SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-K
(Mark One)

[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934

For the fiscal year ended:       March 31, 1999
                                       or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

For the transition period from              TO
                              -------------    -------------

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

                                 CFP GROUP, INC.
             (Exact Name of Registrant as Specified in Its Charter)
           Delaware                                              95-4616486
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)
                                      2013
                          (Primary Standard Industrial
                          Classification Code Number)

                               CFP HOLDINGS, INC.
             (Exact Name of Registrant as Specified in Its Charter)
           Delaware                                              95-4413619
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)
                                      2013
                          (Primary Standard Industrial
                          Classification Code Number)

                           CUSTOM FOOD PRODUCTS, INC.
             (Exact Name of Registrant as Specified in Its Charter)
         California                                              95-3760291
(State or Other Jurisdiction of                              (I.R.S. Employer
 Incorporation or Organization)                           Identification Number)
                                      2013
                          (Primary Standard Industrial
                          Classification Code Number)

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

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter  period that the registrant was required
to file such reports),  and (2) has been subject to filing  requirements for the
past 90 days.

                           [x] YES                  [ ] NO

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

                                       [x]

         All the outstanding shares of CFP Holdings, Inc., Custom Food Products,
Inc. and QF Acquisition  Corp. are owned by CFP Group, Inc. The aggregate market
value of the voting and non-voting  common equity of CFP Group, Inc. held by non
affiliates  as of June 15, 1999 using an assumed  value of $289.02 per share are
as follows:

            Class                                   Aggregate Market Value
            -----                                   ----------------------
Voting Common Stock - Class A                              $4,913
Non voting common stock - Class A                        $1,561,575
Non voting common stock - Class B                          $138,441

         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.

                                                               Outstanding at
                   Class                                        June 15, 1999
                   -----                                        -------------
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


<PAGE>


                                 CFP GROUP, INC.
                               CFP HOLDINGS, INC.
                           CUSTOM FOOD PRODUCTS, INC.
                              QF ACQUISITION CORP.
               Form 10-K for the Fiscal Year Ended March 31, 1999
                                TABLE OF CONTENTS

PART I                                                                    PAGE #
           Item 1.   Business                                               3
           Item 2.   Properties                                            18
           Item 3.   Legal Proceedings                                     19
           Item 4.   Submission of Matters to a Vote of Security Holders   19

PART II
           Item 5.   Market for Registrant's Common Stock and Related
                     Stockholder Matters                                   19
           Item 6.   Selected Financial Data                               20
           Item 7.   Management's Discussion and Analysis of
                     Financial Condition and Results of Operation          21
           Item 7A.  Quantitative and Qualitative Disclosures about
                     Market Risk                                           29
           Item 8.   Financial Statements and Supplementary Data           30
           Item 9.   Changes in and Disagreements with Accountants
                     on Accounting and Financial Disclosure                30

PART III
           Item 10.  Directors and Executive Officers of the Registrant    30
           Item 11.  Executive Compensation                                32
           Item 12.  Security Ownership of Certain Beneficial
                     Owners and Management                                 41
           Item 13.  Certain relationships and related transactions        42

PART IV
           Item 14.  Exhibits, Financial Statement Schedules and
                     Reports on Form 8-K                                   44

SIGNATURES                                                                 49

                                       2

<PAGE>


Special Note Regarding Forward Looking Information

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

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


Part I

         Item 1.  Business

                  History

                           CFP Group,  Inc.  became the parent of CFP  Holdings,
                  Inc.   ("CFP   Holdings")  on  December  31,  1996  after  the
                  recapitalization  of CFP Holdings 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  Capital,  LTD.  ("First
                  Atlantic"),   a  private   investment  firm   specializing  in
                  acquiring and building middle market companies,  and commenced
                  operations  on  April  1,  1993  after  acquiring  all  of the
                  outstanding  stock of Center of the Plate Foods, Inc. ("Center
                  of the Plate"),  and all significant  operating assets of Best
                  Western  Foods,  Inc.  ("Best  Western").  Best  Western was a
                  leading  supplier  of uncooked  beef to the Arby's  restaurant
                  chain while Center of the Plate  constituted what is today the
                  value-added operations of Custom Food Products,  Inc. ("Custom
                  Foods"),  a wholly owned  subsidiary.  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,  L.P. and its general  partner,  QF  Acquisition  Corp.
                  (collectively  "Quality

                                       3

<PAGE>


                  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.

                           In May 1998, William Del Chiaro, President and CEO of
                  Quality Foods,  was appointed  President and CEO of CFP Group,
                  Inc. Concurrent with Mr. Del Chiaro's appointment, Mr. Richard
                  Griffith,  then the  President  and CEO of the  Custom  Foods,
                  agreed to  retire  at the end of June  1998 and  remain on the
                  Board of Directors.  In addition, Mr. Robert Gioia, previously
                  the President  and CEO of CFP Group,  agreed to continue as an
                  active member of the Board of Directors and agreed to become a
                  consultant to the Company effective June 30, 1998.

                           Since his  appointment  as President and CEO, Mr. Del
                  Chiaro has established and implemented the strategic direction
                  for  the  Company.   He  has  focused  on  consolidating   the
                  operations  of the Company under one  management  team and has
                  begun to build  the  infrastructure  to  support  the  planned
                  growth of the Company.

                  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  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 and Custom Foods.

                  Quality Foods

                           Quality  Foods  is  one  of  the  country's   leading
                  manufacturers of pre-cooked and uncooked,  thinly-sliced  beef
                  used primarily in Philadelphia-style steak sandwiches. It also
                  supplies  sliced chicken  products and pre-cooked and uncooked
                  meatballs  and  hamburger  patties. Quality Foods

                                       4

<PAGE>


                  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  eight
                  regional  sales  people  and six sales  support  personnel  in
                  addition to an established network of independent  foodservice
                  brokers and over 400  foodservice  distributors  located in 42
                  states and six Canadian provinces.

                           In June 1997,  the Company  entered into a three-year
                  supply  agreement with Subway,  through  Subway's  independent
                  purchasing   cooperative.   This  agreement   called  for  the
                  establishment of an exclusive supply agreement between Quality
                  Foods and  Subway for the  "Steak & Cheese"  product.  Quality
                  Foods  had  substantially  all of the  volume  prior  to  this
                  agreement  and has since  supplied  all of Subway's  needs for
                  this  product.  During the fiscal year ended  March 31,  1999,
                  Subway  accounted  for $39.2  million or 21% of the  Company's
                  total  sales.  See "Factors  Affecting  Future  Performance  -
                  Importance of Key Customers."

                           The agreement  which called for fixed pricing for the
                  first  year,  allows  for price  adjustments  every six months
                  thereafter  based  on  the  historical  average  cost  of  raw
                  materials plus a margin which covers the Company's  processing
                  costs and profit.

                           In November 1998,  Quality Foods installed a new oven
                  line to  supplement  the cooking  capacity and enable  Quality
                  Foods to reduce its reliance on an outside  copacker.  Quality
                  Foods  continues to operate its original  oven and is still in
                  the process of refining and improving the  performance  of the
                  new oven line.  It is expected  that  during  fiscal year 2000
                  Quality  Foods  will  operate  both  cook  lines and will have
                  substantially eliminated the reliance on the outside copacker.

