SECURITIES AND EXCHANGE COMMISSION
                                       WASHINGTON, D.C. 20549
                                    -----------------------------
<TABLE>
<CAPTION>
                                              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, 1998
                                                or
    |_|  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

     For the transition period from   ............... to ...............

          Commission File Numbers 333-23893; 333-23893-01; 333-23893-02; 333-23893-03
                             --------------------------------------
<S>                                   <C>                                   <C>
                                       CFP HOLDINGS, INC.
                       (Exact Name of Registrant as Specified in Its Charter)
               Delaware                           2013                          95-4413619       
    (State or Other Jurisdiction of   (Primary Standard Industrial            (I.R.S. Employer    
    Incorporation or Organization)     Classification Code Number)          Identification Number) 
                             
                                              
                                              
                                        CFP GROUP, INC.
                     (Exact Name of Registrant as Specified in Its Charter)
              Delaware                             2013                         95-4616486          
   (State or Other Jurisdiction of    (Primary Standard Industrial            (I.R.S. Employer       
   Incorporation or Organization)      Classification Code Number)         Identification Number)    
                                          
                                             
                                   CUSTOM FOOD PRODUCTS, INC.
                     (Exact Name of Registrant as Specified in Its Charter)
           California                             2013                         95-3760291       
  (State or Other Jurisdiction of      (Primary Standard Industrial           (I.R.S. Employer    
  Incorporation or Organization)        Classification Code Number)        Identification Number)

                                      QF ACQUISITION CORP.
                     (Exact Name of Registrant as Specified in Its Charter)
           Delaware                                2013                       22-3174301        
(State or Other Jurisdiction of        (Primary Standard Industrial          (I.R.S. Employer     
Incorporation or Organization)                Classification               Identification Number)  

                              ------------------------------------
                                    1117 West Olympic Blvd.
                                      Montebello, CA 90640
           (Address, Including Zip Code of Registrant's Principal Executive Offices)

                                          213-727-0900
                      (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
definitive proxy of information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.

                                                [ x ]

     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 May 23, 1998
           -----                                             ---------------------------
      Voting Common Stock - Class A, $.01 par value                   14,705    
    Non-voting common Stock - Class A, $.01 par value                 11,241    
    Non-voting common Stock - Class B, $.01 par value                  3,059    
</TABLE>

<PAGE>

<TABLE>

                                                  CFP GROUP, INC.
                                                CFP HOLDINGS, INC.
                                            CUSTOM FOOD PRODUCTS, INC.
                                               QF ACQUISITION CORP.
                                 Form 10K for the Fiscal Year Ended March 31, 1998
                                                 TABLE OF CONTENTS
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                                                                                               Page No.
                                                                                               --------
<S>      <C>          <C>
PART I
         Item 1.      Business                                                                        3
         Item 2.      Properties                                                                     14
         Item 3.      Legal Proceedings                                                              14
         Item 4.      Submission of matters to a Vote of Security Holders                            15

PART II
         Item 5.      Market for Registrant's Common Stock and Related Stockholder Matters           15
         Item 6.      Selected Financial Data                                                        15
         Item 7.      Management's Discussion and Analysis of Financial Condition and Results of
                      Operations                                                                     16
         Item 8.      Financial Statements and Supplementary Data                                    24
         Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial
                      Disclosure                                                                     24

PART III
         Item 10.     Directors and Executive Officers of the Registrant                             25
         Item 11.     Executive Compensation                                                         27
         Item 12.     Security Ownership of Certain Beneficial Owners and Management                 33
         Item 13.     Certain Relationships and Related Transactions                                 34

PART IV
         Item 14.     Exhibits, Financial Statement Schedules and Reports on Form 8-K                36

SIGNATURES                                                                                           38
</TABLE>


                                         2

<PAGE>



Special Note Regarding Forward Looking Informaton

         CFP Group,  Inc., (the  "Company"),  or its  representatives,  may make
forward  looking  statements,  oral or  written,  including  statements  in this
report's Management's Discussion and Analysis of Financial Condition and Results
of  Operations,  press  releases  and 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 and
the  Company's  financial  position  and other plans and  objectives  for future
operations.  Certain of the  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
future  results,  performance  or  achievements  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  among the  factors set forth in the
"Factors Affecting Future Performance" section in Item 1 of this report, as well
as factors contained in the Company's other securities filings.

         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. on December 31,
     1996 after the recapitalization of CFP Holdings in a series of transactions
     whereby 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.  CFP  Holdings  was  formed  in 1993 by 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.,  and  all
     significant  operating assets of Best Western Foods, Inc.. Best Western was
     a leading  supplier of uncooked beef to the Arby's  restaurant  chain while
     Center of the Plate  constituted  what is today Custom  Foods'  value-added
     operations. Under First Atlantic's sponsorship, Custom Foods has focused on
     building its core value-added  product line by expanding its  manufacturing
     facilities, enhancing its product development capabilities and developing a
     growth strategy aimed at diversifying its customer base.

         On December 31, 1996 CFP Holdings  acquired  Quality Foods.  Founded in
     the 1940's as William  Cohen and Son  Company,  Inc.,  Quality  Foods has a
     50-year history of supplying the foodservice industry. Quality Foods is one
     of the  leading  manufacturers  of  sandwich  steak  products in the United
     States.

     General

         The  Company  is a leading  developer,  manufacturer  and  marketer  of
     value-added meat and poultry 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

                                        3

<PAGE>



     products  and  crumble toppings;  barbecue-flavored  meats; and  meatballs.
     The Company principally  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,  Great  Steak & Potato
     Company,  International  House of Pancakes,  Inc.,  Domino's  Pizza,  Inc.,
     Wal-Mart Stores,  Inc., Nathan's Famous Inc., Blimpie  International,  Inc.
     and Arby's.  The Company also serves many of the country's leading packaged
     foods  manufacturers,  including Chef America,  H. J. Heinz Company,  Inc.,
     Foodbrands America, Inc., 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,  which was acquired on December 31, 1996, and
     Custom 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  and  hamburger  patties.
     Quality Foods serves the foodservice industry,  with particular emphasis on
     Quick  Service  Restaurants  (QSRs),  sandwich  chains  and  family  dining
     establishments.  For over ten  years,  Quality  Foods has been the  primary
     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.

         Quality  Foods sells its  products  through an  established  network of
     independent  foodservice  brokers  and  over 400  foodservice  distributors
     located in 42 states and six Canadian provinces. Quality Foods has recently
     developed and introduced  several  complementary  beef and chicken products
     which,  the Company  believes,  can be successfully  marketed through these
     established distribution channels.

         In November 1996,  Quality Foods  completed an $11.0 million  purchase,
     renovation  and retrofit of a 150,000  square foot  production  facility in
     Philadelphia,  and the substantial consolidation of three manufacturing and
     administrative   facilities   into   this   location   (collectively,   the
     "Philadelphia  Consolidation")  which has more than doubled  Quality Foods'
     production  capacity and which the Company  believes will enable it to meet
     its currently  anticipated  manufacturing  needs for at least the next five
     years.

         Custom Foods  develops,  manufactures  and markets  pre-cooked meat and
     poultry  products sold  primarily to  manufacturers  of branded and private
     label packaged foods, also referred to as "industrial" 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 microwaveable sandwich product lines. Chef America
     has accounted for a majority of Custom Foods' sales of pre-cooked  products
     for each of the past three years. See "Factors Affecting Future Performance
     - Importance of Key Customers." Due to capacity constraints and the growing
     needs of its  customers,  Custom  Foods  has,  over the past  three  years,
     significantly  broadened  its  operations  with the opening and  subsequent
     expansion  of  a  new  facility  in  Kentucky.   With  capacity  expansions
     completed,  Custom  Foods  recently  created a direct  sales and  marketing
     department.  Custom  Foods  has  developed  over  400  proprietary  product
     formulations,  many of which, the Company believes, can now be successfully
     marketed through this sales group.

                                        4

<PAGE>



         Custom Foods and its predecessors have supplied beef products to Arby's
     for over 20 years.  Prior to fiscal 1995, Custom Foods supplied Arby's on a
     national basis.  However, in the first quarter of fiscal 1995, Custom Foods
     entered  into an 18-month  contract to supply  Arby's on a regional  basis,
     reducing  the scope of its  arrangement  due to a new  competitive  bidding
     process and a freight advantage  enjoyed by certain other suppliers.  Under
     this contract,  sales to Arby's  declined from $61.0 million in fiscal 1994
     to $26.2 million in fiscal 1995,  resulting in an overall 28.9% decrease in
     Custom Foods' net sales. Nevertheless, Custom Foods' income from operations
     during this period increased 19.7%,  reflecting  significant  growth in its
     more profitable pre-cooked  operations.  In June 1996, following completion
     of the expansion of its Kentucky facility,  Custom Foods entered into a new
     three-year contract to once again supply Arby's on a national basis.


     Recent Developments

         The  Company  has  announced  that it has  signed a letter of intent to
     acquire a privately held Midwestern value-added beef processing company for
     a proposed purchase price of less than $15 million.

         CFP has  substantially  completed its due diligence on the company and,
     subject to the negotiation of a definitive purchase agreement and obtaining
     appropriate  financing,  expects to consummate the acquisition in the third
     calendar quarter.


     Industry

     Value-Added Meat and Poultry Processors

         Value-added  meat and poultry  processors such as the Company  purchase
     raw cuts of beef,  pork,  chicken and turkey and process 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.  The Company  believes that it is well  positioned  among
     value-added meat and poultry  processors to capitalize on these trends as a
     result of its national distribution, broad pre-cooked product capabilities,
     multiple modern  manufacturing  facilities and a diversified  focus on both
     foodservice and industrial markets.

     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.



                                        5

<PAGE>



     Industrial

         The  majority  of  the  Company's  existing  and  targeted   industrial
     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 growth in easy to
     prepare, microwaveable 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 which
     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 many of the 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  industrial
     customers.  Products are provided in either  "solid-muscle," or natural cut
     form, and "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.  Subway  distributors,
     Arby's  distributors and Chef America accounted for 20%, 26% and 15% of the
     Company's  net  sales,  respectively,  in fiscal  1998.  No other  customer
     accounted for as much as 5% of the Company's net sales during fiscal 1998.

         The  Company  supplies  its  foodservice  customers  generally  through
     distributors  which take  title to the  product  and  resell it.  Among the
     Company's  customers  are  many of the  country's  largest  broad  line and
     specialty  food  service  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.

         The  Company's  industrial  customers  comprise  some  of  the  leading
     packaged foods  manufacturers in the country.  Given the highly  customized
     nature of the Company's products, relationships 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.



                                        6

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     Sales and Marketing

         The  Company  divides  its  sales and  marketing  efforts  between  the
     foodservice  and  industrial  markets  in order to better  serve its target
     markets.  Sales are driven by both a direct sales force and an  independent
     broker network.

     The Sales Force

         In its foodservice sales  operations,  the Company employs 11 sales and
     sales  support  personnel,  located  throughout  the United  States.  These
     individuals  manage  the  broker  network  and  develop  and  maintain  the
     Company's relationships with large end purchasers, including Subway and its
     various franchisee groups,  QSRs,  sandwich chains and major  distributors.
     Sales personnel also interface with the Company's  independent  foodservice
     distributor  network,  principally  for  the  purposes  of  developing  new
     accounts for existing products as well as developing new products to market
     through the existing channels.

         Industrial  sales are conducted by six in-house sales and sales support
     personnel,  located in  California  and  Texas.  Sales are  generally  made
     without  the use of  foodservice  brokers,  and  involve  a high  degree of
     customer   service   and   interaction   with  the   product   development,
     manufacturing and purchasing personnel of the end purchaser.

     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
     are a  valuable  asset  providing  significant  new  product  and  customer
     opportunities.  The brokers 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.

     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  and the  addition  of  sauces  and
     vegetables.  The Company has  developed  highly  specialized  products  for
     customers which include  proprietary  recipes and  manufacturing  processes
     that the Company believes would be difficult for a competitor to duplicate.
     Custom Foods usually develops the recipes and  manufacturing  processes for
     its customers, or 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.  The Company often makes forward volume  commitments on
     raw  materials  to lock in  availability  and pricing  consistent  with its
     production  expectations.  The Company also  purchases a variety of spices,
     binders,  sauces  and other  product  additives  used in the  manufacturing
     process.


                                        7

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         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  historically
     experienced  significant price  fluctuations  during the course of the year
     based on seasonal buying  patterns of large users and product  availability
     relative to other cuts of beef, with prices  typically  lowest from June to
     August and  highest in the Spring and Fall.  Historically,  the Company has
     purchased  larger  quantities  during the low points in the seasonal cycle,
     formed the  product  into an  intermediate  stage and frozen it for further
     processing as production requirements dictate.

         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.  For
     fiscal 1998 the  Company  purchased  a  significant  amount of its meat and
     poultry requirements from divisions of ConAgra, Inc.

     Patents and Trademarks

         The Company has no material patents or trademarks on which its business
     depends.

     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
     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 USDA is the  regulatory  body  that is
     primarily responsible for monitoring the Company's  operations.  Beef, pork
     and poultry  inspection 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 programs
     are designed to assure that its Company's  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 the  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  sufficient to
     maintain compliance with applicable government regulations,  although there
     can be no assurances in this regard.

     Employees

         As of March 31, 1998, the Company had approximately 550 employees.


                                        8

<PAGE>



         Approximately  280 of the Company's  employees are  represented  by the
     Teamsters  Union  under  contracts  which  expire in March 2000 and January
     2001. The Company has not had a strike during the past ten years.

