, among other things, (1) approval of the proposed transaction by the
Company 's shareholders, (2) the financial advisor to the Independent Committee
not revoking, modifying or changing the fairness opinion delivered to the
Independent Committee, (3) receipt of any applicable regulatory approvals and
third-party consents and (4) the inapplicability (either by their terms or as a
result of Company Board action) of certain business combination and control
share provisions under Nevada law.  There can be no assurance that the proposed
transaction will be consummated.

     The proposed transaction may only be completed in accordance with
applicable state and federal laws including the Securities Act of 1933, the
Securities Act of 1934 and the Trust Indenture Act of 1939, as amended; however,
it is anticipated that exemptions from the registration requirements of the
Securities Act and the qualification requirements of the Trust Indenture Act
will be available to this transaction.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In 1996, James S. Byrd, George Carter, Norman Kaufman, Robert S. Berg,
Chairman of the Board of Directors and Chief Executive Officer of the Company,
and Steven M. Wemple, President, Chief Operating Officer, Treasurer, Secretary
and Director of the Company, entered into a Shareholders Voting Agreement which
set the manner in which the Company's directors were to be elected and in which
the Company's officers were to be appointed and placed restrictions on the
transfer of stock by the parties to the agreement.  Messrs. Byrd, Carter and
Kaufman sold all shares of the Company's common stock held by them after the
date of the execution of the Shareholders' Voting Agreement and therefore are no
longer parties to the agreement.  On March 6, 2002, Mr. Berg and Mr. Wemple, the
only remaining parties to the Shareholders' Voting Agreement, terminated the
agreement as of that date because the agreement was no longer relevant to the
Company's governance or the transfer by Mr. Berg or Mr. Wemple of the Company's
common stock.

     Robert S. Berg, Chairman of the Board of Directors and Chief Executive
Officer of the Company, and Steven M. Wemple, President, Chief Operating
Officer, Treasurer, Secretary and Director of the Company, jointly own all of
the outstanding stock of Elk River Aviation Inc. ("Elk River"), a charter
aircraft company whose sole business is the leasing of the airplane described in
this paragraph.  On October 1,1998, the Company entered into an agreement
whereby the Company was charged the flat rate of $1,100 per hour of usage, on an
as needed basis.  Elk River was responsible for all operating expenses of the
airplane, such as pilot salary, insurance, fuel, and maintenance.  Subsequently,
the lease rate was amended to $1,500 per hour in June 1999, and to $3,500 per
hour in October 2000.  In Fiscal Years 2001, 2000, and 1999, the

                                      23
<PAGE>

Company paid approximately $922,000, $724,000 and $440,000, respectively, to Elk
River for its use of the airplane. The Company believes that the lease of the
aircraft is important to the Company in order to permit management to
effectively supervise the operations of its restaurants which are located in
seven states, as well as in connection with the efforts of the Company to
analyze potential future restaurant locations. As of September 30, 2001 and
2000, the Company had a receivable of $221,304 and $0, related to certain
expenses paid by the Company on behalf of Elk River Aviation, which is included
in Accounts Receivable on the Consolidated Balance Sheet. In Fiscal 2000, the
Company fully reserved for a deposit of $160,439 with Elk River Aviation as its
collectibility was deemed to be uncertain.

     On July 21, 2000, the Company invested $2,200,000 in land and building for
two Popeye's Chicken and Biscuit restaurants on the West Coast of Florida.  The
Company obtained financing of $1,632,000 from an unrelated party in connection
with this transaction.  The Company leased the two restaurants to T.T. & D.
Foods Inc., a Florida Corporation controlled by Tim Berg, the brother of Robert
S. Berg, the Chairman of the Board of Directors and Chief Executive Officer of
the Company.  Under the terms of the triple net lease, T. T. & D Foods Inc.,
pays annual rent to the Company in the amount of $282,568 and pays insurance,
taxes and other expenses associated with the leased property.  The Company's
annual payments on the debt incurred to finance the two restaurants is $222,662.
During Fiscal years 2001 and 2000, the Company netted income of $59,906 and
$36,135 from this transaction.

     The Company believes that the transactions described above are on the same
terms and conditions as similar transactions with unaffiliated parties.

     Marshal E. Rosenberg, Ph.D., a director of the Company, acted as agent for
the National Life Insurance Company that provided to Sailormen its Salary
Continuation Executive Retention Plan and the life insurance policies on the 13
participants in that Plan, including the executive officers named in the
compensation table in Item 11.  During fiscal 2001, the Company paid to National
Life Insurance Company premiums aggregating $178,000 in connection with such
insurance policies and Dr. Rosenberg received approximately $105,500 in
commissions from the insurance company.  In fiscal 2002, the Company intends to
pay premiums of approximately $250,000 on those insurance policies, and Dr.
Rosenberg will receive approximately $31,250 in commissions from the insurance
company.  All commissions paid to Dr. Rosenberg are calculated at rates
established by state regulatory guidelines. The Company intends to continue to
pay the premiums for the insurance policies in future fiscal years.  Dr.
Rosenberg will continue to receive commissions from the insurance company
calculated at rates established by state regulatory guidelines.

     On June 30, 2001, the Company entered into a Stock Redemption Agreement
with Mr. Berg and Mr. Wemple providing for, among other things, restrictions on
the sale or transfer of the Company's common stock without the consent of the
other parties to the agreement.  The agreement provides that if either Mr. Berg
or Mr. Wemple intends to dispose of the Company's common stock he must first
offer to sell the common stock to the Company and the other party to the
agreement at the price specified in the agreement, which is $6.09 if Mr. Berg
desires to sell his shares of the Company's common stock and $6.43 if Mr. Wemple
decides to sell his shares of the Company's common stock.  Additionally, upon
the death of either Mr. Berg or Mr. Wemple, the agreement requires that we
purchase the stock owned by Mr. Berg or Mr. Wemple,

                                      24
<PAGE>

as applicable, at the prices per share set forth in the preceding sentence.
Those prices were intended to reflect the fair market value of our stock owned
by Mr. Berg and Mr. Wemple and their significant contributions to the Company's
successful operations.

     Under the agreement, the Company purchased a $6,000,000 life insurance
policy on Mr. Berg and a $4,000,000 life insurance policy on Mr. Wemple to be
used by the Company to pay a portion of the purchase price of the Company's
shares owned by them upon their death.  The Company is the owner and beneficiary
of each life insurance policy.  During fiscal 2001, the Company paid premiums
aggregating $33,000 in connection with such policies and Dr. Rosenberg received
approximately $16,500 in commissions from the insurance company.  In fiscal
2002, the Company intends to pay premiums of approximately $132,000 on those
insurance policies, and Dr. Rosenberg will receive approximately $16,500 in
commissions from the insurance company.  All commissions paid to Dr. Rosenberg
are calculated at rates established by state regulatory guidelines. The Company
intends to continue to pay premiums for the insurance policies in future fiscal
years.  Dr. Rosenberg will continue to receive commissions from the insurance
company calculated at rates established by state regulatory guidelines.

     On February 6, 2002, Mr. Berg contributed to Interfoods Acquisition Corp.
("Interfoods Acquisition") 1,476,719 shares of the Company's common stock for an
equivalent number of shares of common stock of Interfoods Acquisition.  On
February 6, 2002, Mr. Wemple contributed to Interfoods Acquisition 932,352
shares of the Company's common stock for an equivalent number of shares of
common stock of Interfoods Acquisition.

     On February 27, 2002, the Company entered into an Amended and Restated
Stock Redemption Agreement (the "Amended and Restated Agreement") with
Interfoods Acquisition and Messrs. Berg and Wemple.  The Amended and Restated
Agreement revised the Stock Redemption Agreement as follows:

     -    The Company agreed that if either Mr. Berg or Mr. Wemple dies prior to
          the completion of the merger of Interfoods Acquisition with and into
          the Company in connection with the going private transaction described
          in Item 12, the Company shall purchase, and Interfoods Acquisition
          shall sell, such number of shares of the Company's common stock owned
          by Interfoods Acquisition that is equivalent to the number of shares
          of common stock of Interfoods Acquisition owned by the decedent.