                  Custom Foods

                           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
                  microwave  sandwich product lines.  Chef America

                                       5

<PAGE>


                  has  accounted  for a  majority  of  Custom  Foods'  sales  of
                  pre-cooked  products for each of the past several  years.  See
                  "Factors  Affecting  Future  Performance  - Importance  of Key
                  Customers."  Sales to Chef America were $25.9 million,  27% of
                  total  Company  sales for the twelve  month period ended March
                  31, 1997; $28.1 million, 15% of total Company sales, in fiscal
                  year 1998; and $24.3 million,  13% of total Company sales,  in
                  fiscal year 1999. During the last quarter of fiscal year ended
                  March 31,  1998 and  during the first two  quarters  of fiscal
                  year 1999, sales to Chef America declined when compared to the
                  prior  year's  comparable  quarter.  It was learned  that Chef
                  America had obtained  additional sources for its meat products
                  and  was   developing   secondary   suppliers.   Chef  America
                  management  has assured the Company  that it will remain a key
                  ingredient  supplier to Chef  America and during the  quarters
                  ended  December  31,  1998 and  March 31,  1999  sales to Chef
                  America  increased  when  compared with the  comparable  prior
                  year's quarter.  The Company supplies Chef America under a one
                  year pricing arrangement whereby volumes are estimated but not
                  guaranteed  and  prices  are fixed  for the up  coming  twelve
                  calendar  months.  Chef  America  operates on a calendar  year
                  basis and has issued  purchase  orders for  products  from the
                  Company for the 1999 calendar year.

                           Due to capacity  constraints and the growing needs of
                  its customers,  Custom Foods has, over the past several years,
                  significantly  broadened its  operations  with the opening and
                  subsequent  expansion  of a new  facility  in  Kentucky.  With
                  capacity  expansions  substantially  completed,  Custom  Foods
                  created a direct sales and research and development department
                  to  develop  new  business  with  existing  customers  and new
                  customers.  Custom  Foods  plans to focus its efforts on a few
                  key  customers  and  continue  to  expand  by  supplying  meat
                  ingredients to them.

                           In June 1996,  Custom Foods entered into a three year
                  supply  agreement  with  Arby's.  Sales to Arby's  were  $39.0
                  million,  41% of total  Company  sales,  for the twelve  month
                  period  ended  March 31,  1997;  $47.1  million,  26% of total
                  Company sales in fiscal year 1998; and $45.3  million,  25% of
                  total Company sales, in fiscal year 1999.

                           Custom Foods is currently in negotiations with Arby's
                  exclusive   purchasing   cooperative  to  renew  its  existing
                  agreement  on  substantially   similar  terms.   Custom  Foods
                  believes  that a new agreement  will be completed  with Arby's
                  purchasing  cooperative  during the first half of fiscal  year
                  2000, although there can be no assurance in this regard.

                           During the quarter ended March 31, 1999,  the Company
                  began planning for the  installation  of a new computer system
                  to replace the existing  systems at both operating  divisions.
                  The new  "enterprise  wide"  solution  is  expected to provide
                  additional  information  to manage  the  business  and will be
                  operational during fiscal year 2000.

                  Industry

                  Value-Added Meat and Poultry Processors

                                       6

<PAGE>


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

                  Foodservice

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

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

                                       7

<PAGE>


                  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,"  natural  cut  form or  "restructured"
                  form,  whereby natural cuts are ground,  blended or emulsified
                  to  provide a  generally  more  consistent  and lower cost end
                  product. The Company manufactures both pre-cooked and uncooked
                  products in both  portion-controlled  and bulk form, depending
                  upon the specific preparation,  storage or manufacturing needs
                  of the end customer.  Various  sauces,  spices,  marinades and
                  vegetable  mixtures are also used in certain of the  Company's
                  products.

                  Customers and End Purchasers

                           The Company serves several  hundred active  customers
                  including broad line and specialty  foodservice  distributors,
                  packaged foods  manufacturers  and major national and regional
                  restaurant chains.  Arby's  distributors,  Subway distributors
                  and  Chef  America  accounted  for  25%,  21%  and  13% of the
                  Company's  net sales,  respectively,  in fiscal 1999. No other
                  customer accounts for as much as 5% of the Company's net sales
                  during fiscal 1999.

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

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

                                       8

<PAGE>


                  Sales and Marketing

                           During the  fiscal  year ended  March 31,  1999,  the
                  Company organized its sales force into eight regions and added
                  five new regional managers to develop new business and oversee
                  the  Company's  network of  independent  brokers.  The Quality
                  Foods  regional  managers  have  continued to call on national
                  accounts  and manage the  independent  broker  network.  It is
                  expected that the new regional managers will be able to handle
                  new business  development for both operating  divisions of the
                  Company.   Custom  Foods  sales   managers   target   specific
                  industrial   customers   with  a  combination  of  research  &
                  development  and product  expertise  to satisfy the  customers
                  need for meat  products  the  Company  has the  capability  to
                  manufacture.

                  The Sales Force

                           In its  foodservice  sales  operations,  the  Company
                  employs  14  sales  and  sales  support   personnel,   located
                  throughout the United States.  These  individuals  oversee 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  and
                  their  customers,  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 four in-house sales
                  and sales support personnel,  located in California. 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.  Given the customer base, this
                  business is highly  focused  and  targeted  with its  specific
                  products.  The  Company  is in the  process  of  adding to its
                  Research & Development capabilities in order to better service
                  the  industrial  market,  as  well  as  developing  additional
                  products for its foodservice customers.

                  Independent Broker Network

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

                                       9

<PAGE>


                  Manufacturing and Processing

                           The  Company  purchases  whole  cuts of raw  meat and
                  poultry in either  fresh or frozen form and  subjects  them to
                  various processing steps including blending,  forming, cooking
                  and, in some cases,  further processing  including  shredding,
                  cubing,  slicing,  freezing  and the  addition  of sauces  and
                  vegetables.  The  Company  has  developed  highly  specialized
                  products for customers which include  proprietary  recipes and
                  manufacturing  processes  that the Company  believes  would be
                  difficult  for a competitor to  duplicate.  Specialized  large
                  customers  usually  require the Company to develop the recipes
                  and  manufacturing  processes for them to meet their  specific
                  needs or the Company  receives  general  requirements and then
                  develops a product  formulation and  manufacturing  process to
                  produce a product that meets the needs of its customers. These
                  requirements can include specific fat and nutritional content,
                  taste,   texture  and  various   performance   characteristics
                  specific to the customer's manufacturing process.

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

                  Raw Materials and Suppliers

                           The  Company's  principal  raw  materials  consist of
                  fresh and frozen  cuts of beef,  pork and  poultry,  purchased
                  from a variety of local,  national and foreign suppliers.  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.

                           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 a 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.   Whenever  possible  and
                  economical, the Company purchases larger quantities during the
                  low points in the  seasonal  cycle,  forms the product into an
                  intermediate  stage and freezes it for further  processing  as
                  production requirements dictate.

                           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,

                                       10

<PAGE>


                  however, concentrate certain beef and pork purchases to ensure
                  the highest  quality and consistency of product and to improve
                  its overall costs.  For fiscal 1999,  the Company  purchased a
                  significant  amount of its meat and poultry  requirements from
                  divisions  of ConAgra,  Inc.  In  addition,  the Company  will
                  contract  with  suppliers  to provide  product  under  minimum
                  volume and price  commitments  in order to ensure a consistent
                  supply of raw materials.

