SECURITIES AND EXCHANGE COMMISSION
                                   WASHINGTON, D.C. 20549

                                          FORM 10-K
(Mark One)

[x]  Annual Report  Pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 For the fiscal year ended: March 31, 2000

                                       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 Numbers 333-23893; 333-23893-01; 333-23893-02; 333-23893-03

                                 CFP GROUP, INC.
             (Exact Name of Registrant as Specified in Its Charter)

          Delaware                                              95-4616486
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)

                                      2013
                          (Primary Standard Industrial
                          Classification Code Number)


                               CFP HOLDINGS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

          Delaware                                              95-4413619
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)

                                      2013
                          (Primary Standard Industrial
                          Classification Code Number)


                           CUSTOM FOOD PRODUCTS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

         California                                             95-3760291
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)

                                      2013
                          (Primary Standard Industrial
                          Classification Code Number)


                                    QFAC, LLC
             (Exact Name of Registrant as Specified in Its Charter)

          Delaware                                              23-2999998
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)

                                      2013
                          (Primary Standard Industrial
                          Classification Code Number)

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

                                 5501 Tabor Road
                             Philadelphia, PA 19120
    (Address, Including Zip Code of Registrant's Principal Executive Offices)

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

                                  215-288-0888
              (Registrant's telephone number, including area code)

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

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

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 shorter  period that the registrant was required
to file such reports),  and (2) has been subject to filing  requirements for the
past 90 days.

                      [ x ] YES               [   ] 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 definitely proxy of information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K.

                                      [ x ]

All the outstanding shares of CFP Holdings, Inc., Custom Food Products, Inc. and
QF Acquisition  Corp. are owned by CFP Group, Inc. The aggregate market value of
the  voting  and  non-voting  common  equity  of CFP  Group,  Inc.  held  by non
affiliates  as of June 15, 2000 using an assumed  value of $500.00 per share are
as follows:

               Class                                   Aggregate Market Value
               -----                                   ----------------------
Voting Common Stock - Class A                                   --
Non voting common stock - Class A                           $2,701,500
Non voting common stock - Class B                            $239,500

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

  There is no public trading market for shares of the registrants Common Stock.

                     Class                          Outstanding at June 15, 2000
                     -----                          ----------------------------
Voting Common Stock - Class A, $.01 par value                 14,705
Non-voting common stock - Class A, $.01 par value              9,859
Non-voting common stock - Class B, $.01 par value              3,865


<PAGE>


                                 CFP GROUP, INC.
                               CFP HOLDINGS, INC.
                           CUSTOM FOOD PRODUCTS, INC.
                                   QFAC, LLC.

               Form 10-K for the Fiscal Year Ended March 31, 2000

                                TABLE OF CONTENTS


PART I                                                                    PAGE #
         Item 1.  Business                                                   3
         Item 2.  Properties                                                16
         Item 3.  Legal Proceedings                                         17
         Item 4.  Submission of Matters to a Vote of Security Holders       17

PART II

         Item 5.  Market for Registrant's Common Stock and Related
                  Stockholder Matters                                       17
         Item 6.  Selected Financial Data                                   19
         Item 7.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operation                        20
         Item 7A. Quantitative and Qualitative Disclosures about
                  Market Risk                                               26
         Item 8.  Financial Statements and Supplementary Data               27
         Item 9.  Changes in and Disagreements with Accountants
                  on Accounting and Financial Disclosure                    27

PART III

         Item 10. Directors and Executive Officers of the Registrant        27
         Item 11. Executive Compensation                                    29
         Item 12. Security Ownership of Certain Beneficial Owners
                  and Management                                            38
         Item 13. Certain relationships and related transactions            39

PART IV

         Item 14. Exhibits, Financial Statement Schedules and Reports
                  on Form 8-K                                               41

SIGNATURES                                                                  47

                                       2

<PAGE>


Special Note Regarding Forward Looking Information

         CFP Group, Inc. ("CFP Group") and it's subsidiaries (such subsidiaries,
together with CFP Group, being sometimes hereinafter collectively referred to as
the "Company"),  or their representatives,  may make forward looking statements,
oral or written,  including statements in this Annual Report on Form 10-K, press
releases and other  filings with the  Securities  and Exchange  Commission  (the
"Commission"),  regarding  estimated future operating  results,  planned capital
expenditures  (including  the  amount  and  nature  thereof)  and the  Company's
financing plans, if any, related thereto,  increases in customers, the Company's
business strategy,  financial position and other plans and objectives for future
operations.  Certain  matters  discussed  may involve  known and unknown  risks,
uncertainties and other factors which may cause the actual results,  performance
or achievements  of the Company to be materially  different from those expressed
or implied by such  forward-looking  statements.  Important  factors  that could
cause the actual  results,  performance or achievements of the Company to differ
materially  from  the  Company's  expectations  are  set  forth  under  "Factors
Affecting  Future  Performance" in Item 1 and elsewhere in this Annual Report on
Form 10-K, as well as factors  contained in the Company's other filings with the
Commission.

         All subsequent oral and written forward looking statements attributable
to the Company or persons acting on its behalf are expressly  qualified in their
entirety by these  factors.  The Company  assumes no obligation to update any of
these statements.

Part I

         Item 1.  Business

                  History

                           CFP Group,  Inc.  became the parent of CFP  Holdings,
                  Inc.   ("CFP   Holdings")  on  December  31,  1996  after  the
                  recapitalization  of CFP Holdings.  CFP Holdings was formed in
                  1993 by First Atlantic  Capital,  Ltd. ("First  Atlantic"),  a
                  private investment firm specializing in acquiring and building
                  middle market companies,  and commenced operations on April 1,
                  1993 after acquiring all of the outstanding stock of Center of
                  the  Plate  Foods,  Inc.  ("Center  of the  Plate"),  and  all
                  significant  operating  assets  of Best  Western  Foods,  Inc.
                  ("Best  Western").  Today,  these two  companies  are known as
                  Custom Foods,  Inc. On December 31, 1996 CFP Holdings acquired
                  Quality Foods,  L.P. and its general  partner,  QF Acquisition
                  Corp.  (collectively  "Quality  Foods").  On June 28, 1999, QF
                  Acquisition  Corp.  was  reorganized  as a  limited  liability
                  company  under  the  name  QFAC,  LLC  for  tax  and  business
                  purposes. Quality Foods is one of the leading manufacturers of
                  sandwich steak products in the United States.

                           In March 1998, William Del Chiaro was named President
                  and CEO of Quality Foods. In May 1998,  William Del Chiaro was
                  appointed to President and CEO of CFP Group,  Inc.  Concurrent
                  with Mr. Del Chiaro's appointment,  Mr. Richard Griffith, then
                  the President and CEO of Custom Foods, agreed to retire at the
                  end of June 1998 and  remain on the  Board of  Directors.  Mr.
                  Griffith  resigned  from  the  Board  of  Directors  effective
                  December 31, 1999. In addition,  Mr. Robert Gioia,  previously

                                       3

<PAGE>


                  the President  and CEO of CFP Group,  agreed to continue as an
                  active member of the Board of Directors and agreed to become a
                  consultant to the Company effective June 30, 1998.

                           Since his  appointment  as President and CEO, Mr. Del
                  Chiaro has established and implemented  strategic and tactical
                  plans for the  Company  contained  within the  Company's  Long
                  Range Plan document  published in April of 1998. This document
                  is the  guiding  factor  in  the  Company's  direction  and is
                  reviewed  several  times per year and altered as  appropriate.
                  Mr. Del  Chiaro's  focus for the Company  centers on continued
                  sustainable  growth.  To achieve this objective a more focused
                  Sales and Marketing  Organization  was put in place. The Sales
                  and Marketing  Organization  has been  significantly  expanded
                  over the past few years.  In Fiscal Year 2000,  Mr. Del Chiaro
                  focused on and completed the successful  consolidation  of the
                  Company under one Management Team and built an  infrastructure
                  to  support  the  future  growth  of  the  Company.  This  was
                  completed by strengthening the Senior Management by hiring Key
                  Officers and  Directors,  and  implementing a new Company wide
                  computer system.  Additionally,  the Company has initiated and
                  planned  construction  for a new facility in  California  that
                  will  produce  all of the  Company's  products  and  house the
                  Company's Research and Development Center.  During Fiscal Year
                  2001,  the Company will  increase its focus on  operations  to
                  offset the expected increases in raw material prices. New York
                  Consulting Partners, experts in operational efficiencies, have
                  been  retained  to  improve  yields  and  overall  operations,
                  including   implementing  specific  standards  and  procedures
                  associated with the Company's Philadelphia operations, then to
                  be expanded to Kentucky and California. Eric Ek, the Company's
                  CFO since 1993,  was promoted to Executive  Vice  President of
                  Corporate Development. Mr. Ek will oversee the building of the
                  California  Facility that will supply the additional  capacity
                  to support the Company's planned growth into the future.

                  General

                           The Company is a leading developer,  manufacturer and
                  marketer of value-added meat, poultry,  and pork products sold
                  to the  foodservice  industry  and  manufacturers  of packaged
                  foods.  The Company  provides a wide range of  pre-cooked  and
                  uncooked products, including beef and chicken sandwich steaks;
                  beef, pork and poultry meat rolls used in further  processing;
                  charbroiled  products and crumble toppings;  barbecue-flavored
                  meats; and meatballs.  The Company  manufactures higher margin
                  specialty   products   that  provide   superior   quality  and
                  performance   for  the   end-user   and  that  are   typically
                  custom-formulated to meet specific customer  requirements.  In
                  the  foodservice  industry,  the Company  supplies some of the
                  country's  leading  restaurant  chains and outlets,  including
                  Subway, Arby's , Great Steak & Potato Company, Domino's Pizza,
                  Inc.,  Wal-Mart  Stores,  Inc., and Nathan's  Famous Inc.. The
                  Company  also serves many of the  country's  leading  packaged
                  foods  manufacturers,  including  Chef  America,  Oscar Mayer,
                  Schwan's Sales  Enterprises  Inc., Kraft Foods Inc. and McLane
                  Company,  Inc.  The  Company  believes  that  its  proprietary
                  recipes and  manufacturing  processes,  national  presence and
                  long-standing  customer  relationships  pose barriers to entry
                  for  other   manufacturers   seeking  to  provide  competitive
                  products.   The  Company  is   comprised   of  two   operating
                  subsidiaries, Quality Foods and Custom Foods.

                                       4

<PAGE>


                  Quality Foods

                           Quality  Foods  is  one  of  the  country's   leading
                  manufacturers of pre-cooked and uncooked,  thinly-sliced  beef
                  used primarily in Philadelphia-style steak sandwiches. It also
                  supplies  sliced chicken  products and pre-cooked and uncooked
                  meatballs. Quality Foods serves the foodservice industry, with
                  particular  emphasis on Quick  Service  Restaurants  ("QSRs"),
                  sandwich  chains and family  dining  establishments.  For over
                  eleven years,  Quality Foods has been the primary, and is now,
                  the  exclusive  supplier  of  pre-cooked  beef  to the  Subway
                  restaurant  chain for its popular  steak and cheese  sandwich.
                  Quality  Foods  employs a  proprietary  forming  and  freezing
                  process that,  the Company  believes,  produces a product with
                  excellent  flavor and visual  appearance,  as well as superior
                  yield when cooked.

                           In June 1997,  the Company  entered into a three-year
                  supply agreement with Subway, subsequently extended to May 31,
                  2001.  The  agreement  which called for fixed  pricing for the
                  first  year,  allows  for price  adjustments  every six months
                  thereafter  based  on  the  historical  average  cost  of  raw
                  materials plus a margin which covers the Company's  processing
                  costs and profit. This agreement  established Quality Foods as
                  the  exclusive  supplier  to Subway  for the  "Steak & Cheese"
                  product.   Prior  to  this   agreement,   Quality   Foods  had
                  substantially  all of the volume and has since supplied all of
                  Subway's  needs  for  this  product.   Sales  to  Subway  were
                  $36.3million, 20% of total Company sales, in fiscal year 1998;
                  $39.2  million,  21% of total  Company  sales,  in fiscal year
                  1999, and $47.5 million, 21% of total Company sales, in fiscal
                  year 2000. The Company is currently in  negotiations  to renew
                  its supply  contract  with Subway and will continue to operate
                  under the same economic terms of the expired agreement for the
                  next twelve months or until a new contract has been finalized.
                  See "Factors  Affecting Future Performance - Importance of Key
                  Customers."

                  Custom Foods

                           Custom  Foods  develops,   manufactures  and  markets
                  pre-cooked meat, poultry,  and pork products sold primarily to
                  manufacturers  of branded and private  label  packaged  foods,
                  also referred to as "consumer  products"  users, and is also a
                  major supplier of frozen,  uncooked beef product to the Arby's
                  restaurant chain.  Custom Foods' pre-cooked products include a
                  variety of pork,  beef,  chicken and turkey items such as meat
                  rolls used in further processing;  barbecue products;  Mexican
                  specialties;  charbroiled patties and crumble toppings. Custom
                  Foods  focuses  on  sales  to   manufacturers  of  frozen  and
                  refrigerated   convenience  foods,   including  items  in  the
                  fast-growing  hand-held  foods  segment.  Custom  Foods is the
                  largest  supplier  of   custom-formulated   meat  and  poultry
                  fillings to Chef America for use in  substantially  all of its
                  microwave  sandwich product lines.  Chef America has accounted
                  for a majority of Custom Foods' sales of  pre-cooked  products
                  for each of the past several  years.  See  "Factors  Affecting
                  Future  Performance - Importance of Key  Customers."  Sales to
                  Chef America were $28.1

                                       5

<PAGE>


                  million,  15% of total  Company  sales,  in fiscal  year 1998;
                  $24.3million, 13% of total Company sales, in fiscal year 1999,
                  and $26.1 million,  12% of total Company sales, in fiscal year
                  2000.  The  Company  supplies  Chef  America  under a one year
                  pricing  arrangement  whereby  volumes are  estimated  but not
                  guaranteed  and prices are fixed for twelve  calendar  months.
                  Chef America  operates on a calendar year basis and has issued
                  purchase  orders for  products  from the  Company for the 2000
                  calendar  year at similar  prices and  volumes as the  Company
                  sold to Chef America during calendar 1999. In addition, Custom
                  Foods is also a major supplier to the Arby's restaurant chain.
                  Custom  Foods  supplies   Arby's  under  a  five  year  supply
                  agreement,  which  expires in May 2004,  and is reported to be
                  the only five year beef supply  contract ever awarded by ARCOP
                  (Arby's  Purchasing  Cooperative).  Sales to Arby's were $47.1
                  million,  26% of total  Company  sales,  in fiscal  year 1998;
                  $45.3  million,  25% of total  Company  sales,  in fiscal year
                  1999; and $50.2 million, 24% of total Company sales, in fiscal
                  year 2000.  While sales  growth  occurred at both Chef America
                  and Arby's in fiscal 2000 over the prior  fiscal  year,  sales
                  from other  existing  customers and new  customers  grew at an
                  increasing  rate. As a result,  Chef America and Arby's sales,
                  while increasing,  represent a decreasing  percentage of total
                  company  sales from the prior  fiscal year,  further  reducing
                  dependence on these key customers.

                           As a result of  increased  sales  resulting  from new
                  customers  and the growth of current  customers,  the  Company
                  significantly  broadened its  operations  with the opening and
                  subsequent  expansion of a new facility in Kentucky  and, most
                  recently,   planning   construction   of  a  new  facility  in
                  California to operate as the Company's flagship  manufacturing
                  plant and Research and Development center.  During the quarter
                  ended March 31,  2000,  the Company  signed a letter of intent
                  with  Cold  Supplychain   Integrated,   Inc.  (Integrated)  to
                  construct a new facility in La Habra, California.  The Company
                  will produce the sandwich  steak product,  currently  produced
                  only by the Company's  Pennsylvania facility. The new facility
                  is  planned  to have  the  capability  to  produce  all of the
                  Company's current and future products, thus making this site a
                  natural choice for the Research and  Development  center.  The
                  Company  intends  to lease the  facility  for a minimum  of 10
                  years  and will  guarantee  a  minimum  level of cold  storage
                  volume to  Integrated  over the lease  term.  The  Company  is
                  currently in final discussions with Integrated to complete the
                  lease  agreement  and  the  operating  agreement,  which  will
                  provide for the construction and future operating  arrangement
                  of the  facility.  The Company  plans to  relocate  all of its
                  operations from its existing  Montebello and Vernon  locations
                  to the newly built  facility which is expected to be completed
                  in the  quarter  ending  June  30,  2001  and is  expected  to
                  encompass 80,000 square feet.

                           On February 3, 2000,  the Company was  notified  that
                  its customer,  Ameriserve Food Distribution,  Inc., which is a
                  primary   distributor  to  Arby's,   Inc.,  filed  Chapter  11
                  Bankruptcy proceedings. The Company had approximately $700,000
                  of accounts  receivable  outstanding  from this customer as of
                  the time of the  filing.  The Company  anticipates  collecting
                  substantially  all of the  outstanding  balance due to written
                  assurance from

                                       6

<PAGE>


                  ARCOP,  Inc., Arby's purchasing  cooperative,  that any credit
                  loss resulting from the aforementioned filing will be recouped
                  at a future time. Therefore, the Company believes that it will
                  not be  negatively  impacted  as a result of this  filing.  In
                  addition, another distributor is being used by the Company and
                  the  Company  does not  anticipate  an impact  on fiscal  2001
                  sales.  Currently,  the  Company  has  recouped  approximately
                  $175,000 of the outstanding balance.

                  Industry

                  Value-Added Meat and Poultry Processors

                           The  Company is  considered  a  value-added  provider
                  within the meat and poultry industry and is focused on serving
                  the foodservice  and consumer  products  markets.  The Company
                  purchases  raw cuts of beef,  pork,  chicken  and  turkey  and
                  processes  them into packaged  form for further  processing or
                  for  distribution  into the  foodservice  and retail  markets.
                  Various steps including blending,  forming,  cooking,  slicing
                  and mixing with  vegetables  and  flavorings  are  employed to
                  create consistent  products that fulfill specific  preparation
                  or  processing  needs  of  customers.   Industry  trends  have
                  increased the demand for value-added meat and poultry products
                  like those  provided by the Company,  including the desire for
                  more uniform and consistent end-products,  continuous focus on
                  reduced  preparation  and/or reduced  manufacturing  costs and
                  increased food safety concerns.

                  Foodservice

                           The    foodservice    industry    is    composed   of
                  establishments  that serve food  outside the home and includes
                  restaurants;  the food  operations  of health care  providers,
                  schools   and  other   institutions,   hotels,   resorts   and
                  corporations;  and other non-traditional  foodservice outlets.
                  Growth in this  industry  has been  driven by the  increase in
                  away-from-home  meal  preparation,  which has  accompanied the
                  expanding  number  of  both  dual  income  and   single-parent
                  households.  Another trend within the foodservice  industry is
                  the  growth  in  the  number  of  non-traditional  foodservice
                  outlets   such   as   convenience   stores,   retail   stores,
                  supermarkets and food kiosks. These non-traditional  locations
                  often  lack   extensive   cooking,   storage  or   preparation
                  facilities,  resulting in a need for  pre-cooked  and prepared
                  foods similar to those provided by the Company.  The expansion
                  in the foodservice  industry has also been  accompanied by the
                  continued  consolidation and growth of broadline and specialty
                  foodservice  distributors,  many of  which  are  long-standing
                  customers of the Company.

                  Consumer Products

                           The majority of the  Company's  existing and targeted
                  "consumer  products" customers are involved in the manufacture
                  of branded and private label packaged  foods.  The same trends
                  which have contributed to the increase in away-from-home  meal
                  preparation  have also  fueled the

                                       7

<PAGE>


                  growth in easy to prepare,  microwave  frozen and refrigerated
                  convenience  foods.  Among the fastest growing segments is the
                  frozen and  refrigerated  hand-held foods market.  This growth
                  has been  driven by improved  product  quality and variety and
                  the increasing need for  inexpensive,  yet hearty,  food items
                  that require minimal  preparation.  Despite rapid growth, many
                  categories  of frozen and  refrigerated  hand-held  foods have
                  achieved minimal household  penetration.  The Company believes
                  it has been successful in establishing and maintaining  supply
                  relationships  with certain selected leading  manufacturers in
                  this  market,   including   Chef  America,   and  that  it  is
                  well-suited to service this customer base with a broad line of
                  value-added products which meet its customers needs.

                  Products

                           The Company  manufactures  and markets a wide variety
                  of  value-added  beef,  pork  and  poultry  products  for both
                  foodservice  and  consumer  products  customers.  Products are
                  provided  in  either  "solid-muscle,"   natural  cut  form  or
                  "restructured" form, whereby natural cuts are ground,  blended
                  or emulsified to provide a generally more consistent and lower
                  cost end product. The Company manufactures both pre-cooked and
                  uncooked  products in both  portion-controlled  and bulk form,
                  depending   upon  the   specific   preparation,   storage   or
                  manufacturing  needs  of the  end  customer.  Various  sauces,
                  spices,  marinades  and  vegetable  mixtures  are also used in
                  certain of the Company's products.

                  Customers and End Purchasers

                           The Company serves several  hundred active  customers
                  including broad line and specialty  foodservice  distributors,
                  packaged foods  manufacturers  and major national and regional
                  restaurant chains.  Arby's  distributors,  Subway distributors
                  and  Chef  America  accounted  for  24%,  21%  and  12% of the
                  Company's  net sales,  respectively,  in fiscal  2000.  As the
                  growth rate of these customers continue, dependence on them is
                  diminishing  as  the  Company's  customer  base  expands.  See
                  "Factors  Affecting  Future  Performance  - Importance  of Key
                  Customers."

                           The  Company   supplies  its  foodservice   customers
                  generally through  distributors that take title to the product
                  and resell it. Among the  Company's  customers are many of the
                  country's   largest  broad  line  and  specialty   foodservice
                  distributors.  For these and other large end  purchasers,  the
                  Company's    products    generally   go   through    extensive
                  qualification  procedures and its  manufacturing  capabilities
                  are subjected to thorough  review by the end purchasers  prior
                  to the Company's  approval as a vendor.  Large end  purchasers
                  typically  select   suppliers  that  can   consistently   meet
                  increased volume  requirements on a national basis during peak
                  promotional  periods.  In  its  value-added  operations,   the
                  Company believes that its manufacturing flexibility,  national
                  presence  and  long-standing   customer   relationships   pose
                  barriers to entry for other  manufacturers  seeking to provide
                  similar  products to the Company's  current large  foodservice
                  end purchasers.

                                       8

<PAGE>


                           The Company's  consumer products  customers  comprise
                  some  of  the  leading  packaged  food  manufacturers  in  the
                  country.  Given the highly  customized nature of the Company's
                  products,  relationships  with  our  customers  are  generally
                  maintained at various  levels within the Company.  The Company
                  believes  that it has been able to maintain  and expand  these
                  relationships  through its attention to customer  service,  by
                  providing  products that  consistently meet the changing needs
                  of  its  customers  and by  remaining  cost  competitive.  The
                  Company  believes  that  once  its  value-added  products  are
                  approved  as  principal  ingredients  in  its  customers'  end
                  products,  there  exist  high  barriers  to  entry  for  other
                  manufacturers as long as the Company's overall quality,  costs
                  and product support remain competitive.