     -    The purchase price for the Company's shares to be redeemed by the
          Company upon the death of Mr. Berg or Mr. Wemple was revised so that
          it is now based on only the fair market value of the shares rather
          than the price set forth in the Stock Redemption Agreement.  Fair
          market value of the shares to be redeemed by the Company shall be
          determined by the Company and the estate of Mr. Berg or Mr. Wemple, as
          applicable, or by arbitration if the Company is unable to agree upon
          the fair market value of the shares.

     The Company's board decided to change the redemption price payable upon
death of Mr. Berg or Mr. Wemple in view of the analysis of Capitalink, L.C.
provided in connection with the proposed going private transaction described in
Item 12 and the prospect of our becoming a

                                      25
<PAGE>

privately held company. The Company will use the proceeds from the insurance
policies on the lives of Mr. Berg and Mr. Wemple to pay the redemption price of
the shares of common stock owned by Mr. Berg and Mr. Wemple on the date of their
respective deaths. If the insurance proceeds exceed the redemption price, the
Company will retain the excess as general working capital.

     There is no present intention by Interfoods Acquisition, Mr. Berg, Mr.
Wemple or the Company to change the provisions of the Amended and Restated Stock
Redemption Agreement with respect to the redemption price to be paid by the
Company for shares of its common stock in the event of the death of Mr. Berg or
Mr. Wemple.

                                    PART IV

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

     (a) 1.  Financial Statements.
             See Index to Financial Statements which appears on page F-1 herein.

         2.  Financial Statement Schedules:
             None

         3.  Exhibits:

     Exhibit No  Description
     ----------  -----------

        3.1      Articles of Incorporation of Interfoods of America, Inc.
                 formerly Sobik's Subs, Inc. as amended (1)

        3.2      By-Laws of Interfoods of America, Inc. formerly Sobik's Subs,
                 Inc. as amended (1)

        4.2      Secured Promissory Note dated September 14, 2000 by Interfoods
                 of America, Inc. and Sailormen, Inc. in favor of American
                 Commercial Capital LLC. (2)

        4.3      Security Agreement dated September 14, 2000 by and among
                 Interfoods of America, Inc., Sailormen, Inc. and American
                 Commercial Capital LLC. (all schedules and exhibits have been
                 omitted other than the schedule of defined terms; such omitted
                 schedules and exhibits will be furnished upon request) (2)

        9.1      Shareholders' Voting Agreement dated April 17, 1996 (1)

        9.2      Termination Agreement dated March 6, 2002

                                      26
<PAGE>

       10.1  Form of Franchise Agreement, entered into by the Company as
             Franchisee, including  the Addendum to Franchise  Agreement. (1)

       10.2  Trademark Licensing Agreement dated March 1, 1993 (1)

       10.9  Asset Purchase Agreement by and between the Company and Ellis
             Enterprise dated January 11, 2000 (3)

       10.10 Asset Purchase Agreement between the Company and RMS Family
             Restaurants dated  September 14, 2000 (3)

       10.11 Executive Retention - Salary Continuation Plan dated January 15,
             2001 (3)

       10.12 Stock Redemption Agreement dated June 30, 2001 by and among the
             Company, Mr. Berg and Mr. Wemple

       10.13 Amended and Restated Stock Redemption Agreement dated February 27,
             2002 by and among the Company, Interfoods Acquisition Corp., Mr.
             Berg and Mr. Wemple

       12.1  Ratio of Earnings to Fixed Charges

       21.1  List of Subsidiaries

               (1)  Incorporated herein by reference to Form 10-SB under the
                    Securities Exchange Act of 1934 filed with the Commission on
                    July 29, 1996, file number 000-21093.

               (2)  Incorporated herein by reference to Form 10-K under the
                    Securities and Exchange Act of 1934 filed with the
                    Commission on December 18, 2001, file number 000-21093.

               (3)  Incorporated herein by reference to Form 10-Q under the
                    Securities Exchange Act of 1934 filed with the Commission on
                    May 14, 2001, file number 000-21093.

  (b.)   Reports on Form 8-K

     The following reports were filed on Form 8-K/A during the fourth quarter of
the period covered by this report:

     On September 4, 2001, the Company filed on Form 8-K/A under item 7(a) and
7(b) the financial statements and pro forma financial information relating to
the January 11, 2000 acquisition of 37 restaurants from Ellis Enterprises Inc.

     On September 21, 2001, the Company filed on Form 8-K/A under item 7(a) and
7(b) the financial statements and pro forma financial information relating to
the March 8, 1999 acquisition of 10 restaurants from The Moody Company.

                                      27
<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.


                                        INTERFOODS OF AMERICA, INC.


                                        /s/ Robert S. Berg
                                        -------------------------------
                                        Robert S. Berg, Chief Executive Officer

                                        March 12, 2002

                                      28
<PAGE>

                 INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                              Page
                                                              ----
<S>                                                           <C>
Report of Independent Certified Public Accountants            F-2
Report of Independent Certified Public Accountants            F-3

Consolidated Financial Statements:

    Consolidated Balance Sheets                               F-4 - F-5

    Consolidated Statements of Operations                     F-6

    Consolidated Statement of Stockholders' Equity            F-7

    Consolidated Statements of Cash Flows                     F-8 - F-9

Notes to Consolidated Financial Statements                    F-10 - F-22
</TABLE>

                                      F-1
<PAGE>

                        REPORT OF INDEPENDENT CERTIFIED
                              PUBLIC ACCOUNTANTS


Board of Directors of
Interfoods of America, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Interfoods of
America, Inc. and Subsidiaries as of September 30, 2001and 2000, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for each of the two years in the period ended September 30, 2001 These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

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

GRANT THORNTON LLP

Miami, Florida,
November 6, 2001 (Except for Note 14, as to which the date is December 24, 2001)

                                      F-2
<PAGE>

              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
Interfoods of America, Inc.:

We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows of Interfoods of America, Inc. (a Nevada
corporation) and subsidiaries for the year ended September 30, 1999. 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 audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of  operations and cash flows of
Interfoods of America, Inc. and subsidiaries for the year ended September 30,
1999, in conformity with accounting principles generally accepted in the United
States of America.

ARTHUR ANDERSEN LLP

Miami, Florida,
November 9, 1999.

                                      F-3
<PAGE>

                 INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                          SEPTEMBER 30, 2001 AND 2000

<TABLE>
<CAPTION>
                     ASSETS                                          2001          2000
                     ------                                          ----          ----
<S>                                                           <C>          <C>
Current assets:
  Cash and cash equivalents                                  $  2,370,032  $  2,371,365
  Certificates of deposit                                       3,527,820     3,527,820
  Accounts receivable                                             276,275        29,378
  Inventories                                                     792,577       746,524
  Prepaid expenses                                                411,269         3,815
                                                             ------------  ------------

      Total current assets                                      7,377,973     6,678,902
                                                             ------------  ------------

Property and equipment, net                                    79,926,823    78,078,077
                                                             ------------  ------------

Other assets:
  Deposits                                                        354,930       371,501
  Goodwill, less accumulated amortization of
   $1,564,541 and $739,763 in 2001 and 2000, respectively      24,736,114    25,668,497
  Other intangible assets, less accumulated
   amortization of $398,329 and $279,832 in
   2001 and 2000,respectively                                   2,005,617     2,102,034


  Debt issuance cost, less accumulated
   amortization of $ 233,997 and $85,163 in
   2001 and 2000, respectively                                  2,448,405     2,577,623
  Other assets                                                    178,362       176,328
                                                             ------------  ------------

      Total other assets                                       29,723,428    30,895,983
                                                             ------------  ------------

      Total assets                                           $117,028,224  $115,652,962
                                                             ============  ============
</TABLE>
                                  (Continued)