     Factors Affecting Future Performance

     Significant Leverage and Indebtedness Service

         The Company  incurred  substantial  indebtedness in connection with the
     financing of the Quality Foods Acquisition and is highly  leveraged.  As of
     March 31, 1998, the Company had total consolidated  indebtedness (including
     capitalized  lease  obligations)  of  approximately  $143.5  million  and a
     stockholders'  deficiency of $25.0 million.  Outstanding  debt at March 31,
     1998  primarily  relates to the 11.625%  Senior Notes due 2004 (the "Senior
     Notes") and  borrowings  under a term loan and revolving  credit  agreement
     (the "Bank Credit  Agreement").  Borrowings under the Bank Credit Agreement
     were  refinanced  in May 1998  with a new $40  million  loan  and  security
     agreement (the "Loan and 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 holders of the Senior Notes, including: (i) limitations
     on the Company's future 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 of
     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, will be at variable rates
     of interest  which will cause the Company to be  vulnerable to increases in
     interest  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 on, 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.

                                        9

<PAGE>

     Importance of Key Customers

         Certain  customers  are material to the business and  operations of the
     Company.   Subway  distributors,   Arby's  distributors  and  Chef  America
     accounted for 20%,  26%, and 15% of the Company's net sales,  respectively,
     in  fiscal  1998.  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  long-term  contracts  with either
     Subway  or  Chef  America,  and the  loss of  either  as a  customer,  or a
     significant  reduction in the Company's business with either of them, would
     have a material  adverse  effect on the Company.  Commencing  with the last
     quarter of fiscal year 1998 and  continuing  through  the first  quarter of
     fiscal year 1999 sales to Chef America have declined. Total revenues at the
     Company's  Custom  Foods  division for the last quarter of fiscal year 1998
     were  essentially  unchanged  when compared to the three months ended March
     31,  1997,  as the  decline in Chef  America  volume was offset by sales to
     other customers. Based on discussions between Chef America and the Company,
     the Company  believes  that Chef  America is  expanding  the number of food
     product suppliers they are using in order to support their growth. However,
     as a result of the decreased  volume to Chef America in the last quarter of
     fiscal  year 1998 and the first  quarter  of fiscal  year  1999,  operating
     results for the Company's  Custom Foods  value-added  division were and are
     expected to be adversely affected.

         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 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.


                                       10

<PAGE>

    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  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 products from the market.

     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 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 United States  Department of Agriculture  ("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

                                       11

<PAGE>



     implement  sanitary  operating  procedures by January 27, 1997. Other HACCP
     program  requirements  began going into effect on January 26, 1998.  As the
     USDA's HACCP  requirements are relatively new, their 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  1997 and 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,  fines,  injunctions,
     recalls or seizures, as well as potential criminal sanctions,  any of which
     would have a material adverse effect on the Company.

         The  business  operations  of the  Company  and the  past  and  present
     ownership  and  operation  of real  property  by the Company 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.

     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, L.P., a Delaware limited partnership ("AEP"),
     of which First Atlantic is the investment manager,  owns 49.3% 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

                                       12

<PAGE>


     addition, AEP has the ability to elect a majority of the Company's Board of
     Directors and the Boards of Directors of its subsidiaries.

     Year 2000

         The Company is in the process of selecting a new Enterprise Wide System
     and currently expects to have a new system selected and implemented by July
     1999.  The  company  believes  that  implementation  of the new system will
     address  its major  "year  2000  issues",  which  arise in cases  where the
     computer  systems or any equipment with computer chips use two-digit fields
     that  recognize  dates using the  assumption  that the first two digits are
     "19". On January 1, 2000, any clock or date recording  mechanism  including
     date sensitive software that uses only two digits to represent the year may
     recognize  a date  using "00" as the year 1900  rather  than the year 2000.
     This  could  result  in  a  system  failure  or  miscalculations,   causing
     disruption  of  operations,   including  among  other  things  a  temporary
     inability  to  process  transactions,  send  invoices  or engage in similar
     activities.

         The Company is currently  engaged in a review of its  computer  systems
     and applications,  including  packaged  software used by the Company,  that
     will not be  addressed by the new system.  The Company  expects to make any
     modifications  required to resolve year 2000 issues in a timely  manner and
     leave adequate time to assess and correct any  significant  issues that may
     materialize.   The   Company  is  also   expecting   to   initiate   formal
     communications  with selected vendors and customers to determine the extent
     to which the  Company is  vulnerable  to those  third  parties'  failure to
     remediate  their own year 2000  issues.  The Company can give no  guarantee
     that the systems of other  companies  on which the  Company's  systems rely
     will be converted on time or that failure to convert by another  company or
     a conversion that is incompatible with the Company's systems would not have
     a material  adverse  effect on the Company.  The Company is taking steps to
     reduce the likelihood that such failures could affect the Company's systems
     through any electronic communications.

         The Company does not expect that the review and modifications described
     above,  excluding  the cost of  implementing  the new system,  will require
     material  expenditures.  If the Company is unable to successfully implement
     the  new  system  sufficiently  in  advance  of  the  year  2000,  however,
     additional  expenditures  could be required and such expenditures  could be
     substantial.  If  modification  required to address the Company's year 2000
     issues are not made,  or are not timely,  the year 2000 issues could have a
     material  impact on the operations and financial  results and conditions of
     the Company. See "Liquidity and Capital Resources".



                                       13

<PAGE>



     Item 2.   Properties
<TABLE>
         The following table sets forth the Company's principal facilities:

<CAPTION>
                                                                      Owned/       Square
Location                             Purpose                          Leased       Footage
--------                             -------                          ------       -------
<S>                                  <C>                              <C>          <C>
Philadelphia, PA.....................Manufacturing and                Owned        150,000
                                     Administrative Offices
Montebello, CA.......................Manufacturing and                Leased        32,000
                                     Administrative Offices
Owingsville, KY......................Manufacturing                    Leased        38,000
Vernon, CA...........................Manufacturing                    Leased        20,000
</TABLE>

     The Company also has  a 45,000  square foot  facility in Camden,  NJ  which
     was closed as part of the Philadelphia Consolidation. The company's current
     intention is to sell this facility.

     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.

         Environmental  assessment  audits  conducted  prior to  Quality  Foods'
     acquisition  of the  Philadelphia  facility  revealed the presence there of
     petroleum  hydrocarbon  contamination from former underground  storage tank
     operations.  The  facility's  former  owner has  conducted  assessment  and
     remedial  work  at  the  site  under  the  oversight  of  the  Pennsylvania
     Department of Environmental Protection. Soil and groundwater remediation is
     substantially  complete.  Pursuant  to an  agreement  among the  facility's
     former owner, Quality Foods, and the Commonwealth of Pennsylvania,  subject
     to certain exceptions, Quality Foods is not responsible to the Commonwealth
     of Pennsylvania for identified environmental contamination that occurred on
     the site prior to Quality Foods' acquisition of the facility.

     Item 3.   Legal proceedings

         The Company is not involved in any legal  matters  within or outside of
     the normal  course of business  which  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

                                       14

<PAGE>



     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  futures  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

         The  Company's  Common  stock is not  publicly  traded.  The Company is
     substantially  owned by Atlantic Equity Partners,  LP (AEP). The Company is
     controlled by AEP, which beneficially owns shares representing 97.2% of the
     voting interest in CFPG,  49.3% on a fully diluted basis, and has the right
     to designate all of the directors of the Company. Accordingly, AEP controls
     the  Company and has the power to elect all of its  directors,  appoint new
     management and approve any action  requiring the approval of the holders of
     the Company's common stock.

         In fiscal 1998 the Company sold 72 Non-voting Class B shares at $694.44
     per share to an employee in a private  placement  pursuant to Section  4(2)
     under the Securities Act.

     Item 6.   Selected financial data
<TABLE>
         The  following  Selected  Consolidated  Financial  Data of the  Company
     should be read in conjunction  with the consolidated  financial  statements
     and  related  notes  of the  Company  and  other  financial  data  included
     elsewhere  in this filing.  The balance  sheet data  presented  below as of
     September 30, 1993,  1994,  1995 and 1996 and March 31, 1997 & 1998 and the
     statement  of  operations  data  presented  below for the six months  ended
     September 30, 1993 and March 31, 1997 and for the years ended September 30,
     1994,  1995 and 1996 and for the year ended March 31, 1998 are derived from
     the audited consolidated financial statements of the Company.
<CAPTION>

                                 Six Months                                       Six Month  
                                   Ended            Years Ended September 30,       Ended     Year Ended
                                September 30,  --------------------------------    March 31,   March 31,
                                   1993         1994       1995          1996       1997          1998
                                --------      --------   --------      --------   --------      --------
<S>                            <C>            <C>        <C>           <C>        <C>           <C>
                                                         (dollars in thousands)
Statement of Operations Data:
  Net sales                    $  44,285      $ 86,598   $ 61,543(1)   $ 65,996   $ 60,529      $181,378
  Cost of sales                   40,352        76,485     49,868        53,818     52,276       152,484
                                --------      --------   --------      --------   --------      --------
  Gross profit                     3,933        10,113     11,675        12,178      8,253        28,894
  Operating expenses               2,052         5,957      6,700         5,512      7,474        17,156
  Other charges                                                           4,996(2)
                                --------      --------   --------      --------   --------      --------

  Income from operations           1,881         4,156      4,975         1,670        779        11,738
  Interest expense                 1,307         2,443      2,632         3,232      4,681        17,236
                                --------      --------   --------      --------   --------      --------


                                                   15

<PAGE>

  Income (loss) before income
    taxes and extraordinary
    items ......................         574        1,713        2,343       (1,562)      (3,902)      (5,498)
  Provision (benefit) for income
    taxes ......................         265          851        1,189         (409)        (541)          30
                                   ---------    ---------    ---------    ---------    ---------    ---------
  Income (loss) before
    extraordinary item .........         309          862        1,154       (1,153)      (3,361)      (5,528)
  Extraordinary (loss) on early
    extinguishment of debt .....                                                          (4,489)
                                   ---------    ---------    ---------    ---------    ---------    ---------

  Net income (loss) ............   $     309    $     862    $   1,154    $  (1,153)   $  (7,850)   $  (5,528)
                                   =========    =========    =========    =========    =========    =========
Other Data:
  EBITDA(3) ....................   $   2,582    $   6,003    $   6,685    $   3,758    $   3,026    $  18,484
  Net cash (used in) provided by
    operating activities .......        (427)       4,375        4,382          135        3,477          661
  Net cash used in investing
    activities .................        (606)        (666)      (1,785)      (1,811)     (67,293)      (3,754)
  Net cash provided by (used in)
    financing activities .......         308       (3,499)      (2,807)       2,168       65,462        2,298
  Depreciation and amortization    $     701    $   1,847    $   1,710    $   2,088    $   2,236    $   6,732
  Interest expense .............       1,307        2,443        2,632        3,232        4,681       17,236
  Capital expenditures .........         445        1,515        5,054        3,009        1,674        5,489
  Ratio of earnings to fixed
    charges(4) .................        1.41x        1.64x        1.83x
Balance Sheet Data:
  Working capital ..............   $   4,908    $   4,309    $   2,754    $   3,153    $  14,702    $  15,507
  Total assets .................      27,660       27,709       30,148       32,203      132,822      133,079
  Total debt, redeemable
    preferred stock and
    redeemable common stock ....      20,369       18,847       19,526       23,223      142,174      145,818
  Total stockholders' equity
    (deficiency) ...............       4,026        4,828        5,884        4,020      (19,383)     (24,959)
<FN>
(1)      Sales declined during the year ended September 30, 1995 as  a result of
         the decline in sales to the Arby's restaurant chain.

(2)      Represents  one-time costs  associated  with the termination of a Sales
         Brokerage  Agreement.  See  "Management's  Discussion  and  Analysis of
         Financial Condition and Results of Operations."

(3)      EBITDA  is  the  sum  of  income  before  income  taxes  and  interest,
         depreciation and amortization  expense.  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.

(4)      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 year ended March
         31, 1998, as earnings were not adequate to cover fixed charges.
</FN>
</TABLE>

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

       Overview

         The Company  develops,  manufactures  and markets  pre-cooked  meat and
     poultry  products sold  primarily to  manufacturers  of branded and private
     label  packaged  foods  and is a major  supplier  of frozen  uncooked  beef
     products to the Arby's and Subway restaurant  chains. In December 1996, the
     Company acquired Quality Foods,  (the  "Acquisition")  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

                                       16

<PAGE>



     and pre-cooked and uncooked meatballs and hamburger patties. As a result of
     the Acquisition, management believes the Company is positioned as a leading
     developer,  manufacturer  and  marketer  of  value-added  meat and  poultry
     products sold to the food service  industry and  manufacturers  of packaged
     foods.

         The  Company  funded the  Acquisition  through  the use of term  loans,
     bridge loans and borrowings available under existing credit facilities.  In
     1997,  the Company  issued $115  million of 11.625%  Senior  Notes due 2004
     ("Senior  Notes") and used the proceeds to repay  substantially  all of the
     debt related to the  Acquisition.  The Company is now highly  leveraged and
     the interest expense  resulting from the Senior Notes and other outstanding
     debt is  expected to  significantly  effect the  results  from  operations.
     Additionally,   amortization  of  intangible   assets  resulting  from  the
     Acquisition  is expected  to  approximate  $3.1  million  annually  through
     December 2016.

     Results from Operations

         In  March  1997,  the  Company  changed  its  fiscal  year end from the
     Saturday  closest  to  September  30 to the  Saturday  closest to March 31.
     Accordingly, the information set forth below sets forth unaudited operating
     results for the six months ended March 31, 1996 and the twelve month period
     ended  March 31,  1997 in order to provide  meaningful  comparisons  to the
     audited  results of operations for the six months ended March 31, 1997, and
     the twelve months ended March 31, 1998. In the opinion of  management,  the
     unaudited   financial   data  set  forth  below  reflect  all   adjustments
     (consisting of normal recurring  accruals)  necessary to present fairly, in
     all material respects, the results of operations for the unaudited periods.
     The year ended  September 30, 1996 is compared to the year ended  September
     30, 1995.