                  Sales and Marketing

                           During the  Fiscal  Year ended  March 31,  2000,  the
                  Company  continued  the  expansion of the Sales and  Marketing
                  Organization  under  Glenn Myers - Senior  Vice  President  of
                  Sales  and  Marketing.  Mr.  Myers  has  formed  5 arms of the
                  organization  to include  Field Sales,  which is broken into 8
                  Regions,  managing a network of 42 Brokers  Nationwide,  and a
                  Direct  Sales  Force in the  Company's  heartland  markets  of
                  Philadelphia,  Baltimore,  Washington, and New Jersey. The 2nd
                  arm of the Organization is Distributor  Development,  focusing
                  on developing  business  building  programs with the Company's
                  largest   Distributors.   In  Fiscal  Year  2000,   Mr.  Myers
                  established  the  Business  Development  Division.  One of the
                  strategic intents of the purchasing of Quality Foods by Custom
                  Foods in  December  of 1996 was to have an  organization  that
                  sold all the Company's  portfolios.  The Business  Development
                  Division is a group of the  Company's  most capable  Sales and
                  Research & Development  Executives whose  responsibility is to
                  call on the Company's largest current  customers,  and develop
                  the Company's  business with its largest  future  prospects as
                  well. This  Organization  sells all of the Company's  products
                  across all divisions. The Sales Operations Department has also
                  been organized into one,  handling all the Company's  Customer
                  Service,  Traffic,  and  Transportation,  etc.  In Fiscal Year
                  2001,  Mr.  Myers will be  initiating  yet  another arm to the
                  Organization  to  sell  to  the  Military  and   International
                  Markets.

                  Independent Broker Network

                           The  Company   maintains  a  network  of  independent
                  foodservice  brokers  covering  most of the  states as well as
                  Canada,  all of which are  compensated on a commission  basis.
                  The Company  believes that its broker  relationships  in close
                  cooperation  with the regional sales managers,  are a valuable
                  asset   providing   significant   new  product  and   customer
                  opportunities.  The regional  sales managers  perform  several
                  significant  functions for the Company  including  identifying
                  and  developing  new  business   opportunities  and  providing
                  customer service and support to the Company's distributors and
                  end  purchasers  through the  effective  use of the  Company's
                  broker network.

                  Manufacturing and Processing

                           The  Company  purchases  whole  cuts of raw  meat and
                  poultry in either  fresh or frozen form and  subjects  them to
                  various processing steps including blending,  forming, cooking
                  and, in some cases,  further processing  including  shredding,
                  cubing,  slicing,  freezing  and the  addition  of sauces  and
                  vegetables.  The  Company  has  developed  highly  specialized
                  products for customers which include  proprietary  recipes and

                                       9

<PAGE>


                  manufacturing  processes  that the Company  believes  would be
                  difficult  for a competitor to  duplicate.  Specialized  large
                  customers  usually  require the Company to develop the recipes
                  and  manufacturing  processes for them to meet their  specific
                  needs or the Company  receives  general  requirements and then
                  develops a product  formulation and  manufacturing  process to
                  produce a product that meets the needs of its customers. These
                  requirements can include specific fat and nutritional content,
                  taste,   texture  and  various   performance   characteristics
                  specific to the customer's manufacturing process.

                           The  Company   generally  retains  ownership  of  its
                  proprietary  manufacturing  processes  and  generally  retains
                  ownership of its product recipes.  Although the customer often
                  specifies  the  ultimate  "label"   requirements  and  product
                  specifications,  the actual  manufacturing steps and processes
                  typically remain confidential and proprietary to the Company.

                  Raw Materials and Suppliers

                           The  Company's  principal  raw  materials  consist of
                  fresh and frozen  cuts of beef,  pork and  poultry,  purchased
                  from a variety of local,  national and foreign  suppliers.  In
                  addition,  the  Company  also  purchases  a variety of spices,
                  binders,  sauces  and  other  product  additives  used  in the
                  manufacturing  process. The Company often makes forward volume
                  commitments   and  purchases  of  raw  materials  to  lock  in
                  availability  and  pricing   consistent  with  its  production
                  expectations.  The Company has experienced an increase in meat
                  costs  during  FY 2000 and  expects  this to  continue.  Where
                  product  pricing  is formula  based for some of the  Company's
                  customers,  primarily Arby's,  the Company does not believe it
                  will be negatively  impacted by these increases as a result of
                  the  higher  costs  being  passed  through  to  the  customer.
                  However, as raw material prices increase,  the Company expects
                  a lag or period of time where the gross  margin will  decrease
                  before the Company can pass on this increase.  The decrease in
                  gross margin is expected to be temporary and the Company plans
                  to  increase  prices  whenever  reasonably  practicable.   The
                  Company expects to be impacted  negatively in the near term as
                  raw material  prices  increase  faster than increases in sales
                  prices.  Over the long term,  the Company  plans to manage the
                  gross margin to historical  levels.  There can be no assurance
                  that  the  Company  will  be  successful  in this  regard.  To
                  minimize  the  impact of meat  cost  fluctuations  within  the
                  market the Company  purchases its raw  materials,  the Company
                  has  developed  least  cost  formulations  to use as a hedging
                  strategy  to reduce the impact of  seasonal  cycles and market
                  supply shortages. Least cost formulations allow the Company to
                  use alternative  cuts of meat to produce its products  without
                  sacrificing quality, consistency, and taste.

                           The Company typically  utilizes a variety of meat and
                  poultry cuts in the manufacture of its restructured  products.
                  In its sandwich  steak  product  lines,  however,  the Company
                  generally  purchases  beef lifter and loin tail cuts to ensure
                  product quality and consistency  throughout the  manufacturing
                  process.  Lifter meat, and to a lesser extent loin tail,  have

                                       10

<PAGE>


                  historically experienced significant price fluctuations during
                  the  course of a year based on  seasonal  buying  patterns  of
                  large users and product availability relative to other cuts of
                  beef. Whenever possible and economical,  the Company purchases
                  larger quantities during the low points in the seasonal cycle,
                  forms the product  into an  intermediate  stage and freezes it
                  for further processing as production  requirements dictate. In
                  an  effort  curtail  the  impact  of  seasonal  cycles  on the
                  Company's  capital and raw materials supply needs,  least cost
                  formulations  are being  implemented by the Company to produce
                  its  products  that  are  most  affected  without  sacrificing
                  quality.

                           The Company  believes that its beef, pork and poultry
                  raw materials are available from a number of sources at market
                  prices  and  quantities  sufficient  to meet  its  anticipated
                  production  needs.  The  Company  does,  however,  concentrate
                  certain beef and pork purchases to ensure the highest  quality
                  and  consistency  of product and to improve its overall costs.
                  The Company will  contract with  suppliers to provide  product
                  under minimum volume and price  commitments in order to ensure
                  a consistent supply of raw materials.  With the development of
                  least cost  formulations,  dependence on key suppliers will be
                  diminished,  thereby giving the Company  greater  leverage and
                  selectivity  when making raw  material  purchases  in the open
                  market.

                  Patents and Trademarks

                           The Company has no material  patents or trademarks on
                  which its business depends.  However,  the Company has branded
                  its steak  product  under the "Philly  Up" brand name.  As the
                  Company's  branding effort becomes  successful and more widely
                  recognized,  this brand is expected to become  valuable to the
                  Company.  During  fiscal  year 2000,  the  Company  expended a
                  concerted  effort to increase brand name  recognition  for its
                  "Philly-Up" brand name through local and national  promotional
                  campaigns.

                  Competition

                           The Company  competes in highly  competitive  markets
                  with a  significant  number of  companies  of  various  sizes,
                  including  divisions or subsidiaries of larger companies.  The
                  principle  competitive  factors  in its  markets  are  product
                  quality and consistency,  price, customer service, and ability
                  to  produce  highly  specialized  products  to  meet  specific
                  customer  requirements.  Many of the Company's competitors are
                  larger and have greater financial, marketing and manufacturing
                  resources.

                  Government Regulatory Matters

                           The  Company is subject to  federal,  state and local
                  health laws and regulations  that establish  standards for the
                  manufacture,  storage,  labeling and transport of  foodstuffs.
                  The United States  Department of  Agriculture  ("USDA") is the
                  regulatory  body that is primarily  responsible for monitoring
                  the Company's operations. Beef, pork and poultry inspection

                                       11

<PAGE>


                  is  mandatory  under the  jurisdiction  of the Food Safety and
                  Inspection  Service (a division of the USDA), for meat that is
                  transported  across  state  lines or is  otherwise  placed  in
                  interstate commerce.

                           The Company operates  USDA-approved  facilities.  The
                  Company's  procedures are designed to assure that its products
                  are  manufactured  under  conditions  that meet or exceed  all
                  applicable government  standards.  Such programs are monitored
                  by federal  inspectors and include:  (i) inspection of meat at
                  various stages of processing,  (ii) temperature monitoring for
                  both fresh and cooked  meat,  (iii),  review and  approval  of
                  labeling  and  (iv)  controlling  and  monitoring  the  use of
                  additives.

                           The  operations  and products of the Company are also
                  subject to state and local regulation through such measures as
                  licensing  of  plants,  enforcement  of health  standards  and
                  inspection  of  the   facilities.   Enforcement   actions  for
                  violations of federal, state and local regulations may include
                  seizure and  condemnation  of  violative  products,  cease and
                  desist  orders,   injunctions,   monetary   penalties   and/or
                  impoundment.  The Company  believes  that its  facilities  and
                  practices are adequate to maintain  compliance with applicable
                  government regulations, although there can be no assurances in
                  this regard.

                  Employees

                           As of March 31, 2000,  the Company had  approximately
                  602 employees.  Approximately  328 of the Company's  employees
                  are  represented by the Teamsters  Union under contracts which
                  expire in January  2001 and March  2005.  The  Company has not
                  experienced  a  strike  during  the  past  eleven  years.  The
                  contract  which expires in March 2005 was recently  negotiated
                  and calls for  nominal  increases  in base wages and  vacation
                  benefits  for the 34 current  union  employees  covered by the
                  contract.  There can be no assurance  that the Company will be
                  successful in negotiating new contracts in the future.

                  Factors Affecting Future Performance

                           In addition to the other  information  in this Annual
                  Report  on Form  10-K,  readers  are  cautioned  to  carefully
                  consider  the  following  factors  that may  affect the future
                  operations and performance of the Company.

                  Significant Leverage and Indebtedness Service

                           The  Company  incurred  substantial  indebtedness  in
                  connection  with the financing of the  acquisition  of Quality
                  Foods  and is  highly  leveraged.  As of  March  31,  2000 the
                  Company  had  total   consolidated   indebtedness   (including
                  capitalized lease obligations) of approximately $157.9 million
                  and a stockholders'  deficiency of $28.8 million.  Outstanding
                  debt at March 31,  2000  primarily  relates to $115.0  million
                  outstanding  principal amount of 11.625% Senior Notes due 2004
                  (the "Senior Notes") and borrowings under a $40.0 million loan
                  security  agreement  (the  "Loan  and

                                       12

<PAGE>


                  Security Agreement").  Subject to the restrictions in the Loan
                  and Security  Agreement  and the Senior Notes  Indenture,  the
                  Company and its subsidiaries may incur additional indebtedness
                  from  time  to  time  to  finance  capital   expenditures  and
                  acquisitions  and for other general  corporate  purposes.  See
                  "Management's  Discussion and Analysis of Financial  Condition
                  and Results of Operations."

                           The  degree to which the  Company is  leveraged  will
                  have important  consequences to the Company and to the holders
                  of  the  Senior  Notes,  including:  (i)  limitations  on  the
                  Company's ability to obtain  additional  financing for working
                  capital or other purposes;  (ii) a substantial  portion of the
                  Company's cash flow from  operations  will be dedicated to the
                  payment of the  principal  and  interest on its  indebtedness,
                  thereby reducing funds available for operations; (iii) certain
                  of the Company's  borrowings,  including the borrowings  under
                  the Loan and  Security  Agreement,  are at  variable  rates of
                  interest  which will cause the  Company  to be  vulnerable  to
                  increases  in  interests  rates;  (iv) making the Company more
                  vulnerable  to economic  downturns and limiting its ability to
                  withstand competitive pressures; and (v) the Senior Notes will
                  mature  after   substantially   all  of  the  Company's  other
                  indebtedness.

                           The Company's  ability to make scheduled  payments of
                  principal of or interest on, or to refinance, its indebtedness
                  will depend on its future operating performance and cash flow,
                  which  are   subject  to   prevailing   economic   conditions,
                  prevailing  interest rate levels, and financial,  competitive,
                  business  and  other  factors,  many of which are  beyond  its
                  control,  as well as the  availability of borrowings under the
                  Loan and Security  Agreement or successor  facilities.  If the
                  Company  is  unable  to  generate  sufficient  cash  flow from
                  operations in the future to service its indebtedness,  it will
                  be  required  to  refinance  all or a portion of its  existing
                  indebtedness,  or to obtain additional financing. There can be
                  no assurance  that any such  refinancing  would be possible or
                  that any additional financing could be obtained. The inability
                  to obtain  additional  financing would have a material adverse
                  effect on the Company.

                  Importance of Key Customers

                           Certain  customers  are  material to the business and
                  operations  of  the  Company.   Arby's  distributors,   Subway
                  distributors  and Chef America  accounted for 24%, 21% and 12%
                  of the Company's net sales,  respectively,  in fiscal 2000. No
                  other  customer  accounted  for as much as 5% of the Company's
                  net sales during the fiscal year.

                           The Company's  prospects will continue to depend upon
                  the  success  of the  Subway and Chef  America  products  that
                  incorporate meats provided by the Company, as well as Subway's
                  and  Chef  America's  retention  of  the  Company  as a  major
                  supplier.  Although the Company believes that it has excellent
                  relationships with these customers and that such relationships
                  are mutually beneficial, the Company does not have a long-term
                  agreement  with Chef  America  and its  agreement  with Subway
                  expires in June 2000.  The  Company's  agreement  with  Arby's
                  expires

                                       13

<PAGE>


                  May  2004.  The loss of any as a  customer,  or a  significant
                  reduction in the Company's  business  with any of them,  would
                  have a material adverse effect on the Company. For fiscal year
                  2000,  sales to each of these  key  customers  increased  from
                  fiscal year 1999, but declined as a percentage of total sales.
                  The Company  believes it has a good  relationship  with all of
                  its  customers.  However,  the loss of  business  from any key
                  customer  could have a negative  impact on the  Company.  Even
                  though sales to these  customers is increasing  year over year
                  and they  represent  a  significant  portion  of sales for the
                  Company,  dependence on them is  diminishing  as the Company's
                  customer base expands.  In total,  these  customers  represent
                  61%,  59%,  and 57% of total  sales for FY 1998,  FY1999,  and
                  FY2000, respectively.

                           While Arby's is one of the  Company's  three  largest
                  customers, sales to Arby's distributors produce relatively low
                  profit  margins,  compared to other higher margin  value-added
                  products  of the  Company,  and  require  a high  level of the
                  Company's  working  capital  relative  to the  profit  margins
                  produced.

                  Competition

                           The Company  operates in highly  competitive  markets
                  with a  significant  number of  companies  of  varying  sizes,
                  including  divisions of or subsidiaries  of larger  companies.
                  The  Company's  sales to  Arby's  and its  sales of  hamburger
                  patties  and  meatball  items to other  customers,  because of
                  their low value-added  nature are the most price sensitive and
                  competitive areas in which the Company  competes.  A number of
                  the  Company's   competitors   have  multiple  product  lines,
                  substantially  greater financial and other resources available
                  to them and are, to varying  degrees,  vertically  integrated.
                  There can be no  assurance  that the Company  can  continue to
                  compete  successfully  with such other companies.  Competitive
                  pressures or other factors could cause the Company's  products
                  to lose market share or result in  significant  price erosion,
                  which would have a material adverse effect on the Company.

                  General Risks of Food Industry

                           The food  industry,  and the markets  within the food
                  industry in which the Company competes, are subject to various
                  risks,   including:   adverse  changes  in  general   economic
                  conditions;  evolving  consumer  preferences;  nutritional and
                  health-related   concerns;   federal,  state  and  local  food
                  inspection and processing controls; consumer product liability
                  claims;  risks of product tampering;  and the availability and
                  expense  of   liability   insurance.   The  meat  and  poultry
                  industries  have recently been subject to increasing  scrutiny
                  due to the  association  of meat  and  poultry  products  with
                  recent outbreaks of illness, and on rare occasions even death,
                  caused by  foodborne  pathogens  such as E. coli,  Salmonella,
                  Listeria  monocytogenes  and others which are found in raw and
                  improperly  cooked meat.  Consumer demand for meat and poultry
                  fluctuates as the result of such outbreaks of illness. Product
                  recalls  are  sometimes  required  in  the  meat  and  poultry
                  industries to withdraw  contaminated  or  mislabeled

                                       14

<PAGE>


                  products from the market.  The Company has not experienced any
                  product  recalls;  however,  there can be no assurance  that a
                  product recall may not be required in the future.

                  Suppliers and Raw Materials

                           The Company  purchases large  quantities of commodity
                  beef,  pork  and  poultry.  Historically,  market  prices  for
                  products  processed by the Company have fluctuated in response
                  to a number of factors, including changes in the United States
                  government  farm support  programs,  changes in  international
                  agricultural   and   trading   policies,   weather  and  other
                  conditions  during the growing  and  harvesting  seasons.  The
                  Company  historically  has  been  able  to pass  through  some
                  increases  in the  prices  of beef,  pork and  poultry  to end
                  users.  Failure to pass on significant  price increases to its
                  customers for a prolonged period of time would have a material
                  adverse  effect  on  the  Company.  Further,  certain  of  the
                  Company's customers,  including Subway and Chef America,  have
                  fixed price  arrangements  for  certain  products in which the
                  sale price is fixed for  periods  of up to one year.  Although
                  the fixed price  arrangements  for Subway and Chef America are
                  for a targeted  quantity of products,  there is no requirement
                  to  deliver  the  products  until a  purchase  order is issued
                  establishing  quantity and delivery time. Should the prices of
                  raw materials increase substantially for a prolonged period of
                  time,  the Company  could be  required to deliver  products to
                  these  customers  at lower  gross  margins  than  historically
                  achieved.

                  Government Regulation

                           The   operations   of  the  Company  are  subject  to
                  extensive  inspection  and regulation by the USDA and by other
                  federal,   state  and   local   authorities,   regarding   the
                  processing,  packaging, storage, transportation,  distribution
                  and labeling of products that are  manufactured,  produced and
                  processed by the Company. The Company's processing  facilities
                  and products are subject to frequent inspection by USDA and/or
                  other federal, state and local authorities.  On July 25, 1996,
                  the USDA issued strict new policies  against  contamination by
                  foodborne  pathogens  such  as E.  coli  and  Salmonella,  and
                  established  a new  system of  regulation  known as the Hazard
                  Analysis Critical Control Points ("HACCP") program.  The HACCP
                  program  required  all meat and poultry  processing  plants to
                  develop and implement sanitary operating  procedures and other
                  program  requirements  on or before  January 26, 1998.  As the
                  USDA's  HACCP  requirements  continue  to  evolve,  their full
                  impact  on the meat and  poultry  industries  is not yet fully
                  known.  However,  the Company believes that it is currently in
                  substantial compliance with all material governmental laws and
                  regulations  (including the January 1998 HACCP  requirements),
                  and  that it  maintains  all  material  permits  and  licenses
                  relating  to its  operations.  Nevertheless,  there  can be no
                  assurance that the Company will be able to maintain compliance
                  with existing laws or  regulations  or that it will be able to
                  comply  with any future laws and  regulations.  Failure by the
                  Company to comply with applicable  laws and regulations  would
                  subject  it  to  civil  remedies,   including  withholding  of
                  necessary USDA  inspections,

                                       15

<PAGE>


                  fines, injunctions,  recalls or seizures, as well as potential
                  criminal sanctions, any of which would have a material adverse
                  effect on the Company.

                  Dependence on Key Management

                           The  Company's  executive  officers and certain other
                  key  employees  have  been  primarily   responsible   for  the
                  development and expansion of the Company's  business,  and the
                  loss of the services of one or more of these individuals could
                  have an adverse  effect on the Company.  The Company's  future
                  success will be dependent in part upon its  continued  ability
                  to recruit, motivate and retain qualified personnel. There can
                  be no assurance  that the Company will be  successful  in this
                  regard.   The  Company  has  employment  and   non-competition
                  agreements with certain key personnel.

                  Controlling Stockholder

                           Atlantic  Equity  Partners,  LP, a  Delaware  limited
                  partnership ("AEP"), of which First Atlantic is the investment
                  manager,  owns 42.2% and 97.2% of the Company's  fully-diluted
                  common  stock  and  voting  common  stock,  respectively.   As
                  controlling  stockholder,  AEP is  able,  subject  to  certain
                  contractual  limitations,  to  determine  the  outcome  of any
                  corporate   transaction  or  other  matter  submitted  to  the
                  stockholders of the Company for approval,  including  mergers,
                  consolidations  or the sale of all or substantially all of the
                  assets of the Company,  or any of its subsidiaries  (including
                  the  Company).  In  addition,  AEP has the  ability to elect a
                  majority of the Company's Board of Directors and the Boards of
                  Directors of its subsidiaries.

         Item 2.  Properties

                  <TABLE>
                  The  following  table  sets  forth  the  Company's   principal
                  facilities:
                  <CAPTION>
                                                              Owned/    Square      Lease
                  Location             Purpose                Leased    Footage     Expiration
                  --------             -------                ------    -------     -----------
                  <S>                  <C>                    <C>       <C>         <C>
                  Philadelphia, PA     Corporate Office and   Owned     150,000
                                       Manufacturing
                  Montebello, CA       Manufacturing          Leased     32,000     March 2003
                  Owingsville, KY      Manufacturing          Leased     38,000     September 2019
                  Vernon, CA           Manufacturing          Leased     20,000     March 2001
                  </TABLE>

                  The Company also has a 45,000  square foot facility in Camden,
                  NJ that was closed in March 1998.  The Company is currently in
                  negotiations to sell this property.

                           During the quarter ended March 31, 2000,  the Company
                  signed a letter of intent  with Cold  Supplychain  Integrated,
                  Inc.  (Integrated) to construct a new food processing facility
                  in La Habra,  California.  The  Company  intends  to lease the
                  facility  for a  minimum  of 10  years  and will  guarantee  a
                  minimum level of cold storage  volume to  Integrated  over the
                  lease term.  The Company is in the final stages of negotiating
                  a  definitive

                                       16

<PAGE>


                  lease  agreement for an 80,000 square foot facility  under the
                  terms of the letter of intent.  Construction  is  expected  to
                  commence in the quarter  ending  September  2000.  The Company
                  plans to  relocate  all of its  operations  from its  existing
                  Montebello  and Vernon  locations to the newly built  facility
                  which is expected to be completed  in the quarter  ending June
                  2001.

                  Environmental Matters

                           The  business  operations  of  the  Company  and  the
                  operation of real  property by Custom Foods and Quality  Foods
                  are subject to extensive and changing federal, state and local
                  environmental   laws,  and   regulations   pertaining  to  the
                  discharge of materials into the environment,  the handling and
                  disposition of wastes  (including solid and hazardous  wastes)
                  or  otherwise  relating  to  protection  of  the  environment.
                  Compliance with federal,  state and local  environmental  laws
                  and  regulations is not expected to have a material  impact on
                  the Company's  capital  expenditures,  earnings or competitive
                  position.  No assurance can be given, however, that additional
                  environmental  issues  relating to presently  known matters or
                  identified sites or to other matters or sites will not require
                  additional, currently unanticipated investigation,  assessment
                  or expenditures.

         Item 3.  Legal Proceedings

                           The  Company  is not  involved  in any legal  matters
                  within or outside of the normal  course of business that would
                  have a material impact on the operations or financial position
                  of the Company.