                  Patents and Trademarks

                           The Company has no material  patents or trademarks on
                  which its  business  depends.  However,  the Company is in the
                  process of branding  its steak  product  under the "Philly Up"
                  brand  name.  As  the  Company's   branding   effort   becomes
                  successful and more widely recognized,  this brand is expected
                  to become valuable to the Company.

                  Competition

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

                  Government Regulatory Matters

                           The  Company is subject to  federal,  state and local
                  health laws and regulations  that establish  standards for the
                  manufacture,  storage,  labeling and transport of  foodstuffs.
                  The  United  States  of  America   Department  of  Agriculture
                  ("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  procedures are designed to assure that its products
                  are  manufactured  under  conditions  that meet or exceed  all
                  applicable government  standards.  Such programs are monitored
                  by federal  inspectors and include:  (i) inspection of meat at
                  various stages of processing,  (ii) temperature monitoring for
                  both fresh and cooked  meat,  (iii),  review and  approval  of
                  labeling  and  (iv)  controlling  and  monitoring  the  use of
                  additives.

                           The  operations  and products of the Company are also
                  subject to state and local regulation through such measures as
                  licensing  of  plants,  enforcement  of health  standards  and
                  inspection  of  the   facilities.   Enforcement   actions  for
                  violations of federal, state and local regulations may include
                  seizure and  condemnation  of  violative  products,  cease and

                                       11

<PAGE>


                  desist  orders,   injunctions,   monetary   penalties   and/or
                  impoundment.  The Company  believes  that its  facilities  and
                  practices are adequate to maintain  compliance with applicable
                  government regulations, although there can be no assurances in
                  this regard.

                  Employees

                           As of March 31, 1999,  the Company had  approximately
                  600 employees.  Approximately  356 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.  The  Company  will be
                  negotiating new contracts with this union in the near term and
                  there can be no assurance  that the Company will be successful
                  in negotiating new contracts.

                  Factors Affecting Future Performance

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

                  Significant Leverage and Indebtedness Service

                           The  Company  incurred  substantial  indebtedness  in
                  connection  with the financing of the  acquisition  of Quality
                  Foods  and is  highly  leveraged.  As of  March  31,  1999 the
                  Company  had  total   consolidated   indebtedness   (including
                  capitalized lease obligations) of approximately $147.0 million
                  and a stockholders'  deficiency of $28.5 million.  Outstanding
                  debt at March 31,  1999  primarily  relates to $115.0  million
                  outstanding  principal amount of 11.625% Senior Notes due 2004
                  (the "Senior Notes") and borrowings under a $40.0 million loan
                  security  agreement  (the  "Loan  and  Security   Agreement").
                  Subject to the restrictions in the Loan and Security Agreement
                  and  the  Senior   Notes   Indenture,   the  Company  and  its
                  subsidiaries  may incur additional  indebtedness  from time to
                  time to finance capital  expenditures and acquisitions and for
                  other general corporate purposes. See "Management's Discussion
                  and   Analysis   of   Financial   Condition   and  Results  of
                  Operations."

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

                                       12

<PAGE>


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

                  Importance of Key Customers

                           Certain  customers  are  material to the business and
                  operations  of  the  Company.   Arby's  distributors,   Subway
                  distributors  and Chef America  accounted for 25%, 21% and 13%
                  of the Company's net sales,  respectively,  in fiscal 1999. No
                  other  customer  accounted  for as much as 5% of the Company's
                  net sales during the fiscal year.

                           The Company's  prospects will continue to depend upon
                  the  success  of the  Subway and Chef  America  products  that
                  incorporate meats provided by the Company, as well as Subway's
                  and  Chef  America's  retention  of  the  Company  as a  major
                  supplier.  Although the Company believes that it has excellent
                  relationships with these customers and that such relationships
                  are mutually beneficial, the Company does not have a long-term
                  agreement  with Chef  America  and its  agreement  with Subway
                  expires in June 2000.  The  Company's  agreement  with  Arby's
                  expires  in June  1999.  The loss of any as a  customer,  or a
                  significant  reduction in the  Company's  business with any of
                  them,  would have a material  adverse  effect on the  Company.
                  During the last  quarter of fiscal  year ended  March 31, 1998
                  and during the first two  quarters  of fiscal year ended March
                  31, 1999,  sales to Chef America declined when compared to the
                  prior  year's  comparable  quarter.  It was learned  that Chef
                  America had obtained  additional sources for its meat products
                  and  was   developing   secondary   suppliers.   Chef  America
                  management  has assured the Company  that it will remain a key
                  ingredient  supplier to Chef  America and during the  quarters
                  ended December 31, 1998 and March 31, 1999 sales  increased to
                  Chef America when  compared with the  comparable  prior year's
                  quarters. The Company believes it has a good relationship with
                  all of its  customers,  including Chef America.  However,  the
                  loss of business  from any key customer  could have a negative
                  impact on the Company.

                           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.   While  the  Company   believes  that  it  will  be

                                       13

<PAGE>


                  successful in  negotiating a new agreement  with Arby's in the
                  first half of fiscal year 2000,  no assurance  can be given in
                  this regard.

                  Competition

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

                  General Risks of Food Industry

                           The food  industry,  and the markets  within the food
                  industry in which the Company competes, are subject to various
                  risks,   including:   adverse  changes  in  general   economic
                  conditions;  evolving  consumer  preferences;  nutritional and
                  health-related   concerns;   federal,  state  and  local  food
                  inspection and processing controls; consumer product liability
                  claims;  risks of product tampering;  and the availability and
                  expense  of   liability   insurance.   The  meat  and  poultry
                  industries  have recently been subject to increasing  scrutiny
                  due to the  association  of meat  and  poultry  products  with
                  recent outbreaks of illness, and on rare occasions even death,
                  caused by  foodborne  pathogens  such as E. coli,  Salmonella,
                  Listeria  monocytogenes  and others which are found in raw and
                  improperly  cooked meat.  Consumer demand for meat and poultry
                  fluctuates as the result of such outbreaks of illness. Product
                  recalls  are  sometimes  required  in  the  meat  and  poultry
                  industries to withdraw  contaminated  or  mislabeled  products
                  from the market.  The Company has not  experienced any product
                  recalls;  however,  there can be no  assurance  that a product
                  recall may not be required in the future.

                  Suppliers and Raw Materials

                           The Company  purchases large  quantities of commodity
                  beef,  pork  and  poultry.  Historically,  market  prices  for
                  products  processed by the Company have fluctuated in response
                  to a number of factors, including changes in the United States
                  government  farm support  programs,  changes in  international
                  agricultural   and   trading   policies,   weather  and  other
                  conditions  during the growing  and  harvesting  seasons.  The
                  Company  historically  has  been  able  to pass  through  some
                  increases  in the  prices  of beef,  pork and  poultry  to end
                  users.  Failure to pass on significant  price increases to its
                  customers for a prolonged period of time would have a material
                  adverse  effect  on  the  Company.  Further,  certain  of  the

                                       14

<PAGE>


                  Company's customers,  including Subway and Chef America,  have
                  fixed price  arrangements  for  certain  products in which the
                  sale price is fixed for  periods  of up to one year.  Although
                  the fixed price  arrangements  for Subway and Chef America are
                  for a targeted  quantity of products,  there is no requirement
                  to  deliver  the  products  until a  purchase  order is issued
                  establishing  quantity and delivery time. Should the prices of
                  raw materials increase substantially for a prolonged period of
                  time,  the Company  could be  required to deliver  products to
                  these  customers  at lower  gross  margins  than  historically
                  achieved.