<TABLE>
         Comparison of the  referenced  periods is effected by the timing of the
     Quality  Foods  acquisition,  which was  completed in December  1996.  As a
     result, the twelve-month and six month periods ended March 31, 1997 include
     results  from   operations   for  Quality  Foods  for  only  three  months.
     Additionally  the twelve and six month periods ended March 31, 1997 include
     only three  months of  amortization  expense on  goodwill  acquired  in the
     Acquisition and two months of interest  expense on the 11.625% Senior Notes
     which were issued in January 1997. The year ended March 31, 1998 includes a
     full twelve-months of Quality Foods' operations,  and goodwill amortization
     expense and interest  expense on the 11.625%  Senior  Notes.  The six month
     period ended March 31, 1996 does not include Quality Foods' operations, any
     goodwill  amortization  expense or interest  expense on the 11.625%  Senior
     Notes. In the discussion that follows,  where  applicable,  the Company has
     quantified  the impact of the  Acquisition  and  related  matters  upon its
     operating results.

<CAPTION>
                                                  Fiscal Year Ended             Six Months Ended                 Year Ended
                                                     September 30,                  March 31,                      March 31,
                                                -----------------------      ------------------------      ------------------------
                                                   1995         1996           1996            1997          1997           1998
                                                ---------     ---------      ---------      ---------      ---------      ---------
                                                       (unaudited)                                                 (unaudited)
                                                                         (in thousands except per pound data)
<S>                                             <C>           <C>            <C>            <C>            <C>            <C>      
Statement of Operations Data:
Net sales ................................     $  61,543      $  65,996      $  30,335      $  60,529      $  96,190      $ 181,378
Cost of sales ............................        49,868         53,818         23,766         52,276         82,328        152,484
                                               ---------      ---------      ---------      ---------      ---------      ---------
Gross profit .............................        11,675         12,178          6,569          8,253         13,862         28,894
Operating expenses .......................         6,700          5,512          2,944          7,474         10,043         17,156
Other charges ............................         4,996          4,996
                                               ---------      ---------      ---------      ---------      ---------      ---------
Income from operations ...................         4,975          1,670         (1,371)           779          3,819         11,738
Interest expense .........................         2,632          3,232          1,512          4,681          6,401         17,236
                                               ---------      ---------      ---------      ---------      ---------      ---------
Income (loss) before income taxes and
  extraordinary items ....................         2,343         (1,562)        (2,883)        (3,902)        (2,582)        (5,498)
Provision (benefit) for income taxes .....         1,189           (409)          (662)          (541)          (288)            30
                                               ---------      ---------      ---------      ---------      ---------      ---------
Income (loss) before extraordinary item ..         1,154         (1,153)        (2,221)        (3,361)        (2,294)        (5,528)

                                                                 17

<PAGE>


  Extraordinary (loss) on early
    extinguishment of debt ...............                                                     (4,489)        (4,489)
                                               ---------      ---------      ---------      ---------      ---------      ---------
   Net income (loss) .....................     $   1,154      $  (1,153)     $  (2,221)     $  (7,850)     $  (6,783)     $  (5,528)
                                               =========      =========      =========      =========      =========      =========
Other Data:
   Net sales:
     Value-added .........................     $  35,294      $  36,391      $  20,566      $  41,486      $  57,191      $ 134,846
     Arby's ..............................        26,249         29,605          9,769         19,043         38,999         46,532
                                               ---------      ---------      ---------      ---------      ---------      ---------
       Total .............................     $  61,543      $  65,996      $  30,335      $  60,529      $  96,190      $ 181,378
                                               =========      =========      =========      =========      =========      =========
   Pounds sold ...........................        43,371         50,417         22,673         41,300         69,042        106,722
     Average net sales price per pound ...     $    1.42      $    1.31      $    1.34      $    1.47      $    1.39      $    1.70
     Average gross profit per pound ......     $    0.27      $    0.24      $    0.29      $    0.20      $    0.20      $    0.27
</TABLE>


<TABLE>
<CAPTION>
                                                             Fiscal Year Ended         Six Months Ended            Year Ended
                                                               September 30,               March 31,                March 31, 
                                                            ------------------        ------------------        ------------------
                                                             1995        1996          1996         1997         1997         1998
                                                            -----        -----        -----        -----        -----        -----
<S>                                                         <C>          <C>          <C>          <C>          <C>          <C>   
Statement of Operations Data:
   Net sales .........................................      100.0%       100.0%       100.0%       100.0%       100.0%       100.0%
   Cost of sales .....................................       81.0         81.5         78.3         86.4         85.6         84.1
                                                            -----        -----        -----        -----        -----        -----
   Gross profit ......................................       19.0         18.5         21.7         13.6         14.4         15.9
   Operating expenses ................................       10.9          8.4          9.7         12.3         10.4          9.4
   Other charges .....................................                     7.6         16.5
                                                            -----        -----        -----        -----        -----        -----
   Income from operations ............................        8.1          2.5         (4.5)         1.3          4.0          6.5
   Interest expense ..................................        4.3          4.9          5.0          7.7          6.7          9.5
                                                            -----        -----        -----        -----        -----        -----
   Income (loss) before income taxes and
     extraordinary item ..............................        3.8         (2.4)        (9.5)        (6.4)        (2.7)        (3.0)
   Provision (benefit) for income taxes ..............        1.9         (0.6)        (2.2)        (0.9)        (0.3)
                                                            -----        -----        -----        -----        -----        -----
      Income (loss) before extraordinary
       item ..........................................        1.9         (1.8)        (7.3)        (5.5)        (2.4)        (3.0)
   Extraordinary (loss) on early
     extinguishment of debt ..........................                                              (7.4)        (4.7)
                                                            -----        -----        -----        -----        -----        -----
     Net income (loss) ...............................        1.9%        (1.8)%       (7.3)%      (12.9)%       (7.1)%       (3.0)%
                                                            =====        =====        =====        =====        =====        =====


</TABLE>
     Fiscal Year ended March 31, 1998 compared to the Twelve Months ended
     March 31, 1997

         Net Sales.  Net sales  increased  by $85.2  million or 89% for the year
     ended March 31, 1998 when  compared to the twelve  month period ended March
     31, 1997.  Approximately  $68.1 million of this increase relates to the net
     sales  generated from Quality Foods which was acquired in December 1996 and
     as such the twelve month period  ended March 31, 1997  includes  only three
     months of Quality Foods  operations.  The remaining  amount of the increase
     relates to  increased  demand  for  Custom  Foods'  value  added  products.
     Commencing with the last quarter of fiscal year 1998 and continuing through
     the first quarter of fiscal year 1999 sales to one of the Company's largest
     customers,  Chef America, have  declined. Total  revenues at the  Company's
     Custom  Foods  division  for the last  quarter  of  fiscal  year  1998 were
     essentially  unchanged  when  compared to the three  months ended March 31,
     1997,  as the decline in Chef  America  volume was offset by sales to other
     customers.  However, as a result of the decreased volume to Chef America in
     the last  quarter of fiscal year 1998 and the first  quarter of fiscal year
     1999, operating results for the Company's Custom Foods value-added division
     were and are expected to be adversely  affected.  However,  as of March 31,
     1998,  the growth in other  value-added  business of the Company has offset
     the impact of the decline in Chef America business.



                                       18

<PAGE>



         Gross Profit.  Gross profit increased by $15 million from $13.9 million
     for the twelve month  period ended March 31, 1997 to $28.9  million for the
     year ended March 31, 1998.  During the same period,  gross margin increased
     from 14.4% to 15.9%. The dollar increase is predominately attributable to a
     full year of gross profit on Quality Foods sales included in the year ended
     March 31, 1998 with only three months  included in the twelve  months ended
     March 31, 1997. The increase in gross margin also primarily  relates to the
     inclusion of a full year of sales of Quality Foods'  products which tend to
     be of a higher  margin than Custom  Foods'  products.  Notwithstanding  the
     decline in Chef America volume during the last quarter of fiscal year 1998,
     gross  profit  and  gross  profit as a  percent  of sales for such  quarter
     increased when compared to the three months ended March 31, 1997.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
     administrative  expenses  increased by $7.1  million to $17.2  million from
     $10.0 million. Selling, general and administrative expenses as a percentage
     of sales  decreased  from  10.4% to  9.5%.  The  increase  in  expenses  is
     principally attributable to the acquisition of Quality Foods,  amortization
     expense of  approximately  $2.3 million  associated with intangible  assets
     originating from the Quality Foods'  acquisition and increased overhead and
     infrastructure  additions to comply with  internal  and external  reporting
     requirements,  to refocus sales and marketing efforts, and increased legal,
     accounting and other  professional  services  costs.  The increase in gross
     expenses was more than offset by the increase in sales.

         Income  from  Operations.  Income  from  operations  increased  by $7.9
     million  from  $3.8  million  to $11.7  million  as a result  of the  items
     discussed above.

         Interest Expense.  Interest expense increased by $10.8 million to $17.2
     million in 1998 from $6.4 million. The increase is entirely attributable to
     interest  expense on the 11.625%  Senior Notes which were issued in January
     1997 and as such were  outstanding  for only two  months  during the twelve
     months ended March 31, 1997.

         Provision  for Income  Taxes.  Provision  (benefit)  for  income  taxes
     increased  to $30,000 for the current  year from  ($288,000)  for the prior
     year.  For the current year,  the expected  income tax benefit based on the
     statutory rate was reduced to zero because the company provided a valuation
     allowance related to its' net operating loss  carryforwards.  The provision
     of $30,000 relates to estimated minimum state tax liabilities.

         Extraordinary  Loss.  The  extraordinary  loss of $4.5  million for the
     twelve months ended March 31, 1997  primarily  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.

         Net Loss.  A net loss of $5.5 million was incurred for the current year
     versus a net loss of $6.8  million for the prior year due to the net impact
     of the

                                       19

<PAGE>



    foregoing items.

    Six months ended March 31, 1997 compared to six months ended March 31, 1996.

         Net Sales. Net sales increased to $60.5 million in the six months ended
     March 31, 1997 from $30.3  million in the six months  ended March 31, 1996.
     Approximately  $18.3 million of this $30.2 million  increase was due to the
     inclusion of Quality Foods' sales subsequent to the Acquisition.  Net sales
     to  Arby's  increased  $9.3  million  during  this  period  as a result  of
     increases  in sales to several  Eastern  U.S.  markets  pursuant to the new
     three-year contract.  Sales of Custom Food's value-added products increased
     moderately  over the prior  period,  principally  as a result of  increased
     sales to new and  existing  customers.  Total  pounds  sold by the  Company
     increased  82% while the average net sales price per pound  increased  10%.
     Pounds sold  increased  primarily due to the Quality  Foods'  results being
     included for three months and the  increased  Arby's  sales.  The net sales
     price per pound increased  primarily from Quality Foods' sales which are at
     higher per pound prices than the sales to Custom Foods' customers.

         Gross Profit. Gross profit increased to $8.3 million for the six months
     ended March 31, 1997 from $6.6  million for the six months  ended March 31,
     1996.  All of the  increase  in gross  profit was  attributable  to Quality
     Foods.  The gross margin  decreased to 13.6% for the six months ended March
     31, 1997 from 21.7% for the six months ended March 31, 1996. The decline of
     the gross margin as a percent of sales was a result of increased  costs for
     raw materials of Custom Foods'  value-added  products which were not passed
     on to  customers,  an increase  in sales to Arby's  that have a  relatively
     lower gross margin compared to sales to other customers,  and lower margins
     on sales by Quality  Foods.  In  connection  with the  purchase  accounting
     adjustments  made  for  the  acquisition  of  Quality  Foods,  the  Company
     increased  the  carrying  value of the  Quality  Foods work in process  and
     finished  goods  inventory by $1.5 million to reflect the fair value of the
     inventory purchased. The subsequent sale of this higher valued inventory at
     lower margins  reduced the overall gross profit for the quarter ended March
     31, 1997.

         Operating  Expenses.  Operating  expenses increased to $7.5 million for
     the six months ended March 31,  1997,  from $2.9 million for the six months
     ended March 31,  1996,  principally  attributable  to (i) the  inclusion of
     Quality Foods  operating  expenses  from the December 31, 1996  acquisition
     date forward of approximately  $1.8 million;  (ii) compensation  expense of
     $1.4 million recorded in connection with the Company's repurchase of common
     stock from  employees  immediately  subsequent  to their  exercise of stock
     options;  (iii) Acquisition and Senior Note Offering closing bonuses to CFP
     Holdings and Quality Foods management of $500,000; and (iv) amortization of
     goodwill related to the Acquisition of $782,000.

         Other  Charges.  Other  charges for the six months ended March 31, 1996
     consisted of $5.0 million for termination of a Sales Brokerage Agreement in

                                       20

<PAGE>



     January 1996.

         Income from  Operations.  Income from operations  increased to $800,000
     for the six months ended March 31, 1997 from a loss of $1.4 million for the
     six months ended March 31, 1996,  as a result of lower gross  margins being
     offset by the lack of other charges as discussed above.

         Interest  Expense.  Interest expense  increased to $4.7 million for the
     six months ended March 31, 1997 compared to $1.5 million for the six months
     ended  March 31,  1996,  primarily  attributable  to the  Offering  and the
     indebtedness incurred to finance the Acquisition.

         Provision for Income Taxes. The benefit for income taxes decreased from
     $662,000  for the six months  ended March 31, 1996 to $541,000  for the six
     months  ended  March 31,  1997.  The income tax  benefit for the six months
     ended  March 31, 1996 was less than the  statutory  rate due  primarily  to
     non-deductible  expenses  including  officer's  life insurance and goodwill
     amortization.  The income tax  benefit  for the six months  ended March 31,
     1997 was  less  than  the  statutory  rate  due  primarily  to the  Company
     providing a valuation allowance against the deferred tax asset.

         Extraordinary  Loss. The extraordinary loss of $4.5 million for the six
     months ended March 31, 1997 primarily  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.

         Net Loss.  Net loss  increased to $7.9 million for the six months ended
     March 31, 1997 from $2.2  million  for the six months  ended March 31, 1996
     due to the net impact of the foregoing items.