                                      F-4
<PAGE>

                 INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                          SEPTEMBER 30, 2001 AND 2000

                                  (Continued)

<TABLE>
<CAPTION>
                                                                   2001           2000
                                                                   ----           ----
<S>                                                       <C>            <C>
          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                    $ 10,428,488   $  9,341,740
  Current portion of advanced vendor rebates                    720,044        956,779
  Current portion of long term debt                           6,080,505      8,007,819
  Current portion of capital lease obligations                  168,714        502,679
  Current portion of deferred income on
   sale-leaseback transactions                                   45,248         45,248
                                                           ------------   ------------

      Total current liabilities                              17,442,999     18,854,265

Long-term debt, net of current portion                       91,724,266     90,511,023
Capital lease obligations, net of current portion                     -        168,714
Advanced vendor rebates, net of current portion               2,256,230      1,953,633
Deferred taxes                                                1,103,703        295,594
Deferred income on sale-leaseback transactions,
  net of current portion                                        663,161        708,413
                                                           ------------   ------------

      Total liabilities                                     113,190,359    112,491,642
                                                           ------------   ------------

Redeemable preferred stock, Class B, nonvoting,
430,000 shares authorized, 0 shares and 225,000 shares
issued and outstanding in 2001 and 2000, respectively                 -        225,000
                                                           ------------   ------------

Commitments and contingencies (Note 10)                              --             --

Stockholders' equity:
  Common stock, 25,000,000 shares authorized
   at $.001 par value; 5,012,099 and 8,270,831
   shares issued and outstanding in
   2001 and 2000, respectively                                    5,012          8,271
   Additional paid-in capital                                 2,843,214      4,349,093
  Retained earnings (accumulated deficit)                       989,639        (11,906)
  Common stock in treasury, at cost, 0 shares and
    3,125,399 shares in 2001 and 2000, respectively                   -     (1,409,138)
                                                           ------------   ------------

      Total stockholders' equity                              3,837,865      2,936,320
                                                           ------------   ------------

      Total liabilities and stockholders' equity           $117,028,224   $115,652,962
                                                           ============   ============
</TABLE>

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

                                      F-5
<PAGE>

                 INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                          2001           2000           1999
                                                                          ----           ----           ----
<S>                                                               <C>             <C>            <C>
Total Restaurant sales                                            $152,088,594    $77,589,129    $37,796,392

Costs and expenses:
  Cost of restaurant operations:
   Cost of sales                                                    48,521,028     24,780,726     12,130,572
   Restaurant wages and related benefits                            40,262,997     20,545,181      9,834,523
   Occupancy and other operating expenses                           34,520,341     17.186,197      9,773,777
                                                                  ------------    -----------    -----------
     Total cost of restaurant operations                           123,304,366     62,512,104     31,738,872

  General and administrative expenses                               12,419,692      7,192,666      3,992,330
  Depreciation and amortization                                      4,878,386      2,188,118        778,051
                                                                  ------------    -----------    -----------

    Total operating expenses                                       140,602,444     71,892,888     36,509,253
                                                                  ------------    -----------    -----------

Operating income                                                    11,486,150      5,696,241      1,287,139
                                                                  ------------    -----------    -----------
Other income (expense):
 Loss on investment in JRECK                                                 -        (93,691)      (182,809)
 Interest expense                                                  (10,135,891)    (4,439,756)      (892,906)
 Interest and other income (expense)                                   459,395       (565,631)      (227,378)
                                                                  ------------    -----------    -----------

    Total other expense                                             (9,742,496)    (5,099,078)    (1,303,093)
                                                                  ------------    -----------    -----------

    Income (loss) before income tax provision                        1,809,654        597,163        (15,954)

Income tax provision                                                  (808,109)      (216,029)      (130,370)
                                                                  ------------    -----------    -----------

    Net income (loss)                                             $  1,001,545    $   381,134    $  (146,324)
                                                                  ============    ===========    ===========

Net earnings (loss) per share - basic and diluted, less
  preferred stock dividends of $0, $0 and
  $750 in 2001, 2000, and 1999 respectively                       $       0.20    $      0.07    $     (0.03)
                                                                  ============    ===========    ===========

Weighted average shares outstanding:

  Basic and diluted                                                  5,133,377      5,468,503      5,713,658
                                                                  ============    ===========    ===========
</TABLE>

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

                                      F-6
<PAGE>

                 INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
             FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                            Retained        Common
                                                         Common Stock        Additional     Earnings       Stock in
                                                       ---------------
                                                                              Paid-in     (Accumulated     Treasury
                                                       Shares      Amount     Capital       deficit)       at cost        Total
                                                       ------      ------     -------     ------------     --------       -----
<S>                                                   <C>         <C>       <C>           <C>            <C>           <C>
BALANCE, OCTOBER 1, 1998                              8,262,405   $ 8,262   $ 4,321,727     $ (245,966)  $  (728,268)  $3,355,755

     Net loss                                                 -         -             -       (146,324)            -     (146,324)

     Preferred stock - Class A dividend                       -         -             -          ( 750)            -         (750)

     Common stock issued to employees                     8,426         9        27,366              -             -       27,375
                                                     ----------   -------   -----------   ------------   -----------   ----------

BALANCE, SEPTEMBER 30, 1999                           8,270,831     8,271     4,349,093       (393,040)     (728,268)   3,236,056


     Net income                                               -         -             -        381,134             -      381,134

      Purchase of common stock in treasury                    -         -             -              -      (680,870)    (680,870)
                                                     ----------   -------   -----------   ------------   -----------   ----------

BALANCE, SEPTEMBER 30, 2000                           8,270,831     8,271     4,349,093        (11,906)   (1,409,138)   2,936,320

        Net income                                            -         -             -      1,001,545             -    1,001,545

     Purchase of common stock in treasury                     -         -             -              -      (100,000)    (100,000)

     Retirement of common stock in
     treasury                                        (3,258,732)   (3,259)   (1,505,879)             -     1,509,138            -
                                                     ----------   -------   -----------   ------------   -----------   ----------

BALANCE, SEPTEMBER 30, 2001                          5, 012,099   $ 5,012   $ 2,843,214     $  989,639   $         -   $3,837,865
                                                     ==========   =======   ===========   ============   ===========   ==========
</TABLE>

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


                                      F-7
<PAGE>

                 INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
<TABLE>
<CAPTION>


                                                                                      2001           2000           1999
                                                                               -----------   ------------   ------------
<S>                                                                            <C>           <C>            <C>
Cash flows from operating activities:
  Net income (loss)                                                            $ 1,001,545   $    381,134   $   (146,324)
  Adjustments to reconcile net income (loss) to net
   cash provided by operating activities
     Depreciation and amortization                                               4,878,386      2,188,118        778,051
     Deferred income tax expense                                                   808,109        216,029        130,370
     Amortization of deferred income on sale-leaseback transactions                (45,252)       (45,252)       (38,974)
     Amortization of debt issuance costs                                           148,834         70,966         14,197
     Amortization of advanced vendor rebates                                      (493,968)      (799,852)             -
     Write down of investment in JRECK                                                  --         93,691        182,809
     Loss on closed stores                                                          90,320         47,942             --
     Common stock issued to employees                                                   --             --         27,375
     Changes in assets and liabilities:
      Accounts receivable                                                         (246,897)      (262,180)        24,920
      Inventories                                                                  (46,053)      (468,355)      (157,773)
      Prepaid expenses                                                            (407,454)        66,378        (21,649)
      Deposits                                                                      16,571        221,331        (70,820)
      Other assets                                                                 (32,848)            --         52,500
      Accounts payable and accrued expenses                                      1,086,748      5,381,842         87,610
      Advanced vendor rebates                                                      559,830      3,710,264             --
                                                                               -----------   ------------   ------------
          Net cash provided by operating activities                              7,317,871     10,802,056        862,292
                                                                               -----------   ------------   ------------
Cash flows from investing activities:
  Acquisition of land, buildings and restaurants                                (4,145,189)   (85,184,792)   (19,718,278)
  Proceeds from sale of real estate                                                170,723        228,500     14,430,370
  Capital expenditures                                                          (1,802,988)    (3,547,065)    (5,022,163)
  Acquisition of other intangible assets                                                --        (40,000)      (109,500)
  Certificates of deposit investments                                                   --     (3,527,820)            --
                                                                               -----------   ------------   ------------