                  Government Regulation

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

                  Dependence on Key Management

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

                                       15

<PAGE>


                  Controlling Stockholder

                           Atlantic  Equity  Partners,  LP, a  Delaware  limited
                  partnership ("AEP"), of which First Atlantic is the investment
                  manager,  owns 38.0% and 97.2% of the Company's  fully-diluted
                  common  stock  and  voting  common  stock,  respectively.   As
                  controlling  stockholder,  AEP is  able,  subject  to  certain
                  contractual  limitations,  to  determine  the  outcome  of any
                  corporate   transaction  or  other  matter  submitted  to  the
                  stockholders of the Company for approval,  including  mergers,
                  consolidations  or the sale of all or substantially all of the
                  assets of the Company,  or any of its subsidiaries  (including
                  the  Company).  In  addition,  AEP has the  ability to elect a
                  majority of the Company's Board of Directors and the Boards of
                  Directors of its subsidiaries.


                  Year 2000

                  Introduction

                           The term "Year 2000 issue" is a general  term used to
                  describe  the  various  problems  that  may  result  from  the
                  improper  processing of dates and date sensitive  calculations
                  by  computers  and  other   equipment  as  the  year  2000  is
                  approached and reached.  These problems  generally  arise from
                  the  fact  that  computers  and  equipment  historically  used
                  two-digit  fields that  recognize  dates using the  assumption
                  that the first  two  digits  are "19".  On  January  1,  2000,
                  systems  using  two-digit  date fields could  recognize a date
                  using  "00"  as 1900  rather  than  the  year  2000,  creating
                  erroneous results or system failures.

                  Company's State of Readiness

                           The  Company has  selected a new Year 2000  compliant
                  Enterprise  Wide  System;  the  Ross  Systems  Renaissance  CS
                  Enterprise  Resource  Planning  System  ("Ross  System").  The
                  Company believes that  implementation  of the Ross System will
                  address the major Year 2000  issues.  The  Company's  plan for
                  addressing  the  remainder of its Year 2000 issues  focuses on
                  the following areas: technical  infrastructure (e.g. networks,
                  servers,   desktop  and  laptop  computers);   vendor/customer
                  interfaces; facilities; and third party suppliers, vendors and
                  customers.  The Year 2000  project  consists of the  following
                  phases:  (1)  conduct  an  inventory  of items  with Year 2000
                  implications;  (2)  assessment  of Year 2000  compliance;  (3)
                  remediation or replacement of items that are determined not to
                  be Year 2000 compliant; (4) testing (including verification of
                  remediated or replaced items);  and (5)  certification of Year
                  2000 compliancy.  The initial inventory phase is complete. The
                  assessment phase is substantially completed with the exception
                  of  the  vendor  disclosure/certification.   The  Company  has
                  initiated  formal  communications  with  selected  vendors and
                  customers  to  determine  the  extent to which the  Company is
                  vulnerable.  This dialogue shall continue throughout the third
                  quarter of fiscal year 2000 to minimize the probability of any
                  service interruption.  The remediation and testing phases will
                  progress  through the first and second  quarter of fiscal year
                  2000.  The

                                       16

<PAGE>


                  Company  currently  plans to complete its  internal  Year 2000
                  project by the  beginning  of the third  quarter  fiscal  year
                  2000.

                  Costs

                           The  Company  expended  $291,000  on the Ross  System
                  implementation  through March 31, 1999. The Company  currently
                  estimates   that  the  aggregate   cost  of  its  Ross  System
                  implementation  project  will be $1.3  million,  although  the
                  amount   could  be  greater.   The  cost   estimate   includes
                  expenditures  incurred  pursuant to the  Company's  technology
                  upgrade and business process reengineering  programs occurring
                  concurrently but not directly related to Year 2000 issues.  In
                  addition,  a portion of the estimated  total costs of the Ross
                  System  implementation  will  be  funded  by  reallocation  of
                  existing resources rather than in incurring incremental costs.
                  This  reallocation  of  resources  is not  expected  to have a
                  significant  impact  on  the  day-to-day   operations  of  the
                  Company.  The  Company's  aggregate  cost  estimate  does  not
                  include  costs that may be incurred by the Company as a result
                  of the failure of any third parties,  including suppliers,  to
                  become Year 2000 ready or costs to implement  any  contingency
                  plans. Such costs may be material.

                  Risks

                           The Company  believes that the completion of its Ross
                  System and Year 2000  projects  as planned  will result in the
                  Company being Year 2000 compliant in a timely manner. However,
                  the  failure  to correct a material  Year 2000  problem  could
                  result in an interruption  in, or a failure of, certain normal
                  business activities or operations,  which could materially and
                  adversely   affect  the  Company's   results  of   operations,
                  liquidity  and  financial  condition.  In  addition,  if third
                  parties  that provide  goods or services  that are critical to
                  the Company's  business  activities fail to adequately address
                  their  Year 2000  issues,  there  could be a similar  material
                  adverse effect on the Company.  The Company  believes that its
                  most  reasonably  likely worst case scenario is the failure of
                  such a third  party.  Such a  failure  could  result  in,  for
                  example,  the  inability  of the  Company to ship  product,  a
                  decrease in customer orders,  or delays in product  deliveries
                  from vendors.  The Company  believes that, with the completion
                  of its Year  2000  project,  the  possibility  of  significant
                  interruptions  of normal  operations  should be  reduced.  The
                  Company also believes that the level of uncertainty  about the
                  Year 2000  compliance  and readiness of material third parties
                  ("External  Parties")  should  diminish  through the first and
                  second quarter of fiscal year 2000.

                  Contingency Plans

                           As part of the Company's Year 2000 project,  specific
                  contingency  plans are being  developed.  The Company  expects
                  that these  plans will  continue to be modified as the Company
                  obtains   additional   information   regarding  the  Company's
                  internal  systems and  equipment  during the  remediation  and
                  testing  phases  and  regarding  the  status  of the Year 2000

                                       17

<PAGE>


                  readiness of External Parties. The Company expects these plans
                  to be finalized by the date of  completion  of all other areas
                  of the Year 2000 projects.

                           As a normal course of business, the Company maintains
                  and deploys contingency plans as part of its disaster recovery
                  program  designed  to  address  various   potential   business
                  interruptions.  These plans may be  applicable  to address the
                  failure of  External  Parties to provide  goods or services to
                  the  Company  as a result  of their  failure  to be Year  2000
                  ready.  During fiscal year 2000, the Company intends to expand
                  its  disaster  recovery  program  to cover  systems  for which
                  detailed contingency plans do not currently exist.

                           Readers are cautioned that forward-looking statements
                  contained   under  "Year  2000  issues"   should  be  read  in
                  conjunction with the Company's  disclosures under the heading:
                  "Special Note Regarding  Forward-Looking  Information" on page
                  three.

         Item 2.  Properties

                  The  following  table  sets  forth  the  Company's   principal
         facilities:

                                                         Owned/        Square
Location                   Purpose                       Leased        Footage
--------                   -------                       ------        -------
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

                  The Company also has a 45,000  square foot facility in Camden,
                  NJ that  was  closed  in March  1998.  The  Company's  current
                  intention is to sell this facility, however there have been no
                  formal offers to purchase 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.