         Fiscal  year ended  September  30,  1996  compared to fiscal year ended
     September 30, 1995

         Net Sales.  Net sales  increased  to $66.0  million in fiscal 1996 from
     $61.5  million in fiscal 1995,  as a result of increases in sales to Arby's
     and other  customers.  Sales to Arby's increased in fiscal 1996 as a result
     of additional  sales to several  Eastern U.S.  markets  pursuant to the new
     three-year contract.  Sales of value-added products by Custom Food Products
     increased slightly over the prior year, principally as a result of sales to
     new and  existing  customers.  Total  pounds sold by the Company  increased
     16.2% while the average  selling price declined  7.7%. The average  selling
     price  declined  primarily  as a result of a reduction  in beef prices from
     1995 to 1996,  which  were  passed  through to Arby's  under the  cost-plus
     pricing structure of the contract.

         Gross  Profit.  Gross profit  increased to $12.2 million in fiscal 1996
     from $11.7 million in fiscal 1995.  The gross margin  declined  slightly to
     18.5% in fiscal 1996 from 19.0% in fiscal 1995  principally  as a result of
     increased sales to Arby's which are lower margin sales.


                                       21

<PAGE>



         Operating  Expenses.  Operating  expenses  decreased to $5.5 million in
     fiscal 1996 from $6.7 million in fiscal 1995, a 17.7% decrease, principally
     attributable to the net effect of the elimination of sales commissions as a
     result of the termination of a Sales Brokerage Agreement.

         Other  Charges.  Other charges in fiscal 1996 consisted of $5.0 million
     for termination of a Sales Brokerage Agreement in January 1996.

         Income  from  Operations.  Income  from  operations  decreased  to $1.7
     million in fiscal 1996 from $5.0 million in fiscal 1995,  primarily  due to
     other charges noted above.

         Interest Expense.  Interest expense increased to $3.2 million in fiscal
     1996 from $2.6  million in fiscal 1995,  a 22.8%  increase,  primarily as a
     result of increased capitalized lease obligations.

         Provision  (Benefit)  for Income  Taxes.  Benefit for income  taxes was
     $400,000  for fiscal 1996, a decrease of $1.6 million from the $1.2 million
     provision for income taxes for fiscal 1995,  calculated using our effective
     tax rates on income  (loss)  before  income  taxes.  The effective tax rate
     benefit of 26.2% for fiscal 1996 changed from the effective income tax rate
     provision  of 50.7% for  fiscal  1995  principally  as a result of the loss
     before  income taxes in fiscal 1996 as compared to the income before income
     taxes in fiscal 1995.  The  effective tax rate of the income tax benefit in
     fiscal 1996 differed from the statutory rate as a result of  non-deductible
     goodwill  amortization,  officers' life insurance and other  non-deductible
     expenses.

         Net Income.  A net loss of $1.2  million was  incurred in fiscal  1996.
     This was a decrease  of $2.4  million  from the $1.2  million net income in
     fiscal 1995, due to the net impact of the foregoing items.

     Liquidity and Capital Resources

         The Company's  total  consolidated  indebtedness  was $143.5 million at
     March 31, 1998,  principally consisting of $115 million in Senior Notes and
     $14  million  in  borrowings  under the Bank  Credit  Agreement  as well as
     various notes payable to government  agencies and capital leases. On May 5,
     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,  subject 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.  All amounts outstanding under the Bank Credit
     Agreement  were  repaid  with new  borrowings  under the Loan and  Security
     Agreement consisting of a $10.0 million term loan and $4.1 million advanced
     under the Revolver. In addition,  deferred financing costs of approximately
     $1 million were written off in  connection  with the  repayment of the Bank
     Credit  Facility.  All  amounts  outstanding  under  the Loan and  Security
     Agreement become due and payable in

                                       22

<PAGE>



     May 2002.

         Loans   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, Inc.

         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.

         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.  In fiscal 1999, the Company  expects its working
     capital to be at its lowest level in the Winter and to peak between May and
     September. Historically, the Company has experienced minimal bad debts with
     respect to accounts receivable,  as well as minimal inventory  obsolescence
     or shrinkage losses.

         For the fiscal year ended March 31, 1998 the Company spent $5.5 million
     on capital expenditures. The Company presently anticipates that its capital
     expenditures for fiscal 1999 will be approximately $7.1 million, consisting
     primarily of growth related projects.

         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  for the next  twelve to  eighteen  months  will be  satisfied
     through a  combination  of cash flow from  operations  and funds  available
     under the Agreement.

     Year 2000

         The Company is in the process of selecting a new Enterprise Wide System
     and currently expects to have a new system selected and implemented by July
     1999.  The  company  believes  that  implementation  of the new system will
     address  its major  "year  2000  issues",  which  arise in cases  where the
     computer  systems or any equipment with computer chips use two-digit fields
     that  recognize  dates using the  assumption  that the first two digits are
     "19". On January 1, 2000, any clock or date recording  mechanism  including
     date sensitive software that uses only two digits to represent the year may
     recognize a date

                                       23

<PAGE>



     using "00" as the year 1900 rather than the year 2000. This could result in
     a system  failure or  miscalculations,  causing  disruption of  operations,
     including among other things a temporary inability to process transactions,
     send invoices or engage in similar activities.

         The Company is currently  engaged in a review of its  computer  systems
     and applications,  including  packaged  software used by the Company,  that
     will not be  addressed by the new system.  The Company  expects to make any
     modifications  required to resolve year 2000 issues in a timely  manner and
     leave adequate time to assess and correct any  significant  issues that may
     materialize.   The   Company  is  also   expecting   to   initiate   formal
     communications  with selected vendors and customers to determine the extent
     to which the  Company is  vulnerable  to those  third  parties'  failure to
     remediate  their own year 2000  issues.  The Company can give no  guarantee
     that the systems of other  companies  on which the  Company's  systems rely
     will be converted on time or that failure to convert by another  company or
     a conversion that is incompatible with the Company's systems would not have
     a material  adverse  effect on the Company.  The Company is taking steps to
     reduce the likelihood that such failures could affect the Company's systems
     through any electronic communications.

         The Company does not expect that the review and modifications described
     above,  excluding  the cost of  implementing  the new system,  will require
     material  expenditures.  If the Company is unable to successfully implement
     the  new  system  sufficiently  in  advance  of  the  year  2000,  however,
     additional  expenditures  could be required and such expenditures  could be
     substantial.  If  modification  required to address the Company's year 2000
     issues are not made,  or are not timely,  the year 2000 issues could have a
     material  impact on the operations and financial  results and conditions of
     the Company.

     Inflation

         Management does not believe that inflation had any material impact upon
     its  business  for the three  years ended  September  30, 1995 and 1996 and
     March 31, 1998 and the six months ended March 31, 1997.

     Item 7A. Quantitative and qualitative disclosures about market risk

         Not applicable.

     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.


                                       24

<PAGE>



Part III
     Item 10.   Directors and executive officers of the registrant

     MANAGEMENT

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

<CAPTION>
      Name                         Age       Position(s)
      ----                         ----      -----------
<S>                                <C>       <C>  
      Executive Officers and Directors
      Roberto Buaron.............. 51        Director, Chairman
      William Del Chiaro.......... 45        Director, President and Chief Executive Officer
      Robert Gioia................ 49        Director
      Richard Griffith............ 65        Director, Vice Chairman
      David Cohen................. 33        Director, Vice Chairman
      Eric Ek..................... 42        Director, Vice President, Chief Financial Officer and
                                             Secretary
      James Long.................. 55        Director, Vice Chairman and Treasurer
      Andrew Kohn................. 30        Director
     
</TABLE>

 
         Roberto  Buaron has been the  Chairman  and a director  of the  Company
     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  President  and
     CEO of  Quality  Foods.  In May  1998 he  became  President  and CEO of the
     Company.   He  was   previously   Executive  Vice  President  of  Sara  Lee
     Corporation's  Hillshire Farm & Kahn's divisions, 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,  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 the Company  since  December  1996.
     From  December  1996 to May  1998 he  served  as the  President  and  Chief
     Executive  Officer of the Company.  Prior to that,  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

                                       25

<PAGE>



     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.

         Richard  Griffith has been Vice Chairman of the Company since  December
     1996 and a  Director  of the  Company  since  March  1993.  He has been the
     President and Chief Executive  Officer of Custom Foods since March 1993 and
     recently  announced that he will be retiring from that position on June 30,
     1998.  Prior to the  formation  of the  Company,  Mr.  Griffith  served  as
     President and Chief Executive Officer of the Company's  predecessors,  Best
     Western and Center of the Plate since November  1991. Mr.  Griffith was the
     founding Chairman of Arcop, Inc., the purchasing  cooperative of the Arby's
     restaurant chain.

         David  Cohen has been Vice  Chairman of Quality  Foods since  September
     1997 and a Director of the Company since  December  1996.  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 has been the Vice President and Chief Financial  Officer of the
     Company since July 1993 and a director of CFP Holdings since December 1996.
     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  home builder 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.

         James Long has been the Vice  Chairman  and  Treasurer  of CFP Holdings
     since  December 1996 and a director of the Company 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 Holdings  since  December  1996.
     Mr.  Kohn is a Vice  President  of First  Atlantic,  with which he has been
     employed  since  1994.  Previously,  Mr.  Kohn was  employed  by  Berkshire
     Partners, a private equity investment firm, and Bear Stearns & Co.

     Compensation of Directors

         All directors are reimbursed for their usual and customary expenses

                                       26

<PAGE>



     incurred  in  attending  all Board of  Directors  and  committee  meetings.
     Directors of the Company receive no remuneration for serving as directors.

     Item 11.   Executive Compensation
<TABLE>
         The following table sets forth a summary of the compensation  earned by
     the  Company's  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.
<CAPTION>

                                Summary Compensation Table (1)


                                       Annual Compensation           Long-Term
                                                                    Compensation
                               Fiscal                             Options   LTIP     All Other
                               Year      Salary         Bonus    Granted   Payouts  Compensation
Name & Title                   (1)        ($)            ($)        (#)      ($)       ($)
------------------------------------------------------------------------------------------------
<S>                            <C>     <C>             <C>                          <C>

Robert Gioia                    1998   325,314         25,000
  Chief Executive Officer      -----------------------------------------------------------------
                                1997    80,664   (2)   12,500 (3)
                               -----------------------------------------------------------------
                                1996             (4)
                               -----------------------------------------------------------------

Richard Griffith                1998   315,246         48,387                       18,918 (6)
  Vice Chairman                -----------------------------------------------------------------
                                1997   300,000        196,200 (5)                    7,015 (6)
                               -----------------------------------------------------------------
                                1996   299,803        150,000                        6,078 (6)
                               -----------------------------------------------------------------

David Cohen                     1998   166,792         25,000                       16,800 (9)
  Vice Chairman                -----------------------------------------------------------------
                                1998   132,186                                       8,400 (12)
                               -----------------------------------------------------------------
                                1996             (4)
                               -----------------------------------------------------------------

Eric Ek                         1998   198,950         23,556                        8,506 (11)
  Chief Financial Officer      -----------------------------------------------------------------
                                1997   151,884        120,100(10)                    7,015 (11)
                               -----------------------------------------------------------------
                                1996   125,500         48,945                        4,736 (11)
                               -----------------------------------------------------------------

Steve Diener                    1998   132,186                                       8,400 (12)
  Vice President of Sales      -----------------------------------------------------------------
  & Marketing                   1998   132,186                                       8,400 (12)
                               -----------------------------------------------------------------
                                1996    26,442  (13)
                               -----------------------------------------------------------------
<FN>
 (1)  For purposes of this table,  the fiscal years  referred to herein mean the
      12-month periods ended March 31.

 (2)  Consists of compensation received for the last 3 months of the period from
      the Company Mr. Gioia's base compensation  under his employment  agreement
      with the Company is $325,000.

 (3)  Consists  of bonus  earned  for the last 3 months of the  period  from the
      Company.

 (4)  Became an employee of the Company in January 1997.

 (5)  Includes (i) $42,857 of bonus received in connection with the consummation
      of the Quality Foods  Acquisition  and (ii) $ 107,143 of bonus received in
      connection with the consummation of the Senior Notes Offering.

 (6)  For 1998:  Consists of $18,918 of car  allowance and value of personal use
      of the  Company's  automobile.  For 1997:  Consists  of $7,015 of value of
      personal use of the Company's automobile.  For 1996: Consists of $6,078 of
      value of personal use of the Company's automobile.

 (7)  Consists of compensation received for the last 3 months of the period from
      the Company.  Mr. Cohen's base compensation under his employment agreement
      with  the  Company  is  $240,000  through  September  1997  and  $125,000,
      thereafter.

 (8)  Consists  of bonus  earned  for the last 3 months of the  period  from the
      Company.

 (9)  For 1998:  Consists of $4,800  excess term life  insurance and $12,000 car
      allowance. For 1997: Consists of $3,000 car allowance.

 (10) Includes (i) $28,571 of bonus received in connection with the consummation
      of the Quality  Foods  Acquisition  and (ii) $71,429 of bonus  received in
      connection with the consummation of the Senior Notes Offering.

 (11) For 1998:  Consists of $8,400 for car  allowance and $106 excess term life
      insurance.  For 1997:  Consists of $4,545 of  disability  insurance,  $370
      excess term life insurance and $2100 of car allowance.  For 1996: Consists
      of $4,366 of disability insurance and $370 excess term life insurance.

 (12) For 1998: Consists of car allowance. For 1997: Consists of car allowance.

 (13) Became an employee of the Company in January 1996.
</FN>
</TABLE>

                                       27

<PAGE>




                        OPTION GRANTS IN LAST FISCAL YEAR

         There were no options granted to any of the Named Executive Officers in
     the last fiscal year.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTIONS VALUES
<TABLE>
         The  following  table  sets  forth  information  with  respect  to each
     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>
                                                                    Number of           Value of
                                                                    Securities        Unexercised
                                                                Underlying Options    In-The-Money
                                                                    at FY-End       Options at FY-End
                                 Shares                                (#)               ($)(1)
                               Acquired on          Value           Exercisable/      Exercisable/
Name                           Exercise (#)       Realized ($)      Unexercisable      Unexercisable
<S>                               <C>                 <C>             <C>               <C>
Robert Gioia...............       --                  --                0/0                0/0
Richard Griffith...........       --                  --              1,149/0           465,345/0
David Cohen................       --                  --                0/0                0/0
Eric Ek....................       --                  --               444/0            179,820/0
Steve Diener...............       --                  --                0/0                0/0
<FN>
----------- 
 (1)  Based on the fair  market  value of the  Common  Stock at March  31,  1998
      ($694.00 per share), as determined by the Company's Board of Directors.
</FN>
</TABLE>

     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  $325,000  per  year.  Mr.  Del  Chiaro is also  eligible  to
     participate  in the  Company's  annual  cash bonus plan which is based upon
     Quality  Foods'  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" (as such 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 the
     termination by the Company "without cause".