                           The Company is likely to be subject to claims arising
                  from time to time in the ordinary  course of its business.  In
                  certain of such actions,  plaintiffs  may request  punitive or
                  other  damages  that  may not be  covered  by  insurance  and,
                  accordingly,  no  assurance  can be given with  respect to the
                  ultimate  outcome  of  any  such  possible  future  claims  or
                  litigation or their effect on the Company.

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

                           The  Company  did not submit any matters to a vote of
                  security holders during the year covered by this report.


Part II

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

                           There is no established public trading market for the
                  Company's  Voting  Class A  Common  Stock,  Nonvoting  Class A
                  Common Stock or Nonvoting  Class B Common  Stock.  As of March
                  31,  2000  there  were 7 holders  of record of Voting  Class A
                  Common  Stock,  there were 15  holders of record of  Nonvoting
                  Class A Common  Stock and there  were 14  holders of record of
                  Nonvoting  Class B Common Stock.  The Company has not

                                       17

<PAGE>


                  declared dividends in the last three fiscal years and does not
                  anticipate doing so in the foreseeable  future. For additional
                  information,  see  "Security  Ownership of Certain  Beneficial
                  Owners and Management" in this Annual Report of Form 10-K.

                           Since   April  1,  1996  the   Company   has   issued
                  unregistered   securities   to  investors  and  certain  other
                  individuals as set forth below.

                                    In  December  1996 in  connection  with  the
                           purchase  by  CFP  Holdings  of  Quality  Foods,  the
                           Company issued 2,162 shares of its Nonvoting  Class B
                           Common  Stock  to  holders  of  equity  interests  in
                           Quality Foods valued at $1.5 million.

                                    In January 1997, (i) in connection  with the
                           recapitalization of CFP Holdings,  each person owning
                           capital stock (or options to acquire capital stock of
                           CFP Holdings)  exchanged  their equity  interests for
                           equivalent  interests of capital stock (or options to
                           acquire capital stock) of CFP Group; (ii) the Company
                           issued  720  shares of its  Nonvoting  Class B Common
                           Stock  to a group of  Quality  Foods  management  for
                           $500,000 with the Company receiving  promissory notes
                           totaling  $343,000 as partial  consideration for such
                           sale;  (iii) the  Company  issued  439  shares of its
                           Nonvoting  Class B Common  Stock,  valued at $304,583
                           for  $.01  per  share  to  NationsBridge,  L.L.C.  in
                           exchange for services;  (iv) the Company issued 4,538
                           shares of its  Nonvoting  Class A Common Stock valued
                           at  $1,722,520  upon the  exercise  by  NationsCredit
                           Commercial Corporation and CFP Associates of warrants
                           issued in exchange for services;  and (v) the Company
                           issued 2,546 shares of its  Nonvoting  Class A Common
                           Stock for  $735,845  to a group of  employees  of the
                           Company when  Incentive  Stock Options were exercised
                           in conjunction with the payment of a special dividend
                           by the Company in connection with the offering of the
                           Senior Notes.

                                    In  September  1997,  the Company  issued 72
                           shares of its Nonvoting Class B shares for $50,000 to
                           an employee of the  Company.  The Company  received a
                           Promissory Note for $35,000 as partial consideration.

                                    During fiscal year 2000,  the Company issued
                           shares in connection with certain employees  electing
                           to exercise their options to purchase  Company stock.
                           Also,  the  Company  repurchased  company  stock from
                           former  employees.  With  respect to the  issuance of
                           shares to certain  employees,  the Company issued 674
                           shares of its  Nonvoting  Class A shares for $194,799
                           and issued 984 shares of its Nonvoting Class B shares
                           for $412,762.  The Company received  Promissory Notes
                           in the amount of $532,415 as consideration. Regarding
                           the repurchase of shares from former  employees,  the
                           Company  entered into an agreement with a shareholder
                           to purchase  1,716  shares of common  stock and 1,124
                           option  shares on or before June 30, 2000 for a gross
                           price of

                                       18

<PAGE>


                           $500 per share.  On January 4, 2000, the Company paid
                           $858,000  for the 1,716 shares of common  stock.  The
                           Company  subsequently  purchased the remaining  1,124
                           option shares in April 2000. In addition,  two former
                           employees had their shares repurchased by the Company
                           for  $193,000  and  cancelled a  Promissory  Note for
                           $82,000 in connection  with the  transaction.  During
                           April  2000,  the  Company  purchased  100  shares of
                           common  stock for $500 per share from an  employee of
                           the Company.

                           All of the  aforementioned  issuances  were  made  in
                  reliance upon the exemption from the registration requirements
                  of the  Securities  Act.  of 1933,  as amended,  contained  in
                  Section 4(2) of the Securities Act.

         Item 6.  Selected Financial Data

<TABLE>
                           The following selected consolidated financial data of
                  the Company  has been  derived  from the audited  consolidated
                  financial  statements  of the  Company  and  should be read in
                  conjunction with the audited consolidated financial statements
                  and related notes hereto and the other financial data included
                  elsewhere in this filing.

<CAPTION>
                                                                               Six
                                                                              Months
                                                 Year Ended                    Ended                     Year Ended
                                                September 30,                 March 31,                  March 31,
                                            1995              1996            1997 (1)        1998           1999           2000
                                         ---------         ---------         ---------      ---------      ---------      ---------
<S>                                      <C>               <C>               <C>            <C>            <C>            <C>
Statement of Operations Data:

Net sales                                $  61,543         $  65,996         $  60,529      $ 181,378      $ 183,164      $ 211,282
Cost of sales                               49,868            53,818            52,276        152,484        147,518        174,969
                                         ---------         ---------         ---------      ---------      ---------      ---------
Gross profit                                11,675            12,178             8,253         28,894         35,646         36,313
Selling, general and
  administrative
  expenses                                   6,700             5,512             7,474         17,156         20,411         18,670
Other charges                                                  4,996(2)
                                         ---------         ---------         ---------      ---------      ---------      ---------
Income from operations                       4,975             1,670               779         11,738         15,235         17,643
Interest expense                             2,632             3,232             4,681         17,236         17,322         17,914
                                         ---------         ---------         ---------      ---------      ---------      ---------
Income (loss) before
  income taxes and
  extraordinary items                        2,343            (1,562)           (3,902)        (5,498)        (2,087)          (271)
Provision (benefit)
  for income taxes                           1,189              (409)             (541)            30            467           (350)
                                         ---------         ---------         ---------      ---------      ---------      ---------
Income (loss) before
  extraordinary item                         1,154            (1,153)           (3,361)        (5,528)        (2,554)            79
Extraordinary loss on
  early extinguishment
  of debt                                                                       (4,489)(3)                    (1,003)(4)
                                         ---------         ---------         ---------      ---------      ---------      ---------
Net income (loss)                        $   1,154         $  (1,153)        $  (7,850)     $  (5,528)     $  (3,557)     $      79
                                         =========         =========         =========      =========      =========      =========
Other Data:

EBITDA (5)                               $   6,685         $   3,758         $   3,026      $  18,484      $  22,224      $  25,548
Net cash provided by
  (used in) operating
  activities                                 4,382               135             3,477            661          4,244         (4,340)
Net cash used in
  investing activities                      (1,785)           (1,811)          (67,293)        (3,754)        (6,643)        (6,922)
Net cash (used in)
  provided by
  financing activities                      (2,807)            2,168            65,462          2,298          2,875         10,048
Depreciation and
amortization                                 1,710             2,088             2,236          6,732          6,733          7,681
Interest expense                             2,632             3,232             4,681         17,236         17,322         17,914

                                                                 19

<PAGE>
Capital expenditures                         5,054             3,009             1,674          5,489          6,104          7,038
Ratio of earnings to
  fixed charges (6)                           1.83x
Balance Sheet  Data:

Working capital                          $   2,754         $   3,153         $  14,702      $  15,373      $  18,093      $  30,236
Total assets                                30,148            32,203           132,822        133,079        136,404        148,152
Total debt, redeemable
  preferred stock and
  redeemable common
  stock                                     19,526            23,223           142,174        145,818        149,327        159,772
Total stockholders
  equity (deficiency)                        5,884             4,020           (19,383)       (24,959)       (28,516)       (28,834)
<FN>

         (1)      In March 1997,  the  Company  changed its fiscal year end from
                  the Saturday  closest to September 30 to the Saturday  closest
                  to March 31.

         (2)      Represents one-time costs associated with the termination of a
                  Sales Brokerage Agreement.

         (3)      Represents  the write-off of deferred  financing  costs due to
                  early payment of long-term debt, partially offset by discounts
                  gained due to early repayment of certain long-term debt.

         (4)      The Company used proceeds from new  borrowings  under the Loan
                  and Security Agreement to repay all amounts  outstanding under
                  its prior credit  agreement.  This represents the write-off of
                  unamortized deferred financing costs associated with the prior
                  credit agreement.

         (5)      EBITDA is the sum of income  before income taxes and interest,
                  depreciation and amortization  expense (and  extraordinary and
                  unusual  items).  EBITDA is  presented  because it is a widely
                  accepted financial indicator of a Company's ability to service
                  indebtedness.  However,  EBITDA should not be considered as an
                  alternative  to income from  operations  or to cash flows from
                  operating   activities  (as  determined  in  accordance   with
                  generally  accepted  accounting  principles) and should not be
                  construed   as  an   indication   of  a  Company's   operating
                  performance or as a measure of liquidity.

         (6)      In  calculating  the  ratio  of  earnings  to  fixed  charges,
                  earnings  consist  of income  before  income  taxes plus fixed
                  charges.  Fixed charges  consist of interest  (which  includes
                  amortization  of deferred  financing  costs) and  one-third of
                  rental  expense,  deemed  representative  of that  portion  of
                  rental expense  estimated to be  attributable  to interest.  A
                  ratio of earnings to fixed  charges is not  presented  for the
                  year ended  September 30, 1996, the six months ended March 31,
                  1997 or the years ended March 31,  1998,  1999,  and 2000,  as
                  earnings  were  not  adequate  to  cover  fixed  charges.  The
                  deficiency  of  earnings  to cover  fixed  charges  were  $1.6
                  million for the fiscal year ended  September  30,  1996,  $3.9
                  million for the six month period  ended March 31,  1997,  $5.5
                  million for the fiscal year ended March 31, 1998, $2.1 million
                  for the fiscal year ended March 31, 1999,  and $.3 million for
                  the fiscal year ended March 31, 2000.
</FN>
</TABLE>
         Item 7.  Management's  Discussion  and Analysis of Financial  Condition
                  and Results of Operations

                  Results from Operations

                  The following  table  represents  the  Company's  consolidated
                  income statement showing each income statement  component as a
                  percentage of net sales.

                                                          Year Ended March 31,
                                                      1998      1999       2000
                                                      -----     -----     -----
Statement of Operations Data:

Net sales                                             100.0%    100.0%    100.0%
Cost of sales                                          84.1      80.5      82.8
                                                      -----     -----     -----
Gross profit                                           15.9      19.5      17.2
Selling, general and administrative expenses            9.4      11.1       8.8
                                                      -----     -----     -----
Income from operations                                  6.5       8.4       8.4
Interest expense                                        9.5       9.5       8.5
                                                      -----     -----     -----
Loss  before income taxes and extraordinary items      (3.0)     (1.1)     (0.1)
Provision (benefit) for income taxes                              0.3      (0.2)
                                                      -----     -----     -----
(Loss) Income before extraordinary item                (3.0)     (1.4)      0.1

                                       20

<PAGE>


Extraordinary loss on early extinguishment of debt               (0.5)
                                                      -----     -----     -----
Net (loss) income                                      (3.0)%    (1.9)%     0.1%
                                                      =====     =====     =====

                  Fiscal Year Ended  March 31, 2000  compared to the Fiscal Year
                  ended March 31, 1999

                           Net Sales.  Net sales  increased by $28.1  million or
                  15.4% to $211.3  million  for the fiscal  year ended March 31,
                  2000 when compared to $183.2 million for the fiscal year ended
                  March 31, 1999. Total pounds sold by the Company  increased by
                  19.4  million  pounds or 17.9% for the fiscal year ended March
                  31,  2000 when  compared  to the fiscal  year ended  March 31,
                  1999. This increase was experienced in all products within the
                  Company's  product  portfolio  and is a direct  result  of the
                  Company's   restructuring  of  the  sales  organization,   and
                  continued  investment and execution in its growth and branding
                  strategies. Particularly, sales of the Company's higher margin
                  value-added  products increased by 17.1% to $161.1 million for
                  the fiscal year ended  March 31, 2000 from $137.9  million for
                  the  fiscal  year  ended  March  31,  1999 and sales to Arby's
                  increased by 10.9% to $50.2  million for the fiscal year ended
                  March 31,  2000 from $45.3  million  for the fiscal year ended
                  March 31, 1999. In addition,  sales to key  customers  such as
                  Subway   and  Chef   America   increased   14.8%   and   6.3%,
                  respectively. The net sales price decreased to $1.65 per pound
                  from $1.69 per pound as a result of a product mix shift in the
                  Broiler  Line   business   combined  with  passing  lower  raw
                  materials prices to customers who are charged on a "cost plus"
                  basis,  primarily  Arby's,  and  a  decrease  in  the  average
                  contract prices to Chef America.

                           Gross Profit. Gross profit increased to $36.3 million
                  for the fiscal year ended  March 31,  2000 from $35.6  million
                  for the fiscal year ended March 31,  1999.  Volume was the key
                  driver for this  $700,000  increase  in  performance  over the
                  prior year. The gross margin decreased to 17.2% for the fiscal
                  year ended March 31, 2000 from 19.5% for the fiscal year ended
                  March  31,  1999  and  the  average  gross  profit  per  pound
                  decreased   to  $0.29  from   $0.33  for  the  same   periods,
                  respectively.  The primary  factors for the  decrease  include
                  higher raw material costs, lower yields due to production line
                  inefficiencies,  higher  operating  costs as a  result  of the
                  increased  volume over the prior  year,  and a decrease in the
                  average contract prices to Chef America.

                           Selling,   General   and   Administrative   Expenses.
                  Selling,  general and  administrative  expenses  decreased  to
                  $18.7  million  for the fiscal  year ended March 31, 2000 from
                  $20.4  million for the fiscal year ended March 31,  1999.  The
                  $1.7  million  decrease  in expenses  is  primarily  due lower
                  expenses  reflecting the Company's  capitalization  of certain
                  personnel costs directly related to the  implementation of the
                  Company's new enterprise wide computer  system,  lower expense
                  due to  unfilled  positions,  lower  compensation  related  to
                  performance   based   compensation,    and   stronger   fiscal
                  management,   partially   offset  by  an  increase  sales  and
                  marketing  expenses  primarily  as a result  of  increases  in
                  brokerage   costs.   Included   in   selling,   general,   and
                  administrative  expense  for FY 2000 is a one time  charge  of
                  $237,142  related to the  Company's  purchase of 1,124

                                       21

<PAGE>


                  option  shares  from a former  employee  of the  Company.  See
                  Market for Registrant's  Common Equity and Related Stockholder
                  Matters.

                           Income from Operations.  As a result of the foregoing
                  items,  income from operations  increased to $17.6 million for
                  the fiscal year ended  March 31,  2000 from $15.2  million for
                  the fiscal year ended March 31, 1999.

                           Interest Expense. Interest expense increased to $17.9
                  million  for the fiscal  year ended  March 31, 2000 from $17.3
                  million for the fiscal year ended March 31, 1999. The $600,000
                  increase is primarily a result of increased  borrowings  under
                  the Company's revolving credit facility.

                           Income Taxes. An income taxes benefit of $350,000 was
                  recorded  for the fiscal year ended March 31, 2000 as compared
                  to a provision of $467,000 for the fiscal year ended March 31,
                  1999. The primary factors contributing to this were income tax
                  refunds  combined with lower state tax  obligations  resulting
                  from  the   reorganization   of  the  Company's   Pennsylvania
                  subsidiary into a limited liability company.

                           Extraordinary  Loss.  In the first  quarter of fiscal
                  year 1999, the Company used proceeds from borrowings under the
                  Loan and Security  Agreement to repay all amounts  outstanding
                  under its prior credit  agreement.  In  connection  with these
                  repayments,  an extraordinary  loss on the  extinguishment  of
                  debt of approximately  $1.0 million was recorded.  This amount
                  principally consisted of unamortized deferred financing costs.

                           Net Income. As a result of the foregoing factors, the
                  Company had net income of $79,000 for the year ended March 31,
                  2000 versus a net loss of $3.6 million for the prior year.

                  Fiscal Year Ended  March 31, 1999  compared to the Fiscal Year
                  ended March 31, 1998

                           Net Sales.  Net sales increased by $1.8 million or 1%
                  to $183.2  million  for the fiscal  year ended  March 31, 1999
                  when  compared  to $181.4  million  for the fiscal  year ended
                  March 31, 1998. Total pounds sold by the Company  increased by
                  1.6 million pounds or 1.5% for the fiscal year ended March 31,
                  1999 when  compared to the fiscal  year ended March 31,  1998.
                  Sales of the  Company's  higher  margin  value-added  products
                  increased by 2.3% to $137.9  million for the fiscal year ended
                  March 31, 1999 from  $134.8  million for the fiscal year ended
                  March 31, 1998 and sales to Arby's  decreased by 2.7% to $45.3
                  million  for the fiscal  year ended  March 31, 1999 from $46.5
                  million for the fiscal year ended March 31, 1998.The  increase
                  in net sales  reflects  an  overall  increase  in sales of the
                  Company's  Quality Foods  division,  offset in large part by a
                  decrease in sales from the Custom Foods division. The increase
                  in sales at Quality  Foods was a result of  increases in sales
                  of its value  added  products.  The  decrease  in net sales at
                  Custom  Foods was a result of  decreased  sales of value added
                  products  and the reduced  sales  prices of its

                                       22

<PAGE>


                  products as a result of the cost plus  nature of the  contract
                  with Arby's.  Approximately  $1.2 million of the reduced sales
                  at Custom  Foods was a result of the lower  prices  charged to
                  Arby's due to the lower  prices  paid for raw  materials.  The
                  decrease in sales of Custom Foods' value added  business was a
                  result of a reduction in sales to one of Custom Foods  largest
                  customers,  Chef America.  Commencing with the last quarter of
                  fiscal year 1998 and continuing  through the second quarter of
                  fiscal year 1999 sales to Chef America declined.  However,  as
                  of March 31, 1999, the growth in other value added business of
                  the  Company  had offset the impact of the decline in sales to
                  Chef  America  and  the  comparable  quarterly  sales  to Chef
                  America  increased during the quarters ended December 31, 1998
                  and March 31, 1999. The net sales price decreased to $1.69 per
                  pound from $1.70 per pound as a result of the above changes.

                           Gross Profit. Gross profit increased to $35.6 million
                  for the fiscal year ended  March 31,  1999 from $28.9  million
                  for the fiscal year ended March 31,  1998.  This $6.7  million
                  increase was  primarily  due to  increased  sales and improved
                  efficiencies  in  operations  at the  Company's  Quality Foods
                  division,  as well as lower  prices paid for raw  materials at
                  both  divisions.  The gross margin  increased to 19.5% for the
                  fiscal  year  ended  March 31,  1999 from 15.9% for the fiscal
                  year ended  March 31, 1998 and the  average  gross  profit per
                  pound  increased  to $0.33  from  $0.27 for the same  periods,
                  respectively, for the same reasons.

                           Selling,   General   and   Administrative   Expenses.
                  Selling, general and administrative expenses increased by $3.2
                  million to $20.4  million  for the fiscal year ended March 31,
                  1999 from $17.2  million  for the fiscal  year ended March 31,
                  1998.  The increase in expenses is primarily  due to strategic
                  staffing   additions,   as  the   Company   invested   in  its
                  infrastructure  to  consolidate  the  Company's  businesses to
                  support  future  sales  growth.  The Company does not allocate
                  selling,  general and  administrative  Expenses to each of the
                  Company's operating divisions.

                           Income from Operations.  As a result of the foregoing
                  items,  income from operations  increased to $15.2 million for
                  the fiscal year ended March 31, 1999 from $11.7 million of the
                  fiscal year ended March 31, 1998.

                           Interest Expense. Interest expense increased slightly
                  to $17.3 million for the fiscal year ended March 31, 1999 from
                  $17.2 million for the fiscal year ended March 31, 1998.

                           Provision  for  Income  Taxes.  Provision  for income
                  taxes  increased  to $467,000  for the fiscal year ended March
                  31, 1999 from $30,000 for the fiscal year ended March 31, 1998
                  due to the need to provide for an expected  increase in income
                  tax expense in certain  states in which the  Company  operates
                  and the disallowance of certain  deductions  resulting from an
                  IRS audit of prior years.

                           Extraordinary  Loss.  The Company used  proceeds from
                  borrowings under the Loan and Security  Agreement to repay all
                  amounts

                                       23

<PAGE>


                  outstanding  under its prior credit  agreement.  In connection
                  with  these   repayments,   an   extraordinary   loss  on  the
                  extinguishment  of  debt of  approximately  $1.0  million  was
                  recorded  in FY1999.  This  amount  principally  consisted  of
                  unamortized deferred financing costs.

                           Net Loss. A net loss of $3.6 million was incurred for
                  the  year  ended  March  31,  1999  versus  a net loss of $5.5
                  million  for  the  prior  year  due to the net  impact  of the
                  foregoing items.

                           Liquidity and Capital Resources.  The Company's total
                  consolidated  indebtedness  was  $158.1  million  at March 31,
                  2000,  principally  consisting of $115 million in Senior Notes
                  and $29.9  million in  borrowings  under the Loan and Security
                  Agreement  as well as  various  notes  payable  to  government
                  agencies  and capital  leases.  Borrowings  under the Loan and
                  Security Agreement consist of a $10.0 million term loan, $17.8
                  million of  revolving  credit  borrowings  and $2.1 million in
                  equipment  loans.  As of March 31, 2000, the Loan and Security
                  Agreement  provides  for  a  $10.0  million  term  loan  and a
                  revolving  credit  facility up to $30.0 million,  subject to a
                  borrowing  base  and  other  limitations,   including  amounts
                  outstanding  under  term  loans,  equipment  loans,  letter of
                  credit,  and other  borrowing  instruments  under the Loan and
                  Security Agreement. All amounts outstanding under the Loan and
                  Security  Agreement become due and payable in May 2002. During
                  June 2000,  the Company  increased  its credit  facility  from
                  $40.0 million to $45.0 million to provide  additional  working
                  capital.

                           Borrowings under the Loan and Security  Agreement are
                  secured  by  substantially   all  of  the  Company's   assets,
                  including  a pledge  of all the  stock of  Quality  Foods  and
                  Custom Foods,  are  guaranteed by the Company's  subsidiaries,
                  which  guarantees  are  secured  by  substantially  all of the
                  assets of the Company's subsidiaries,  and are further secured
                  by a pledge of all the stock of CFP  Holdings.  The Company is
                  also required to maintain a ratio not greater than 2.5 of debt
                  under the Loan and Security  Agreement to EBITDA,  as defined,
                  to remain in compliance under the agreement.

                           The Loan and  Security  Agreement  and the  Indenture
                  contain  numerous  restrictive  covenants,   which  limit  the
                  discretion  of the  management  of the Company with respect to
                  certain business  matters.  These covenants place  significant
                  restrictions  on,  among  other  things,  the  ability  of the
                  Company to incur additional  indebtedness,  to create liens or
                  other encumbrances,  to pay dividends or make other restricted
                  payments,  to make investments,  to make capital expenditures,
                  loans and  guarantees  and to sell or  otherwise  dispose of a
                  substantial  portion  of assets  to,  or merge or  consolidate
                  with, another entity.