                                       18

<PAGE>


         Item 3.  Legal Proceedings

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

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


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

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


Part II

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

                           There is no established public trading market for the
                  Company's  Voting  Class A  Common  Stock,  Nonvoting  Class A
                  Common Stock or Nonvoting Class B Common Stock. As of June 15,
                  1999  there were  seven  holders  of record of Voting  Class A
                  Common  Stock,  there were 15  holders of record of  Nonvoting
                  Class A Common Stock and there were seven holders of record of
                  Nonvoting  Class B Common Stock.  The Company has not declared
                  dividends in the last two fiscal years and does not anticipate
                  doing   so  in  the   foreseeable   future.   For   additional
                  information,  see  "Security  Ownership of Certain  Beneficial
                  Owners and Management" in this Annual Report of Form 10-K.

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

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

                                    In January 1997, (i) in connection  with the
                           recapitalization of CFP Holdings,  each person owning
                           capital stock (or options to acquire capital stock of
                           CFP Holdings)  exchanged  their equity  interests for
                           equivalent  interests of capital stock (or options to
                           acquire capital stock) of CFP Group; (ii) the Company
                           issued  720  shares of its  Nonvoting  Class B Common
                           Stock  to a group of  Quality  Foods  management  for
                           $500,000 with the Company receiving  promissory notes
                           totaling  $343,000 as partial  consideration for such
                           sale;  (iii) the  Company  issued  439  shares of

                                       19

<PAGE>


                           its  Nonvoting  Class  B  Common  Stock,   valued  at
                           $304,583 for $.01 per share to NationsBridge,  L.L.C.
                           in exchange  for  services;  (iv) the Company  issued
                           4,538  shares of its  Nonvoting  Class A Common Stock
                           valued   at   $1,722,520   upon   the   exercise   by
                           NationsCredit    Commercial   Corporation   and   CFP
                           Associates   of  warrants   issued  in  exchange  for
                           services;  and (v) the Company issued 2,546 shares of
                           its Nonvoting  Class A Common Stock for $735,845 to a
                           group of  employees  of the  Company  when  Incentive
                           Stock Options were exercised in conjunction  with the
                           payment  of a  special  dividend  by the  Company  in
                           connection with the offering of the Senior Notes.

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

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


         Item 6.  Selected Financial Data

<TABLE>
                           The following Selected Consolidated Financial Data of
                  the   Company   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, 1994,  1995 and 1996,  and March 31, 1997,  1998 and 1999,
                  and the statement of operations  data presented  below for the
                  years ended  September  30,  1994,  1995 and 1996,  six months
                  ended March 31,  1997,  and for the years ended March 31, 1998
                  and 1999, are derived from the audited consolidated  financial
                  statements of the Company.

<CAPTION>
                                                                                        Six
                                                                                       Months
                                                                                        Ended               Years Ended
                                               Years Ended September 30,                March 31,             March 31,
                                         1994            1995            1996            1997            1998            1999
                                       ---------       ---------       ---------       ---------       ---------       ---------
                                                                     (dollars in thousands)
<S>                                    <C>             <C>             <C>             <C>             <C>             <C>
Statement of Operations Data:
Net sales                              $  86,598       $  61,543(1)    $  65,996       $  60,529       $ 181,378       $ 183,164
Cost of Sales                             76,485          49,868          53,818          52,276         152,484         147,518
                                       ---------       ---------       ---------       ---------       ---------       ---------
Gross profit                              10,113          11,675          12,178           8,253          28,894          35,646
Selling, general and
  administrative expenses                  5,957           6,700           5,512           7,474          17,156          20,411
Other Charges                                                              4,996(2)
                                       ---------       ---------       ---------       ---------       ---------       ---------
Income from operations                     4,156           4,975           1,670             779          11,738          15,235
Interest expense                           2,443           2,632           3,232           4,681          17,236          17,322
                                       ---------       ---------       ---------       ---------       ---------       ---------
Income (loss) before income
  taxes and extraordinary items            1,713           2,343          (1,562)         (3,902)         (5,498)         (2,087)
Provision (benefit)
  for income taxes                           851           1,189            (409)           (541)             30             467
                                       ---------       ---------       ---------       ---------       ---------       ---------
Income (loss) before
extraordinary item                           862           1,154          (1,153)         (3,361)         (5,528)         (2,554)
Extraordinary loss on
  early extinguishment of debt                                                            (4,489)(3)                      (1,003)(4)
                                       ---------       ---------       ---------       ---------       ---------       ---------

                                                                 20

<PAGE>


Net Income (loss)                      $     862       $   1,154       $  (1,153)      $  (7,850)      $  (5,528)      $  (3,557)
                                       =========       =========       =========       =========       =========       =========
Other Data:

EBITDA (5)                             $   6,003       $   6,685       $   3,758       $   3,026       $  18,484       $  22,224
Net cash provided by
  operating activities                     4,375           4,382             135           3,477             661           4,244
Net cash used in
investing activities                        (666)         (1,785)         (1,811)        (67,293)         (3,754)         (6,643)
Net cash (used in)
  provided by
  financing activities                    (3,499)         (2,807)          2,168          65,462           2,298           2,875
Depreciation and
  amortization                         $   1,847       $   1,710       $   2,088       $   2,236       $   6,732       $   6,733
Interest expense                           2,443           2,632           3,232           4,681          17,236          17,322
Capital expenditures                       1,515           5,054           3,009           1,674           5,489           6,104
Ratio of earnings to
  fixed charges (6)                         1.64x           1.83x
Balance Sheet  Data:
Working capital                        $   4,309       $   2,754       $   3,153       $  14,702       $  15,373       $  18,093
Total assets                              27,709          30,148          32,203         132,822         133,079         136,404
Total debt, redeemable
  preferred stock and
  redeemable common stock                 18,847          19,526          23,223         142,174         145,818         149,327
Total stockholders
  equity (deficiency)                      4,828           5,884           4,020         (19,383)        (24,959)        (28,516)

<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.

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

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

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

(6)      In calculating the ratio of earnings to fixed charges, earnings consist
         of income before income taxes plus fixed charges. Fixed charges consist
         of interest (which includes  amortization of deferred  financing costs)
         and one-third of rental expense,  deemed representative of that portion
         of rental expense estimated to be attributable to interest.  A ratio of
         earnings to fixed charges is not presented for the year ended September
         30, 1996,  the six months ended March 31, 1997 or the years ended March
         31,  1998 and  1999,  as  earnings  were not  adequate  to cover  fixed
         charges.  The  deficiency  of earnings to cover fixed charges were $1.6
         million for the fiscal year ended  September 30, 1996, $3.9 million for
         the six month period ended March 31, 1997,  $5.5 million for the fiscal
         year ended  March 31,  1998 and $3.6  million for the fiscal year ended
         March 31, 1999
</FN>
</TABLE>


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

                  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 twelve
                  month  period  ended  March  31,  1997  in  order  to  provide
                  meaningful  comparisons  to the audited  results of

                                       21

<PAGE>
                  operations for the fiscal years ended March 31, 1998 and 1999.
                  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
                  period.