          Net cash used in investing activities                                 (5,777,454)   (92,071,177)   (10,419,571)
                                                                               -----------   ------------   ------------
Cash flows from financing activities:
  Proceeds from long-term debt                                                   3,183,794     89,171,727      9,076,360
  Repayment of long-term debt                                                   (4,400,544)    (2,820,282)      (340,666)
  Redemption of Restricted Class A Preferred stock                                      --             --        (50,000)
  Redemption of Restricted Class B Preferred stock                                (225,000)       (60,000)       (60,000)
  Preferred stock - Class A dividend                                                    --             --           (750)
  Purchase of treasury stock                                                      (100,000)      (680,870)            --
  Debt issuance costs                                                                    -     (2,337,999)      (223,670)
                                                                               -----------   ------------   ------------

                 Net cash provided by (used in) financing activities            (1,541,750)    83,272,576      8,401,274
                                                                               -----------   ------------   ------------

                 Net increase (decrease) in cash and cash equivalents               (1,333)     2,003,455     (1,156,005)

Cash and cash equivalents:
  Beginning of period                                                            2,371,365        367,910      1,523,915
                                                                               -----------   ------------   ------------
  End of period                                                                $ 2,370,032   $  2,371,365   $    367,910
                                                                               ===========   ============   ============
</TABLE>
                                  (Continued)

                                      F-8
<PAGE>

                 INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

                                  (Continued)

<TABLE>
<CAPTION>
                                                             2001            2000            1999
                                                       ----------      ----------    ------------
<S>                                                    <C>             <C>           <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION:

   Interest paid                                       $9,825,326      $ 4,030,756    $   778,710
                                                       ==========      ===========    ===========

   Income taxes paid                                   $        0      $     3,114   $     12,211
                                                       ==========      ===========   ============

SUPPLEMENTAL DISCLOSURES OF NONCASH
  INVESTING AND FINANCING ACTIVITIES:
   Net assets and assumed certain liabilities of
     acquired businesses-
      Total assets                                             --      $85,995,072   $ 20,114,481
      Total liabilities assumed                                --         (810,280)      (396,203)
                                                                       -----------   ------------


      Net cash paid                                            --      $85,184,792   $ 19,718,278
                                                                       ===========   ============

</TABLE>

In Fiscal 2001, the Company retired 3,258,732 shares of common stock held in
treasury which had a cost of $1,509,138.



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


                                      F-9
<PAGE>

                 INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       SEPTEMBER 30, 2001, 2000 AND 1999

1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

BUSINESS OPERATIONS

Interfoods of America, Inc., a Nevada corporation (the "Company"), is through
its wholly owned subsidiary, Sailormen Inc., a Florida corporation, a franchisee
and operator of Popeye's/registered trademark/Chicken and Biscuits ("Popeye's")
restaurants. Pursuant to franchise agreements with AFC Enterprises, Inc., the
Company currently operates 165 Popeye's restaurants located in Florida, Alabama,
Illinois, Georgia, Mississippi, Louisiana and Missouri. 81 of the 165
restaurants are located in the state of Florida and these restaurants derive
approximately 56% of its revenue in Fiscal 2001.

The accompanying consolidated financial statements include the accounts of
Interfoods of America, Inc. ("Interfoods" or the "Company" formerly known as
Sobik's Subs, Inc.) and its wholly owned subsidiaries, SBK Franchise Systems,
Inc. ("SBK"), Sobik's Restaurant Corp. ("Restaurant"), Tropic Foods Ltd., West
Point Partners, Inc. and Sailormen, Inc. ("Sailormen"). In September 1996, the
Company changed its name from Sobik's Subs, Inc. to Interfoods of America, Inc.
Intercompany balances and transactions are eliminated in consolidation.

SBK was engaged in franchise sales of a system of producing and merchandising
distinctive specialty sandwiches, related food items and other products, under
the name "Sobik's Subs." The Company sold SBK and Restaurant in December 1997
for consideration of $1.1 million, comprised of a $500,000 promissory note due
December 4, 1998, $500,000 worth of acquirer's ("JRECK") common stock and
$100,000 cash. The 1999 financial statements include expenses of $182,809
reflecting the adjustment for the impairment in the Company's investment in
JRECK, as required by SFAS 115 "Accounting for Certain Investments in Debt and
Equity Securities." In Fiscal 2000, the Company sold all the shares of JRECK
stock for $123,500 and incurred a loss of investment of $93,691 which is
reflected as an other expense.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all highly liquid investments with an original
maturity of three months or less.

CERTIFICATES OF DEPOSIT

The Company invests its excess cash in certificates of deposit which have
maturities of 12 months or less. These investments are pledged as collateral for
certain of the Company's debt.

INVENTORIES

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

REVENUE RECOGNITION

Restaurant sales are recognized at time of sale with delivery of product to the
customer.


RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation.

ADVERTISING

All costs associated with advertising and promoting the Company products are
expensed when incurred.

                                     F-10
<PAGE>

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. The Company capitalizes construction
in progress. The Company does not depreciate the construction in progress until
the assets are placed in service. Significant store re-imaging costs and other
improvements are capitalized as additions to the property and equipment, while
repairs and maintenance costs are expensed as incurred. Depreciation is
calculated using the straight-line method over the following estimated useful
lives:

         Building                       39 years
         Leasehold improvements         Lesser of 20 years or life of lease
         Furniture and equipment        3-10 years

For income tax purposes, accelerated methods of depreciation are used.

START-UP COSTS

The Company currently expenses costs relating to new restaurant start-up
activities. Such costs include training and labor costs prior to opening a new
restaurant. On April 3, 1998, the Accounting Standards Executive Committee
issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities", which requires the write-off of all previously capitalized start-up
costs. The effective date of SOP 98-5 is for fiscal years beginning after
December 15, 1998. The Company adopted SOP 98-5 in Fiscal 2000. In Fiscal 1999,
the Company expensed approximately $60,000 of start-up costs. As of September
30, 2001, the Company had no remaining capitalized start-up costs.

INTANGIBLE ASSETS

Goodwill represents the excess of purchase price over the fair value of assets
and liabilities acquired in acquisitions accounted for under the purchase method
of accounting. Goodwill is amortized on a straight line basis over periods
ranging from 30 to 40 years, which management believes is a reasonable life in
light of the characteristics present in the Popeye's Franchise community. Other
intangible assets are recorded at cost and consist of franchise rights, which
are being amortized using the straight-line method over 20 years. The franchise
agreements are for an initial term of 20 years and may be extended for
additional ten-year terms upon the payment of one-half of the then-applicable
franchise fee and the execution of a renewal franchise agreement. The franchise
agreement terms require the Company to pay royalties of 5% and advertising of 3%
of net sales on a weekly basis.

Statement of Financial Accounting Standard ("SFAS") No. 121, "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
requires that long-lived assets and certain identifiable intangibles to be held
and used or disposed of by an entity be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Under such circumstances, SFAS 121 requires that long-lived
assets and certain identifiable intangibles to be held and used or disposed of
be reported at the lower of their carrying amount or fair value less cost to
sell. Accordingly, when events or circumstances indicate that long-lived assets
may be impaired, the Company estimates the asset's future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
expected future undiscounted cash flows is less than the carrying amount of the
asset, an impairment loss is recognized based on the excess of the carrying
amount over the fair value of the asset. In Fiscal 2001, 2000 and 1999, the
Company wrote off $90,320, $47,948 and $0 of goodwill and other assets relating
to store closures.

DEBT ISSUANCE COSTS

The costs of obtaining financing are deferred and included as debt issuance
costs in the accompanying consolidated balance sheets and are amortized over the
term of the loan to which such costs relate.