         The Company has entered  into an  employment  agreement  with Mr. Gioia
     (the "Gioia Employment  Agreement") that expires on December 31, 2001 or on
     an  earlier  date in  accordance  with the  terms of the  Gioia  Employment
     Agreement.  Base  compensation  under the  Gioia  Employment  Agreement  is
     $325,000 per year plus an annual adjustment beginning in January 1998 based
     on the Consumer  Price Index.  Mr. Gioia is also eligible to participate in
     the Company's annual cash bonus plan which is based upon the Company's


                                       28


<PAGE>



     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.  Gioia at any time for  "cause"  or  after a  specified  period  upon a
     "disability" (as such terms are defined in the Gioia Employment 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 base salary and the pro
     rata  portion of his  minimum  annual  bonus  payable  through the later of
     December 31, 2001 or 18 months from the date of  termination by the Company
     "without  cause." In connection with the Gioia Employment  Agreement,  upon
     the  adoption  of the 1998  Stock  Option  Plan Mr.  Gioia  will be granted
     options to purchase up to that number of shares of Class B Nonvoting Common
     Stock,  $.01 par value, of CFP Group (the "Class B Nonvoting Common Stock")
     equal to 1.25% of the  total  number of issued  and  outstanding  shares of
     common stock of CFP Group (determined on a fully-diluted basis).

         The Company has entered into an employment  agreement with Mr. Griffith
     (the "Griffith Employment  Agreement") that expires on December 31, 1999 or
     on an earlier date in accordance with the terms of the Griffith  Employment
     Agreement.  Base compensation  under the Griffith  Employment  Agreement is
     $300,000 per year plus an annual adjustment beginning in July 1997 based on
     the Consumer Price Index.  Mr.  Griffith is also eligible to participate in
     the  Company's  annual  cash bonus plan which is based upon  Custom  Foods'
     achievement  of  certain  annual  performance   targets.  The  Company  may
     terminate Mr. Griffith at any time for "cause" or after a specified  period
     upon a "disability"  (as such terms are defined in the Griffith  Employment
     Agreement). If the Company terminates Mr. Griffith "without cause" (as such
     term is defined in the  Griffith  Employment  Agreement),  Mr.  Griffith is
     entitled to receive,  among other things,  the aggregate of his base salary
     payable through the earlier of December 31, 1999 or 18 months from the date
     of termination by the Company  "without  cause" 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. Cohen as
     amended  (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 which is based upon
     Quality Food's 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  "without
     cause." In

                                       29

<PAGE>



     connection with the Cohen  Employment  Agreement,  upon the adoption of the
     1998 Stock Option Plan Mr. Cohen will be granted  options to purchase up to
     that number of shares of Class B Nonvoting  Common Stock of CFP Group equal
     to 1.07% of the total  number of issued  and  outstanding  shares of common
     stock of CFP Group (determined on a fully-diluted basis).

         The Company has entered  into an  employment  agreement  with Mr. Ek as
     amended (the "Ek Employment  Agreement")  that expires on December 31, 1999
     or on an earlier  date in  accordance  with the terms of the Ek  Employment
     Agreement.  Base compensation under the Ek Employment Agreement is $200,000
     per year  plus an annual  adjustment  beginning  in July 1997  based on the
     Consumer  Price  Index.  Mr.  Ek is also  eligible  to  participate  in the
     Company's  annual  cash  bonus  plan  which is  based  upon  Custom  Foods'
     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 "without cause" and the pro rata portion
     of his annual bonus for the fiscal year in which such termination occurred.

     Put Rights of Messrs. Gioia, Cohen and Griffith

         Under  the terms of their  respective  employment  agreements,  each of
     Messrs.  Gioia,  Cohen and Griffith have the right,  in connection with the
     termination of their employment under certain circumstances, to sell to CFP
     Group,  and CFP  Group is  obligated  to  purchase,  the  shares of Class A
     Nonvoting  Common Stock (in the case of Mr. Griffith) and Class B Nonvoting
     Common Stock (in the case of Messrs.  Gioia and Cohen)  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  pursuant to a formula (in the case
     of Mr. Griffith) and an appraisal (in the case of Messrs. Gioia and Cohen).
     The right of such  individuals to sell their shares to CFP Group is subject
     to the terms and conditions of the then  outstanding  credit  facilities of
     CFP Group and its subsidiaries.

         In addition,  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  credit  facilities of CFP
     Group and its subsidiaries.


     Employee Stock Option Plan


                                       30

<PAGE>



     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.

         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 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 transferrable  other than by
     will or the laws of  descent  and  distribution  and (e) no  option  may be
     granted to 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 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

                                       31

<PAGE>



     price  of  the  Common  Stock  over  the  Option  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 Option  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 Option Price paid.  The tax basis of such shares to
     such  employee  will be equal to the Option 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 Option 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.

     1998 Stock Option Plan

         On June 17, 1998 the Company's Board of Directors  adopted,  subject to
     shareholder approval, a new incentive stock option program (the "1998 Stock
     Option Plan") which  includes the existing  management  of the Company,  as
     well as key senior  executives  and  management of Quality Foods and Custom
     Foods.



                                       32

<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 the  Company  as of May 30,  1998 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  officers  as a group.  Except  as  otherwise
     indicated,  each of the  stockholders  has sole voting and investment power
     with respect to the shares beneficially owned. Unless otherwise  indicated,
     the address for each stockholder is c/o CFP Group,  Inc., 1117 West Olympic
     Boulevard, P.O. Box 1027, Montebello, California 90640.
<CAPTION>

                                                      Shares of Voting                            Shares of          Percentage of
                                                        Common Stock   Percentage of              Nonvoting         All Classes of
                                                            (1)        Voting Common            Common Stock(1)      Common Stock
Name and Address of Beneficial Owner                      Class A          Stock         Class A          Class B   (Fully-Diluted)
<S>                                                        <C>             <C>             <C>             <C>            <C>
Atlantic Equity Partners, L.P.(2) ...............          14,293          97.2%            --              --            49.3%
Roberto Buaron (3) ..............................          14,293          97.2             --              --            49.3
Richard Griffith (4) ............................            --            --              3,161            --            10.9
Robert Gioia (5) ................................            --            --               --             1,081           3.7
Eric Ek .........................................            --            --              1,066            --             3.7
David Cohen (6) .................................            --            --               --             1,081           3.7
James Long (7) ..................................             173           1.2             --              --              *
Steve Diener ....................................            --            --                100            --              *
All officers and directors as a group
(8 persons) .....................................          14,466          98.4            4,337           2,162          72.2
<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 designated Class
         B Nonvoting Common 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 Afros  Finanziana
         S.p.a ("Afros"),  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 Afros 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 Afros disclaim any beneficial  ownership
         of any of the AEP Shares. Certain present and former employees of First
         Atlantic, an affiliate of AEP, owning an additional 412 shares of Class
         A Voting Stock,  have granted AEP the right to vote the shares of Class
         A Voting Stock beneficially owned by them.

(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,

                                       33

<PAGE>

         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)      Includes 70 shares of Class A Nonvoting  Stock owned by Mr.  Griffith's
         Profit Sharing Trust and 150 shares of Class A Nonvoting Stock owned by
         Mr. Griffith's wife.

(5)      Represents  1,081  shares of Class B Nonvoting  Stock owned by RDG Food
         Corp.,  Inc.  ("RDG").  Mr.  Gioia,  as the  sole  shareholder  of RDG,
         controls  the voting and  disposition  of the shares  owned by RDG and,
         therefore,  is deemed to  beneficially  own the Class B Nonvoting Stock
         owned by RDG.

(6)      Represents  1,081 shares of Class B Nonvoting  Stock 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.

(7)      Address is c/o First Atlantic Capital,  Ltd., 135 East 57th Street, New
         York, New York, 10022.
</FN>
</TABLE>

     Item 13.   Certain relationships and related transactions

         CERTAIN TRANSACTIONS

         Transactions with Certain Stockholders

         During  fiscal 1998 the Company  repurchased  334 shares of  Non-voting
     Class B Stock from former employees of the Company.

         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 1998 were  $666,000.  Such  agreement  will  continue  until
     December 31, 2003 unless extended pursuant to its terms.

         In connection with the  acquisition of Quality Foods,  Robert Gioia and
     David Cohen, and entities  controlled by them,  received cash consideration
     for their interests in Quality Foods upon the closing of the Acquisition of
     $6,232,945  and  $5,131,366,   respectively,   and  $344,230  and  $290,000
     respectively  upon  partial  release  of the  purchase  price  escrowed  at
     closing, and are entitled to receive their respective pro rata shares, with
     the other Sellers, of any amounts,  if and when released,  of the remaining
     part of the purchase price escrowed at closing.

     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.

                                       34

<PAGE>



     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 date of the Stockholders'  Agreement,  (iii) a
     sale of all or  substantially  all of the  stock  of CFP  Group in a single
     transaction or (d) 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  Corporation  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 Corporation) to cause the size of the Board
     to  consist  of nine  directors  (or such  other  number as a  Majority  in
     Interest  of  AEP  Stockholders  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
     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 Selling  Group may  transfer  any stock
     prior to the third anniversary of the date of the  Stockholders'  Agreement
     and  thereafter no 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 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  that  number  of  shares  of stock of CFP  Group  which
     constitutes,  in the aggregate, more than 50% of the total number of shares
     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

                                       35

<PAGE>



     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 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:



                                       36

<PAGE>



          FY 1998 10-K Exhibit Index
          
          Exhibit #:
          
          (10) Material contracts:
          
                   10.1     Loan and Security Agreement dated May 5, 1998
          between Fleet Capital Corporation and CFP Holdings, Inc. (Filed
          herewith).
          
                   10.2     Employment Agreement dated March 9, 1998
          between CFP Holdings, Inc. and William G. DelChiaro. (Filed
          herewith).
          
                   10.3     Amendment number 1 dated September 15, 1997 to
          Employment Agreement between CFP Holdings, Inc. and David
          Cohen. (Filed herewith).
          
          (12) Statements re computation of ratios:
          
                   12.1     Computation of Earnings to Fixed Charges.(Filed
          herewith).
          
          (21) Subsidiaries of the registrant:

                   CFP Group, Inc., a Delaware Corporation
                   CFP Holdings, Inc., a Delaware Corporation
                   Custom Food Products, Inc., a California Corporation
                   QF Acquisition Corp., a Delaware Corporation
        
          (27) Financial Data Schedule. (Filed herewith).
          
          4)       Reports on Form 8-K
          
                   None.
Signatures
                                       37

<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of 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 26th day of June, 1998.


                                  CFP GROUP, INC.
                                  By:
                                                      /s/ Roberto Buaron
                                          --------------------------------------
                                                        Roberto Buaron
                                                     Chairman of the Board

         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the 26th day of June,  1998, by the following  persons
in the capacities indicated:


                        Name                            Title
                        ----                            -----


                 /s/ Roberto Buaron                  
------------------------------------------    Chairman of the Board and Director
                     Roberto Buaron

               /s/ William Del Chiaro      
------------------------------------------    President, Chief Executive Officer
                   William Del Chiaro

                  /s/ Robert Gioia         
------------------------------------------    Director
                      Robert Gioia

                     /s/ Eric Ek            
------------------------------------------    Vice President, Chief Financial
                        Eric Ek               Officer, Secretary and Director 
                                              (Principal Financial Officer and 
                                               Principal Accounting Officer)   
                                                            
                /s/ Richard Griffith       
------------------------------------------    Director
                    Richard Griffith

                 /s/ James A. Long        
------------------------------------------    Director
                     James A. Long

                  /s/ David Cohen          
------------------------------------------    Director
                      David Cohen

                  /s/ Andrew Kohn         
------------------------------------------    Director
                      Andrew Kohn

                                       38

<PAGE>


<TABLE>
                                               CFP Holdings, Inc.

                                Schedule II - Valuation and Qualifying Accounts

                                    Years ended September 30, 1995, and 1996

                         Six Months Ended March 31, 1997 and year ended March 31, 1998

<CAPTION>

                                        Balance
                                          at                                                          Balance
                                       beginning     Charged to       Charged to                      at end
               Description             of period      Expenses          Other       Deductions       of period
               -----------             ---------      --------          -----       ----------       ---------
<S>                                      <C>            <C>            <C>             <C>               <C>
Accounts Receivable:                                           (In Thousands)
Allowance for doubtful accounts
   Year ended September 30, 1995           9            129               -               -              138
   Year ended September 30, 1996         138             12               -            (100)              50
   Period ended March 31, 1997            50             22              50             (29)              93
   Year ended March 31, 1998              93            119             (79)            (18)             115

</TABLE>
                                                   39

<PAGE>

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

                  Financial  Statements  for the Years Ended  September 30, 1995
                  and 1996 and March 31, 1998 and the Six Months Ended March 31,
                  1997 and Independent Auditors' Report



<PAGE>


INDEPENDENT AUDITORS' REPORT


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

We have audited the accompanying  consolidated balance sheets of CFP Group, Inc.
and subsidiaries  (the "Company") as of March 31, 1997 and 1998, and the related
consolidated  statements of operations,  stockholders' equity (deficiency),  and
cash flows for the years ended September 30, 1995 and 1996, the six months ended
March 31, 1997,  and the year ended March 31, 1998. Our audits also included the
financial  statement schedule listed at Item 14. These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial  statements and financial statement schedule based
on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  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 CFP Group, Inc. and subsidiaries as
of March 31, 1997 and 1998,  and the results of their  operations and their cash
flows for the years  ended  September  30, 1995 and 1996,  the six months  ended
March 31, 1997,  and the year ended March 31, 1998 in conformity  with generally
accepted accounting  principles.  Also, in our opinion, such financial statement
schedule,  when  considered  in  relation  to the basic  consolidated  financial
statements  taken  as a whole,  present  fairly  in all  material  respects  the
information set forth therein.