                           The Company entered into a sale leaseback arrangement
                  with The CIT Group (CIT) in April 2000 where CIT purchased and
                  then  subsequently  leased back to the Company food processing
                  and computer  related  equipment.  The primary  purpose of the
                  arrangement   was  to  provide  the  Company  with  additional
                  liquidity  in the amount of $2.6

                                       24

<PAGE>


                  million for working  capital needs.  The term of the agreement
                  is 24 months  for  computer  equipment  and 36 months for food
                  processing equipment.

                           Net  cash  used  in  operating  activities  was  $4.3
                  million in fiscal 2000  compared  to $4.2  million of net cash
                  provided by operating  activities in fiscal 1999.  The primary
                  factors of this usage of cash over prior  year's  provision is
                  the  Company's   increased   investment  in  inventories   and
                  increased  accounts   receivable,   both  resulting  from  the
                  increase in sales in fiscal 2000 and the Company's decision to
                  build up  inventories at its fiscal year end. Net cash used in
                  investing  activities was $6.9 million in fiscal 2000 compared
                  to $6.6  million in fiscal  1999.  Cash  provided by financing
                  activities  was $10.0  million in fiscal 2000 compared to $2.9
                  million in fiscal 1999. Cash provided by financing  activities
                  was  primarily  received from  borrowings  under the Company's
                  credit facility.

                           In  addition  to its debt  service  obligations,  the
                  Company  requires  liquidity  for working  capital and capital
                  expenditures.  The Company  experiences  seasonal increases in
                  its working  capital as a result of large  product  promotions
                  and planned inventory  increases based upon seasonally low raw
                  material prices.

                           For the fiscal years ended March 31, 2000,  1999, and
                  1998 the Company  spent $7.0 million,  $6.6 million,  and $5.5
                  million,  respectively,  on capital expenditures.  The Company
                  presently anticipates that its capital expenditures for fiscal
                  2001 will be between $4.4  million and $8.0 million  depending
                  on the needs  associated  with the  Company's  new  California
                  facility and the timing associated with its opening.

                           The Company's  primary  sources of liquidity are cash
                  flows  from  operations  and  borrowings  under  the  Loan and
                  Security  Agreement.  Based upon the current  and  anticipated
                  level of  operations,  the Company  believes  that its working
                  capital  requirements,  capital  expenditures and debt service
                  requirements  will be satisfied  through a combination of cash
                  flow from  operations and funds  available  under the Loan and
                  Security Agreement. However, in connection with the opening of
                  its new California facility,  the Company may need to evaluate
                  and or revise its  existing  debt  agreements  to support  its
                  planned growth.

                  Year 2000

                           As of the date of this  report,  the  Company  is not
                  aware  of any  adverse  effects  of Year  2000  issues  on the
                  Company  including  its  systems  and  operations.The  Company
                  selected a Year 2000  compliant  Enterprise  Wide System,  the
                  Ross  Systems  Renaissance  CS  Enterprise  Resource  Planning
                  System ("Ross System"). The Company expended $1,600,000 on the
                  Ross System  implementation  through March 31, 2000.  The cost
                  includes  expenditures  incurred  pursuant  to  the  Company's
                  technology upgrade and business process reengineering programs
                  occurring  concurrently  but not directly related to Year 2000
                  issues. The Company has successfully  completed Phase I of the
                  implementation.  Phase I

                                       25

<PAGE>


                  entailed replacing systems at risk with the Ross System. Phase
                  II is now underway  and it is  comprised of replacing  all the
                  remaining systems with the Ross System.

                           The  Company  believes  the  conversion  to the  Ross
                  System and Year 2000 project has resulted in the Company being
                  Year 2000  compliant and the Company has not  experienced  any
                  major Year 2000 problems to date. In addition,  the Company is
                  not aware of any material  Year 2000 problems  experienced  by
                  material  third  parties  ("External  Parties")  and  has  not
                  received  any  notification  from  External  Parties  to date.
                  However,  the Company  will  continue to monitor all  critical
                  systems  for  the  appearance  of  delayed   complications  or
                  disruptions,  problems relating to the leap year, and problems
                  encountered by third parties with whom the Company deals.

                  Inflation

                           Management  does not believe that  inflation  had any
                  material  impact upon its  business for the fiscal years ended
                  March 31, 2000, 1999, and 1998.

         Item 7A. Quantitative and qualitative disclosures about market risk.

                  Long-term Debt

                           The Company's  exposure to market risk for changes in
                  interest rates relates  primarily to the Company's current and
                  future debt obligations.

<TABLE>
                           The  table  below  provides  information   concerning
                  long-term  debt  outstanding  at  March  31,  2000,  including
                  principal  amounts  maturing each year,  average interest rate
                  and fair value.

<CAPTION>
                                                                                                                       Total Fair
                             2001       2002         2003          2004         2005     Thereafter       Total           Value
                           ---------  ---------  ------------  -------------  ---------  -----------  ------------    -------------
<S>                        <C>        <C>        <C>           <C>            <C>        <C>          <C>             <C>
11.625%
Senior Notes Average                                           $ 115,000,000                          $115,000,000    $ 105,800,000
Interest Rate Variable        11.625     11.625        11.625%        11.625%
Rate Notes Average         $ 357,000  $ 357,000  $ 29,244,000                                         $ 29,958,000(a)
Interest Rate                   9.00%      9.00%         9.00%
Variable Government Notes  $ 200,000  $ 200,000  $    200,000  $     200,000  $ 200,000  $ 2,952,000  $  3,952,000(a)
Average
Interest Rate                    6.0%       6.0%          6.0%           6.0%       6.0%         6.0%
Fixed Rate Notes           $ 226,000  $ 160,000  $    156,000  $     160,000  $ 165,000  $ 2,310,000  $  3,177,000(a)
Average Interest Rate           2.18%      3.60%         3.50%          3.38%      3.23%        3.23%
Capitalized Leases
Fixed Rates                $ 260,000  $ 311,000  $     64,000  $      69,000  $  82,000  $ 5,060,000  $  5,846,000(a)
Average Interest
Rate                           14.42%     14.62%        14.90%         14.90%     14.90%       14.90%

<FN>
(a)      The carrying value of these debt instruments approximates fair value as
         either the rate of interest is tied to market  rates or, if  necessary,
         the Company  believes it could  refinance  this  instrument  at similar
         terms as of March 31, 2000.
</FN>
</TABLE>

                                       26

<PAGE>


         Item 8.  Financial statements and supplementary data

                  See  Item 14  Exhibits,  financial  statement  schedules,  and
                  reports on Form 8-K.

         Item 9.  Changes in and  disagreements  with  accountants on accounting
                  and financial disclosure.

                  None.


Part III

         Item 10. Directors and Executive Officers of the registrant

                  MANAGEMENT

                  Directors and Executive Officers of the Company

                           Set forth below are names,  ages and positions of the
                  directors and executive  officers of CFP Group.  All directors
                  hold office until the next annual meeting of stockholders  and
                  until their successors are duly elected and qualified, and all
                  executive officers hold office at the pleasure of the Board of
                  Directors.

Name                                Age    Position(s)
----                                ---    -----------
Executive Officers and Directors
Roberto Buaron                      54     Director, Chairman of the Board
William Del Chiaro                  47     Director, President and Chief
                                           Executive Officer
James Long                          57     Director, Vice Chairman and Treasurer
Andrew Kohn                         33     Director
Robert Gioia                        52     Director
David Cohen                         36     Director
Eric Ek                             44     Director, Executive
                                           Vice President, and Secretary
Ronald Gallo                        36     Senior Vice President, Chief
                                           Financial Officer
Glenn Myers                         37     Senior Vice President, Sales and
                                           Marketing

                           Roberto  Buaron has been the  Chairman and a Director
                  of CFP Group since December 1996. He is the Chairman and Chief
                  Executive Officer of First Atlantic, which he founded in 1989.
                  From 1987 to 1989,  he was an Executive  Vice  President  with
                  Overseas  Partners,  Inc., an investment  management firm. Mr.
                  Buaron is currently a director of BPC Holding Corporation.

                           William  Del Chiaro  joined the Company in March 1998
                  as a Director and as President  and CEO of Quality  Foods.  In
                  May 1998 he  became  President  and CEO of CFP  Group.  He was
                  previously  Executive Vice President of Sara Lee Corporation's
                  Hillshire Farm & Kahn's division, a $1 billion manufacturer of
                  processed   and   packaged   meats  for  the  retail   grocer,
                  foodservice and other markets.  There he was responsible for a
                  substantial  portion  of the  business's  operations,  capital
                  expenditures,

                                       27

<PAGE>


                  sales and marketing.  Prior to this  position,  Mr. Del Chiaro
                  spent ten years as a senior  executive of Mars, Inc., where he
                  held  top-level  marketing  and sales  positions  in the Uncle
                  Ben's,   Dove   International,   M&M/Mars,   and   foodservice
                  divisions.   His  experience  also  includes  three  years  as
                  Director of Marketing  of Dr.  Pepper  Company's  food service
                  division,   as  well  as  various   positions  of   increasing
                  responsibility  during a seven-year career at Proctor & Gamble
                  Company.

                           Robert  Gioia has been a Director  of CFP Group since
                  December  1996.  From December 1996 to June 30, 1998 he served
                  as the President and Chief  Executive  Officer of the Company.
                  Effective  June 30, 1998 Mr. Gioia became a consultant  to the
                  Company. Prior to December 1996, he was the Chairman and Chief
                  Executive  Officer of Quality Foods and of a  corporation  (of
                  which he is the  sole  stockholder)  which  was a  partner  of
                  Quality  Foods  since  July  1992.  He  has  held   management
                  positions in the food  processing  industry for over 22 years.
                  Prior to joining Quality Foods,  Mr. Gioia was responsible for
                  sales  and  marketing  of  the  foodservice   division,   both
                  restaurant  and  institutional,  of the Red  Wing  Company,  a
                  national food  manufacturer  and processor.  In addition,  Mr.
                  Gioia held several positions,  including Vice President,  with
                  the Gioia  Macaroni  Company,  a national  pasta  manufacturer
                  founded by the Gioia family in 1910.

                           David  Cohen has been a Director  of CFP Group  since
                  December 1996 and also serves as Vice  Chairman of QFAC,  LLC.
                  Prior to that he  served  as  President  and  Chief  Operating
                  Officer of Quality  Foods since July 1992 and  President  of a
                  corporation (of which he is the sole stockholder)  which was a
                  partner of Quality  Foods.  Mr. Cohen joined  Quality Foods in
                  1983 and has served in numerous positions,  including National
                  Sales Manager, before becoming Chief Operating Officer.

                           Eric Ek was the Vice  President  and Chief  Financial
                  Officer of Custom Foods from July 1993 to August  1998,  and a
                  Vice President,  Chief  Financial  Officer and Director of CFP
                  Group from  December  1996. In August 1998, he was promoted to
                  Senior Vice  President  and Chief  Financial  Officer,  and in
                  February  2000  was  promoted  to  Executive  Vice  President.
                  Previously,  Mr. Ek was a  Managing  Director  at  Takenaka  &
                  Company,  a Pacific Rim focused  investment  banking firm from
                  1990 to 1993.  At  Takenaka,  Mr. Ek was the  Chief  Financial
                  Officer   of   a   residential   homebuilder   and   a   Chief
                  Administrative  Officer  for a  manufacturing  firm.  Prior to
                  joining Takenaka, Mr. Ek was employed by KPMG Peat Marwick and
                  Ernst & Young from 1982 to 1990. Mr. Ek is a Certified  Public
                  Accountant.

                           Ronald Gallo has been the Vice  President of Business
                  Planning  since  joining  the  Company in July 1998 and Senior
                  Vice  President  of Staff  Operations  since  March  1999.  In
                  February 2000, concurrent with Mr. Ek's promotion to Executive
                  Vice  President,  he  was  promoted  to  the  Company's  Chief
                  Financial Officer.  Previously,  Mr. Gallo was the director of
                  Planning  and  Trade  Marketing  for  Sara  Lee  Corporation's
                  Hillshire  Farm & Kahn's  Division.  Mr.  Gallo worked for the
                  Sara Lee

                                       28

<PAGE>


                  Corporation for almost ten years,  from 1989 to 1998,  holding
                  various positions in a financial capacity. Mr. Gallo earned an
                  M.B.A. from Xavier University in Cincinnati, Ohio in 1996.

                           James Long has been the Vice  Chairman and  Treasurer
                  of  CFP  Group  since  December  1996  and a  director  of CFP
                  Holdings  since  March  1993.  He has been an  Executive  Vice
                  President  of First  Atlantic  since March 1991.  From January
                  1990  to  February  1991,  Mr.  Long  was  an  Executive  Vice
                  President at Kleinwort  Benson Equity Fund, a leveraged buyout
                  fund.  Mr.  Long  is  currently  a  director  of  BPC  Holding
                  Corporation.

                           Andrew  Kohn has been a Director  of CFP Group  since
                  December 1996. Mr. Kohn is a Vice President of First Atlantic,
                  with whom he has been  employed  since 1994.  Previously,  Mr.
                  Kohn was  employed by  Berkshire  Partners,  a private  equity
                  investment firm and Bear Stearns & Co.

                           Glenn  Myers has been the Senior  Vice  President  of
                  Sales and  Marketing  since joining the Company in April 1999.
                  Previously,  Mr. Myers was Vice President of National Accounts
                  Sales for Best Foods  International.  In  addition,  Mr. Myers
                  held various  positions from 1985 to 1996 in Sales,  Marketing
                  and Training for Campbell Soup Company.  Mr. Myers  received a
                  B.A. degree from Oswego State University in 1984.


         Item 11. Executive Compensation

                           The  following  table  sets  forth a  summary  of the
                  compensation  earned by the Company's  current Chief Executive
                  Officer and its four other most highly  compensated  executive
                  officers  (collectively,  the "Named Executive  Officers") for
                  services  rendered  in all  capacities  during the last fiscal
                  year.


<TABLE>
                                       SUMMARY COMPENSATION TABLE(1)

<CAPTION>
                                                                             LONG-TERM
                                                                            COMPENSATION
                                      ANNUAL COMPENSATION               OPTIONS       LTIP       ALL OTHER
                                 FISCAL     SALARY        BONUS         GRANTED      PAYOUTS   COMPENSATION
NAME AND TITLE                    YEAR        ($)          ($)            (#)          ($)          ($)
<S>                               <C>       <C>          <C>              <C>                   <C>
William Del Chiaro                2000      400,000      400,000          411(4)                25,470(5)
    President and Chief           1999      327,596      271,905        1,589(4)                15,900(5)
    Executive Officer             1998       12,500(3)    75,000(3)
Eric Ek                           2000      230,000       66,820           50(4)                27,182(9)

                                                   29

<PAGE>

    Executive Vice                1999      202,000      172,550          200(4)                14,162(9)
    President                     1998      198,950       23,556                                 8,506(9)
Ron Gallo(6)                      2000      149,136       44,740          188(4)                18,644(7)
    Chief Financial Officer       1999       92,500       39,812          350(4)                 6,750(7)
    Senior Vice President         1998
Glenn Myers(10)                   2000      150,000       45,000           50(4)                 9,736(11)
    Senior Vice President of      1999
    Sales and Marketing           1998
David Cohen                       2000      144,200       43,260           50(4)                21,571(8)
    Director(2)                   1999      127,165      103,321          367(4)                13,337(8)
                                  1998      166,792       25,000                                13,337(8)

<FN>
(1)      For purposes of this table,  the fiscal  years  referred to herein mean
         the 12-month periods ended March 31.

(2)      Mr. Cohen also serves as Vice Chairman of QFAC, LLC.

(3)      Became  an  employee  of  the  Company  in  March  1998.  During  1998,
         compensation  included base salary of $325,000  since his start date of
         March 18, 1998 and a signing  bonus of $75,000.  During  1999,  Mr. Del
         Chiaro's salary was increased to $400,000.

(4)      Options granted under the 1998 stock option plan.

(5)      For 2000:  Consist of $14,400 car  allowance,  $1,056  excess term life
         insurance,  $7,170  medical  and dental  insurance,  $2,844  disability
         insurance.  For 1999:  Consists  of $14,400  car  allowance  and $1,500
         excess term life insurance.

(6)      Became an employee of the Company in July 1998.

(7)      For 2000:  Consists of $9,000 for car allowance,  $359 excess term life
         insurance,  $7,486  medical  and dental  insurance,  $1,799  disability
         insurance. For 1999: Consists of $6,750 for car allowance.

(8)      For 2000: Consists of $12,000 for car allowance,  $330 excess term life
         insurance,  $7,486  medical  and dental  insurance,  $1,755  disability
         insurance.  For 1999:  Consists of $12,000 for car allowance and $1,337
         excess term life  insurance.  For 1998:  Consists of $1,337 excess term
         life insurance and $12,000 car allowance.

(9)      For 2000:  Consists of $8,900 for car  allowance,  $10,445  medical and
         dental  insurance,  $757  excess  term  life  Insurance  and  $7,080 in
         disability  insurance.  For 1999: Consists of $8,400 for car allowance,
         $1,020 excess term life  insurance and $4,742 in disability  insurance.
         For 1998:  Consists  of $8,400 for car  allowance  and $106 excess term
         life insurance.

(10)     Became an employee of the Company in April 1999.

(11)     For 2000:  Consists of $396 excess term life insurance,  $7,486 medical
         and dental insurance, $1,854 disability insurance.
</FN>
</TABLE>

                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
                           The following table sets forth the options granted to
                  the Named Executive Officers during the last fiscal year under
                  the 1998 stock option plan.

<CAPTION>
                                 Percent
                                 of Total                                  Potential
                                 Options                               Realizable Value at
                    Number of    Granted                                 Assumed Annual
                    Securities     to                                    Rates of Stock
                    Underlying  Employees   Exercise of                Price Appreciation
                     Options    in Fiscal   Base Price    Expiration    for Option Term
                     Granted      Year        ($/Sh)        Date       5% ($)   10% ($)
                     -------      ----        ------        ----       ------   -------
<S>                    <C>        <C>        <C>          <C>        <C>        <C>
William Del Chiaro     411        29.0%      289.02       7-1-2009   $215,951   $414,217
Eric Ek                 50         3.5%      289.02       7-1-2009   $ 26,271   $ 50,393
Ron Gallo              188        13.3%      289.02       7-1-2009   $ 98,780   $189,476

                                            30

<PAGE>


Glenn Myers             50         3.5%      289.02       7-1-2009   $ 26,271   $ 50,393
David Cohen             50         3.5%      289.02       7-1-2009   $ 26,271   $ 50,393
</TABLE>


                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

<TABLE>
                           The  following  table  sets  forth  information  with
                  respect  to the  exercise  of stock  options  during  the last
                  fiscal year by each of the Named  Executive  Officers  and the
                  number of options  held at fiscal  year end and the  aggregate
                  value of in-the-money options held at fiscal year end.

<CAPTION>
                                                                                   Value of
                                                                Number of         Unexercised
                                  Shares                       Securities        In-The-Money
                                Acquired on                    Underlying         Options At
                                 Exercise                      Options at       March 31, 2000
                                 A Shares        Value       March 31, 2000         ($)(1)
                                   / B         Realized       Exercisable /      Exercisable /
                                  Shares          ($)         Unexercisable      Unexercisable
                                  ------          ---         -------------      -------------
<S>                                <C>            <C>            <C>               <C>
William G. Del Chiaro              0/400          --             0/1,600           0/337,568
Eric Ek                           444/50          --              0/200            0/42,196
Ron Gallo                          0/107          --              0/431            0/90,932
Glenn Myers                        0/60           --              0/240            0/50,635
David Cohen                        0/337          --              0/80             0/16,878

<FN>
(1)      Based on the assumed fair market value of the Common Stock at March 31,
         2000  ($500.00 per share),  as  determined  by the  Company's  Board of
         Directors.
</FN>
</TABLE>


                  Compensation of Directors

                           All  Directors  are  reimbursed  for their  usual and
                  customary   expenses   incurred  in  attending  all  Board  of
                  Directors  and  committee  meetings.  Directors of the Company
                  receive no remuneration for serving as directors.

                           The Company has entered into a  consulting  agreement
                  with Mr. Gioia (the "Gioia Consulting Agreement") that expires
                  on December 31, 2001 or on an earlier date in accordance  with
                  the terms of the Gioia Consulting Agreement. Base compensation
                  under the Gioia  Consulting  Agreement  through March 31, 1999
                  was $331,500.  Effective April 1, 1999,  base  compensation is
                  $125,000 per year.  Mr. Gioia was also eligible to participate
                  in the  Company's  annual  cash bonus plan for the fiscal year
                  ended  March 31,  1999,  which was  based  upon the  Company's
                  achievement of certain annual performance targets. The Company
                  may  terminate  Mr.  Gioia at any time for  "cause" or after a
                  specified  period  upon a  "disability"  (as  such  terms  are
                  defined in the Gioia  Consulting  Agreement).  If the  Company
                  terminates Mr. Gioia "without  cause" (as such term is defined
                  in the Gioia Employment  Agreement),  Mr. Gioia is entitled to
                  receive,  among  other  things,  the  aggregate  of his annual
                  consulting  fee through  the later of December  31, 2001 or 18
                  months  from  the  date  of  termination  by the  Company.  In
                  accordance with Mr. Gioia's prior Employment  Agreement,  with
                  the  adoption of the 1998 Stock  Option  Plan,  Mr.  Gioia was
                  granted  options to  purchase  428 shares of Class B Nonvoting
                  Common  Stock,  $.01 par  value,  of CFP Group  (the  "Class B

                                       31

<PAGE>


                  Nonvoting Common Stock").

                  Compensation Committee Interlocks and Insider Participation

                           The  Compensation  Committee  is comprised of Roberto
                  Buaron,  Chairman of CFP Group and James Long,  Vice  Chairman
                  and  Treasurer  of CFP Group.  See  "Transaction  with Certain
                  Stockholders."

                  Employment Contracts

                           The Company has entered into an employment  agreement
                  with Mr. Del Chiaro  (the "Del Chiaro  Employment  Agreement")
                  that  expires  on  March  17,  2001 or on an  earlier  date in
                  accordance  with  the  terms  of  the  Del  Chiaro  Employment
                  Agreement.  Base compensation  under the Del Chiaro Employment
                  Agreement  is  $400,000  per  year.  Mr.  Del  Chiaro  is also
                  eligible to  participate  in the  Company's  annual cash bonus
                  plan,  which is based upon the  achievement  of certain annual
                  performance  targets. The Company may terminate Mr. Del Chiaro
                  at any time for  "cause" or after a  specified  period  upon a
                  "disability"  (such as terms  are  defined  in the Del  Chiaro
                  Employment  Agreement).  If the  Company  terminates  Mr.  Del
                  Chiaro  "without  cause"  (as such term is  defined in the Del
                  Chiaro  Employment  Agreement),  Mr. Del Chiaro is entitled to
                  receive,  among other things, the aggregate of his base salary
                  payable  for 18  months  from the date of  termination  by the
                  Company.