<TABLE>
                           Comparison of the  referenced  periods is affected by
                  the   timing   of   the   Quality   Foods   acquisition   (the
                  "Acquisition"),  which was  completed in December  1996.  As a
                  result, the twelve-month  period ended March 31, 1997 includes
                  results  from  operations  for  Quality  Foods for only  three
                  months. Additionally,  the twelve month period ended March 31,
                  1997  includes  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 years  ended  March 31,  1998 and 1999
                  include a full  twelve-months of Quality Foods' operations and
                  goodwill  amortization  expense  and  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.
                  Amortization   of  intangible   assets   resulting   from  the
                  Acquisition   approximates   $3.1  million   annually  through
                  December 2016.

<CAPTION>
                                                                                 Year Ended March 31,
                                                                      1997                 1998                1999
                                                                    ---------           ---------           ---------
                                                                   (unaudited)
<S>                                                                 <C>                 <C>                 <C>
Statement of Operations Data:
Net sales                                                           $  96,190           $ 181,378           $ 183,164
Cost of Sales                                                          82,328             152,484             147,518
                                                                    ---------           ---------           ---------
Gross profit                                                           13,862              28,894              35,646
Selling, general and administrative expenses                           10,043              17,156              20,411
                                                                    ---------           ---------           ---------
Income from operations                                                  3,819              11,738              15,235
Interest expense                                                        6,401              17,236              17,322
                                                                    ---------           ---------           ---------
Income (loss) before income taxes and extraordinary items              (2,582)             (5,498)             (2,087)
Provision (benefit) for income taxes                                     (288)                 30                 467
                                                                    ---------           ---------           ---------
Income (loss) before extraordinary item                                (2,294)             (5,528)             (2,554)
Extraordinary (loss) on early extinguishment of debt                   (4,489)                                 (1,003)
                                                                    ---------           ---------           ---------
Net income (loss)                                                   $  (6,783)          $  (5,528)          $  (3,557)
Other Data:

Net sales
  Value-added                                                       $  57,191           $ 134,846           $ 137,885
  Arby's                                                               38,999              46,532              45,279
                                                                    ---------           ---------           ---------
     Total                                                          $  96,190           $ 181,378           $ 183,164
                                                                    =========           =========           =========
Pounds sold                                                            69,042             106,722             108,315
  Average net sales price per pound                                 $    1.39           $    1.70           $    1.69
  Average gross profit per pound                                    $    0.20           $    0.27           $    0.33


                                                                                 Year Ended March 31,
                                                                      1997                 1998                1999
                                                                    ---------           ---------           ---------
Statement of Operations Data:
Net sales                                                              100.0%              100.0%              100.0%
Cost of Sales                                                           85.6                84.1                80.5
                                                                       -----               -----               -----
Gross profit                                                            14.4                15.9                19.5
Selling, general and administrative expenses                            10.4                 9.4                11.1
                                                                       -----               -----               -----
Income from operations                                                   4.0                 6.5                 8.4
Interest expense                                                         6.7                 9.5                 9.5
                                                                       -----               -----               -----
Income (loss) before income taxes and extraordinary items               (2.7)               (3.0)               (1.1)
Provision (benefit) for income taxes                                    (0.3)                                    0.3
                                                                       -----               -----               -----
Income (loss) before extraordinary item                                 (2.4)               (3.0)               (1.4)
Extraordinary (loss) on early extinguishment of debt                    (4.7)                                   (0.5)
                                                                       -----               -----               -----
Net income (loss)                                                       (7.1)%              (3.0)%              (1.9)%
                                                                       =====               =====               =====
</TABLE>

                                                            22
<PAGE>


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

                           Net Sales.  Net sales increased by $1.8 million or 1%
                  to $183.2  million  for the year  ended  March  31,  1999 when
                  compared to $181.4 million for the fiscal year ended March 31,
                  1998.  Total  pounds  sold  by the  Company  increased  by 1.6
                  million  pounds or 1.5% for the year ended March 31, 1999 when
                  compared to the year ended March 31,  1998.  This  increase in
                  net  sales  reflects  an  overall  increase  in  sales  of the
                  Company's  Quality Foods  division,  offset in large part by a
                  decrease in sales from the Custom Foods division. The increase
                  in sales at Quality  Foods was a result of  increases in sales
                  of its value  added  products.  The  decrease  in net sales at
                  Custom  Foods was a result of  decreased  sales of value added
                  products  and the  reduced  sales  prices of its  value  added
                  products as a result of the cost plus  nature of the  contract
                  with Arby's.  Approximately  $1.2 million of the reduced sales
                  at Custom  Foods was a result of the lower  prices  charged to
                  Arby's due to the lower  prices  paid for raw  materials.  The
                  decrease in sales of Custom Foods' value added  business was a
                  result of a reduction in sales to one of Custom Foods  largest
                  customers,  Chef America.  Commencing with the last quarter of
                  fiscal year 1998 and continuing  through the second quarter of
                  fiscal year 1999 sales to Chef America declined.  However,  as
                  of March 31, 1999, the growth in other value added business of
                  the  Company  had offset the impact of the decline in sales to
                  Chef  America  and  the  comparable  quarterly  sales  to Chef
                  America  increased during the quarters ended December 31, 1998
                  and March 31, 1999. The net sales price decreased to $1.69 per
                  pound from $1.70 per pound as a result of the above changes.

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

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

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

                                       23

<PAGE>


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

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

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

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

                  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 fiscal year ended March 31, 1998 when  compared to
                  the twelve month  period  ended March 31, 1997.  Approximately
                  $65.3  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
                  second  quarter  of  fiscal  year  1999  sales  to  one of the
                  Company's largest  customers,  Chef America,  declined.  Total
                  revenue 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.  Total  pounds sold by the Company  increased  37.7
                  million pounds or 55% for the fiscal year ended March 31, 1998
                  when compared to the twelve month period ended March 31, 1997.
                  Approximately  30.3 million pounds of this increase relates to
                  the sales  generated from Quality Foods.  Excluding the impact
                  of the  acquisition  of  Quality,  pounds sold  increased  5.8
                  million  pounds or 9.5% at Custom  Foods for the  fiscal  year
                  ending  March 31,  1998.  The net sales price  increased  from
                  $1.65 per pound to $1.70 per pound as a result of an  increase
                  in sales of the Company's value-added products.

                                       24

<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 9.4%.  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  satisfy   internal   and   external   reporting
                  requirements,  to refocus  sales and  marketing  efforts,  and
                  increased  legal,  accounting and other  professional  service
                  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  in the twelve
                  months  ended March 31,  1997 to $11.7  million in fiscal year
                  1998 as a result of the factors discussed above.

                           Interest Expense. Interest expense increased by $10.8
                  million to $17.2 million in fiscal year 1998 from $6.4 million
                  in the twelve  months  ended March 31,  1997.  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 year ended March 31,
                  1998 from  ($288,000) for the prior 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 related 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.

                                       25

<PAGE>


                           Net Loss. A net loss of $5.5 million was incurred for
                  the fiscal year ended March 31, 1998 versus a net loss of $6.8
                  million for the twelve month period  ending March 31, 1997 due
                  to the net impact of the foregoing.

                  Liquidity and Capital Resources.