DELOITTE & TOUCHE LLP

Los Angeles, California
June 5, 1998



<PAGE>


CFP GROUP, INC. AND SUBSIDIARIES

<TABLE>
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND 1998
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                                   March 31,
                                                                                                          --------------------------
                                                                                                            1997               1998
                                                                                                                 (In thousands)
<S>                                                                                                       <C>               <C>     
CURRENT ASSETS:
  Cash                                                                                                    $  2,139          $  1,344
  Accounts receivable, net of allowance for doubtful accouts of $93,000 and
    $115,000 at March 31, 1997 and 1998, respectively (Note 2)                                              10,719            12,007
  Inventories (Notes 2 and 4)                                                                               11,340            15,718
  Prepaid expenses and other current assets                                                                  2,526               890
                                                                                                          --------          --------
          Total current assets                                                                              26,724            29,959

PROPERTY AND EQUIPMENT, NET (Notes 2 and 5)                                                                 25,402            27,004

COSTS OF IN EXCESS OF NET ASSETS ACQUIRED,
  NET (Notes 2 and 3)                                                                                       72,021            68,608

INTANGIBLE AND OTHER ASSETS, NET (Notes 2 and 6)                                                             8,675             7,508


                                                                                                          --------          --------
TOTAL                                                                                                     $132,822          $133,079
                                                                                                          ========          ========

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

                                                                -2-

<PAGE>


<TABLE>
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                                 March 31,
                                                                                                        ---------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                  1997               1998
                                                                                                               (In thousands)
<S>                                                                                                     <C>               <C>      
CURRENT LIABILITIES:
  Current portion of long-term obligations (Note 7)                                                     $   1,991         $   2,232
  Accounts payable                                                                                          4,964             6,816
  Accrued expenses and other current liabilities                                                            5,055             5,362
  Income taxes payable                                                                                         12                42

           Total current liabilities                                                                       12,022            14,452
                                                                                                        ---------         ---------

LONG-TERM OBLIGATIONS (Note 7)                                                                            137,864           141,267
                                                                                                        ---------         ---------

COMMITMENTS AND CONTINGENCIES (Notes 12 and 13)

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

STOCKHOLDER'S DEFICIENCY (Note 10):
  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;
    11,241 (inclusive of 3,011 shares classified as redeemable common stock)
    shares issued and outstanding                                                                           2,204             2,204
  Nonvoting  common stock - Class B, $.01 par value;  25,000 shares  authorized;
    3,321 and 3,059 shares  (inclusive of 2,162 shares  classified as redeemable
    common stock) issued and outstanding at March 31, 1997
      and March 31, 1998, respectively                                                                        805               623
  Stockholders' notes receivable                                                                             (337)             (203)
  Accumulated deficit                                                                                     (25,251)          (30,779)
                                                                                                        ---------         ---------

             Total stockholders' deficiency                                                               (19,383)          (24,959)
                                                                                                        ---------         ---------

TOTAL                                                                                                   $ 132,822         $ 133,079
                                                                                                        =========         =========
</TABLE>


<PAGE>


CFP GROUP, INC. AND SUBSIDIARIES

<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 1995 AND 1996, SIX MONTHS ENDED MARCH 31, 1997
AND YEAR ENDED MARCH 31, 1998
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                          Six
                                                                                                         Months            Year
                                                                     Years Ended September 30,            Ended            Ended
                                                                    ---------------------------          March 31,        March 31,
                                                                       1995             1996               1997             1998

<S>                                                                 <C>               <C>               <C>               <C>      
SALES (Note 2)                                                      $  61,543         $  65,996         $  60,529         $ 181,378

COST OF SALES                                                          49,868            53,818            52,276           152,484
                                                                    ---------         ---------         ---------         ---------

GROSS PROFIT                                                           11,675            12,178             8,253            28,894

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES (Note 8)                                                     6,700             5,512             7,474            17,156

SALES BROKERAGE AGREEMENT
  TERMINATION COSTS (Notes 8 and 10)                                                      4,996
                                                                    ---------         ---------         ---------         ---------

INCOME FROM OPERATIONS                                                  4,975             1,670               779            11,738

INTEREST EXPENSE (Note 7)                                               2,632             3,232             4,681            17,236
                                                                    ---------         ---------         ---------         ---------

INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR
  INCOME TAXES AND EXTRAORDINARY ITEM                                   2,343            (1,562)           (3,902)           (5,498)

PROVISION (BENEFIT) FOR INCOME
  TAXES (Notes 2 and 11)                                                1,189              (409)             (541)               30
                                                                    ---------         ---------         ---------         ---------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                                 1,154            (1,153)           (3,361)           (5,528)

EXTRAORDINARY LOSS ON EARLY
  EXTINGUISHMENT OF DEBT (Note 7)                                                                          (4,489)
                                                                    ---------         ---------         ---------         ---------

NET INCOME (LOSS)                                                   $   1,154         $  (1,153)        $  (7,850)        $  (5,528)
                                                                    =========         =========         =========         =========

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

                                                                -3-

<PAGE>


<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES


<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED SEPTEMBER 30, 1995 AND 1996, SIX MONTHS ENDED MARCH 31, 1997
AND YEAR ENDED MARCH 31, 1998
---------------------------------------------------------------------------------------------------------------------------

                                                                   Nonvoting -              Nonvoting -
                                          Voting Class A -           Class A                  Class B
                                            Common Stock           Common Stock             Common Stock      Shareholder
                                         -------------------     -------------------      ------------------     Notes
                                         Shares      Amount      Shares      Amount       Shares      Amount   Receivable
                                                                      (Dollars In Thousands)
<S>                                       <C>       <C>            <C>      <C>            <C>      <C>         <C>
BALANCE, SEPTEMBER 30, 1994               14,705    $  3,196       2,725    $    592                                       
  Net income                                                                                                               
  Redeemable preferred dividends                                                                                           
                                          ------    --------     ---------  --------
BALANCE, SEPTEMBER 30, 1995               14,705       3,196       2,725         592
  Net loss                                                                          
  Redeemable preferred dividends                                                    
  Increase in carrying value of stock
    warrant purchase obligations                                                    
                                          ------    --------     ---------  --------
BALANCE, SEPTEMBER 30, 1996               14,705       3,196       2,725         592                                       
  Net loss                                                                                                                 
  Redeemable preferred dividends                                                                                           
  Increase in carrying value of stock
    warrant purchase obligations                                                                                           
  Exercise of stock warrants                                       4,538       1,723                                       
  Exercise of stock options                                        7,487       2,163                                       
  Issuance of common stock                                             1           1       3,321    $  2,305    $   (343)  
  Repayment of stockholder notes                                                                                       6   
  Repurchase of common stock                                      (3,510)     (1,456)                                      
  Distribution to stockholders                                                                                             
  Shares reclassified to redeemable
    common stock                                                  (3,011)       (819)     (2,162)     (1,500)              
                                          ------    --------     ---------  --------      --------  --------    --------   
BALANCE, MARCH 31, 1997                   14,705       3,196       8,230       2,204       1,159         805        (337)  

  Issuance of common stock and
    grant of note receivable                                                                  72          50         (35)  
  Repurchase of common stock and
    cancellation of note receivable                                                         (334)       (232)        169   
  Net loss                                                                                                                 
                                          ------    --------     ---------  --------      --------  --------    --------   
BALANCE, March 31, 1998                   14,705    $  3,196       8,230    $  2,204         897    $    623    $   (203)  
                                          ======    ========     =========  ========      ========  ========    ========   


                                          Retained
                                          Earnings
                                        (Accumulated
                                           Deficit)    Total

                                        (Dollars In Thousands)
BALANCE, SEPTEMBER 30, 1994             $  1,040    $  4,828
  Net income                               1,154       1,154
  Redeemable preferred dividends             (98)        (98)
                                        --------     --------
BALANCE, SEPTEMBER 30, 1995                2,096       5,884
  Net loss                                (1,153)     (1,153)
  Redeemable preferred dividends             (94)        (94)
  Increase in carrying value of stock
    warrant purchase obligations            (617)       (617)
                                        --------     --------
BALANCE, SEPTEMBER 30, 1996                  232       4,020
  Net loss                                (7,850)     (7,850)
  Redeemable preferred dividends             (27)        (27)
  Increase in carrying value of stock
    warrant purchase obligations            (207)       (207)
  Exercise of stock warrants                           1,723
  Exercise of stock options                            2,163
  Issuance of common stock                             1,963
  Repayment of stockholder notes                           6
  Repurchase of common stock                          (1,456)
  Distribution to stockholders           (17,399)    (17,399)
  Shares reclassified to redeemable
    common stock                                      (2,319)
                                        --------     --------
BALANCE, MARCH 31, 1997                  (25,251)    (19,383)

  Issuance of common stock and
    grant of note receivable                              15
  Repurchase of common stock and
    cancellation of note receivable                      (63)
  Net loss                                (5,528)     (5,528)
                                        --------     --------
BALANCE, March 31, 1998                 $(30,779)   $(24,959)
                                        ========     ========

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

                                      -4-

<PAGE>


CFP GROUP, INC. AND SUBSIDIARIES

<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995 AND 1996, SIX MONTHS ENDED MARCH 31, 1997
AND YEAR ENDED MARCH 31, 1998
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                             Six
                                                                                    Years Ended             Months         Year
                                                                                   September 30,             Ended         Ended
                                                                              -----------------------       March 31,     March 31,
                                                                                1995           1996           1997          1998
<S>                                                                           <C>            <C>            <C>            <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                           $  1,154       $ (1,153)      $ (7,850)      $ (5,528)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
    Depreciation and amortization                                                1,710          2,088          2,236          6,732
    Amortization of deferred financing costs and original
      issue discount                                                               602            630            389          1,283
    Deferred income taxes                                                         (171)           (10)          (546)
    Loss on sale of equipment                                                                                                    15
    Extraordinary loss on early extinguishment of debt                                                         4,489
    Changes in assets and liabilities, net of the effects from
      the acquisition of Quality Foods LP:
        Accounts receivable                                                        (18)          (658)          (170)        (1,288)
        Inventories                                                                430           (479)         1,802         (4,378)
        Prepaid expenses and other current assets                                 (362)           324           (963)         1,636
        Income taxes receivable/payable                                            473           (399)            98             30
        Accounts payable                                                           (57)            84            289          1,852
        Accrued expenses and other current liabilities                             621           (292)         3,703            307
                                                                              --------       --------       --------       -------- 
           Net cash provided by operating activities                             4,382            135          3,477            661
                                                                              --------       --------       --------       -------- 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment                                         (1,821)        (1,432)        (1,674)        (4,497)
  Acquisition of Quality Foods L.P.                                                                          (65,647)
  Proceeds from sale of property and equipment                                                                    44          1,137
  Other assets                                                                      36           (379)           (16)          (394)
                                                                              --------       --------       --------       -------- 
           Net cash used in investing activities                                (1,785)        (1,811)       (67,293)        (3,754)
                                                                              --------       --------       --------       -------- 

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

                                                                -5-

<PAGE>


CFP GROUP, INC. AND SUBSIDIARIES

<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995 AND 1996, SIX MONTHS ENDED MARCH 31, 1997
AND YEAR ENDED MARCH 31, 1998
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                               Six
                                                                                         Years Ended          Months        Year
                                                                                        September 30,          Ended        Ended
                                                                                   ----------------------     March 31,    March 31,
                                                                                     1995         1996          1997        1998
<S>                                                                                <C>          <C>          <C>          <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under revolving loan facility                                         $   8,300    $   9,725    $  14,821    $  23,000
  Repayment of revolving loan facilities                                              (9,050)      (9,975)     (15,821)     (18,500)
  Proceeds from issuance of long-term debt                                             8,800        5,681      218,500
  Repayment of long-term debt and capitalized lease
    obligations                                                                      (10,857)      (3,120)    (122,847)      (1,847)
  Deferred financing costs                                                                                     (11,455)        (308)
  Proceeds from sale of common stock                                                                               157           15
  Purchase of redeemable preferred stock                                                             (143)      (1,207)
  Collection of shareholder notes receivable                                                                         6            1
  Purchase of common stock                                                                                        (692)         (63)
  Distributions to shareholders                                                                                (16,000)
                                                                                   ---------    ---------    ---------    ---------
          Net cash (used in) provided by financing activities                         (2,807)       2,168       65,462        2,298
                                                                                   =========    =========    =========    =========
NET (DECREASE) INCREASE IN CASH                                                         (210)         492        1,646         (795)

CASH, BEGINNING OF PERIOD                                                                211            1          493        2,139
                                                                                   ---------    ---------    ---------    ---------
CASH, END OF PERIOD                                                                $       1    $     493    $   2,139    $   1,344
                                                                                   =========    =========    =========    =========

SUPPLEMENTAL  DISCLOSURES OF CASH FLOW INFORMATION  
  Cash paid (received)  during  the year for:
    Interest                                                                       $   1,831    $   2,265    $   2,099    $  15,386
    Income taxes                                                                         973                       (93)          33

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

                                                                -6-

<PAGE>


CFP GROUP, INC. AND SUBSIDIARIES

<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995 AND 1996, SIX MONTHS ENDED MARCH 31, 1997
AND YEAR ENDED MARCH 31, 1998
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                                               Six
                                                                                    Years Ended               Months         Year
                                                                                   September 30,               Ended         Ended
                                                                               ----------------------         March 31,    March 31,
                                                                                1995           1996             1997         1998
<S>                                                                            <C>            <C>            <C>            <C>
SUPPLEMENTAL DISCLOSURES OF NONCASH
  INVESTING AND FINANCING ACTIVITY:
  Acquisition of property and equipment through
    capital leases                                                             $ 3,233        $ 1,577                       $ 1,019
  Accrued dividends on redeemable preferred stock                                   98             94        $    27
  Issuance of common stock in exchange for equity
    interest in Quality Foods L.P.                                                                             1,500
  Issuance of employee notes in exchange for nonvoting
    Class B common stock                                                                                         343             35
  Exercise price of stock options for which the cost to
    exercise was deducted from the distribution to
    stockholders                                                                                               1,399
  Issuance of nonvoting Class B common stock to
    a financial institution for services rendered in
      1997; and to an employee in 1998                                                                          305             50
</TABLE>


     During the year ended  September 30, 1996 and the six months ended March 31
     1997,  the  carrying  value  of  the  stock  warrant  purchase  obligations
     increased  by $617,000 and  $207,000,  respectively,  with a  corresponding
     charge to retained  earnings.  During the six months  ended March 31, 1997,
     the stock warrant purchase  obligations with a carrying value of $1,723,000
     were redeemable for nonvoting Class A common stock.