                           The Company has entered into an employment  agreement
                  as amended with Mr. Cohen (the "Cohen  Employment  Agreement")
                  that  expires on December  31,  2001 or on an earlier  date in
                  accordance with the terms of the Cohen  Employment  Agreement.
                  Base  compensation  under the Cohen  Employment  Agreement  is
                  $125,000  per year  plus an  annual  adjustment  beginning  in
                  January 1998 based on the Consumer  Price Index.  Mr. Cohen is
                  also  eligible to  participate  in the  Company's  annual cash
                  bonus  plan  that is based  upon the  achievement  of  certain
                  annual performance targets,  subject to the right to receive a
                  minimum  annual  cash  bonus  of  $50,000.   The  Company  may
                  terminate  Mr.  Cohen  at any  time  for  "cause"  or  after a
                  specified  period  upon a  "disability"  (as  such  terms  are
                  defined in the Cohen  Employment  Agreement).  If the  Company
                  terminates Mr. Cohen "without  cause" (as such term is defined
                  in the Cohen Employment  Agreement),  Mr. Cohen is entitled to
                  receive,  among other things, the aggregate of his base salary
                  and the pro rata portion of his minimum  annual bonus  through
                  the later of  December  31, 2001 or 18 months from the date of
                  termination  by the  Company.  In  accordance  with the  Cohen
                  Employment Agreement,  and in conjunction with the adoption of
                  the 1998 Stock Option Plan,  Mr. Cohen was granted  options to
                  purchase up to 367 shares of Class B Nonvoting Common Stock of
                  CFP Group.

                           The Company has entered into an employment  agreement
                  with Mr. Ek (the "Ek  Employment  Agreement")  that expires on
                  June 30,  2001 or on an earlier  date in  accordance  with the
                  terms of the Ek Employment Agreement.  Base compensation under
                  the Ek  Employment  Agreement is

                                       32

<PAGE>


                  $240,000 per year.  Mr. Ek is also eligible to  participate in
                  the  Company's  annual  cash bonus plan that is based upon the
                  Company's  achievement of certain annual performance  targets.
                  The  Company may  terminate  Mr. Ek at any time for "cause" or
                  after a specified  period upon a  "disability"  (as such terms
                  are defined in the Ek  Employment  Agreement).  If the Company
                  terminates Mr. Ek "without  cause" (as such term is defined in
                  the Ek Employment  Agreement),  Mr. Ek is entitled to receive,
                  among other things,  the aggregate of his base salary  payable
                  for 12 months from the date of  termination by the Company and
                  the pro rata  portion of his annual  bonus for the fiscal year
                  in which such termination occurred.

                           The Company has entered into an employment  agreement
                  with Mr. Gallo (the "Gallo Employment  Agreement) to expire on
                  March 31, 2003 or on an earlier  date in  accordance  with the
                  terms of the Gallo  Employment  Agreement.  Base  compensation
                  under the Gallo Employment Agreement is $200,000 per year plus
                  an annual  adjustment  beginning in July of each year based on
                  the  discretion of the  compensation  committee.  Mr. Gallo is
                  also  eligible to  participate  in the  Company's  annual cash
                  bonus plan which is based upon the  Company's  achievement  of
                  certain annual performance  targets. The Company may terminate
                  Mr. Gallo at any time for "cause" or after a specified  period
                  upon a  "disability"  (as such terms are  defined in the Gallo
                  Employment  Agreement).  If the Company  terminates  Mr. Gallo
                  "without  cause"  (as  such  term  is  defined  in  the  Gallo
                  Employment Agreement), Mr. Gallo is entitled to receive, among
                  other things,  the aggregate of his base salary payable for 12
                  months from the date of termination by the Company and the pro
                  rata  portion of his annual bonus for the fiscal year in which
                  such termination occurred.

                  Put Rights of Messrs. Gioia and Cohen

                           Under  the  terms  of  their  respective   employment
                  agreements, each of Messrs. Gioia and Cohen have the right, in
                  connection  with the termination of their  relationships  with
                  the Company under certain circumstances, to sell to CFP Group,
                  and CFP Group is obligated to purchase,  the shares of Class B
                  Nonvoting Common owned by them. The price at which such shares
                  may be  purchased  and sold is  intended to be the fair market
                  value thereof as determined by an appraisal. The right of such
                  individuals  to sell  their  shares to CFP Group is subject to
                  the  terms  and  conditions  of  the  then   outstanding  debt
                  instruments of CFP Group and its subsidiaries.

                  Call Rights of Messrs. Griffith

                           Under the terms of the Griffith Employment Agreement,
                  CFP Group  has the  right,  under  certain  circumstances,  to
                  require  Mr.  Griffith to sell the shares of Class A Nonvoting
                  Common  Stock  owned by him to CFP  Group.  The price at which
                  such  shares may be  purchased  and sold is intended to be the
                  fair market value thereof as determined pursuant to a formula.
                  The right of CFP Group to purchase  Mr.  Griffith's  shares is
                  also  subject  to  the  terms  and   conditions  of  the  then
                  outstanding  indebtedness  of CFP Group and its  subsidiaries.
                  See "Item 13. Certain Relationships and

                                       33

<PAGE>


                  Related  Transactions  - Certain  Transactions  - Stockholders
                  Agreement."

                  EMPLOYEE STOCK OPTION PLAN

                  1995 Stock Option Plan

                           The  Company's  1995 Stock  Option Plan (the  "Option
                  Plan"),  which was  assumed  by CFP Group in  December,  1996,
                  provides  for  the  grant  of  both  incentive  stock  options
                  ("ISOs")  and   non-qualifying   stock  options   ("NSOs")  to
                  directors and employees of, and  independent  consultants  and
                  contractors to, the Company and its  subsidiaries.  A total of
                  11,586  shares of Nonvoting  Common Stock has been  authorized
                  and reserved for  issuance  under the Option Plan,  subject to
                  adjustment to reflect changes in capitalization resulting from
                  stock splits,  stock dividends and similar events. As of March
                  31,  2000,  a total of 3,560  shares  have  been  issued  upon
                  exercise of options  issued under the Option Plan, and options
                  to purchase 220 shares are vested and unexercised.

                           The  Option  Plan is  administered  by the  Board  of
                  Directors  or  a  Stock  Option  Committee  ("the  Committee")
                  appointed by the Board of  Directors.  The  Committee  has the
                  authority to  interpret  the Option  Plan,  to  determine  the
                  persons to whom  options  will be granted,  to  determine  the
                  basis upon which the options will be granted, and to determine
                  the exercise price, duration and other terms of the options to
                  be  granted  under the  Option  Plan,  provided,  among  other
                  things,  that (a) the exercise price of ISOs granted under the
                  Option Plan may not be less than the fair market  value of the
                  stock  subject to the option on the date of the grant (110% of
                  fair market value if the employee is the  beneficial  owner of
                  10% or  more  of  CFP  Group's  voting  securities),  (b)  the
                  exercise  price must be paid in cash, by personal or certified
                  check or by surrendering  previously owned shares of nonvoting
                  common stock upon the exercise of the option,  (c) the term of
                  the option may not exceed ten years (or five years in the case
                  of an ISO granted to an employee who is the  beneficial  owner
                  of 10% or  more  of CFP  Group's  voting  securities),  (d) no
                  option  is  transferable  other  than by  will or the  laws of
                  descent and distribution and (e) no option may be granted by a
                  member of the Committee.

                           Upon  the  termination  of an  optionee's  employment
                  (other than by death or disability), such person's options may
                  be exercised during the three-month  period following the date
                  of such  termination.  In the event of the death or disability
                  of an optionee,  the option may be exercised by such person or
                  his  personal  representative  during  the  six  month  period
                  following  the date the  optionee  ceases to be an employee of
                  the  Company  by reason of such  death or  disability.  In the
                  event of a Corporate  Transaction  (as such term is defined in
                  the Option  Plan),  each  outstanding  option under the Option
                  Plan which is not assumed or replaced with a comparable option
                  from the successor corporation will automatically terminate.

                           ISOs  may  not  be  granted  under  the  plan  to any
                  individual if the

                                       34

<PAGE>


                  effect of such grant  would be to permit  that  person to have
                  the  first  opportunity  to  exercise  such  options,  in  any
                  calendar year, for the purchase of shares having a fair market
                  value (at the time of the grant of such  options) in excess of
                  $100,000.  ISOs granted  under the Option Plan are intended to
                  have the federal income tax  consequences of a qualified stock
                  option. An employee to whom an incentive stock option ;("ISO")
                  which  qualifies under Section 422 of the Code is granted will
                  not recognize  income at the time of grant or exercise of such
                  Option.  However,  upon the  exercise of an ISO, any excess in
                  the fair market  price of the Common  Stock over the  exercise
                  price  constitutes  a  tax  preference  item  which  may  have
                  alternative minimum tax consequences for the employee.  If the
                  employee  sells such  shares more than one year after the date
                  of  transfer  of such shares and more than two years after the
                  date of  grant  of  such  ISO,  the  employee  will  generally
                  recognize  a  long-term  capital  gain  or loss  equal  to the
                  difference, if any, between the sale prices of such shares and
                  the  exercise  price.  In such  case,  CFP  Group  will not be
                  entitled to a federal income tax deduction in connection  with
                  the grant or  exercise of the ISO.  If the  employee  does not
                  hold such shares for the  required  period,  when the employee
                  sells  such  shares,  the  employee  will  recognize  ordinary
                  compensation   income  and  possibly   capital  gain  or  loss
                  (long-term or short term,  depending on the holding  period of
                  the stock sold) in such amounts as are  prescribed by the Code
                  and the regulations  thereunder,  and CFP Group will generally
                  be entitled to a Federal income tax deduction in the amount of
                  such ordinary compensation income recognized by the employee.

                           An  employee  to  whom a  nonqualified  stock  option
                  ("NSO") is granted  will not  recognize  income at the time of
                  grant of such option.  When such employee  exercises such NSO,
                  the employee will recognize ordinary compensation income equal
                  to the excess,  if any, of the fair  market  value,  as of the
                  date of option exercise,  of the shares the employee  receives
                  upon such exercise over the exercise price paid. The tax basis
                  of such shares to such  employee will be equal to the exercise
                  price  paid  plus  the  amount,  if  any,  includible,  in the
                  employee's gross income, and the employee's holding period for
                  such  shares will  commence on the date on which the  employee
                  recognizes  taxable income in respect of such shares.  Gain or
                  loss upon a subsequent  sale of any Common Stock received upon
                  the exercise of a NSO generally would be taxed as capital gain
                  or loss  (long-term or short-term,  depending upon the holding
                  period of the stock sold).  Certain  additional rules apply if
                  the exercise price is paid in shares  previously  owned by the
                  participant.  Subject to the applicable provisions of the Code
                  and  regulations  thereunder,  CFP  Group  will  generally  be
                  entitled to a Federal income tax deduction in respect of a NSO
                  in  an  amount  equal  to  the  ordinary  compensation  income
                  recognized by the employee.  This deduction  will, in general,
                  be  allowed  for the  taxable  year of CFP  Group in which the
                  participant  recognizes  such  ordinary  income.  The Board of
                  Directors  may  amend  the  Option  Plan  without  stockholder
                  approval in any respect other than any amendment that requires
                  stockholder  approval  by law or  pursuant to the rules of the
                  Code regarding qualified stock options.

                                       35

<PAGE>


                  1998 Stock Option Plan

                           On June 17,  1998 the  Company's  Board of  Directors
                  adopted  a new  incentive  stock  option  program  (the  "1998
                  Plan"),  which provides for the grant of both incentive  stock
                  options ("ISOs") and non-qualifying  stock options ("NSOs") to
                  directors and employees of, and  independent  consultants  and
                  contractors to, the Company and its  subsidiaries.  A total of
                  5,525 shares of Nonvoting Common Stock has been authorized and
                  reserved  for  issuance  under  the  1998  Plan,   subject  to
                  adjustment to reflect changes in capitalization resulting from
                  stock splits,  stock dividends and similar events. As of March
                  31, 2000, a total of 984 shares have been issued upon exercise
                  of options issued under the 1998 Plan, options to purchase 677
                  shares are vested and  unexercised,  and  options to  purchase
                  3,878 are unvested.

                           The  1998  Plan  is  administered  by  the  Board  of
                  Directors  or  a  Stock  Option  Committee  ("the  Committee")
                  appointed by the Board of  Directors.  The  Committee  has the
                  authority to interpret the 1998 Plan, to determine the persons
                  to whom options will be granted,  to determine  the basis upon
                  which  the  options  will be  granted,  and to  determine  the
                  exercise price,  duration and other terms of the options to be
                  granted  under the 1998 Plan,  provided,  among other  things,
                  that (a) the  exercise  price of ISOs  granted  under the 1998
                  Plan may not be less than the fair  market  value of the stock
                  subject to the  option on the date of the grant  (110% of fair
                  market value if the employee is the beneficial owner of 10% or
                  more of CFP Group's voting securities), (b) the exercise price
                  must be paid in cash,  by  personal or  certified  check or by
                  surrendering previously owned shares of nonvoting common stock
                  upon the  exercise of the  option,  (c) the term of the option
                  may not  exceed ten years (or five years in the case of an ISO
                  granted to an employee who is the  beneficial  owner of 10% or
                  more of CFP  Group's  voting  securities),  (d) no  option  is
                  transferable  other  than by will or the laws of  descent  and
                  distribution  and (e) no option  may be granted by a member of
                  the Committee.

                           Upon  the  termination  of an  optionee's  employment
                  (other than by death or disability), such person's options may
                  be exercised during the three-month  period following the date
                  of such  termination.  In the event of the death or disability
                  of an optionee,  the option may be exercised by such person or
                  his  personal  representative  during  the  six  month  period
                  following  the date the  optionee  ceases to be an employee of
                  the  Company  by reason of such  death or  disability.  In the
                  event of a Corporate  Transaction  (as such term is defined in
                  the 1998 Plan), each outstanding  option under the Option Plan
                  which is not assumed or replaced with a comparable option from
                  the successor corporation will automatically terminate.

                           ISOs may not be  granted  under  the 1998 plan to any
                  individual if the effect of such grant would be to permit that
                  person to have the first opportunity to exercise such options,
                  in any calendar year, for the purchase of shares having a fair
                  market  value  (at the time of the grant of such  options)  in
                  excess  of  $100,000.  ISOs  granted  under  the 1998 Plan

                                       36

<PAGE>


                  are intended to have the federal income tax  consequences of a
                  qualified stock option. An employee to whom an incentive stock
                  option;  ("ISO") which qualifies under Section 422 of the Code
                  is granted will not  recognize  income at the time of grant or
                  exercise of such option. However, upon the exercise of an ISO,
                  any excess in the fair market  price of the Common  Stock over
                  the exercise price constitutes a tax preference item which may
                  have alternative minimum tax consequences for the employee. If
                  the  employee  sells such  shares more than one year after the
                  date of  transfer of such shares and more than two years after
                  the dates of grant of such ISO,  the employee  will  generally
                  recognize  a  long-term  capital  gain  or loss  equal  to the
                  difference, if any, between the sale prices of such shares and
                  the  exercise  price.  In such  case,  CFP  Group  will not be
                  entitled to a federal income tax deduction in connection  with
                  the grant or  exercise of the ISO.  If the  employee  does not
                  hold such shares for the  required  period,  when the employee
                  sells  such  shares,  the  employee  will  recognize  ordinary
                  compensation   income  and  possibly   capital  gain  or  loss
                  (long-term or short term,  depending on the holding  period of
                  the stock sold) in such amounts as are  prescribed by the Code
                  and the regulations  thereunder,  and CFP Group will generally
                  be entitled to a Federal income tax deduction in the amount of
                  such ordinary compensation income recognized by the employee.

                           An  employee  to  whom a  nonqualified  stock  option
                  ("NSO") is granted  will not  recognize  income at the time of
                  grant of such option.  When such employee  exercises such NSO,
                  the employee will recognize ordinary compensation income equal
                  to the excess,  if any, of the fair  market  value,  as of the
                  date of option exercise,  of the shares the employee  receives
                  upon such exercise over the exercise price paid. The tax basis
                  of such shares to such  employee will be equal to the exercise
                  price  paid  plus  the  amount,  if  any,  includible,  in the
                  employee's gross income, and the employee's holding period for
                  such  shares will  commence on the date on which the  employee
                  recognizes  taxable income in respect of such shares.  Gain or
                  loss upon a subsequent  sale of any Common Stock received upon
                  the exercise of a NSO generally would be taxed as capital gain
                  or loss  (long-term or short-term,  depending upon the holding
                  period of the stock sold).  Certain  additional rules apply if
                  the exercise price is paid in shares  previously  owned by the
                  participant.  Subject to the applicable provisions of the Code
                  and  regulations  thereunder,  CFP  Group  will  generally  be
                  entitled to a Federal income tax deduction in respect of a NSO
                  in  an  amount  equal  to  the  ordinary  compensation  income
                  recognized by the employee.  This deduction  will, in general,
                  be  allowed  for the  taxable  year of CFP  Group in which the
                  participant  recognizes  such  ordinary  income.  The Board of
                  Directors may amend the 1998 Plan without stockholder approval
                  in  any  respect  other  than  any  amendment   that  requires
                  stockholder  approval  by law or  pursuant to the rules of the
                  Code regarding qualified stock options.


                                       37

<PAGE>
         Item 12. Security ownership of certain beneficial owners and management

                  PRINCIPAL STOCKHOLDERS
<TABLE>
                           The following  table sets forth  certain  information
                  regarding  the  ownership of the capital stock of CFP Group as
                  of May 31, 2000 with  respect to (i) each person  known by the
                  Company to own  beneficially  more than 5% of the  outstanding
                  shares of any class of its voting capital stock,  (ii) each of
                  the Company's  directors,  (iii) the Named Executive  Officers
                  and (iv) all  directors  and  executive  officers  as a group.
                  Except as otherwise  indicated,  each of the  stockholders has
                  sole  voting  and  investment  power  with  respect  to shares
                  beneficially  owned. Unless otherwise  indicated,  the address
                  for each stockholder is c/o CFP Group,  Inc., 5501 Tabor Road,
                  Philadelphia, Pennsylvania 19120.
<CAPTION>
                                 Shares of                                         Percentage of
                                   Voting      Percentage                           All Classes
                                   Common       of Voting                            of Common
      Name and Address of         Stock(1)       Common      Shares of Nonvoting    Stock (Fully
        Beneficial Owner          Class A         Stock        Common Stock(1)       -Diluted)
                                                              Class A    CLASS B
<S>                                <C>            <C>            <C>        <C>        <C>
  Atlantic Equity Partners,        14,293         97.2%          -          -          42.2%
  L.P. (2)
  Roberto Buaron (3)               14,293         97.2%          -          -          42.2%
  William Del Chiaro                                             -         400          5.9%
  Robert Gioia (4)                   -              -            -        1,081         4.5%
  Ron Gallo                                                                107          1.6%
  Eric Ek                            -              -          1,539       50           5.3%
  David Cohen (5)                    -              -            -        1,418         4.4%
  James Long (6)                    173           1.2%           -          -            *
  Glenn Myers                        -              -                      60            *
  All officers and directors       14,466         98.4%        1,539      3,116        64.8%
    as a group (8 persons)
<FN>
*        Less than one percent.

(1)      The  authorized  capital stock of CFP Group  consists of 160,000  shares of capital
         stock,  including  150,000  shares of Common  Stock,  $.01 par value  (the  "Common
         Stock")  and 10,000  shares of  Preferred  Stock,  $.01 par value  (the  "Preferred
         Stock"). Of the 150,000 shares of common Stock, 100,000 shares are designated Class
         A Voting Common Stock (the "Class A Voting  Stock"),  25,000 shares are  designated
         Class A  Nonvoting  Stock (the "Class A Nonvoting  Stock"),  and 25,000  shares are
         designed Class B Nonvoting Stock (the "Class B Nonvoting Stock").

(2)      Address is P.O. Box 847, One Capital  Place,  Fourth Floor,  Grand  Cayman,  Cayman
         Islands, British West Indies. Atlantic Equity Associates,  L.P. ("AEA") is the sole
         general partner of AEP and as such exercises  voting and/or  investment  power over
         shares of capital stock owned by AEP,  including the shares of Common Stock held by
         AEP (the "AEP  Shares").  Mr.  Buaron  is the sole  stockholder  of Buaron  Capital
         Corporation  ("BCC").  BCC is the managing  general  partner of AEA. Rodney Limited
         ("Rodney"),  an  indirect  wholly  owned  subsidiary  of  Akros  Finanziana  S.p.a.
         ("Akros"),  is also a general  partner of AEA. As general  partners of AEA, BCC and
         Rodney share voting and/or investment power over, and may be deemed to beneficially
         own the AEP Shares. BCC and Rodney disclaim any beneficial  ownership of any shares
         of capital stock owned by AEP,  including the AEP Shares.  Through their respective
         affiliations  with BCC,  Rodney  and AEA,  Mr.  Buaron and Akros  control  the sole
         general  partner of AEP and therefore  have the authority to control  voting and/or
         investment power over, and may be deemed to beneficially  own, the AEP Shares.  Mr.
         Buaron and Akros  disclaim  any  beneficial  ownership  of any AEP Shares.  Certain
         present and former  employees of First  Atlantic,  an  affiliate of AEP,  owning an
         additional 412 shares (2.8%) of Class A Voting Stock, have granted AEP the right to
         vote the shares of Class A Voting Stock  beneficially  owned by them,  accordingly,
         AEP has the right to vote 100% of the voting common stock of CFP Group.

(3)      Address is c/o First Atlantic  Capital,  Ltd., 135 East 57th Street,  New York, New
         York 10022.  Represents  shares of Common Stock to be owned and  controlled by AEP.
         Mr. Buaron is the sole  shareholder of BCC. BCC is the managing  general partner of
         AEA. AEA is the sole general  partner of AEP and as such,  exercises  voting and/or
         investment  power  over  shares  of  capital  stock  owned and  controlled  by AEP,
         including the AEP Shares.  Mr. Buaron,  as the sole shareholder and Chief Executive
         Officer of BCC, and Rodney,  as a general partner of AEA,  control the sole general
         partner of AEP and therefore share voting and/or  investment power over, and may be
         deemed to  beneficially  own, the AEP Shares.  Mr. Buaron  disclaims any beneficial
         ownership of the AEP Shares.

(4)      Represents 1,081 shares of Class B Nonvoting Stock owned by Robert D. Gioia, Alison
         Gioia's Trust, Carolyn Gioia's Trust, and Lauren Gioia's Trust.

(5)      Represents 1,081 shares of Class B Nonvoting of Amjor Holdings,  Inc. ("AHI").  Mr.
         Cohen, as the sole  stockholder of AHI,  controls the voting and disposition of the
         shares  owned by AHI and,  therefore,  is  deemed to  beneficially  own the Class B
         Nonvoting Stock owned by AHI.

                                       38
<PAGE>


(6)      Address is c/o First Atlantic  Capital,  Ltd., 135 East 57th Street,  New York, New
         York  10022.  These  shares are part of the 412 shares  owned by present and former
         employees of First Atlantic. See note 2 above.
</FN>
</TABLE>


         Item 13. Certain relationships and related transactions

                  CERTAIN TRANSACTIONS

                  Transactions with Certain Stockholders

                           Effective December 31, 1996, the Company entered into
                  a new  management  consulting  agreement  with First  Atlantic
                  which provides for the annual payment of  compensation  in the
                  amount  of  $600,000  plus  out of  pocket  expenses  to First
                  Atlantic  in  exchange  for  providing  management  consulting
                  services to the Company and its  subsidiaries.  Payments under
                  this agreement  during fiscal years 1998,  1999, and 2000 were
                  $666,000, $698,000 and $629,000,  respectively. Such agreement
                  will continue until December 31, 2003 unless extended pursuant
                  to its terms.