ADVANCED VENDOR REBATES

The Company has entered into certain contractual agreements with two vendors to
receive rebates for future use of its products. As a result of these agreements,
the Company received advanced rebates of $ 559,830 and $3,710,264 in Fiscal 2001
and 2000 which was recorded as deferred revenue. As rebates are earned, the cost
of restaurant operations is reduced in the Consolidated Statement of Operations
and a corresponding decrease is recorded to advanced vendor rebates in the
Consolidated Balance Sheet. The Company is amortizing the advanced vendor
rebates based on gallon's purchased in accordance with the contractual
agreements.

                                     F-11
<PAGE>

INCOME TAXES

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the amounts reported in the
financial statements and the accompanying notes. Actual results could differ
from those estimates.

DISCLOSURES ABOUT FAIR VALUES
OF FINANCIAL STATEMENTS

The carrying amounts of cash, accounts receivable, and accounts payable
approximate fair value due to the short-term nature of these accounts. The fair
value of debt and redeemable preferred stock approximates the carrying value of
such accounts.

NET INCOME PER SHARE

Basic net income per common share is computed by dividing net income by the
weighted average number of common shares outstanding. Diluted net income per
common share assumes the maximum dilutive effect from stock options and warrants
and other potential dilutive securities. For all periods presented, basic and
diluted net income per share are the same. The Company currently does not have
any stock options or warrants outstanding.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board approved the issuance of
SFAS 141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible
Assets". SFAS 141 requires that all business combinations initiated after June
30, 2001 must be accounted for under the purchase method. In addition, SFAS 142
requires that all intangible assets acquired that are obtained through
contractual or legal right, or are capable of being separately sold,
transferred, licensed, rented or exchanged shall be recognized as an asset apart
from goodwill. Goodwill and intangibles with indefinite lives will no longer be
subject to amortization, but will be subject to at least an annual assessment
for impairment by applying a fair value based test. SFAS 142 is required to be
applied starting with fiscal years beginning after December 15,2001, with early
adoption permitted in certain circumstances. The Company may elect to adopt SFAS
142 effective October 1,2001 or October 1,2002. This election must be made prior
to the issuance of its financial statements for the quarter ended December 31,
2001. Due to the complexity of this new standard and its recent issuance, the
Company is continuing to evaluate whether it will adopt SFAS 142 effective
October 1,2001. The Company continued to amortize goodwill under its current
method through September 30,2001. Once the standard is adopted, annual goodwill
amortization of approximately $ 822,000, respectively, will no longer be
recognized.

BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION

In Fiscal 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information", which changed the way companies report
information about operating segments. The Company has one single reporting
segment, its revenues are derived from customers located in the United States
and all of the Company's long lived assets are located in the United States.

                                     F-12
<PAGE>

2.  ACQUISITIONS

The Company made four acquisitions and the purchase of real estate on an
existing store in Fiscal 2000. Consideration for these acquisitions was
primarily cash which was generated by long term debt financing. The acquisitions
have been accounted for using the purchase method and, accordingly, the acquired
assets and assumed liabilities, including goodwill, have been recorded at their
estimated fair values as of the date of acquisition. The operations of the
acquired businesses have been included in the Company's consolidated statement
of operations since the date of each respective acquisition.

The following table sets forth businesses acquired during 2000 and the
consideration paid:

<TABLE>
<CAPTION>

                                                  Date of            Total
                Acquisition                     Acquisition      Consideration
                -----------                     -----------      -------------
                                                                 (In Thousands)
<S>                                          <C>                 <C>
    73 stores from RMS Family Restaurants    September 14, 2000        $46,178
    Store #9 - Real Estate                   August 9, 2000            $ 1,300
    One store from Jack Scoville             July 27, 2000             $   819
    Two stores from Melin Corporation        July 21, 2000             $ 2,203
    37 stores from Ellis Enterprises         January 11,2000           $34,685
                                                                       -------
                                                                       $85,185
                                                                       =======
</TABLE>

The following table sets forth the estimated fair value of the assets acquired
for the above acquisitions (in thousands):

<TABLE>
<S>                                                                     <C>
       Assets, including cash                                           $64,988
       Goodwill                                                         $19,168
       Other intangibles                                                $ 1,839
       Liabilities assumed                                              $   810
</TABLE>

The goodwill acquired is being amortized on a straight line basis over 30 years.

The Company made two acquisitions in Fiscal 1999. Consideration for these
acquisitions was cash, which was generated by sale-leasebacks and long term debt
financing. The acquisitions have been accounted for using the purchase method
and, accordingly, the acquired assets and assumed liabilities, including
goodwill, have been recorded at their estimated fair values as of the date of
acquisition. The operations of the acquired businesses have been included in the
Company's consolidated statement of operations since the date of each respective
acquisition.

The following table sets forth businesses acquired during 1999 and the
consideration paid:

<TABLE>
<CAPTION>

                                          Date of                           Total
         Name of Business               Acquisition                     Consideration
         ----------------               -----------                     --------------
                                                                       (In Thousands)
<S>                                     <C>                             <C>
       TMC FOODS L.L.C.                 March 8,1999                         $ 9,250
       Tex Mo / San Nan Corporations    March 22,1999                         10,601
                                                                             -------
                                                                             $19,851
                                                                             =======
</TABLE>

                                     F-13
<PAGE>

The following table sets forth the estimated fair value of the assets acquired
for the above acquisitions (in thousands):
<TABLE>
<CAPTION>

       <S>                                                                                                 <C>
       Assets, including cash                                                                              $15,380
       Goodwill                                                                                              4,689
       Other intangibles                                                                                       178
       Liabilities assumed                                                                                     396
</TABLE>


3.  PROPERTY AND EQUIPMENT

Property and equipment consist of the following at September 30:

<TABLE>
<CAPTION>
                                                                      2001                                    2000
                                                                      ----                                    ----
<S>                                                            <C>                                     <C>
       Land                                                    $12,528,580                             $11,759,922
       Building                                                 35,939,948                              32,511,578
       Leasehold improvements                                   16,706,490                              15,463,287
       Furniture and equipment                                  21,232,212                              19,307,248
       Construction in progress                                    242,400                               1,851,553
                                                               -----------                             -----------

                                                                86,649,630                              80,893,588
       Less - accumulated depreciation
                    and amortization                            (6,722,807)                             (2,815,511)
                                                               -----------                             -----------

                                                               $79,926,823                             $78,078,077
                                                               ===========                             ===========
</TABLE>

4.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following at September 30:

<TABLE>
<CAPTION>
                                                                      2001                                    2000
                                                                      ----                                    ----
<S>                                                            <C>                                     <C>
       Accounts payable                                        $ 4,713,704                              $4,471,779
       Accrued payroll                                           1,277,135                               1,130,109
       Accrued property taxes                                    1,014,057                                 953,690
       Accrued payroll and sales taxes                           1,254,475                               1,066,102
       Accrued interest                                            819,565                                 509,000
       Other                                                     1,349,552                               1,211,060
                                                               -----------                              ----------
              Total accounts payable and
                 accrued expenses                              $10,428,488                              $9,341,740
                                                               ===========                              ==========
</TABLE>

                                     F-14
<PAGE>

5.        LONG-TERM DEBT

<TABLE>
<CAPTION>
Long-term debt consists of the following at September 30:                  2001                          2000
                                                                           ----                          ----
<S>                                                                   <C>                           <C>
   Note payable to a financial institution, due in
   monthly installments totaling $26,584 including
   interest at 8.68% through October 2013. Collateralized
   by certain of the Company's assets.                                2,382,830                     2,490,298

   Annual lines of credit with a financial institution for
   borrowings of $3,877,820. Interest is payable monthly at
   variable interest rates with the principal balances due
   October 28, 2001, and April 19, 2002 subject to annual
   renewal approval by the financial institution.
   Collateralized by certificates of deposit and some of
   the Company assets.                                                3,477,820                     3,500,000