     On December 31, 1996, the Company  acquired all of the equity  interests in
     Quality Foods L.P. and its two general partners,  which are now operated as
     QF  Acquisition  Corp.  ("Quality  Foods")  for a  purchase  price of $65.6
     million (see Note 3).

See accompanying notes to consolidated financial statements.
                                                                     (Concluded)

                                      -7-

<PAGE>


CFP GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

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  their  equity  interests  for
     equivalent interests of capital stock (or options to acquire capital stock)
     of  the  Company.  Accordingly,  these  consolidated  financial  statements
     include  the  historical  results of CFP  Holdings,  Inc.  for all  periods
     presented.  CFP Group, Inc. and CFP Holdings,  Inc. are companies that have
     no operations or assets separate from their investments in their respective
     subsidiaries and rely on CFP Holdings,  Inc.'s  subsidiaries for their 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.

     On December 31, 1996, the Company  acquired all of the equity  interests in
     Quality Foods. Quality Foods is a Pennsylvania-based manufacturer primarily
     of pre-cooked and uncooked, thinly sliced beef used in "Philadelphia-style"
     steak  sandwiches.  The  financial  statements  include the  operations  of
     Quality Foods from the date of acquisition (See Note 3).

     On March 31, 1993, the Company acquired  substantially all of the assets of
     Best Western  Foods,  Inc. and all the  outstanding  stock of Center of the
     Plate Foods,  Inc. The  acquisitions  were accounted for as purchases.  The
     cost in excess of net assets acquired related to the purchase of the assets
     of Best  Western  Foods,  Inc.  and a portion of the stock of Center of the
     Plate Foods,  Inc. was based on the fair values of the identifiable  assets
     acquired and liabilities  assumed.  However,  because certain shares of the
     stock of Center of the Plate Foods,  Inc. were purchased from a stockholder
     of the Company,  a portion of the cost in excess of net assets acquired was
     reduced to reflect the  historical  basis of the  stockholder's  continuing
     interest in the Company.

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  Year-End - During March 1997, the Company changed its year-end from
     the Saturday  closest to September 30 to the Saturday  closest to March 31.
     All full years presented are 52 weeks;  the six-month period ended March 31
     consists of 26 weeks.  For clarity of presentation,  the Company  describes
     its prior  year-ends as September 30 and its prior  quarter-end and current
     year-end as March 31. The  Company's  fiscal  quarter-end  is the  Saturday
     closest to the calendar quarter-end.

                                      -8-

<PAGE>


     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 44%, 40%, 23%, and 15% of total sales for the years ended
     September 30, 1995 and 1996,  the six months ended March 31, 1997,  and the
     year ended March 31,  1998,  respectively.  Accounts  receivable  from this
     customer totaled 11% and 7% of total accounts  receivable at March 31, 1997
     and  1998,  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 September
     30, 1995 and 1996,  the six months  ended March 31, 1997 and the year ended
     March 31, 1998, approximately 43%, 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 the
     double-declining method for all other property and equipment.  Depreciation
     is provided  for over the  estimated  useful  lives of the related  assets,
     ranging from 3 to 40 years.  Leasehold  improvements are amortized over the
     shorter of their useful lives or the term of the lease.

     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.  Accumulated
     amortization  was  $1,919,000  and  $5,332,000  at March 31, 1997 and 1998,
     respectively (see Note 3).

     Covenants  Not to Compete - Covenants not to compete are stated at cost and
     are  amortized  on a  straight-line  basis  over  five  years.  Accumulated
     amortization  was  $2,065,000  and  $2,643,000  at March 31, 1997 and 1998,
     respectively.  At March  31,  1998,  covenants  not to  compete  are  fully
     amortized.

     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  carrying  amounts of accounts
     receivable  and accounts  payable  approximate  fair value because of their
     short-term  nature.  The  carrying  amounts  of  substantially  all  of the
     Company's outstanding long-term obligations  approximate fair value because
     their  interest  rates  are  based  on  variable  reference  rates or rates
     currently available to the Company for debt with similar terms.

     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

                                      -9-

<PAGE>


     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 of 1997, the FASB issued Financial
     Accounting  Standards No. 131,  "Disclosure about Segments of an Enterprise
     and Related Information" ("SFAS 131"), which requires disclosure of certain
     information about operating segments, geographic areas in which the Company
     operates,  major  customers  and  products and  services.  The Company will
     evaluate the effect that this new standard has on the  Company's  financial
     statement  presentation,  and the required information will be reflected in
     the financial statements for the year ended March 31, 1999.

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.

     If the  acquisition  and the  related  equity  and  debt  transactions  had
     occurred  on  October  1, 1995,  the  results on a pro forma  basis for the
     combined  operations  of the Company  and Quality  Foods for the year ended
     September  30, 1996 and for the six months  ended March 31, 1997 would have
     been as follows:

                                                  September 30,        March 31,
                                                      1996               1997
                                                         (In Thousands)
Net sales                                           $ 156,645         $  81,578
Loss before extraordinary item                      $  (3,297)        $  (4,265)


     The fair value of the assets acquired was $95.4 million,  the cash paid was
     $65.6  million,  the fair value of common stock issued was $1.5 million and
     liabilities assumed or paid upon the acquisition were $28.3 million.

                                      -10-

<PAGE>


4.   INVENTORIES

     Inventories consisted of the following:


                                                             March 31,
                                                     ---------------------------
                                                      1997                1998
                                                           (in thousands)
Raw materials                                        $ 4,498             $ 5,655
Work-in-process                                        2,157               3,470
Finished goods                                         4,685               6,593
                                                     -------             -------
Total                                                $11,340             $15,718
                                                     =======             =======


5.   PROPERTY AND EQUIPMENT

     Property and equipment consisted of the following:


                                                             March 31,
                                                     --------------------------
                                                       1997              1998
                                                           (in thousands)
Land                                                 $    376          $    376
Building                                               17,232            19,171
Machinery and equipment                                 9,590            11,135
Office furniture and fixtures                             492               759
Leasehold improvements                                  2,479             2,531
Construction in progress                                  185                80
                                                     --------          --------
                                                       30,354            34,052
Accumulated depreciation                               (4,952)           (7,048)
                                                     --------          --------
Property and equipment, net                          $ 25,402          $ 27,004
                                                     ========          ========


6.   INTANGIBLES AND OTHER ASSETS

     Intangible and other assets consisted of the following:


                                                              March 31,
                                                     --------------------------
                                                       1997             1998
                                                          (in thousands)
Covenants not to compete                             $  2,643
Deferred financing costs                               12,231          $ 12,539
Other assets                                              210               568
                                                     --------          --------
                                                       15,084            13,107
Accumulated amortization                               (6,409)           (5,599)
                                                     --------          --------
Total                                                $  8,675          $  7,508
                                                     ========          ========


                                      -11-

<PAGE>


7.   LONG-TERM OBLIGATIONS

     Long-term obligations consisted of the following:

                                                              March 31,
                                                       ------------------------
                                                         1997            1998
                                                             (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 (8.5% at March 31, 1998) plus
     2% or  eurodollar  rate  (5.7% at  March  31,
     1998)   plus   3%,   payable    semiannually,
     principal  payable quarterly at $1.0 million,
     increasing to $2.2 million with the remaining
     balance due in June 2002                            10,000           9,000

     Revolving loan payable to a bank, interest at
     a  reference  rate  (8.5% at March 31,  1998)
     plus 1.25% or eurodollar  rate (5.7% at March
     31,  1998)  plus  2.5%,   payable  quarterly,
     expires June 2002                                      500           5,000

     Debt   assumed   in   connection   with   the
     acquisition  of Quality  Foods:  Revenue bond
     payable to a government  financing authority,
     interest at a reference  rate (5.65% at March
     31, 1998) not to exceed 18%, payable monthly,
     principal   payable   annually  at  $100,000,
     increasing to $400,000 through December 2014         4,300           4,200

     Notes   payable  to  a   government   agency,
     interest  at  2%,   payable  with   principal
     monthly through April 2012, collateralized in
     a   second    position   on   the   Company's
     Philadelphia facility                                2,154           1,955

     Note payable to a government agency, interest
     at 0.5%, payable monthly beginning April 1999
     through October 2005,  principal and interest
     payable in equal  monthly  installments  from
     November    2005    through    April    2010,
     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     February     2012,
     collateralized  in a shared third position on
     the Company's Philadelphia facility                    747             710

     Capital lease obligations  payable in varying
     monthly     installments     through    2021,
     collateralized  by  buildings  and  equipment
     with  a  net  book  value  of  6,042,000  and
     $6,317,000   at  March  31,  1997  and  1998,
     respectively                                         6,154           6,634
                                                       --------        --------
     Total                                              139,855         143,499
     Current portion                                     (1,991)         (2,232)
                                                       --------        --------
     Long-term debt                                    $137,864        $141,267
                                                       ========        ========


     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,  1998,  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.

                                      -12-

<PAGE>


     The Company has entered into a bank credit  agreement for a revolving  note
     payable and a term loan payable ("Bank Debt"). Maximum borrowings under the
     revolving  loan  payable are $20.0  million  subject to a  borrowing  base.
     Available  borrowings  at March 31, 1998 were $7.4  million.  The revolving
     loan  payable  also  provides  for standby  letters of credit of up to $3.0
     million and for the reduction of available  borrowings  equal to the amount
     outstanding under the revenue bond payable. 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.  At March
     31, 1998,  no amounts were  available for dividend  payments.  The interest
     rates for the  revolving  loan  payable and term loan are reduced  when the
     Company  achieves  certain  leverage  ratios.  On May 4, 1998,  all amounts
     outstanding  under the bank  credit  agreement  were  repaid  (see Note 14,
     Subsequent Events).

     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.

     In connection with a loan agreement and a capital lease, the Company issued
     warrants,  which contained antidilution  provisions,  to purchase 2,700 and
     412 shares,  respectively,  of common  stock at $0.01 per share.  The stock
     warrant  purchase  obligations  were initially  recorded at their estimated
     fair value at the date of issuance.  Adjustments  to the carrying  value of
     the stock warrants purchase  obligations to the estimated  redemption price
     were recognized during the period from the date of issuance to the earliest
     put date of the  warrants.  During the year ended  September  30, 1995,  no
     adjustment to the carrying value of the stock warrant purchase  obligations
     was required.  During the year ended  September  30, 1996,  the Company had
     increased  the carrying  value of the warrants  from $899,000 to $1,516,000
     with a corresponding  charge to retained  earnings of $617,000.  During the
     six months  ended March 31, 1997,  the  carrying  value of the warrants was
     increased by $207,000 and the warrants were converted into 4,538  nonvoting
     shares of Class A common stock.

     As part of the  acquisition  of Quality Foods,  the Company  borrowed $76.0
     million under term loans and $25.0  million under bridge notes.  The bridge
     notes,  $66.0  million  of the term  notes,  and  certain  other  long-term
     obligations  were repaid  upon the  issuance  of the senior  notes  payable
     resulting in an extraordinary  loss of $4.5 million.  No income tax benefit
     was  allocated  to the  extraordinary  loss,  as the  Company's  income tax
     benefit was fully allocated to the loss from operations.

                                      -13-

<PAGE>


     Minimum  principal  payments of long-term  obligations as of March 31, 1998
     are as follows:


                           Year Ending           1998
                             March 31,       (In Thousands)
                              1999             $  2,232
                              2000                2,729
                              2001                2,813
                              2002                2,880
                              2003                6,619
                              Thereafter        126,226
                                               --------
                              Total            $143,499
                                               ========


8.   RELATED PARTY TRANSACTIONS

     The Company had a sales brokerage  agreement with a stockholder under which
     the stockholder was paid a specified  commission  based on sales of certain
     products to certain customers. The agreement was terminated in January 1996
     for a fee of  $4,996,000.  Commission  expense  under  this  agreement  was
     $2,142,000  and $570,000 for the years ended  September  30, 1995 and 1996,
     respectively.  Upon  termination  of the  sales  brokerage  agreement,  the
     Company  entered into a consulting  agreement  that provided for a one-year
     contract with an option to extend for one  additional  year. The consulting
     agreement provided for annual payments of $100,000 with an additional bonus
     of $100,000 at the discretion of the Company. During 1996, the Company paid
     $100,000  total.  During  December  1996,  the  Company  purchased  all 865
     nonvoting Class A common shares owned by this stockholder for $692,000.

     Effective  December 31,  1996,  the Company  entered into a new  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  $393,000,  $400,000,
     $292,000 and $666,000,  including reimbursed expenses,  for the years ended
     September 30, 1995 and 1996,  the six months ended March 31, 1997,  and the
     year ended March 31, 1998,  respectively.  The Company  paid an  investment
     banking  fee of  $750,000  to the  same  affiliate  of a  stockholder  upon
     consummation of the acquisition of Quality Foods.

     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, 1998, was approximately $3.9 million through December 2001.