                           The Company's  total  consolidated  indebtedness  was
                  $147.0  million at March 31, 1999,  principally  consisting of
                  $115 million in Senior Notes and $18.3  million in  borrowings
                  under the Loan and Security  Agreement (the "Loan and Security
                  Agreement")  as well as various  notes  payable to  government
                  agencies  and capital  leases.  Borrowings  under the Loan and
                  Security  Agreement consist of a $10.0 million term loan, $5.8
                  million of  revolving  credit  borrowings  and $2.5 million in
                  equipment loans. The Loan and Security  Agreement provides for
                  a $10.0 million term loan and a revolving  credit  facility up
                  to $30.0  million,  subject  to a  borrowing  base  and  other
                  limitations,  including amounts  outstanding under term loans,
                  equipment  loans,   letter  of  credit,  and  other  borrowing
                  instruments under the Loan and Security Agreement. All amounts
                  outstanding  under the Loan and Security  Agreement become due
                  and payable in May 2002.

                           Borrowings under the Loan and Security  Agreement are
                  secured  by  substantially   all  of  the  Company's   assets,
                  including  a pledge  of all the  stock of  Quality  Foods  and
                  Custom Foods,  are  guaranteed by the Company's  subsidiaries,
                  which  guarantees  are  secured  by  substantially  all of the
                  assets of the Company's subsidiaries,  and are further secured
                  by a pledge of all the stock of CFP Holdings.

                           The 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.

                           Net cash provided by operating  activities  increased
                  to $4.2  million in fiscal 1999 from  $661,000 in fiscal 1998,
                  primarily  reflecting the improvement in operations.  Net cash
                  used in  investing  activities  increased  to $6.6  million in
                  fiscal  1999 from $3.8  million in fiscal  1998.  Fiscal  1998
                  investment activity included $1.1 million from the proceeds of
                  a sale  leaseback  transaction.  Cash  provided  by  financing
                  activities  increased from $2.3 million in fiscal 1998 to $2.9
                  million in fiscal  1999.  For the six months  ended  March 31,
                  1997 the Company reported $3.5 million in net cash provided by
                  operating activities, $67.3 million net cash used in investing
                  activities and $65.5 million in net cash provided by financing
                  activities.  The net cash used in investing activities and the
                  net cash

                                       26

<PAGE>


                  provided  by  financing  activities  for the six months  ended
                  March 31, 1997 relate to the Quality Foods acquisition and the
                  substantial indebtedness incurred with the financing thereof.

                           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  2000,  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, 1999 the Company
                  spent  $6.6  million  on  capital  expenditures.  The  Company
                  presently anticipates that its capital expenditures for fiscal
                  2000 will be between $6.0 million and $7.0 million.

                           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 Loan and Security Agreement.


                  Year 2000

                  Introduction

                           The term "Year 2000 issue" is a general  term used to
                  describe  the  various  problems  that  may  result  from  the
                  improper  processing of dates and date sensitive  calculations
                  by  computers  and  other   equipment  as  the  year  2000  is
                  approached and reached.  These problems  generally  arise from
                  the  fact  that  computers  and  equipment  historically  used
                  two-digit  fields that  recognize  dates using the  assumption
                  that the first  two  digits  are "19".  On  January  1,  2000,
                  systems  using  two-digit  date fields could  recognize a date
                  using  "00"  as 1900  rather  than  the  year  2000,  creating
                  erroneous results or system failures.

                  Company's State of Readiness

                           The  Company has  selected a new Year 2000  compliant
                  Enterprise  Wide  System;  the  Ross  Systems  Renaissance  CS
                  Enterprise  Resource  Planning  System  ("Ross  System").  The
                  Company believes that  implementation  of the Ross System will
                  address the major Year 2000  issues.  The  Company's  plan for
                  addressing  the  remainder of its Year 2000 issues  focuses on
                  the following areas: technical  infrastructure (e.g. networks,
                  servers,   desktop  and  laptop  computers);   vendor/customer

                                       27

<PAGE>


                  interfaces; facilities; and third party suppliers, vendors and
                  customers.  The Year 2000  project  consists of the  following
                  phases:  (1)  conduct  an  inventory  of items  with Year 2000
                  implications;  (2)  assessment  of Year 2000  compliance;  (3)
                  remediation or replacement of items that are determined not to
                  be Year 2000 compliant; (4) testing (including verification of
                  remediated or replaced items);  and (5)  certification of Year
                  2000 compliancy.  The initial inventory phase is complete. The
                  assessment phase is substantially completed with the exception
                  of  the  vendor  disclosure/certification.   The  Company  has
                  initiated  formal  communications  with  selected  vendors and
                  customers  to  determine  the  extent to which the  Company is
                  vulnerable.  This dialogue shall continue throughout the third
                  quarter of fiscal year 2000 to minimize the probability of any
                  service interruption.  The remediation and testing phases will
                  progress  through the first and second  quarter of fiscal year
                  2000.  The Company  currently  plans to complete  its internal
                  Year 2000 project by the beginning of the third quarter fiscal
                  year 2000.

                  Costs

                           The  Company  expended  $291,000  on the Ross  System
                  implementation  through March 31, 1999. The Company  currently
                  estimates   that  the  aggregate   cost  of  its  Ross  System
                  implementation  project  will be $1.3  million,  although  the
                  amount   could  be  greater.   The  cost   estimate   includes
                  expenditures  incurred  pursuant to the  Company's  technology
                  upgrade and business process reengineering  programs occurring
                  concurrently but not directly related to Year 2000 issues.  In
                  addition,  a portion of the estimated  total costs of the Ross
                  System  implementation  will  be  funded  by  reallocation  of
                  existing resources rather than in incurring incremental costs.
                  This  reallocation  of  resources  is not  expected  to have a
                  significant  impact  on  the  day-to-day   operations  of  the
                  Company.  The  Company's  aggregate  cost  estimate  does  not
                  include  costs that may be incurred by the Company as a result
                  of the failure of any third parties,  including suppliers,  to
                  become Year 2000 ready or costs to implement  any  contingency
                  plans. Such costs may be material.

                  Risks

                           The Company  believes that the completion of its Ross
                  System and Year 2000  projects  as planned  will result in the
                  Company being Year 2000 compliant in a timely manner. However,
                  the  failure  to correct a material  Year 2000  problem  could
                  result in an interruption  in, or a failure of, certain normal
                  business activities or operations,  which could materially and
                  adversely   affect  the  Company's   results  of   operations,
                  liquidity  and  financial  condition.  In  addition,  if third
                  parties  that provide  goods or services  that are critical to
                  the Company's  business  activities fail to adequately address
                  their  Year 2000  issues,  there  could be a similar  material
                  adverse effect on the Company.  The Company  believes that its
                  most  reasonably  likely worst case scenario is the failure of
                  such a third  party.  Such a  failure  could  result  in,  for
                  example,  the  inability  of the  Company to ship  product,  a
                  decrease in customer orders,  or delays in product  deliveries
                  from vendors.  The Company  believes that, with the

                                       28

<PAGE>


                  completion  of its  Year  2000  project,  the  possibility  of
                  significant  interruptions  of  normal  operations  should  be
                  reduced.   The  Company  also   believes  that  the  level  of
                  uncertainty  about the Year 2000  compliance  and readiness of
                  material third parties  ("External  Parties")  should diminish
                  through the first and second quarter of fiscal year 2000.

                  Contingency Plans

                           As part of the Company's Year 2000 project,  specific
                  contingency  plans are being  developed.  The Company  expects
                  that these  plans will  continue to be modified as the Company
                  obtains   additional   information   regarding  the  Company's
                  internal  systems and  equipment  during the  remediation  and
                  testing  phases  and  regarding  the  status  of the Year 2000
                  readiness of External Parties. The Company expects these plans
                  to be finalized by the date of  completion  of all other areas
                  of the Year 2000 projects.