   Notes payable to a financial institution, due in monthly
   installments totaling $36,659 including interest at 9.65%
   through April 2014. Collateralized by certain of the
   Company's assets.                                                  3,097,062                     3,230,998

   Notes payable to a financial institution, due in
   monthly installments totaling $46,990 including
   interest at 9.50% through April 2014. Collateralized
   by certain of the Company's assets.                                4,131,140                     4,294,059

   Notes payable to a financial institution, due in
   monthly installments totaling $368,797 including
   interest of 10.81% through November, 2019.
   Collateralized by certain of the Company assets.                  34,774,080                    35,403,124

   Notes payable to a financial institution, due in
   monthly installments totaling $398,587 including
   interest at 10.15% through April, 2019.
   Collateralized by certain of the Company's assets                 37,991,965                    38,800,000

   Notes payable to a financial institution, due in
   monthly installments totaling $51,762 including
   interest at 9.84% through October 2012. Collateralized
   by certain of the Company's assets.                                4,181,893                     4,380,777

   Mortgage notes payable to a financial institution, due in
   monthly installments totaling $11,222 including
   interest of 10.02% through September 2020.
   Collateralized by land and building                                1,131,355                     1,150,000

   Mortgage note payable to a financial institution, due in
   monthly installments totaling $13,371 including
   interest of 10.43% through August 2020.
   Collateralized by land and building                                1,309,706                     1,330,374
</TABLE>

                                     F-15
<PAGE>

<TABLE>
<CAPTION>
LONG-TERM DEBT (Continued)                                                                            2001       2000
                                                                                                      ----       ----
<S>                                                                                               <C>         <C>
   Mortgage note payable to a financial institution, due in
   monthly installments totaling $6,960 including
   interest of 10.29% through August 2020.
   Collateralized by land and building.                                                            688,072    699,129

   Mortgage note payable to a financial institution, due in
   monthly  installments totaling $7,698 including interest
   at 8.96% through April  2021.
   Collateralized by land and building.                                                            843,614          0

   Mortgage note payable to a financial institution, due in
   monthly  installments totaling $6,152 including interest
   at 9.58% through August  2021.
   Collateralized by land and building.                                                            649,112    650,000

   Mortgage note payable to a financial institution, due in
   monthly  installments totaling $5,596 including interest
   at 8.96% through June  2021.
   Collateralized by land and building.                                                            597,454          0

   Mortgage note payable to a financial institution, due in
   monthly  installments totaling $5,774 including interest
   at 8.52% through January  2021
   Collateralized by land and building.                                                            650,000          0

   Mortgage note payable to a financial institution, due in
   monthly  installments totaling $5,783 including interest
   at 8.52% through December  2020.
   Collateralized by land and building.                                                            650,000          0

   Mortgage note payable to a financial institution,
   payable in interest only payments at 7.0%
   due September 13, 2001. Collateralized by land and building.                                          0  1,047,565

   Mortgage payable to a financial institution,
   payable in interest only payments at 11.623% due
   October 14, 2000. Collateralized by certain of the Company's assets.                                  0    600,000

   Mortgage note payable to a financial institution, due in
   monthly installments totaling $4,055 including
   interest at 8.00% through August 2005.                                                          163,164    197,278

   Various equipment notes payable to a financial institution,
   due in monthly installments totaling $16,011 including
   interest at various rates ranging from 9.4% to 11.14%
   Collateralized by certain of the Company's assets with
   maturities ranging from March 2005 through April 2008.                                          801,708    745,240
</TABLE>


                                     F-16
<PAGE>

<TABLE>
<CAPTION>
   LONG-TERM DEBT (Continued)                                                                          2001           2000
                                                                                                       ----           ----
<S>                                                                                            <C>            <C>
   Construction advances to long term commitments
   Interest is payable monthly at libor plus 4.27% until construction
   is completed and then is converted to a permanent long term fixed rate.
   Collateralized by land and building                                                              283,796              -
                                                                                               ------------   ------------

                                                                                                 97,804,771     98,518,842

   Less - current portion                                                                        (6,080,505)    (8,007,819)
                                                                                               ------------   ------------

   Long-term debt                                                                              $ 91,724,266   $ 90,511,023
                                                                                               ============   ============
</TABLE>

Annual maturities of long-term debt as of September 30, 2001 are as follows:

      2002                                                         6,080,505
      2003                                                         2,878,349
      2004                                                         3,184,255
      2005                                                         3,517,174
      2006                                                         3,830,189
      Thereafter                                                  78,314,299
                                                                ------------
                                                                $ 97,804,771
                                                                ============

     Several of the notes payable and leases include certain restrictive
covenants, including maintenance of certain prescribed debt and fixed charge
coverage ratios and limitation on the incurrence of additional indebtedness
without prior written consent. As of September 30, 2001, management believes
that the Company was in violation of its fixed charge coverage ratio for certain
leases. Accordingly, the Company is in technical default on certain of its
leases. To cure the default, the Company will be required to accelerate payment
due under the agreements of approximately $1,000,000 of additional principal on
the leases. In February 2002, the landlord on these leases agreed to forbear
from exercising its remedies provided in the leases in return for the Company
satisfying certain future obligations.

6.  CAPITAL LEASE

     In connection with one of its acquisitions in Fiscal 2000, the Company
assumed capital leases for certain equipment. The leases are treated as capital
leases for financial statement purposes, and the remaining obligation is
$168,714, at September 30, 2001. The related cost of $671,393 was recorded in
property and equipment at September 30, 2001 and 2000. The remaining term of the
leases range from 2 months to 8 months and the monthly lease payments range from
$11,083 to $13,616.

The following is a schedule of equipment under capital leases as of September
30:

                                                                  2001      2000
                                                                  ----      ----
                    Equipment                                 $671,393  $671,393
                    Less: Accumulated amortization:           $ 69,936     2,797
                                                              --------  --------
                                                              $601,457  $668,596
                                                              --------  --------

The minimum future payments on the capital leases are as follows:
               2002                                           $168,714
                                                              --------
               Total minimum lease payments                   $168,714

               Less: Amount representing interest             $  5,442
                                                              --------

               Present value of minimum lease payments        $163,272
                                                              --------
               Less: Current portion                          $168,714
                                                              --------

               Long-term obligation under capital leases             -
                                                              --------

                                     F-17
<PAGE>

7.  COMMON AND PREFERRED STOCK

On April 22, 1997, the Company acquired 1,030,000 shares of its common stock
from a former director in exchange for 430,000 shares of mandatorily redeemable
Restricted Class B preferred stock, which were redeemable monthly at a rate of
5,000 shares for $5,000 per month for 86 months. No dividends are paid on this
preferred stock. During each of the two years ended September 30, 2000 and 1999,
the Company redeemed 60,000 of these preferred shares for $60,000. All remaining
outstanding preferred stock was redeemed in October 2000 for $225,000.

In October 1998, the Company redeemed its Class A Preferred Stock for $50,000.

In 1999, the Company issued 8,426 shares of common stock to its employees as
bonuses. Compensation expense of $27,375 was recorded in connection with this
issuance.

The Company purchased on the open market 572,066 shares of its common stock in
Fiscal 2000 for a total cost of $680,870 and an additional 133,333 shares of
common stock in Fiscal 2001 for a total cost of $100,000. In Fiscal 2001, the
Company retired 3,258,732 shares of common stock held in treasury which had a
cost of $1,509,138.