                                      -14-

<PAGE>


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 upon the  occurrence  of
     certain employment related events, which include termination without cause,
     termination   for  nonrenewal  of  employment   agreement  and  involuntary
     termination. With respect to 3,011 shares of Redeemable Nonvoting - Class A
     common stock, the redemption price is determined by a formula  specified in
     the agreement. 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  3,011
     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, 1998, no increase 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.
     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  September  30,  1995,  11,239  options  were  granted at an
     exercise  price of $289 per share,  of which 3,871 and 7,437  options  were
     exercisable  as of September 30, 1995 and 1996,  respectively.  In December
     1996,  7,487 options at $289 per share were exercised for nonvoting  common
     stock.  Thereafter,  the Company  repurchased  2,645  shares of these newly
     issued  shares for $2.1 million less the exercise  cost of $764,000 for net
     cash paid of $1,352,000 that was recorded as compensation expense. At March
     31, 1998, a total of 2,206 vested  options at an exercise price of $289 per
     share, expiring 2002, were outstanding.

     The  Company has adopted  the  disclosure-only  provision  of SFAS No. 123,
     "Accounting  for  Stock-Based  Compensation."  The estimated  fair value of
     options  granted  during 1995  pursuant to SFAS No. 123 was  $664,000.  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 income  (loss) would have been
     $1.0 million,  $(1.3) million,  $(8.0) million,  and $(5.7) million for the
     years ended  September 30, 1995 and 1996 and for the six months ended March
     31, 1997 and the year ended March 31, 1998, respectively. The fair value of
     each option grant was  estimated  using the  Black-Scholes  option  pricing
     model with the following weighted average  assumptions:  dividend yield and
     volatility of zero, a risk free interest rate of 6.28% and expected  option
     lives of 3.7 years.

                                      -15-

<PAGE>


     On June 17, 1998 the Company's  Board of Directors,  subject to shareholder
     approval,  adopted a new  incentive  stock option  program (the "1998 Stock
     Option Plan") which  includes the existing  management  of the Company,  as
     well as key senior  executives  and  management of Quality Foods and Custom
     Foods.

11.  INCOME TAXES

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


                                                           Six
                                       Years Ended     Months Ended  Year Ended
                                      September 30,      March 31     March 31
                                  -------------------     -------     -------
                                   1995        1996        1997          1998
Current:
  Federal                         $ 1,092     $  (401)
  State                               268           2     $     5     $    30
                                  -------     -------     -------     -------
                                    1,360        (399)          5          30
                                  -------     -------     -------     -------
Deferred:
  Federal                            (135)         39        (427)
  State                               (36)        (49)       (119)
                                  -------     -------     -------     -------
                                     (171)        (10)       (546)
                                  -------     -------     -------     -------
Total provision (benefit)         $ 1,189     $  (409)    $  (541)    $    30
                                  =======     =======     =======     =======


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

<CAPTION>
                                                                               Six
                                                           Years Ended     Months Ended Year Ended
                                                           September 30,      March 31,  March 31,
                                                         ----------------     ---------  ---------
                                                         1995      1996         1997        1998
<S>                                                      <C>        <C>         <C>         <C>
Statutory rate                                           35.0%     (35.0)%     (35.0)%     (35.0)%
Officer's life insurance and other nondeductible
  expenses                                                1.8        4.0         0.7         2.0
Goodwill amortization                                     4.3        6.4         1.2         1.8
State taxes, net                                          9.6       (1.6)        1.9        (2.0)
Valuation allowance                                                             17.3        33.2
                                                         ----      -----       -----       -----  
Effective tax rate                                       50.7%     (26.2)%     (13.9)%       0.0%
                                                         ====      =====       =====       =====  
</TABLE>

                                      -16-

<PAGE>


<TABLE>
     Deferred income taxes consist of the following:

<CAPTION>
                                                                            September 30,                         March 31,
                                                                      -------------------------           ------------------------
                                                                       1995              1996               1997            1998
                                                                                              (In Thousands)
<S>                                                                   <C>               <C>               <C>              <C>    
Deferred income tax assets:
  Federal net operating loss carryforwards                                                                $ 2,894          $ 4,747
  State taxes                                                         $    53           $    26                                160
  Accrued vacation                                                         29                39               114              113
  Expense accruals                                                         12                21                38              485
  State net operating loss carryforwards                                                     43               627              849
  AMT credit carryforward                                                                   189               126              126
  Valuation allowances                                                                                     (3,149)          (5,333)
                                                                      -------           -------           -------          -------
                                                                      $    94           $   318           $   650          $ 1,147
                                                                      =======           =======           =======          =======

Deferred income tax liabilities:
  Depreciation and amortization                                       $   555           $   681           $   405          $ 1,135
  Prepaid expenses                                                         53                51               101               12
  Other                                                                    41               131               144
                                                                      -------           -------           -------          -------
                                                                      $   649           $   863           $   650          $ 1,147
                                                                      =======           =======           =======          =======
</TABLE>


     At March 31, 1998, the Company has federal net operating loss carryforwards
     of approximately $13.5 million that are available ratably over the next six
     fiscal years and that expire in 2012.  At March 31,  1998,  the Company has
     various state operating loss carryforwards  aggregating approximately $12.3
     million that expire in 2002 through 2017.

     During the six months  ended  March 31,  1997 and the year ended  March 31,
     1998,  the  Company  established  a  valuation  allowance  equal to the net
     deferred tax asset of $3.1 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  $618,000,  $618,000,  $444,000 and
     $1,220,000 for the years ended  September 30, 1995 and 1996, the six months
     ended  March 31,  1997 and the year  ended  March 31,  1998,  respectively.
     Certain of the leases  require  the  payment  of  related  property  taxes,
     insurance, maintenance and other costs.

                                      -17-

<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, 1998 are summarized as follows:


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

          1999                                          $  1,290       $   965
          2000                                             1,252           874
          2001                                             1,093           624
          2002                                             1,131           530
          2003                                               844           441
          Thereafter                                      14,594            20
                                                         --------      -------
          Total minimum lease payments                    20,204       $ 3,454
          Amount representing interest                   (13,570)      =======
                                                         -------

          Present value of net minimum lease payments   $  6,634
                                                        ========


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 $29,000 and $98,000 for the six
     months ended March 31, 1997 and year ended March 31, 1998, respectively.

14.  SUBSEQUENT EVENTS

     On May 5, 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  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.  All amounts outstanding
     under the existing Bank debt were repaid with new borrowings under the Loan
     and Security  Agreement  consisting  of a $10.0  million term loan and $4.1
     million advanced under the Revolver. In addition,  deferred financing costs
     of  approximately  $1  million  were  written  off in  connection  with the
     repayment  of the Bank debt.  All  amounts  outstanding  under the Loan and
     Security Agreement become due and payable in May 2002.

15.  QUARTERLY FINANCIAL DATA (UNAUDITED)

     Selected  financial  information  for the  quarterly  periods for the years
     ended March 31, 1998 and the six months ended March 31, 1997 are  presented
     below (in thousands):

                                                   1998
                          -----------------------------------------------------
                          June 30      September 30    December 31     March 31

Net sales                 $ 44,755       $ 46,593       $ 47,335       $ 42,695
Gross profit                 7,472          8,088          6,675          6,659
Income from operations       3,346          3,928          2,172          2,292
Loss before income taxes      (804)          (484)        (2,160)        (2,050)
Net loss                      (804)          (484)        (2,160)        (2,080)


                                                                 1997
                                                       -------------------------
                                                       December 31     March 31

Net sales                                               $ 20,624       $ 39,905
Gross profit                                               2,561          5,692
Income (loss) from operations                              1,025           (246)
Income (loss) before income taxes and 
     extraordinary item                                      202         (4,104)
Extraordinary item                                                       (4,489)
Net loss                                                     (50)        (7,800)


                                      -18-

<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, 1998 and for the
     year then  ended and as of March 31,  1997,  and for the six  months  ended
     March 31, 1997 is as follows:

<CAPTION>
                                                                                       March 31, 1998
                                                              ---------------------------------------------------------------------
                                                                 CFP
                                                               Holdings              CFP                                 CFP Group,
                                                                 Inc.               Group,                                   Inc.
                                                             Consolidated            Inc.            Eliminations       Consolidated
                                                                                        (In Thousands)
<S>                                                           <C>                 <C>                 <C>                 <C>      
Total current assets                                          $  29,963           $      (4)                              $  29,959
Total noncurrent assets                                         103,120                                                     103,120
Investment in subsidiary                                                              6,047           $  (6,047)
                                                              ---------           ---------           ---------           ---------
Total                                                         $ 133,083           $   6,043           $  (6,047)          $ 133,079
                                                              =========           =========           =========           =========
Total current liabilities                                     $  14,452                                                   $  14,452

Total noncurrent liabilities                                    141,267                                                     141,267

Intercompany (receivable) payable                               (28,683)          $  28,683
                                                              ---------           ---------

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
  Stockholders notes receivable                                                        (203)                                   (203)
  Accumulated deficit                                            (3,523)            (30,779)              3,523             (30,779)
                                                              ---------           ---------           ---------           ---------
Total stockholder's equity
  (deficiency)                                                    4,819             (24,959)             (4,819)            (24,959)
                                                              ---------           ---------           ---------           ---------
Total                                                         $ 133,083           $   6,043           $  (6,047)          $ 133,079
                                                              =========           =========           =========           =========
</TABLE>

                                                                -19-

<PAGE>


<TABLE>
<CAPTION>
                                                                                       Year Ended March 31, 1998
                                                                     -------------------------------------------------------------- 
                                                                        CFP
                                                                      Holdings            CFP                             CFP Group,
                                                                        Inc.             Group,                             Inc.
                                                                    Consolidated          Inc.         Eliminations     Consolidated
                                                                                             (In Thousands)
<S>                                                                  <C>               <C>               <C>              <C>       
Sales                                                                $ 181,378                                            $ 181,378
Cost of sales                                                          152,484                                              152,484
                                                                     ---------                                            --------- 
Gross profit                                                            28,894                                               28,894
Selling, general and administrative
  expenses                                                              17,156                                               17,156
                                                                     ---------                                            --------- 
Income from operations                                                  11,738                                               11,738

Equity in loss of subsidiary                                                           $  (5,528)        $   5,528
Interest expense                                                        17,236                                               17,236
                                                                     ---------         ---------         ---------        --------- 
Loss before income taxes and
  extraordinary item                                                    (5,498)           (5,528)            5,528           (5,498)

Provision for income taxes                                                  30                                                   30
                                                                     ---------         ---------         ---------        --------- 
Loss before extraordinary item                                          (5,528)           (5,528)            5,528           (5,528)
Extraordinary loss on early extinguishment
  of debt
                                                                     ---------         ---------         ---------        --------- 
Net loss                                                             $  (5,528)        $  (5,528)        $   5,528        $  (5,528)
                                                                     =========         =========         =========        ========= 
</TABLE>

                                                                -20-

<PAGE>


<TABLE>
<CAPTION>
                                                                                         March 31, 1997
                                                              ---------------------------------------------------------------------
                                                                CFP
                                                               Holdings             CFP                                  CFP Group,
                                                                 Inc.              Group,                                    Inc.
                                                             Consolidated           Inc.             Eliminations       Consolidated
                                                                                         (In Thousands)
<S>                                                           <C>                 <C>                 <C>                 <C>      
Total current assets                                          $  26,724                                                   $  26,724
Total noncurrent assets                                         106,098                                                     106,098
Investment in subsidiary                                                          $   1,828           $  (1,828)
                                                              ---------           ---------           ---------           ---------
Total                                                         $ 132,822           $   1,828           $  (1,828)          $ 132,822
                                                              =========           =========           =========           =========

Total current liabilities                                     $  12,022                                                   $  12,022

Total noncurrent liabilities                                    137,864                                                     137,864

Intercompany (receivable) payable                               (18,892)          $  18,892
                                                              ---------           ---------
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                                          6,655               3,009              (6,655)              3,009
  Stockholders notes receivable                                                        (337)                                   (337)
  Accumulated deficit                                            (9,251)            (25,251)              9,251             (25,251)
                                                              ---------           ---------           ---------           ---------
Total stockholder's equity
  (deficiency)                                                      600             (19,383)               (600)            (19,383)
                                                              ---------           ---------           ---------           ---------
Total                                                         $ 132,822           $   1,828           $  (1,828)          $ 132,822
                                                              =========           =========           =========           =========
</TABLE>

                                                                -21-

<PAGE>


<TABLE>
<CAPTION>
                                                                                    Six Months Ended March 31, 1997
                                                                      ------------------------------------------------------------- 
                                                                         CFP
                                                                       Holdings           CFP                             CFP Group,
                                                                         Inc.            Group,                             Inc.
                                                                     Consolidated         Inc.         Eliminations     Consolidated
                                                                                               (In Thousands)
<S>                                                                   <C>               <C>               <C>              <C>      
Sales                                                                 $ 60,529                                             $ 60,529
Cost of sales                                                           52,276                                               52,276
                                                                      --------                                             -------- 
Gross profit                                                             8,253                                                8,253
Selling, general and administrative
  expenses                                                               7,474                                                7,474
                                                                      --------                                             -------- 
Income from operations                                                     779                                                  779

Equity in loss of subsidiary                                                            $ (7,850)         $  7,850
Interest expense                                                         4,681                                                4,681
                                                                      --------          --------          --------         -------- 
Loss before income taxes and
  extraordinary item                                                    (3,902)           (7,850)            7,850           (3,902)

Provision for income taxes                                                (541)                                               (541)
                                                                      --------          --------          --------         -------- 
Loss before extraordinary item                                          (3,361)           (7,850)            7,850           (3,361)
Extraordinary loss on early extinguishment
  of debt                                                               (4,489)                                             (4,489)
                                                                      --------          --------          --------         -------- 
Net loss                                                              $ (7,850)         $ (7,850)         $  7,850         $ (7,850)
                                                                      ========          ========          ========         ======== 
</TABLE>

                                                            * * * * * *

(13395)

                                                                -22-