                  Stockholders' Agreement

                           CFP Group, AEP, NationsCredit Commercial Corporation,
                  Richard Griffith,  Robert Gioia,  David Cohen, Eric Ek and the
                  other  Stockholders named therein entered into a Stockholders'
                  Agreement (the "Stockholders' Agreement") dated as of December
                  31, 1996, which contains certain  restrictions with respect to
                  the  transfer of CFP Group's  capital  stock,  certain  rights
                  granted by CFP Group with  respect to such  shares and certain
                  voting and other  arrangements.  The rights and obligations of
                  each party to the  Stockholders'  Agreement shall terminate as
                  to such  stockholder  upon  the  earliest  to occur of (i) the
                  transfer of all stock of CFP Group owned by such  stockholder,
                  (ii)  the   twentieth   anniversary   of  the   dates  of  the
                  Stockholders' Agreement,  (iii) a sale of all or substantially
                  all of the stock of CFP Group in a single transaction, or (iv)
                  the  consummation  of an initial public offering of the common
                  stock of CFP Group which  results in net proceeds to CFP Group
                  of at least $100 million dollars.

                           The  Company and the  Stockholders  shall use its and
                  their best efforts (including any action required to amend the
                  Certificate  of  Incorporation  or By-Laws of the  Company) to
                  cause the size of the Board to consist of seven  directors (or
                  such  other   number  as  a  Majority   in   Interest  of  AEP
                  Stockholders (as defined in the Stockholders  Agreement) shall
                  determine) and to provide that, notwithstanding any vacancies,
                  any  corporate  action  taken by the Board of the  Corporation
                  must be  approved by at least five  directors  (or such larger
                  number as shall constitute a majority of the Board).

                           The Stockholders'  Agreement provides that all of the
                  parties to the  Stockholders'  Agreement  other than AEP (each
                  such other  party  being  referred  to herein as the  "Selling
                  Group")  are  prohibited  from  transferring

                                       39

<PAGE>


                  any stock to any person  engaged in a business  which competes
                  in any manner with the business conducted by CFP Group and its
                  subsidiaries.  In addition,  subject to certain exceptions, no
                  member of the Selling Group may transfer stock unless it first
                  offers  such  stock to CFP  Group.  Should  CFP Group  fail to
                  accept all or any part of the stock offered for sale, AEP will
                  have  the  right  to  purchase  all or any  part of the  stock
                  offered but not accepted for purchase by CFP Group. Should AEP
                  fail to accept  all such  stock  offered  for  sale,  then the
                  Selling  Group  member may transfer the stock so offered to an
                  Institutional  Investor  (as  such  term  is  defined  in  the
                  Stockholders'  Agreement) or to such other  purchaser as shall
                  be approved by AEP (and its transferees).

                           In the  event  that AEP  receives  an  offer  from an
                  unaffiliated  third  party to  purchase  more  than 50% of the
                  total  number of shares of CFP  Group  then  outstanding,  AEP
                  shall not  transfer  any stock  unless the terms of such offer
                  are  extended  to  the  other   stockholders   and  the  other
                  stockholders are given the opportunity to participate on a pro
                  rata basis in such sale.

                           Pursuant to the  Stockholders'  Agreement,  if at any
                  time AEP shall  approve  (i) a proposal  from a person that is
                  not an  affiliate  of AEP for the transfer of all of the stock
                  of CFP Group,  (ii) the merger or  consolidation  of CFP Group
                  with or into another person that is not an affiliate of AEP in
                  which the  stockholders  will receive cash or  securities  for
                  their   shares   or  (iii)  the  sale  by  CFP  Group  or  its
                  subsidiaries of all or substantially  all of their assets to a
                  person that is not an affiliate of AEP, then each  stockholder
                  shall be required to  participate in such  transaction  and to
                  take all  necessary  action to cause  CFP Group to  consummate
                  such transaction.

                           In the event of a Termination  of  Relationship  of a
                  Management   Investor  (as  such  terms  are  defined  in  the
                  Stockholders'  Agreement),  CFP Group  shall have the right to
                  repurchase  all or  any  part  of  the  stock  owned  by  such
                  Management Investor.  The price at which such shares are to be
                  purchased shall be either the lesser of the price paid by such
                  terminated  Management Investor or the fair value per share of
                  the stock (as determined in accordance  with the provisions of
                  the  Stockholders'   Agreement),   depending  on  whether  the
                  Management  Investor was terminated for "cause" (as defined in
                  the  Stockholders'  Agreement)  or for any  reason  other than
                  "cause."

                  Indemnification of Officers and Directors

                           The  Certificates of  Incorporation  of CFP Holdings,
                  CFP Group,  Custom Foods and Quality Foods contain  provisions
                  eliminating  the personal  liability of directors for monetary
                  damages for breaches of their duty of care,  except in certain
                  prescribed  circumstances.  The  Bylaws of CFP  Holdings,  CFP
                  Group,  Custom  Foods and  Quality  Foods  also  provide  that
                  directors  and  officers  will be  indemnified  to the fullest
                  extent  authorized by Delaware law or  California  law, as the
                  case may be, as it now exists or may in the future be amended,
                  against all expenses and  liabilities  reasonably  incurred in
                  connection with service for or on behalf

                                       40

<PAGE>


                  of CFP Holdings,  CFP Group, Custom Foods or Quality Foods (as
                  the case may be).  The Bylaws of CFP  Holdings,  CFP Group and
                  Custom Foods  provide that the right of directors and officers
                  to  indemnification  is not  exclusive  of any other right now
                  possessed or hereinafter acquired under any statute, agreement
                  or otherwise.

Part IV

         Item 14. Exhibits,  financial statement schedules,  and reports on Form
                  8-K

                           Set   forth   below   are   consolidated    financial
                  statements,  financial  statement schedules and exhibits filed
                  as part of this Annual Report on Form 10-K.

                  1)       Consolidated Financial Statements

                           Filed herewith.

                  2)       Financial Statement Schedules

                           Schedule II,  Valuation and Qualifying  Accounts,  is
                           filed herewith.  All other schedules are not included
                           because they are not applicable.

                  3)       Exhibits

                           The  following  Exhibits  are  filed as a part of, or
                           incorporated by reference into this report:

                           3.1      Amended   and   Restated    Certificate   of
                                    Incorporation of CFP Holdings  (incorporated
                                    by   reference   to   Exhibit   3.1  of  the
                                    Registrants  Registration  Statement on Form
                                    S-4  (File  Nos.  333-23893,   333-23893-01,
                                    333-23893-02  and  333-23893-03   (the  "S-4
                                    Registration Statement").

                           3.2      By-laws  of CFP  Holdings  (incorporated  by
                                    reference   to   Exhibit   3.2  of  the  S-4
                                    Registration Statement).

                           3.3      Amended   and   Restated    Certificate   of
                                    Incorporation of CFP Group  (incorporated by
                                    reference   to   Exhibit   3.3  of  the  S-4
                                    Registration Statement).

                           3.4      By-Laws  of  CFP  Group   (incorporated   by
                                    reference   to   Exhibit   3.4  of  the  S-4
                                    Registration Statement).

                           3.5      Agreement  of  Merger  dated  as of June 28,
                                    1999,   between  QF  Acquisition   Corp.,  a
                                    Delaware  corporation,   and  QFAC,  LLC,  a
                                    Delaware    limited     liability    company
                                    (incorporated  by  reference to Exhibit 2 of
                                    the  Registrants  Form 10-Q for the  quarter
                                    ended June 30, 1999).

                                       41

<PAGE>


                           3.6      Certificate of Formation of QFAC, LLC issued
                                    by the  Secretary  of State of the  State of
                                    Delaware on April 15, 1999  (incorporated by
                                    reference to Exhibit 3.1 of the  Registrants
                                    Form  10-Q for the  quarter  ended  June 30,
                                    1999).

                           3.7      Operating  Agreement of QFAC, LLC dated June
                                    28,  1999   (incorporated  by  reference  to
                                    Exhibit 3.2 of the Registrants Form 10-Q for
                                    the quarter ended June 30, 1999).

                           3.8      By-laws of QFAC,  LLC adopted as of June 28,
                                    1999  (incorporated  by reference to Exhibit
                                    3.3 of the  Registrants  Form  10-Q  for the
                                    quarter ended June 30, 1999).

                           3.9      Amended    and    Restated    Articles    of
                                    Incorporation of Custom Foods  (incorporated
                                    by  reference  to  Exhibit  3.7 of  the  S-4
                                    Registration Statement).

                           3.10     By-laws  of Custom  Foods  (incorporated  by
                                    reference   to   Exhibit   3.8  of  the  S-4
                                    Registration Statement).

                           4.1      Indenture dated January 28, 1997,  among CFP
                                    Holdings,  CFP Group, Custom Foods, QFAC and
                                    United  States Trust Company of New York, as
                                    Trustee (the "Trustee")  (including the form
                                    of Note as Exhibit A and the other  exhibits
                                    thereto)   (incorporated   by  reference  to
                                    Exhibit   4.1   of  the   S-4   Registration
                                    Statement).

                           4.2      First Supplemental  Indenture dated June 29,
                                    1999,  among CFP Holdings,  Inc., CFP Group,
                                    Inc.,  Custom Food  Products,  QFAC, LLC and
                                    United  States  Trust  Company  of New  York
                                    (incorporated by reference to Exhibit 4.1 of
                                    the  Registrants  Form 10-Q for the  quarter
                                    ended June 30, 1999).

                           4.3      Registration  Rights Agreement dated January
                                    28,  1997  among CFP  Holdings,  CFP  Group,
                                    Custom   Foods,    QFAC,    NCMI   and   DLJ
                                    (incorporated by reference to Exhibit 4.2 of
                                    the S-4 Registration Statement).

                           10.1     Securities Purchase Agreement dated December
                                    31, 1996, among CFP Holdings, Quality Foods,
                                    L.P., the Partners of Quality  Foods,  L.P.,
                                    certain  additional   beneficial  owners  of
                                    Quality  Foods,  L.P., the  Stockholders  of
                                    QFAC and the  stockholders  of QF Management
                                    Corp  (incorporated  by reference to Exhibit
                                    10.1 of the S-4 Registration Statement).

                           10.2     Employment   agreement  dated  December  31,
                                    1996,  between CFP  Holdings and David Cohen
                                    (incorporated  by  reference to Exhibit 10.2
                                    of the S-4 Registration Statement).

                                       42

<PAGE>


                           10.3     Amendment No. 1 dated  September 15, 1997 to
                                    Employment  Agreement  between CFP Holdings,
                                    Inc.  and  David  Cohen   (incorporated   by
                                    reference to Exhibit 10.3 of the Registrants
                                    Form  10-K  for the  year  ended  March  31,
                                    1998).

                           10.4     Employment  Agreement  dated  March 31, 2000
                                    between CFP  Holdings  and Eric W. Ek (Filed
                                    herewith).

                           10.7     Management    consulting   agreement   dated
                                    December  31, 1996  between CFP Holdings and
                                    First  Atlantic   Capital,   Ltd.   ("FACL")
                                    (incorporated  by  reference to Exhibit 10.7
                                    of the S-4 Registration Statement).

                           10.8     Investment  Banking Agreement dated March 1,
                                    1996,   between   CFP   Holdings   and  FACL
                                    (incorporated  by  reference to Exhibit 10.8
                                    of the S-4 Registration Statement).

                           10.9     Stockholders'  Agreement  dated December 31,
                                    1996,  among CFP Group and the  stockholders
                                    listed on Annex I thereto  (incorporated  by
                                    reference   to  Exhibit   10.9  of  the  S-4
                                    Registration Statement).

                           10.10    Standard  Industrial  Lease  dated  April 7,
                                    1981, between Philip E. Bauer Properties and
                                    Best Western Foods, Inc. (including material
                                    Amendments     and    Addendums     thereto)
                                    (incorporated  by reference to Exhibit 10.10
                                    of the S-4 Registration Statement).

                           10.11    Standard    Industrial    Lease--Net   dated
                                    November   3,   1991,   among   William   I.
                                    Altshuler,  Maxine  Altshuler  and Center of
                                    the Plate  Foods  Inc.  (including  material
                                    Amendments     and    Addendums     thereto)
                                    (incorporated  by reference to Exhibit 10.11
                                    of the S-4 Registration Statement).

                           10.12    Lease  Agreement  dated  September 30, 1994,
                                    between  CFP  Associates  and  Custom  Foods
                                    (Including Material Amendments and Addendums
                                    thereto)   (incorporated   by  reference  to
                                    Exhibit   10.12  of  the  S-4   Registration
                                    Statement).

                           10.13    Employment  Agreement  dated  March 9,  1998
                                    between CFP  Holdings,  Inc.  and William G.
                                    Del Chiaro  (incorporated  by  reference  to
                                    Exhibit  10.2 of the  Registrants  Form 10-K
                                    for the year ended March 31, 1998).

                           10.14    Loan and  Security  Agreement  Dated  May 5,
                                    1998 between Fleet Capital  Corporation  and
                                    CFP   Holdings,    Inc.

                                       43

<PAGE>


                                    (incorporated  by  reference to Exhibit 10.1
                                    of the  Registrants  Form  10-K for the year
                                    ended March 31, 1998).

                           10.15    Trademark   Collateral   Security  Agreement
                                    dated May 5,  1998  between  QF  Acquisition
                                    Corp.  (d/b/a  Quality  Foods),   and  Fleet
                                    Capital    Corporation    (incorporated   by
                                    reference   to   Exhibit    10.16   of   the
                                    Registrants  Form  10-K for the  year  ended
                                    March 31, 1999).

                           10.16    Patent Collateral  Security  Agreement dated
                                    May 5, 1998  between  QF  Acquisition  Corp.
                                    (d/b/a   Quality  Foods  and  Fleet  Capital
                                    Corporation  (incorporated  by  reference to
                                    Exhibit 10.17 of the  Registrants  Form 10-K
                                    for the year ended March 31, 1999).

                           10.17    Patent  Assignment of Security  dated May 5,
                                    1998 between QF Acquisition  Corp. and Fleet
                                    Capital    Corporation    (incorporated   by
                                    reference   to   Exhibit    10.18   of   the
                                    Registrants  Form  10-K for the  year  ended
                                    March 31, 1999).

                           10.18    Amendment  and  Assumption  Agreement  dated
                                    June 28, 1999,  among QF Acquisition  Corp.,
                                    QFAC, LLC, CFP Holdings,  Inc.,  Custom Food
                                    Products,    Inc.,    and   Fleet    Capital
                                    Corporation  (incorporated  by  reference to
                                    Exhibit  10.1 of the  Registrants  Form 10-Q
                                    for the quarter ended June 30, 1999).

                           10.19    Pledge and  Security  Agreement  between CFP
                                    Holdings, Inc. and Fleet Capital Corporation
                                    in respect of Membership  Interests of QFAC,
                                    LLC  (incorporated  by  reference to Exhibit
                                    10.2 of the  Registrants  Form  10-Q for the
                                    quarter ended June 30, 1999).

                           10.20    Pledge  Agreement  dated May 5, 1998 between
                                    CFP   Holdings,   Inc.  and  Fleet   Capital
                                    Corporation  (incorporated  by  reference to
                                    Exhibit 10.19 of the  Registrants  Form 10-K
                                    for the year ended March 31, 1999).

                           10.21    Pledge  Agreement  dated May 5, 1998 between
                                    CFP   Group,    Inc.   and   Fleet   Capital
                                    Corporation  (incorporated  by  reference to
                                    Exhibit 10.20 of the  Registrants  Form 10-K
                                    for the year ended March 31, 1999).

                           10.22    Consulting  Agreement  dated  June 30,  1998
                                    between  CFP  Holdings,  Inc.  and Robert D.
                                    Gioia  (incorporated by reference to Exhibit
                                    10.1 of the  Registrants  Form  10-Q for the
                                    quarter ended September 30, 1998).

                                       44

<PAGE>


                           10.23    CFP  Holdings,  Inc.  1995 Stock Option Plan
                                    dated   March  1,  1995   (incorporated   by
                                    reference   to   Exhibit    10.22   of   the
                                    Registrants  Form  10-K for the  year  ended
                                    March 31, 1999).

                           10.24    CFP Group Inc.  1998 Stock Option Plan dated
                                    July 15, 1998  (incorporated by reference to
                                    Exhibit  10.2 of the  Registrants  Form 10-Q
                                    for the quarter ended September 30, 1998).

                           10.25    Employment  Agreement  dated  March 31, 2000
                                    between CFP Group,  Inc. and Ronald J. Gallo
                                    (Filed herewith).

                           10.26    Union  Contract  dated April 1, 2000 between
                                    Wholesale   and  Retail  Food   Distribution
                                    Teamsters  Local  Union # 63 and Custom Food
                                    Products, Inc. (Filed herewith).

                           10.27    Amendment #3 to Loan and Security  Agreement
                                    Dated  June 5, 2000  between  Fleet  Capital
                                    Corporation  and CFP Holdings,  Inc.  (Filed
                                    herewith).

                           10.28    Lease Agreement dated April 18, 2000 between
                                    The CIT Group and Custom Food Products, Inc.
                                    (Filed herewith).

                           10.29    Lease Agreement dated April 18, 2000 between
                                    The  CIT   Group  and   QFAC,   LLC   (Filed
                                    herewith).

                           12.1     Computation  of Ratio of  Earnings  to Fixed
                                    Charges (Filed herewith).

                           21       Subsidiaries  of the  CFP  Group,  Inc.  CFP
                                    Holdings,   Inc.,  A  Delaware   Corporation
                                    Custom Food  Products,  Inc.,  a  California
                                    Corporation  QFAC,  LLC, a Delaware  limited
                                    liability company

                           27       Financial Data Schedule (Filed herewith).

                  4)       Reports on Form 8-K (None.)

                           No reports on form 8-K were filed by the  Registrants
                           during the last quarter of the period covered by this
                           Report on Form 10-K.

                           5.       SUPPLEMENTAL  INFORMATION  TO  BE  FURNISHED
                                    WITH REPORTS FILED PURSUANT TO SECTION 15(d)
                                    OF THE ACT BY  REGISTRANTS

                                       45

<PAGE>


                                    WHICH   HAVE   NOT   REGISTERED   SECURITIES
                                    PURSUANT TO SECTION 12 OF THE ACT.

                                    Except for a copy of this  Annual  Report on
                                    Form 10-K,  no annual  report to  securities
                                    holders  covering  the   registrants'   last
                                    fiscal year or proxy  material  will be sent
                                    to security holders.

                                       46

<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,  on the 23rd day of
June, 2000.


                                       CFP GROUP, INC.

                                       By: _____________________________________
                                                   William G. Del Chiaro
                                           President and Chief Executive Officer

         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the  23rd day of June, 2000, by the following  persons
in the capacities indicated:

                  Name                                  Title
                  ----                                  -----

____________________________________        Chairman of the Board and Director
           Roberto Buaron


____________________________________        President, Chief Executive Officer
        William G. Del Chiaro               and Director


____________________________________        Director
            Robert Gioia


____________________________________        Executive Vice President, Secretary
             Eric W. Ek                     and Director


____________________________________        Vice Chairman of the Board,
            James A. Long                   Treasurer and Director


____________________________________        Director
             David Cohen


____________________________________        Director
             Andrew Kohn


____________________________________        Senior Vice President, Chief
           Ronald J. Gallo                  Financial Officer (Principal
                                            Financial Officer and Principal
                                            Accounting Officer)

                                       47

<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,  on the 23rd day of
June, 2000.


                                       CFP HOLDINGS, INC.

                                       By: _____________________________________
                                                   William G. Del Chiaro
                                           President and Chief Executive Officer

         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the  23rd day of June, 2000, by the following  persons
in the capacities indicated:

                  Name                                  Title
                  ----                                  -----

____________________________________        Chairman of the Board and Director
           Roberto Buaron


____________________________________        President, Chief Executive Officer
        William G. Del Chiaro               and Director


____________________________________        Director
            Robert Gioia


____________________________________        Executive Vice President, Secretary
             Eric W. Ek                     and Director


____________________________________        Vice Chairman of the Board,
            James A. Long                   Treasurer and Director


____________________________________        Director
             David Cohen


____________________________________        Director
             Andrew Kohn


____________________________________        Senior Vice President, Chief
           Ronald J. Gallo                  Financial Officer (Principal
                                            Financial Officer and Principal
                                            Accounting Officer)

                                       48

<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,  on the 23rd day of
June, 2000.


                                       CUSTOM FOOD PRODUCTS, INC.

                                       By: _____________________________________
                                                   William G. Del Chiaro
                                           President and Chief Executive Officer

         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the  23rd day of June, 2000, by the following  persons
in the capacities indicated:

                  Name                                  Title
                  ----                                  -----

____________________________________        Director
           Roberto Buaron


____________________________________        President, Chief Executive Officer
        William G. Del Chiaro               and Director


____________________________________        Director
            Robert Gioia


____________________________________        Executive Vice President, Secretary
             Eric W. Ek                     and Director


____________________________________        Chairman of the Board
            James A. Long                   and Director


____________________________________        Senior Vice President, Chief
           Ronald J. Gallo                  Financial Officer (Principal
                                            Financial Officer and Principal
                                            Accounting Officer)

                                       49

<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,  on the 23rd day of
June, 2000.


                                       QFAC, LLC

                                       By: _____________________________________
                                                   William G. Del Chiaro
                                           President and Chief Executive Officer

         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the  23rd day of June, 2000, by the following  persons
in the capacities indicated:

                  Name                                  Title
                  ----                                  -----

____________________________________        Managing Member
           Roberto Buaron


____________________________________        President, Chief Executive Officer
        William G. Del Chiaro               and Managing Member


____________________________________        Managing Member
            Robert Gioia


____________________________________        Executive Vice President, Secretary
             Eric W. Ek                     and Managing Member


____________________________________        Chairman of the Board,
            James A. Long                   and Managing Member


____________________________________        Vice Chairman of the Board and
             David Cohen                    Managing Member


____________________________________        Senior Vice President, Chief
           Ronald J. Gallo                  Financial Officer (Principal
                                            Financial Officer and Principal
                                            Accounting Officer)

                                       50

<PAGE>

<TABLE>
                                                         CFP HOLDINGS, INC.
                                           Schedule II - Valuation and Qualifying Accounts

                                                Years Ended September 1995, and 1996
                                                   Six Months Ended March 31, 1997
                                             Years Ended March 31, 1998, 1999, and 2000

<CAPTION>
                                               Balance at                                                               Balance at
                                               beginning        Charged to         Charged to                              end
      Description                              of period         Expenses            Other            Deductions        of period
      -----------                              ---------         --------            -----            ----------        ---------
Accounts Receivable:                                                          (In Thousands)

<S>                                                 <C>              <C>               <C>                <C>                <C>
Allowance for doubtful accounts

Year ended September 30, 1995                        9               129              --                 --                  138

Year ended September 30, 1996                      138                12              --                 (100)                50

Year ended March 31, 1997                           50                22                50                (29)                93

Year ended March 31, 1998                           93               119               (79)               (18)               115

Year ended March 31, 1999                          115               256              --                   (2)               369

Year ended March 31, 2000                          369               623              --                 (210)               782
</TABLE>

                                                                 51
<PAGE>



                                            ------------------------------------
                                            CFP Group, Inc.

                                            Consolidated Financial Statements as
                                            of March  31,  2000 and 1999 and for
                                            each  of  the  Three  Years  in  the
                                            Period  Ended  March  31,  2000  and
                                            Independent Auditors' Report


<PAGE>


INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
  CFP Group, Inc.:

We have audited the accompanying  consolidated balance sheets of CFP Group, Inc.
and subsidiaries  (the "Company") as of March 31, 2000 and 1999, and the related
consolidated statements of operations,  stockholders' deficiency, and cash flows
for each of the three years in the period ended March 31, 2000.  Our audits also
included the financial  statement  schedule  listed at Item 14. These  financial
statements and the financial  statement  schedule are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and the financial statement schedule based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial  position of the Company as of March 31, 2000
and 1999,  and the results of its  operations and its cash flows for each of the
three years in the period  ended March 31, 2000 in  conformity  with  accounting
principles generally accepted in the United States of America.