8.  RELATED PARTY TRANSACTIONS

Robert S. Berg, Chairman of the Board of Directors and Chief Executive Officer
of the Company, and Steven M. Wemple, President, Chief Operating Officer,
Treasurer, Secretary and Director of the Company, jointly own all of the
outstanding stock of Elk River Aviation Inc.("Elk River"), a charter aircraft
company whose sole business is the leasing of the airplane described in this
paragraph. On October 1,1998, the Company entered into an agreement whereby the
Company was charged the flat rate of $1,100 per hour of usage, on an as needed
basis. Elk River was responsible for all operating expenses of the airplane,
such as pilot salary, insurance, fuel, and maintenance. Subsequently, the lease
rate was amended to $1,500 per hour in June 1999, and to $3,500 per hour in
October 2000. In Fiscal Years 2001, 2000, and 1999 the Company paid $922,000,
$724,000 and $440,000, respectively, to Elk River for its use of the airplane.
The Company believes that the lease of the aircraft is important to the Company
in order to permit management to effectively supervise the operations of its
restaurants which are located in seven states, as well as in connection with the
efforts of the Company to analyze potential future restaurant locations. As of
September 30, 2001 and 2000, the Company had a receivable of $221,304 and $0,
related to certain expenses paid by the Company on behalf of Elk River Aviation,
which is included in Accounts Receivable on the Consolidated Balance Sheet. In
Fiscal 2000, the Company fully reserved for a deposit of $160,439 with Elk River
Aviation as its collectibility was deemed to be uncertain.

On July 21, 2000, the Company invested $2,200,000 in land and building for two
Popeye's Chicken and Biscuit restaurants on the West Coast of Florida. The
Company obtained financing of $1,632,000 from an unrelated party in connection
with this transaction. The Company leased the two restaurants to T.T. & D. Foods
Inc., a Florida Corporation controlled by Tim Berg, the brother of Mr. Berg.
Under the terms of the triple net lease, T. T. & D Foods Inc., pays annual rent
to the Company in the amount of $282,568 and pays insurance, taxes and other
expenses associated with the leased property. The Company's annual payments on
the debt incurred to finance the two restaurants is $222,662. During Fiscal
years 2001, and 2000, the Company netted income of $59,906 and $36,135 from this
transaction.

The Company believes that the transaction described above are the same terms and
conditions as similar transactions with unaffiliated parties.

Marshal E. Rosenberg Ph.D., the outside director of the Company, acted as agent
for the National Life Insurance Company that provided the Sailormen, Inc. Salary
Continuation Executive Retention Plan and the life insurance policies on 13
participants in that plan including certain of the Company's executive officers.
During Fiscal 2001, the Company paid to National Life Insurance Company premiums
aggregating $178,000 in connection with such insurance policies. Mr. Rosenberg
received approximately $105,500 in commissions from the insurance company in
connection with such insurance policies. No such commissions were paid in Fiscal
2000 or Fiscal 1999.

                                     F-18
<PAGE>

9.  INCOME TAXES

The components of the income tax provision for federal income taxes for 2001,
2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                               2001               2000             1999
                               ----               ----             ----
<S>                      <C>                 <C>              <C>
      Current            $       --          $      --        $      --
      Deferred             (808,109)          (216,029)        (130,370)
                         ----------          ---------        ---------
                         $ (808,109)         $(216,029)       $(130,370)
                         ==========          =========        =========
</TABLE>

The tax effects of temporary differences that give rise to the deferred tax
liabilities at September 30, 2001 and 2000 are presented below:

<TABLE>
<CAPTION>
                                                  2001          2000
                                           -----------   -----------
<S>                                        <C>           <C>
      Depreciation and amortization        $(2,146,181)  $(1,218,166)
      Gain deferred for book purposes          274,508       283,376
      Capital losses                           148,800       109,156
      Other                                     47,968       (38,670)
      Deferred compensation                     50,340            --
      Net operating loss carryforward          520,862       568,710
                                           -----------   -----------
      Net deferred income tax liability    $(1,103,703)  $  (295,594)
                                           -----------   -----------
</TABLE>

At September 30, 2001, the Company had net operating loss carryforwards
available to offset future taxable income and tax liabilities of approximately
$1,344,000 that expire primarily in 2020 and 2021. The Company believes that it
is more likely than not that all of the net operating loss carryforwards will be
utilized prior to their expiration, based on the Company's estimates of its
future earnings and the expected timing of temporary difference reversals.
Accordingly, there's no valuation allowance recorded as of September 30, 2001 or
2000.

The effective income tax provision (benefit) on pre-tax income (loss) differed
from the provision computed at the U.S. Federal statutory rate for the following
reasons:

<TABLE>
<CAPTION>
                                                          2001         2000        1999
                                                     ---------    ---------   ---------
<S>                                                 <C>          <C>          <C>
      (Provision) Benefit computed at Federal
         statutory rate of 34%                       $(615,282)   $(203,035)  $   5,302
      Non-deductible goodwill                          (55,150)     (55,150)    (37,824)
      State income taxes, net of federal benefit       (85,876)     (26,135)     (4,152)
      Life insurance premiums                          (53,101)           -           -
      Penalties                                         (2,177)      (4,762)    (31,063)
      Other                                              3,477       73,053     (62,633)
                                                     ---------    ---------   ---------
                                                     $(808,109)   $(216,029)  $(130,370)
                                                     ---------    ---------   ---------
 </TABLE>

10.  COMMITMENTS AND CONTINGENCIES

a.  Office and Store Leases

During September 1996, under a sale-leaseback agreement, the Company sold five
owned stores (land and buildings) for $2,230,000 and leased them back under
twenty-year operating lease agreements. The transactions resulted in a total
gain of $309,741, which has been deferred and is being amortized over the
twenty-year lease terms. Proceeds from the sale were used to pay off existing
notes payable and other current liabilities. During December 1996, under a sale-
leaseback agreement, the Company sold a store for $425,000 and leased the store
back under a twenty-year operating lease. The transaction has resulted in a gain
of $100,000, which has been deferred and is being amortized over the twenty-year
lease term.

During December 1997, under a sale-leaseback agreement, the Company sold eight
owned stores (land and buildings) for approximately $3,700,000 and leased them
back under twenty-year operating lease agreements. The transactions resulted in
a gain of approximately $530,000, which is being amortized over the twenty-year
lease term.

                                     F-19
<PAGE>

During July 1998, under a sale and leaseback agreement, the Company sold two
owned stores (land and buildings) for $1,650,000 and leased them back under
twenty-year operating lease agreements.

During March 1999, under a sale-leaseback agreement, the Company sold twenty
owned stores (land and buildings) for approximately $12,800,000 and leased them
back under twenty-year operating lease agreements. During July 1999, under a
sale and leaseback agreement, the Company sold two owned stores (land and
buildings) for $1,100,000 and leased them back under twenty-year operating lease
agreements. During August 1999, under a sale-leaseback agreement, the Company
sold one owned store (land and building) for $530,370 and leased it back under a
twenty-year operating lease agreement.

The company leases certain restaurants under operating leases. These leases
generally have initial terms of twenty years and usually provide for renewal
options, ranging from 5 to 20 years. Several of the leases contain escalation
clauses and common area maintenance charges, taxes and insurance.

Certain of the leases require additional (contingent) percentage rental payments
based on attaining minimum monthly or annual gross sales, on the respective
restaurants. Contingent rental expense for the Fiscal years 2001, 2000 and 1999
is included in the rent expense shown below.

Future minimal rental commitments for operating leases over the next five years
with noncancellable terms in excess of one year as of September 30, 2001, are as
follows:

<TABLE>
<S>                                               <C>
      2002                                        $ 5,011,000
      2003                                          4,924,000
      2004                                          4,708,000
      2005                                          4,299,000
      2006                                          3,644,000
      Thereafter                                   42,853,000
                                                  -----------
                                                  $65,439,000
                                                  ===========
</TABLE>

Rent expense for the years ended September 30, 2001, 2000, and 1999 was
$6,111,827, $3,509,961, and $2,525,779 respectively.

b.  Litigation

In October 2000, the Company settled the suit, filed by the former chairman of
the board of directors of the Company by purchasing all of the outstanding
shares of the Company's preferred stock for $225,000 and paid an additional
$15,000 for the settlement. The $15,000 was recorded as an expense in fiscal
2000.