Los Angeles, California
June 12, 2000


<PAGE>


<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND 1999
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                                 March 31,
                                                                                                          --------------------------
ASSETS                                                                                                      2000              1999
                                                                                                                (In Thousands)
<S>                                                                                                       <C>               <C>
CURRENT ASSETS:
  Cash                                                                                                    $    606          $  1,820
  Accounts receivable, net of allowance for doubtful accounts of $782,000 and
    $369,000 at March 31, 2000 and 1999, respectively (Note 2)                                              23,578            15,448
  Inventories (Notes 2 and 4)                                                                               23,897            16,839
  Prepaid expenses and other current assets                                                                    412               692
                                                                                                          --------          --------

            Total current assets                                                                            48,493            34,799

PROPERTY AND EQUIPMENT, Net (Notes 2 and 5)                                                                 33,465            29,922

COSTS IN EXCESS OF NET ASSETS ACQUIRED,
  Net (Notes 2 and 3)                                                                                       62,022            65,195

INTANGIBLE AND OTHER ASSETS, Net (Notes 2 and 6)                                                             4,172             6,488
                                                                                                          --------          --------


TOTAL                                                                                                     $148,152          $136,404
                                                                                                          ========          ========

<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>


<PAGE>


<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND 1999
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                               March 31,
                                                                                                     ------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                               2000                 1999
                                                                                                             (In Thousands)

<S>                                                                                                  <C>                  <C>
CURRENT LIABILITIES:
  Current portion of long-term obligations (Note 7)                                                  $   1,043            $   1,113
  Accounts payable                                                                                      11,923                8,904
  Accrued expenses and other current liabilities                                                         5,291                6,689
                                                                                                     ---------            ---------

           Total current liabilities                                                                    18,257               16,706
                                                                                                     ---------            ---------

LONG-TERM OBLIGATIONS (Note 7)                                                                         156,890              145,895
                                                                                                     ---------            ---------

COMMITMENTS AND CONTINGENCIES (Notes 12)

REDEEMABLE COMMON STOCK (Note 9)                                                                         1,839                2,319
                                                                                                     ---------            ---------

STOCKHOLDERS' DEFICIENCY
  Preferred stock, $.01 par value; 6,472 shares authorized;
    none issued and outstanding
  Voting common stock - Class A, $.01 par value; 100,000 shares
    authorized; 14,705 shares issued and outstanding                                                     3,196                3,196
  Nonvoting common stock - Class A, $.01 par value; 25,000 shares
    authorized; 9,959 and 11,241 shares issued and outstanding
    (inclusive of 1,350 and 3,011 shares classified as redeemable
    common stock) at March 31, 2000 and 1999, respectively                                               2,330                2,204
  Nonvoting common stock - Class B, $.01 par value; 25,000 shares
    authorized; 3,865 and 3,059 shares issued and outstanding
    (inclusive of 2,162 shares classified as redeemable
    common stock) at March 31, 2000 and 1999, respectively                                                 912                  623
  Stockholders' notes receivable                                                                          (637)                (203)
  Accumulated deficit                                                                                  (34,635)             (34,336)
                                                                                                     ---------            ---------

             Total stockholders' deficiency                                                            (28,834)             (28,516)
                                                                                                     ---------            ---------

TOTAL                                                                                                $ 148,152            $ 136,404
                                                                                                     =========            =========
</TABLE>


<PAGE>


<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------


<CAPTION>
                                                                                              Year Ended March 31,
                                                                              -----------------------------------------------------
                                                                                2000                  1999                   1998
                                                                                                  (in Thousands)
<S>                                                                           <C>                   <C>                   <C>
NET SALES (Note 2)                                                            $ 211,282             $ 183,164             $ 181,378

COST OF SALES                                                                   174,969               147,518               152,484
                                                                              ---------             ---------             ---------

GROSS PROFIT                                                                     36,313                35,646                28,894

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES (Notes 8, 10 and 13)                                                  18,670                20,411                17,156

                                                                              ---------             ---------             ---------
INCOME FROM OPERATIONS                                                           17,643                15,235                11,738

INTEREST EXPENSE (Note 7)                                                        17,914                17,322                17,236
                                                                              ---------             ---------             ---------

LOSS BEFORE (BENEFIT) PROVISION FOR
  INCOME TAXES AND EXTRAORDINARY ITEM                                              (271)               (2,087)               (5,498)

(BENEFIT) PROVISION FOR INCOME TAXES
  (Notes 2 and 11)                                                                 (350)                  467                    30
                                                                              ---------             ---------             ---------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                                              79                (2,554)               (5,528)

EXTRAORDINARY LOSS ON EARLY
  EXTINGUISHMENT OF DEBT (Note 7)                                                                      (1,003)
                                                                              ---------             ---------             ---------

NET INCOME (LOSS)                                                             $      79             $  (3,557)            $  (5,528)
                                                                              =========             =========             =========

<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>


<PAGE>


<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED MARCH 31, 2000, 1999 AND 1998 (Dollars in Thousands)
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                   Nonvoting         Nonvoting
                                              Voting Class A        Class A           Class B
                                               Common Stock       Common Stock      Common Stock   Shareholders'
                                            ----------------  -----------------  ----------------      Notes    Accumulated
                                            Shares   Amount   Shares    Amount   Shares    Amount   Receivable    Deficit     Total

<S>                                          <C>    <C>        <C>     <C>         <C>    <C>       <C>         <C>        <C>
BALANCE, MARCH 31, 1997                      14,705  $ 3,196   11,241  $  2,204    3,321  $   805   $   (337)   $(25,251)  $(19,383)
 Issuance of common stock and
   grant note receivable                                                              72       50        (35)                    15
 Repurchase of common stock and
   cancellation of note receivable                                                  (334)    (232)       169                    (63)
  Net loss                                                                                                        (5,528)    (5,528)
                                            -------  -------  -------  --------  -------  -------   --------    --------   --------
BALANCE, MARCH 31, 1998                      14,705    3,196   11,241     2,204    3,059      623       (203)    (30,779)   (24,959)
  Net loss                                                                                                        (3,557)    (3,557)
                                            -------  -------  -------  --------  -------  -------   --------    --------   --------
BALANCE, MARCH 31, 1999                      14,705    3,196   11,241     2,204    3,059      623       (203)    (34,336)   (28,516)
 Issuance of common stock and
   grant note receivable                                          674       195      984      413       (532)                    76

 Repurchase of redeemable common stock                         (1,716)                                              (378)      (378)

 Repurchase of common stock, cancellation
    of note receivable, and other                                (240)      (69)    (178)    (124)        82                   (111)

  Payments on note receivable                                                                             16                     16

  Net income                                                                                                          79         79
                                            -------  -------  -------  --------  -------  -------   --------    --------   --------
BALANCE, MARCH 31, 2000                      14,705  $ 3,196    9,959  $  2,330    3,865  $   912   $   (637)   $(34,635)  $(28,834)
                                            =======  =======  =======  ========  =======  =======   ========    ========   ========
</TABLE>

<PAGE>


<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                    Year Ended March 31,
                                                                                          -----------------------------------------
                                                                                           2000             1999             1998
                                                                                                       (In Thousands)
<S>                                                                                       <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                                       $    79          $(3,557)         $(5,528)
  Adjustments to reconcile net income loss to net cash
    provided by operating activities:
    Depreciation and amortization                                                           7,681            6,733            6,732
    Amortization of deferred financing costs                                                1,200            1,199            1,283
    (Gain) loss on sale of equipment                                                          (13)              (9)              15
    Extraordinary loss on early extinguishment of debt                                                       1,003
    Changes in assets and liabilities:
      Accounts receivable                                                                  (8,130)          (3,441)          (1,288)
      Inventories                                                                          (7,058)          (1,255)          (4,378)
      Prepaid expenses and other current assets                                               280              198            1,636
      Accounts payable                                                                      3,019            2,088            1,852
      Accrued expenses and other current liabilities                                       (1,398)           1,285              337
                                                                                          -------          -------          -------

           Net cash (used for) provided by operating activities                            (4,340)           4,244              661
                                                                                          -------          -------          -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment                                                    (7,914)          (6,104)          (4,497)
  Proceeds from sale of property and equipment                                                116                9            1,137
  Other assets                                                                                876             (548)            (394)
                                                                                          -------          -------          -------

           Net cash used in investing activities                                           (6,922)          (6,643)          (3,754)
                                                                                          -------          -------          -------

<FN>
See accompanying notes to consolidated financing statements.
                                                                                                                         (Continued)
</FN>
</TABLE>

<PAGE>


<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                               Year Ended March 31,
                                                                                  -------------------------------------------------
                                                                                    2000                 1999                1998
                                                                                                   (In Thousands)
<S>                                                                               <C>                 <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under revolving loan facility                                        $ 140,892           $  21,263           $  23,000
  Repayment of revolving loan facility                                             (128,840)            (20,500)            (18,500)
  Proceeds from issuance of long-term debt                                                               12,500
  Repayment of long-term debt and capitalized lease
    obligations                                                                      (1,127)             (9,754)             (1,847)
  Deferred financing costs                                                                                 (634)               (308)
  Proceeds from sale of common stock                                                     76                                      15
  Purchase of common stock                                                             (969)                                    (63)
  Collection of shareholders' notes receivable                                           16                                       1
                                                                                  ---------           ---------           ---------
          Net cash provided by financing activities                                  10,048               2,875               2,298
                                                                                  ---------           ---------           ---------

NET (DECREASE) INCREASE IN CASH                                                      (1,214)                476                (795)

CASH, BEGINNING OF PERIOD                                                             1,820               1,344               2,139
                                                                                  ---------           ---------           ---------

CASH, END OF PERIOD                                                               $     606           $   1,820           $   1,344
                                                                                  =========           =========           =========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION -
  Cash paid (received) during the year for:
    Interest                                                                      $  16,706           $  16,128           $  15,386
    Income taxes                                                                       (501)                403                  33

<FN>
See accompanying notes to consolidated financial statements.
                                                                                                                         (Continued)
</FN>
</TABLE>


<PAGE>


<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                            Year Ended March 31,
                                                                                                         ---------------------------
                                                                                                          2000      1999       1998
                                                                                                               (In Thousands)
<S>                                                                                                      <C>                  <C>
SUPPLEMENTAL DISCLOSURES OF NONCASH
  INVESTING AND FINANCING ACTIVITY:
  Issuance of employee notes in exchange for nonvoting
    common stock                                                                                         $  532               $   35
  Issuance of nonvoting Class B common stock to
    a financial institution for services rendered in
    1997 and to an employee in 1998                                                                                               50
Cancellation of employee note in exchange for nonvoting
    common stock                                                                                             82
  Acquisition of property and equipment through
    capital lease obligations                                                                                                  1,019

<FN>
See accompanying notes to consolidated financial statements.
                                                                                                                         (Concluded)
</FN>
</TABLE>

<PAGE>


CFP GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

1.       BUSINESS

         CFP Group,  Inc. (the "Company") was  incorporated on November 26, 1996
         as New CFP  Holdings,  Inc.  and  subsequently  changed its name to CFP
         Group,  Inc. The Company was formed to recapitalize CFP Holdings,  Inc.
         On December 31, 1996,  each person owning  capital stock (or options to
         acquire capital stock) of CFP Holdings,  Inc.  exchanged his/her equity
         interests  for  equivalent  interests  of capital  stock (or options to
         acquire  capital  stock)  of  the  Company.  CFP  Group,  Inc.  has  no
         operations  or assets  separate from its  investment in its  respective
         subsidiaries and relies on its subsidiaries for its cash flows.

         CFP Group,  Inc.,  through  its wholly  owned  subsidiaries,  develops,
         manufactures  and markets  precooked  and uncooked  meat  products sold
         primarily to manufacturers of branded and private label packaged foods,
         foodservice distributors, and restaurants.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

         Principles of Consolidation - The accompanying  consolidated  financial
         statements include the accounts of CFP Group, Inc. and its wholly owned
         subsidiaries.  All significant  intercompany  balances and transactions
         have been eliminated in consolidation.

         Fiscal Periods - The Company's  fiscal year end is the last Saturday of
         March. For clarity of presentation,  the Company discloses its year-end
         as March 31. All years presented are 52 weeks in duration.

         Revenue  Recognition - The Company  recognizes  revenue as products are
         shipped.

         Concentration  of Credit Risk - Financial  instruments that subject the
         Company to credit risk consist  primarily of accounts  receivable.  The
         Company  performs  ongoing  credit  evaluations  of its  customers  and
         maintains an allowance for potential credit losses. The Company has one
         significant  customer  that  accounted  for more than 10% of its sales.
         Sales to this customer  totaled 12%, 13% and 15% of total sales for the
         years  ended  March 31,  2000,  1999 and 1998,  respectively.  Accounts
         receivable  from  this  customer  totaled  7% and 9% of total  accounts
         receivable  at March 31,  2000 and  1999,  respectively.  In  addition,
         pursuant   to   franchise   supply   agreements   with  two   different
         international  franchising  operations,  the Company sells  products to
         authorized  distributors,  who  in  turn  sell  these  products  to two
         franchising operations. During the years ended March 31, 2000, 1999 and
         1998,  approximately 45%, 46% and 46% of sales,  respectively,  were to
         such distributors.

         Inventories  -  Inventories  are stated at the lower of cost or market.
         Cost is determined using the first-in, first-out method.

         Property and Equipment - Property and equipment are stated at cost. The
         Company uses the straight-line  method of depreciation and amortization
         for buildings and leasehold improvements and both the straight-line and
         double-declining   methods  for  all  other   property  and  equipment.
         Depreciation  is provided  for over the  estimated  useful lives of the
         related assets,  ranging from 3 to 39 years. Leasehold improvements are
         amortized  over the  shorter of their  useful  lives or the term of the
         lease.



<PAGE>


         The Company  capitalizes  all direct costs incurred in the  development
         and installation of new computer and operation systems and construction
         of new equipment. Such amounts include the costs of materials and other
         direct construction costs,  purchase of computer hardware and software,
         outside programming and consulting fees and direct employee salaries.

         Intangible   and   Long-Lived   Assets  -  The   Company   reviews  the
         recoverability  of intangible and long-lived  assets whenever events or
         changes  in  circumstances  indicate  that the  carrying  value of such
         assets may not be  recoverable.  If the expected future cash flows from
         the use of such assets  (undiscounted and without interest charges) are
         less  than the  carrying  value,  the  Company's  policy is to record a
         write-down  that is  determined  based on the  difference  between  the
         carrying value of the asset and its estimated fair value.

         Cost in Excess of Net  Assets  Acquired  - Cost in excess of net assets
         acquired  is  amortized  over  periods  of  20 to 40  years  using  the
         straight-line  method.  Accumulated  amortization  was  $12,158,000 and
         $8,745,000 as of March 31, 2000 and 1999, respectively (see Note 3).

         Income Taxes - Deferred income taxes are determined  based on temporary
         differences  between the  financial  reporting  and income tax bases of
         assets and  liabilities  at the balance  sheet date,  multiplied by the
         applicable tax rates.  Future tax benefits are recognized to the extent
         that realization of such benefits is more likely than not.

         Fair  Value of  Financial  Instruments  - The fair  value of  financial
         instruments,  other than long-term  debt,  closely  approximates  their
         carrying  values because of their  short-term  maturity.  The estimated
         fair value of long-term debt,  including current  maturities,  based on
         references  to quoted  market  prices was below its  carrying  value by
         approximately  $9.2 million and $18.9  million as of March 31, 2000 and
         1999, respectively.

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

         New Accounting  pronouncements--In  June 1998, the Financial Accounting
         Standards  Board  ("FASB")  issued  Statement of  Financial  Accounting
         Standards ("SFAS") No. 133, "Accounting for Derivative  Instruments and
         Hedging  Activities." As amended by SFAS No. 137, SFAS 133 is effective
         for financial  statements  issued for all fiscal quarters of all fiscal
         years beginning after June 15, 2000. The Company will adopt SFAS 133 as
         required  in  April  2001.  SFAS 133  requires  all  derivatives  to be
         recorded  on the  balance  sheet at fair  value.  The Company is in the
         process of  evaluating  the effect that this new standard  will have on
         its financial statements.

         Reclassification  - Certain  reclassifications  were made to prior year
         statements to conform to the current year presentation.

3.       BUSINESS ACQUISITIONS

         On December 31, 1996, pursuant to a securities purchase agreement,  the
         Company  acquired all of the equity  interests  in Quality  Foods for a
         total  purchase  price of $67.1  million,  which was  composed  of cash
         payments to sellers of $64.0 million less a purchase  price  adjustment
         refund  received  from the sellers of  $354,000,  the issuance of 2,162
         shares of nonvoting  common stock - Class B valued at $1.5 million plus
         acquisition costs of $2.6 million less cash assumed of $600,000.  Funds
         for the acquisition,  repayment of certain existing  indebtedness,  and
         working capital were primarily provided by $76.0 million in term loans,
         a  $20.0  million  revolving  credit  facility  and  $25.0  million  of
         subordinated  bridge loans.  This  acquisition  has been  accounted for
         under the purchase method, and the results of the operations of Quality
         Foods have been included in the consolidated financial statements since
         the date of  acquisition.  The purchase price has been allocated to the
         assets  acquired and  liabilities  assumed  based on fair values at the
         date of acquisition. This resulted in an excess of cost over net assets
         acquired of $62.6 million,  which is being amortized on a straight-line
         basis over 20 years.



<PAGE>


4.       INVENTORIES

         Inventories consisted of the following:

                                                      March 31,
                                              ------------------------
                                                2000            1999
                                                    (In Thousands)

         Raw materials                        $  8,279        $  5,820
         Work-in-process                         5,602           3,773
         Finished goods                         10,384           7,918
                                              --------        --------

         Total                                  24,265          17,511
         Less reserve                             (368)           (672)
                                              --------        --------

         Inventory, net                       $ 23,897        $ 16,839
                                              ========        ========


5.       PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following:

                                                                 March 31,
                                                          --------------------
                                                            2000         1999
                                                             (In Thousands)

         Land                                             $    376    $    376
         Building                                           19,644      19,550
         Machinery and equipment                            20,330      15,872
         Office furniture and fixtures                       1,431       1,288
         Leasehold improvements                              2,137       2,110
         Construction in progress                            3,348         371
                                                          --------    --------

         Total                                              47,266      39,567
         Less accumulated depreciation and amortization    (13,801)     (9,645)
                                                          --------    --------

         Property and equipment, net                      $ 33,465    $ 29,922
                                                          ========    ========


6.       INTANGIBLES AND OTHER ASSETS

         Intangible and other assets consisted of the following:

                                                        March 31,
                                                   -------------------
                                                    2000         1999
                                                     (In Thousands)

         Deferred financing costs                  $ 7,835     $ 7,835
         Other assets                                            1,116
                                                   -------     -------
         Total                                       7,835       8,951
         Less accumulated amortization              (3,663)     (2,463)
                                                   -------     -------

         Intangible and other assets, net          $ 4,172     $ 6,488
                                                   =======     =======


<PAGE>


7.       LONG-TERM OBLIGATIONS

         Long-term obligations consisted of the following:

                                                               March 31,
                                                         ----------------------
                                                           2000          1999
                                                            (In Thousands)

Senior notes payable, interest at 11.625%, payable
   semiannually, principal due January 2004              $ 115,000    $ 115,000
Term note payable to a bank, interest at a reference
   rate (8.75% at March 31, 2000), interest payable
   monthly, principal payable on May 1, 2002                10,000       10,000
Revolving loan payable to a bank, interest at a
   reference rate (8.75% at March 31, 2000), interest
   payable monthly, expires May 1, 2002                     17,815        5,763
Term note payable to a bank, interest at a reference
   rate (8.75% at March 31, 2000), interest payable
   monthly, principal quarterly at $89,285.72,
   principal payable January through February 2006           2,143        2,500
Revenue bond payable to a government financing
   authority, interest at a reference rate (6% at March
   31, 2000) not to exceed 18%, payable monthly,
   principal payable annually at $200,000, increasing
   to $400,000 through December 2014                         3,952        4,100
Notes payable to a government agency, interest at 2%,
   payable monthly through April 2012, collateralized
   in a second position on the Company's Philadelphia
   facility                                                  1,433        1,545
Note payable to a government agency, interest at 0.5%,
   payable monthly beginning February 1999 through July
   2005, principal and interest payable in equal
   monthly installments from August 2005 through
   January 2012, collateralized in a shared third
   position on the Company's Philadelphia facility           1,000        1,000
Notes payable to a government agency, interest at
   5.25%, payable monthly with principal through March
   2012, collateralized in a shared first position on
   the Company's Philadelphia facility                         640          678

Notes payable to a government agency, interest at 2%,
   payable with principal monthly through April 2001           104          206

Capital lease obligations payable in varying monthly
   installments through 2021, collateralized by
   buildings and equipment with a net book value of
   $5,383,000 and $5,787,000 at March 31, 2000 and
   1999, respectively                                        5,846        6,216
                                                         ---------    ---------
Total                                                      157,933      147,008
Current portion                                             (1,043)      (1,113)
                                                         ---------    ---------
Long-term debt                                           $ 156,890    $ 145,895
                                                         =========    =========


         The senior notes  payable are senior  unsecured  obligations  that rank
         pari passu in the right of payment  with all other  existing and future
         senior  debt  of  the  Company.   The  senior  notes  payable   provide
         limitations on the sale or transfer of the Company's  subsidiaries  and
         also  provide  for the  holders of the notes to require  the Company to
         purchase the notes upon a change in control of the Company.  The senior
         notes  payable   contain   certain   financial   covenants,   including
         limitations on incurring  additional  debt,  payments to  stockholders,
         capital stock  transactions and transactions with affiliates.  At March
         31, 2000, no amounts were available for dividend payments.  The Company
         may redeem the notes prior to maturity,  subject to certain  redemption
         premiums.  The senior notes payable are obligations of CFP Holdings and
         are, jointly and severally,  unconditionally  guaranteed in full by CFP
         Group and each of CFP Holdings' subsidiaries.

         In May 1998, the Company entered into a $40.0 million loan and security
         agreement  (the  "Loan  and  Security   Agreement")  with  a  financial
         institution  providing for revolving  credit loans (the "Revolver") and
         term loan options.  Maximum borrowings under the Revolver cannot exceed
         $40.0  million,  limited



<PAGE>


         to  a  borrowing  base  and  other   limitations,   including   amounts
         outstanding  under term  loans,  letters of credit and other  borrowing
         instruments under the Loan and Security  Agreement.  At March 31, 2000,
         the Company had $18 million  outstanding  under the  revolver and $10.0
         million outstanding under term loans. All amounts outstanding under the
         Loan  and  Security  Agreement  become  due and  payable  in May  2002.
         Subsequent  to  March  31,  2000  the  Company  increased  the Loan and
         Security  Agreement  to $45.0  million,  limited  to  similar  terms as
         mentioned herein.

         In 1999, the Company repaid all amounts  outstanding  under an existing
         bank  borrowing  arrangement  with advances under the Loan and Security
         Agreement.  In connection  with this repayment the Company  recorded an
         extraordinary loss on the  extinguishment of debt of $1,003,000,  which
         primarily consisted of unamortized deferred financing costs.

         The Bank Debt is  collateralized  by substantially all of the Company's
         assets and is guaranteed jointly and severally, and unconditionally, in
         full by each of the Company's  subsidiaries.  The bank credit agreement
         provides  for the  maintenance  of certain  financial  ratios and other
         financial   covenants   and  also  includes   limitations   on  capital
         expenditures,  incurrence  of  additional  debt,  payment of dividends,
         capital stock transactions and asset dispositions.