The Company and Sailormen are parties to certain legal proceedings arising from
matters incidental to their business. Management is of the opinion that these
actions will not have a material effect on the financial conditions, results of
operations or liquidity of the Company.

c.    Significant Suppliers

The Company's restaurants purchase fresh chicken from approximately 5 suppliers.
In Fiscal 2001 one vendor represented approximately 55% of the total Company's
chicken purchases. In Fiscal 2000 and 1999, no one chicken vendor was a
significant supplier.

11.  RETIREMENT AND SAVINGS PLAN

The Company started a 401(k) retirement and savings plan during Fiscal 2000.
Eligible employees are allowed to contribute up to 15% of their compensation
annually. The Company did not match any portion of the employee contributions
during Fiscal 2001 or 2000.

The Company concluded that continued services of select key executives is
essential for the future growth and operations of Company. Therefore, effective
January 15, 2001, the Company started an Executive retirement plan for key
employees. Participants approved by the Executive committee will be 20% invested
after 10 years of service and 20% each year thereafter. Participants will be 100
% vested when they have been a participant in the Salary Continuation Executive
Retention Plan for a period of 15 years or at retirement (65/th/ birthday),
whichever is earliest. As of September 30, 2001 the Company has an accrued
liability of $129,909 related to this plan.

                                     F-20
<PAGE>

12.  STOCK REDEMPTION AGREEMENT

     On June 30, 2001 the Company entered into a Stock Redemption Agreement with
two of its executive officers providing for, among other things, restrictions on
the sale or transfer of the Company's common stock without the consent of the
other stockholders and the Company. The agreement provides that if either
executive officer intends to dispose of an interest in the Company, they must
first offer his stock to the Company at a price determined in accordance with
the agreement. Upon the death of either of these executive officers, the
agreement requires the Company to purchase their outstanding common shares for a
price ranging from $6.09 through $6.43 per common share. The Agreement also
provided for two key life insurance policies: one for Robert S. Berg, Chairman
of the Board of Directors and Chief Executive Officer of the Company, and Steven
M. Wemple, President , Chief Operating Officer, Treasurer, Secretary and
Director of the Company. During Fiscal 2001, the Company paid premiums in the
amount of approximately of $33,000 for these policies. The Company is the
beneficiary on each of these policies.

     On February 27, 2002, the Stock Redemption Agreement was amended and
restated providing that an executive officer intending to dispose of an interest
in the Company must first offer his stock to the Company at a price equal to the
fair market value of such shares of stock as determined by the executive officer
and the Company. In addition, upon the death of either of these executive
officers, the amended agreement now requires the Company to purchase their
outstanding common shares at a price determined to be the fair market value as
agreed to by both the estate of the executive officer and the Company.

13.  QUARTERLY FINANCIAL DATA (UNAUDITED)

     Summarized quarterly results of operations for the two years ended
September 30, 2001 are as follows:

<TABLE>
<CAPTION>

                                                        First           Second         Third       Fourth
                                                      Quarter          Quarter       Quarter      Quarter
                                                 ------------      ------------  ------------ -----------
<S>                                              <C>               <C>           <C>          <C>
Fiscal Year ended September 30, 2001


Revenues:                                        $ 36,842,626       $38,002,498   $38,479,463  $38,764,007

Operating income                                    3,045,681         2,992,244     2,839,130    2,609,095

Net income (loss)                                $    363,913       $   435,903   $   308,267  $  (106,538)  *
                                                 ============       ===========   ===========  ===========

Net income  per share, basic and diluted         $       0.07       $      0.08   $      0.06       ($0.02)
                                                 ============       ===========   ===========  ===========

Fiscal Year ended  September 30, 2000


Revenues:                                        $ 12,494,684       $19,965,480   $20,906,917  $24,222,048

Operating income                                      858,877         1,791,683     1,715,474    1,330,207

Net income (loss)                                $    306,284       $   288,831   $   299,917  $  (513,898)  **
                                                 ============       ===========   ===========  ===========

Net income (loss) per  share, basic and diluted  $       0.05       $      0.05   $      0.06  $     (0.10)
                                                 ============       ===========   ===========  ===========
</TABLE>

*  During fiscal 2001, the Company incurred certain costs in the fourth quarter
resulting in additional expenses of approximately $370,000 of which
approximately $225,000 represents costs incurred upon the sale of two closed
restaurants properties and approximately $74,000 relates to a change in the
Company's estimated effective tax rate during the fourth quarter.

** Decrease in income is due to certain expenses incurred during the quarter
related to the RMS acquisition.

14. SUBSEQUENT EVENT

On October 23, 2001, the Company announced that it had received a proposal from
Robert S. Berg and Steven M. Wemple for a going private transaction. The
proposed transaction, which would effect a change in control of the Company,
would be in the form of a merger with a corporation wholly-owned by Mr. Berg and
Mr. Wemple. Pursuant to the proposal, the Company's shareholders (other than Mr.
Berg and Mr. Wemple) would receive unsecured, subordinated notes of the Company,
in exchange for the principal amount of $1.20 per share of the Company's Common
Stock.

                                     F-21
<PAGE>

The notes to be issued by the Company in the transaction would bear interest at
the rate of 5% per annum. Interest would be payable semi-annually, with
principal becoming due and payable in a single payment at maturity, which would
be the third anniversary of the date of issuance. The notes would be
subordinated to all senior debt of the Company and would be issued in minimum
principal amounts of $100 and thereafter in multiples of $25. Company
shareholders would receive the cash equivalent in lieu of any fractional notes.

If the proposed transaction is completed, the Company will no longer be a public
reporting entity and its stock will no longer be publicly traded.

The Board of Directors has appointed Marshal E. Rosenberg, Ph.D., the sole
director of the Company other than Messrs. Berg and Wemple, to head a Special
Committee to review the proposed transaction. The Special Committee has retained
an independent financial advisor and legal counsel for purposes of evaluating
the proposal.

The proposed transaction would result in the acquisition of all of the
outstanding shares of common stock of the Company (other than the shares by
Messrs. Berg and Wemple and their acquisition corporation). The final terms of
any acquisition will be based on negotiations between the acquirers and the
Special Committee, which is currently ongoing. The proposed acquisition is
subject to, among other things, (1) approval of the proposed transaction by the
Special Committee of the Board of Directors and the Company 's shareholders, (2)
receipt of a fairness opinion by the Special Committee, (3) receipt of any
applicable regulatory approvals and third-party consents and (4) the
inapplicability (either by their terms or as a result of Company Board action)
of certain business combination and control share provisions under Nevada law.
There can be no assurance that a definitive merger agreement will be executed
and delivered, that the proposed transaction will be consummated.

The proposed acquisition may only be completed in accordance with applicable
state and federal laws including the Securities Act of 1933, the Securities Act
of 1934 and the Trust Indenture Act of 1939, as amended; however, it is
anticipated that exemptions from the registration requirements of the Securities
Act and the qualification requirements of the Trust Indenture Act will be
available to this transaction.

On December 24, 2001, the Company announced that it has entered into a
definitive merger agreement with Interfoods Acquisition Corp., a corporation
wholly-owned by Robert S. Berg and Steven M. Wemple. Under the Agreement,
Interfoods Acquisition Corp. will merge with the Company which will be the
entity surviving the merger. The stockholders of the Company (other than Messrs.
Berg and Wemple, Interfoods Acquisition Corp. and stockholders of the Company
who exercise their dissenters' rights under Nevada law) will receive unsecured,
subordinated notes of the Company in the principal amount of $1.45 per share of
Company common stock.

The debentures to be issued by the Company in the transaction will bear interest
at the rate of 10% per annum. Interest will be payable semi-annually on each
June 30 and December 31. The principal of the debentures will be payable as
follows: 20% on the second anniversary of the date of the issuance of the
debentures and the remainder on the third anniversary of the date of issuance of
the debentures. The notes will be subordinated to all senior debt of the Company
and will be issued in minimum principal amounts of $100 and thereafter in
multiples of $25. Company shareholders will receive the cash equivalent in lieu
of any fractional notes.

                                     F-22