         The  revenue  bond  payable  provides  for monthly  escrow  deposits in
         amounts sufficient to fund annual sinking fund requirements.  Mandatory
         sinking fund  redemptions  are required  each  December 1 through final
         redemption in 2014. The bonds are supported by an irrevocable letter of
         credit, which is backed by a guarantee provided by a commercial lender.
         The  letter of  credit  and  guarantee  are  collateralized  by a first
         priority  lien  on  the  Company's   Philadelphia  real  property.  The
         commercial lender also has a lien on certain production equipment owned
         by the Company.

         One of the notes  payable  to a  government  agency  requires  that the
         Company maintain a letter of credit for $750,000.

         Minimum  principal  payments of long-term  obligations  as of March 31,
         2000 are as follows:

       Year Ending                                               2000
        March 31,                                           (In Thousands)

         2001                                                  $  1,043
         2002                                                     1,028
         2003                                                    29,664
         2004                                                   115,429
         2005                                                       447
         Thereafter                                              10,322
                                                               --------
         Total                                                 $157,933
                                                               ========


8.       RELATED PARTY TRANSACTIONS

         The Company has a management  consulting agreement with an affiliate of
         a stockholder  under which the Company is obligated to pay $600,000 per
         year plus expenses  through  December 2003, at which time the agreement
         is automatically extended annually,  until terminated by the Company or
         the  stockholder.   Consulting  expense  under  this  and  a  preceding
         agreement was $629,000,  $736,000,  and $666,000,  including reimbursed
         expenses,   for  the  years  ended  March  31,  2000,  1999  and  1998,
         respectively.



<PAGE>


         The  Company  and  certain  of its  shareholders  have  entered  into a
         shareholder  agreement  that  restricts  the  transfer  or  sale of the
         Company's  stock.  Among other  provisions,  the shareholder  agreement
         provides  for the  right of first  refusal  upon  sale of the  stock in
         addition to  providing  for the  election of certain  directors  of the
         Company.

         The Company has entered into employment  agreements with certain of its
         executive  officers,  which expire at various  dates  through  December
         2001.  Such  agreements  provided for minimum salary  levels,  adjusted
         annually for cost-of-living  changes, as well as for incentive bonuses,
         which are payable if specified  management goals are attained,  and for
         the issuance of stock  options.  The  aggregate  commitment  for future
         salaries and minimum bonuses at March 31, 2000, was approximately  $1.5
         million  through  December  2001.  Additionally,   the  Company  has  a
         consulting  agreement  with a key  employee,  which expires in December
         2001  and  provides  for a total  commitment  for  future  salaries  of
         approximately $220,000.

9.       REDEEMABLE COMMON STOCK

         In  December  1996,  in  connection   with  the  execution  of  certain
         employment agreements (see Note 8), three management  shareholders were
         granted the right to sell certain  shares of common stock and shares to
         be issued  upon the  exercise  of  certain  stock  options  back to the
         Company.  The  management  shareholders  have the  right to sell  these
         shares   back  to  the   Company   upon  the   occurrence   of  certain
         employment-related  events,  which include  termination  without cause,
         termination  for  nonrenewal  of employment  agreement and  involuntary
         termination.  Originally there was 3,011 shares of redeemable nonvoting
         - Class A common stock,  which the redemption  price is determined by a
         formula  specified in the agreement.  On December 31, 1999, the Company
         repurchased  1,716  shares of nonvoting - Class A common stock from one
         shareholder  at its fair  market  value  per  share of $500 for a total
         purchase price of $858,000.  With respect to 2,162 shares of redeemable
         nonvoting  - Class B common  stock,  the  redemption  price is the fair
         value of shares or in  certain  circumstances  the  higher of the price
         paid for the  stock or the  fair  value.  The  redemption  amounts  are
         payable  in cash  or,  in  certain  circumstances,  subordinated  notes
         payable.  With  respect  to the  remaining  1,350  shares,  in  certain
         circumstances, the Company has the right to purchase the stock from the
         management  shareholder at a formula-driven  price as determined in the
         agreement.

         The redeemable common stock was initially recorded at its fair value at
         the date the common stock was issued. Adjustments to the carrying value
         of the redeemable  common stock are recorded when the redemption  value
         exceeds the  carrying  value.  As of March 31,  2000,  no change in the
         carrying value was necessary.

10.      STOCK OPTION PLAN

         In  connection  with the  recapitalization  (see Note 1),  the  Company
         assumed all  obligations  of CFP Holdings  under the CFP Holdings Stock
         Option Plan (the "1995 Stock Option  Plan").  Under the plan,  which is
         administered  by the Board of  Directors,  11,586  shares of  nonvoting
         common stock were reserved for the issuance of incentive  stock options
         or nonqualified  stock options to directors,  employees and consultants
         of the Company.  The price,  terms and  conditions of each issuance are
         determined  based on the provisions of the plan.  During the year ended
         March,  31, 2000,  no options were granted  under the 1995 Stock Option
         Plan,  674 options were exercised and 188 options  terminated.  Also in
         2000,  1,124  vested but  unexercised  options  were  purchased  by the
         Company  for a total  purchase  price of  $562,000  or $500 per  share.
         Compensation  expense of $237,000  is included in selling,  general and
         administrative  expense,  which represents the difference  between $500
         and the  exercise  price of $289.  As of March  31,  2000,  220  vested
         options at an exercise  price of $289 per share,  expiring  2002,  were
         outstanding.



<PAGE>


         In June 1998 the Company's Board of Directors,  adopted a new incentive
         stock  option plan (the "1998 Stock  Option  Plan"),  which  allows the
         grant of both incentive stock options and nonqualified stock options to
         key  employees  of the  Company.  A total of 6,603  shares of nonvoting
         common stock has been  authorized  and reserved for issuance under this
         plan.  As of March 31,  2000,  5,539  options  had been  granted  at an
         exercise  price of either $289 or $694,  which  included  1,418 granted
         during  fiscal year 2000.  Additionally  during  fiscal year 2000,  984
         options were exercised and 1,253 options were  terminated.  As of March
         31, 2000,  there were a total of 4,556 options  outstanding,  including
         677 vested options and 3878 unvested options.

         The Company has adopted the  disclosure-only  provision of Statement of
         Financial  Accounting  Standards  ("SFAS")  No.  123,  "Accounting  for
         Stock-Based  Compensation."  As  such,  the  Company  accounts  for its
         stock-based   compensation   plans  in  accordance  with  APB  No.  25,
         "Accounting  for Stock Issued to Employees."   The estimated fair value
         of options  granted under the 1995 Stock Option Plan and the 1998 Stock
         Option  Plan  pursuant  to SFAS  No.  123 was  $664,000  and  $480,000,
         respectively. Had compensation cost for the Company's stock option plan
         been  determined  based  on  their  fair  value  at the  date of  grant
         consistent with the provisions of SFAS No. 123, the Company's pro forma
         net loss would have been,  $75,000,  $3.7  million and $5.7 million for
         the years ended March 31, 2000, 1999 and 1998,  respectively.  The fair
         value of each option grant was estimated using the Black-Scholes option
         pricing model with the following assumptions: dividend yield of zero, a
         risk-free  interest  rate of 6.36%,  volatility  of 24%,  and  expected
         option life of 5 years.

11.      INCOME TAXES

         The (benefit) provision for income taxes consisted of the following:

                                                Year Ended March 31
                                             --------------------------
                                              2000       1999      1998
         Current:
           Federal                           $(562)
           State                               212      $ 467     $  30
                                             -----      -----     -----
                                              (350)       467        30
                                             -----      -----     -----
         Total (benefit) provision           $(350)     $ 467     $  30
                                             =====      =====     =====


<TABLE>
         The major elements  contributing to the difference  between the federal
         statutory income tax rate and the effective income tax rate relating to
         loss before income taxes are as follows:

<CAPTION>
                                                                                       Year Ended March 31,
                                                                             --------------------------------------
                                                                                  2000         1999         1998

<S>                                                                              <C>          <C>          <C>
Statutory rate                                                                   (35.0)%      (35.0)%      (35.0)%
Net refunds from NOL carryback claim                                            (182.0)         0.6          2.0
Officer's life insurance and other nondeductible expenses                         20.5          0.6          2.0
Goodwill amortization                                                             36.7          3.2          1.8
State taxes, net                                                                  21.7         10.6         (2.0)
Valuation allowance                                                               8.9          35.7         33.2
                                                                                 -----        -----        -----
Effective tax rate                                                              (129.2)%       15.1%         0.0%
                                                                                ======         ====          ===
</TABLE>


<PAGE>


<TABLE>
         Deferred income taxes consist of the following:

<CAPTION>
                                                                                                 March 31,
                                                                                 -----------------------------------------
                                                                                  2000              1999             1998
                                                                                              (In Thousands)
<S>                                                                              <C>              <C>              <C>
         Deferred income tax assets:
           Federal net operating loss carryforwards                              $ 4,900          $ 5,171          $ 4,747
           State taxes                                                                15              113              160
           Accrued vacation                                                           56              102              113
           Expense accruals                                                          782              767              485
           State net operating loss carryforwards                                  1,273              452              849
           Other                                                                     258              106              126
           Valuation allowances                                                   (5,825)          (4,785)          (5,333)
                                                                                 -------          -------          -------
                                                                                 $ 1,459          $ 1,926          $ 1,147
                                                                                 =======          =======          =======
         Deferred income tax liabilities:
           Depreciation and amortization                                         $ 1,459          $ 1,905          $ 1,135
           Other                                                                                       21               12
                                                                                 -------          -------          -------
                                                                                 $ 1,459          $ 1,926          $ 1,147
                                                                                 =======          =======          =======
</TABLE>


         At  March  31,  2000,  the  Company  had  federal  net  operating  loss
         carryforwards  of  approximately  $14.0  million  expiring 2013 through
         2020. At March 31, 2000, the Company had various states  operating loss
         carryforwards of approximately $13.7 million, which expire in the years
         2001 through 2020.

         For the  years  ended  March  31,  2000,  1999 and  1998,  the  Company
         established a valuation  allowance  equal to the net deferred tax asset
         of $5.8 million, $4.8 million, and $5.3 million, respectively.

12.      COMMITMENTS

         The Company  leases its  facilities  and certain  equipment  under both
         capital and noncancelable operating leases that expire through November
         2021.   Rent  expense  under  operating   leases  totaled   $1,190,000,
         $1,120,000 and $1,220,000 for the years ended March 31, 2000,  1999 and
         1998,  respectively.  Certain  of the  leases  require  the  payment of
         related property taxes, insurance, maintenance and other costs.



<PAGE>


         Minimum future lease payments under both capital and operating  leases,
         together with the present value of the net minimum lease payments under
         capital leases as of March 31, 2000, are summarized as follows:

                                                 Capital               Operating
      Year Ending                                 Leases                Leases
       March 31,                                         (In Thousands)

         2001                                    $ 1,094               $   226
         2002                                      1,113                   154
         2003                                        844                    94
         2004                                        841                    63
         2005                                        843                    27
         Thereafter                               12,913
                                                 -------               -------
         Total minimum lease payments             17,648               $   564
                                                                       =======
         Amount representing interest            (11,802)
         Present value of net minimum
           lease payments                        $ 5,846
                                                 =======


         The  Company is involved in certain  legal  proceedings  arising in the
         ordinary  course  of  business,  none of  which is  expected  to have a
         material impact on the financial condition of the Company.

13.      BENEFIT PLAN

         One  of  the  Company's   subsidiaries   has  a  defined   contribution
         profit-sharing salary reduction plan covering  substantially all of its
         employees   not  otherwise   covered  under  a  collective   bargaining
         agreement.   Company  contributions  to  the  profit-sharing  plan  are
         determined  by the  Board of  Directors  and are a  percentage  of each
         participant's  compensation.  Benefit  plan  expense  recorded  by  the
         Company was  $329,913,  $266,000  and $98,000 for the years ended March
         31, 2000, 1999, and 1998 respectively.

14.      SEGMENT INFORMATION

         In fiscal year 1999, the Company implemented SFAS No. 131,  "Disclosure
         about Segments of an Enterprise and Related  Information." SFAS No. 131
         requires  disclosure of certain  information about operating  segments,
         geographic areas in which the Company operates, and major customers. In
         accordance  with SFAS No. 131,  the Company has  determined  it has two
         operating  segments,  Custom Food Products and Quality  Foods.  Each of
         these segments is managed separately primarily because of geography and
         differences  in  products  and  customer  base.  Custom  Food  Products
         develops,  manufactures and markets precooked meat and poultry products
         sold primarily to  manufacturers  of branded and private label packaged
         foods. Custom Food Products is also a major supplier of frozen uncooked
         beef products to a national franchise  operation.  Quality Foods is the
         country's  leading  manufacturer  of thinly sliced beef supplying quick
         service restaurants, sandwich chains, and family dining establishments.

         Custom Foods  Products has one  significant  customer  that  represents
         approximately $26.1 million, $24 million, and $28 million for the years
         ended March 31, 2000, 1999 and 1998,  respectively.  Additionally,  the
         Company  sells  products to authorized  distributors,  who in turn sell
         these products to two franchising operations.  For Custom Food Products
         one of these franchising  operations is significant in total with $50.2
         million,  $45  million,  and $47  million for the years ended March 31,
         2000, 1999 and 1998, respectively. Quality Foods also has a significant
         franchise  customer  with sales of $47.5  million,  $39 million and $36
         million  for  the  years  ended   March  31,   2000,   1999  and  1998,
         respectively.



<PAGE>


         The  accounting  policies  of  these  segments  are the  same as  those
         described  in the  summary of  significant  accounting  principles.  In
         accordance  with SFAS No. 131, the Company has  prepared the  following
         tables,  which present  information  related to each operating  segment
         included in internal management reports.

<TABLE>
                                                                2000
                                                           (In Thousands)

<CAPTION>
                                                      Custom           Quality         Corporate
                                                       Foods            Foods          and Other       Eliminations          Total
                                                     ---------        ---------        ---------       ------------        ---------
<S>                                                  <C>              <C>              <C>               <C>               <C>
Net sales to external customers                      $  97,984        $ 113,298                                            $ 211,282
Interest expense                                           881              478        $  16,555                              17,914
Depreciation and amortization expense                    1,661            5,735              285                               7,681
Segment profit (loss) from operations                   12,050            6,247             (654)                             17,643
Long-lived assets                                       29,014           82,347          109,051         $(120,753)           99,659
Total segments assets                                   45,668          114,149          109,088          (120,753)          148,152
Capital expenditures                                       925            6,113                                                7,038


                                                                1999
                                                           (In Thousands)

                                                      Custom           Quality         Corporate
                                                       Foods            Foods          and Other       Eliminations          Total
                                                     ---------        ---------        ---------       ------------        ---------
Net sales to external customers                      $  87,676        $  95,488                                            $ 183,164
Interest expense                                           945              394        $  15,983                              17,322
Depreciation and amortization expense                    1,539            4,910              284                               6,733
Extraordinary item                                                                         1,003                               1,003
Segment profit (loss) from operations                   11,177            5,055             (997)                             15,235
Long-lived assets                                       27,468           87,948          117,959         $ (131,770)         101,605
Total segments assets                                   41,245          108,816          118,113           (131,770)         136,404
Capital expenditures                                     1,224            4,880                                                6,104



<PAGE>


                                                                1998
                                                           (In Thousands)

                                                      Custom           Quality         Corporate
                                                       Foods            Foods          and Other       Eliminations          Total
                                                     ---------        ---------        ---------       ------------        ---------
Net sales to external customers                      $  87,676        $  95,488                                            $ 183,164

Net sales to external customers                      $  94,992        $  86,386                                            $ 181,378
Interest expense                                           863            4,490        $  11,883                              17,236
Depreciation and amortization expense                    2,190            4,197              345                               6,732
Extraordinary item
Segment profit (loss) from operations                    9,555            3,256           (1,073)                             11,738
Long-lived assets                                       27,903           75,977          160,086         $ (160,712)         103,254
Total segments assets                                   40,848           92,597          160,346           (160,712)         133,079
Capital expenditures                                     2,132            3,384                                                5,516
</TABLE>


15.      QUARTERLY FINANCIAL DATA (UNAUDITED)

         Selected financial  information for the quarterly periods for the years
         ended March 31, 2000 and 1999.

                                                      2000
                                   --------------------------------------------
                                   June 30     Sept. 30    Dec. 31     March 31

                                                  (In Thousands)

Net sales                          $ 47,473    $ 51,206    $ 57,312    $ 55,291
Gross profit                          9,171       9,476       9,181       8,485
Income from operations                4,576       5,119       4,177       3,771
Income (loss) before income
  taxes                                 238         635        (257)       (887)
Net income (loss)                       216         580        (243)       (474)


                                                      1999
                                   --------------------------------------------
                                   June 30     Sept. 30    Dec. 31     March 31

                                                  (In Thousands)

Net sales                          $ 44,275    $ 45,070    $ 46,137    $ 47,682
Gross profit                          8,172       9,108       8,761       9,605
Income from operations                3,247       4,274       3,913       3,801
Loss before income taxes             (1,143)        (79)       (393)       (472)
Net loss                             (2,196)       (260)       (393)       (708)


<PAGE>


16.      SUMMARIZED FINANCIAL INFORMATION

<TABLE>
         The full financial statements of each of the other co-guarantors of the
         senior notes  payable (see Note 7) have not been  provided  because the
         Company's  management  believes that the presentation of full financial
         statements   is  not  material  to  investors.   Summarized   financial
         information of CFP Group,  Inc. and CFP Holdings,  Inc. as of March 31,
         2000 and 1999 is as follows:

<CAPTION>
                                                                                             March 31, 2000
                                                                     ---------------------------------------------------------------
                                                                         CFP
                                                                       Holdings           CFP                            CFP Group,
                                                                         Inc.            Group,                              Inc.
                                                                     Consolidated         Inc.          Eliminations    Consolidated

                                                                                              (In Thousands)
<S>                                                                    <C>              <C>              <C>              <C>
Total current assets                                                   $  48,493                                          $  48,493
Total noncurrent assets                                                   99,65                                  9           99,659
Investment in subsidiary                                                                $  10,872        $ (10,872)
                                                                       ---------        ---------        ---------        ---------
Total                                                                  $ 148,152        $  10,872        $ (10,872)       $ 148,152
                                                                       =========        =========        =========        =========
Total current liabilities                                              $  18,257                                          $  18,257
                                                                       ---------        ---------        ---------        ---------
Total noncurrent liabilities                                             156,890                                            156,890
                                                                       ---------        ---------        ---------        ---------
Intercompany (receivable) payable                                        (16,123)       $  16,123
                                                                       ---------        ---------        ---------        ---------
Redeemable preferred stock                                                 1,228                         $  (1,228)
                                                                       ---------        ---------        ---------        ---------
Common stock subject to redemption                                                          1,839                             1,839
                                                                       ---------        ---------        ---------        ---------
Stockholder's equity (deficiency):
  Voting common stock                                                      3,196            3,196           (3,196)           3,196
  Nonvoting common stock                                                   5,081            3,242           (5,081)           3,242
  Stockholders' notes receivable                                                             (637)                             (637)
  Accumulated deficit                                                    (20,377)         (34,635)          20,377          (34,635)
                                                                       ---------        ---------        ---------        ---------
Total stockholder's equity (deficiency)                                  (12,100)         (28,834)          12,100          (28,834)
                                                                       ---------        ---------        ---------        ---------
Total                                                                  $ 148,152        $ (10,872)       $  10,872        $ 148,152
                                                                       =========        =========        =========        =========

Sales                                                                  $ 211,282                                          $ 211,282
Cost of sales                                                            174,969                                            174,969
                                                                       ---------        ---------        ---------        ---------
Gross profit                                                              36,313                                             36,313
Selling, general and administrative expenses                              18,670                                             18,670
                                                                       ---------        ---------        ---------        ---------
Income from operations                                                    17,643                                             17,643
Equity in loss of subsidiary                                                            $      79        $     (79)
Interest expense                                                          17,914                                             17,914
                                                                       ---------        ---------        ---------        ---------
Loss before income taxes and extraordinary item                             (271)             (79)              79             (271)
Benefit for income taxes                                                    (350)                                              (350)
                                                                       ---------        ---------        ---------        ---------
Income before extraordinary item                                              79              (79)              79               79
Extraordinary loss on early extinguishment of debt
                                                                       ---------        ---------        ---------        ---------
Net income                                                             $      79        $     (79)       $      79        $      79
                                                                       =========        =========        =========        =========
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                                                                                            March 31, 1999
                                                                   ----------------------------------------------------------------
                                                                       CFP
                                                                    Holdings             CFP                             CFP Group,
                                                                       Inc.             Group,                              Inc.
                                                                   Consolidated          Inc.          Eliminations     Consolidated

                                                                                             (In Thousands)

<S>                                                                 <C>               <C>               <C>               <C>
Total current assets                                                $  34,799                                             $  34,799
Total noncurrent assets                                               101,605                                               101,605
Investment in subsidiary                                                              $   2,490         $  (2,490)

Total                                                               $ 136,404         $   2,490         $  (2,490)        $ 136,404
                                                                    =========         =========         =========         =========
Total current liabilities                                           $  16,706                                             $  16,706
                                                                    ---------         ---------         ---------         ---------
Total noncurrent liabilities                                          145,895                                               145,895
                                                                    ---------         ---------         ---------         ---------
Intercompany (receivable) payable                                     (28,687)        $  28,687
                                                                    ---------         ---------         ---------         ---------
Redeemable preferred stock                                              1,228                           $  (1,228)
                                                                    ---------         ---------         ---------         ---------
Common stock subject to redemption                                                        2,319                               2,319
                                                                    ---------         ---------         ---------         ---------
Stockholder's equity (deficiency):
  Voting common stock                                                   3,196             3,196            (3,196)            3,196
  Nonvoting common stock                                                5,146             2,827            (5,146)            2,827
  Stockholder's notes receivable                                                           (203)                               (203)
  Accumulated deficit                                                  (7,080)          (34,336)            7,080           (34,336)
                                                                    ---------         ---------         ---------         ---------
Total stockholder's equity (deficiency)                                 1,262           (28,516)           (1,262)          (28,516)
                                                                    ---------         ---------         ---------         ---------
Total                                                               $ 136,404         $   2,490         $  (2,490)        $ 136,404
                                                                    =========         =========         =========         =========

Sales                                                               $ 183,164                                             $ 183,164
Cost of sales                                                         147,518                                               147,518
                                                                    ---------         ---------         ---------         ---------
Gross profit                                                           35,646                                                35,646
Selling, general and administrative expenses                           20,411                                                20,411
                                                                    ---------         ---------         ---------         ---------
Income from operations                                                 15,235                                                15,235
Equity in loss of subsidiary                                                          $  (3,557)        $   3,557
Interest expense                                                       17,322                                                17,322
                                                                    ---------         ---------         ---------         ---------
Loss before income taxes and
  extraordinary item                                                   (2,087)           (3,557)            3,557            (2,087)
Provision for income taxes                                                467                                                   467
                                                                    ---------         ---------         ---------         ---------
Loss before extraordinary item                                         (2,554)           (3,557)            3,557            (2,554)
Extraordinary loss on early
  extinguishment of debt                                               (1,003)                                               (1,003)
                                                                    ---------         ---------         ---------         ---------

Net loss                                                            $  (3,557)        $  (3,557)        $   3,557         $  (3,557)
                                                                    =========         =========         =========         =========
</TABLE>

                                                               ******