                           As a normal course of business, the Company maintains
                  and deploys contingency plans as part of its disaster recovery
                  program  designed  to  address  various   potential   business
                  interruptions.  These plans may be  applicable  to address the
                  failure of  External  Parties to provide  goods or services to
                  the  Company  as a result  of their  failure  to be Year  2000
                  ready.  During fiscal year 2000, the Company intends to expand
                  its  disaster  recovery  program  to cover  systems  for which
                  detailed contingency plans do not currently exist.

                           Readers are cautioned that forward-looking statements
                  contained   under  "Year  2000  issues"   should  be  read  in
                  conjunction with the Company's  disclosures under the heading:
                  "Special Note Regarding  Forward-Looking  Information" on page
                  three.

                  Inflation

                           Management  does not believe that  inflation  had any
                  material  impact upon its  business for the fiscal years March
                  31, 1999 and 1998, and the twelve months ended March 31, 1997.


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

                  Long-term Debt

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

<TABLE>
                           The  table  below  provides  information   concerning
                  long-term  debt  outstanding  at  March  31,  1999,  including
                  principal  amounts  maturing each year,  average interest rate
                  and fair value.


                                       29
<PAGE>

<CAPTION>
                                                                                                                            Total
                              2002       2001        2002           2003         2004      Thereafter        Total       Fair Value
                              ----       ----        ----           ----         ----      ----------        -----       ----------
<S>                        <C>         <C>         <C>        <C>             <C>          <C>          <C>             <C>
11.625% Senior Notes                                                          $115,000,000              $115,000,000    $96,097,000
Average Interest Rate        11.625%     11.625%     11.625%       11.625%      11.625%
Variable Rate Notes        $357,000    $357,000    $357,000   $16,120,000     $357,000       $715,000    $18,263,000(a)
Average Interest Rate          7.75%       7.75%       7.75%         7.75%        7.75%          7.75%
Variable Government Notes  $100,000    $200,000    $200,000      $200,000     $200,000     $3,200,000     $4,100,000(a)
Average Interest Rate           5.0%        5.0%        5.0%          5.0%         5.0%           5.0%
Fixed Rate Notes           $284,000    $289,000    $196,000      $189,000     $192,000     $2,297,000     $3,429,000(a)
Average Interest Rate          2.20%       2.18%       3.60%         3.50%        3.38%          3.23%
Capitalized Leases Fixed
  Rates                     $372,000   $260,000    $311,000       $62,000      $69,000     $5,142,000     $6,216,000(a)
Average Interest Rate        14.13%       14.42%      14.62%        14.90%       14.90%         14.90%

<FN>
(a)      The carrying value of these debt instruments  approximates fair value as either the rate of interest is tied to
         market rates or, if necessary,  the Company  believes it could refinance this instrument at similar terms as of
         March 31, 1999.
</FN>
</TABLE>


         Item 8.  Financial statements and supplementary data

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


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

                  None.


Part III

         Item 10. Directors and Executive Officers of the registrant


                  MANAGEMENT

                  Directors and Executive Officers of the Company

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

<CAPTION>
               Name                                Age     Position(s)
               ----                                ---     -----------
<S>                                                <C>     <C>
               Executive Officers and Directors
               Roberto Buaron                      53      Director, Chairman
               William Del Chiaro                  46      Director, President & Chief Executive Officer
               Robert Gioia                        51      Director
               Richard Griffith                    66      Director
               David Cohen                         35      Director
               Eric Ek                             43      Director, Senior Vice President, Chief
                                                             Financial Officer and Secretary
               James Long                          56      Director, Vice Chairman & Treasurer
               Andrew Kohn                         32      Director
               Jeffry Kohlhoff                     51      Senior Vice President Operations
</TABLE>

                                       30

<PAGE>


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

                                    William  Del Chiaro  joined  the  Company in
                           March 1998 as a Director and as President  and CEO of
                           Quality  Foods.  In May 1998 he became  President and
                           CEO of CFP Group.  He was  previously  Executive Vice
                           President of Sara Lee Corporation's  Hillshire Farm &
                           Kahn's  division,   a  $1  billion   manufacturer  of
                           processed and packaged  meats for the retail  grocer,
                           foodservice   and   other   markets.   There  he  was
                           responsible   for  a   substantial   portion  of  the
                           business's  operations,  capital expenditures,  sales
                           and marketing. Prior to this position, Mr. Del Chiaro
                           spent ten years as a senior  executive of Mars, Inc.,
                           where he held top-level marketing and sales positions
                           in the Uncle Ben's, Dove International, M&M/Mars, and
                           foodservice  divisions.  His experience also includes
                           three years as Director of  Marketing  of Dr.  Pepper
                           Company's food service  division,  as well as various
                           positions  of  increasing   responsibility  during  a
                           seven-year career at Proctor & Gamble Company.

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

                                    Richard  Griffith has been a Director of CFP
                           Group  since  December  1996  and a  Director  of CFP
                           Holdings and Custom Foods since April 1, 1993. He was
                           the President and Chief  Executive  Officer of Custom
                           Foods from March 1993 until his retirement  from that
                           position  on June 30,  1998.  Effective  July 1, 1998
                           through  December 31, 1999, Mr. Griffith agreed to be
                           available to provide consulting services if requested
                           by  the  Company.  Prior  to  the  formation  of  CFP
                           Holdings,  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 a Director of CFP Group
                           since  December  1996.  Prior  to that he  served  as
                           President  and Chief  Operating  Officer  of

                                       31
<PAGE>

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

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

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

                                    Jeffry  Kohlhoff was promoted to Senior Vice
                           President,  Operations for CFP Group  effective April
                           1, 1999. Mr. Kohlhoff has been with the Company since
                           1995,    first   serving   as   Vice   President   of
                           Manufacturing  for Custom Foods,  and then serving as
                           Vice  President  of  Operations  for  Quality  Foods.
                           Previously,  Mr.  Kohlhoff  was  Director  of Quality
                           Assurance for Chef  America,  Inc. from 1993 to 1994.
                           Mr.  Kohlhoff was employed by Stokely USA,  Inc. from
                           1986  to 1993  where  he was the  Vice  President  of
                           Quality  Management.  Prior to joining  Stokely,  Mr.
                           Kohlhoff  was  Quality   Manager  for  Far  East  and
                           Worldwide  Vegetable  Development  for  the  Pilsbury
                           Company.

         Item 11.          Executive Compensation

                                    The following  table sets forth a summary of
                           the  compensation  earned  by the  Company's  current
                           Chief  Executive  Officer,   former  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.

                                       32
<PAGE>
<TABLE>

                                        SUMMARY COMPENSATION TABLE(1)
<CAPTION>
                                                                       LONG-TERM
                                       ANNUAL COMPENSATION            COMPENSATION
           NAME AND TITLE         FISCAL    SALARY      BONUS     OPTIONS     LTIP        ALL OTHER
                                   YEAR       ($)        ($)      GRANTED    PAYOUTS     COMPENSATION
                                                                    (#)        ($)            ($)
<S>                                <C>     <C>         <C>         <C>                     <C>
      William Del Chiaro           1999    327,596     271,905     1,589(4)                15,900(5)
          President and Chief      1998     12,500(3)   75,000(3)
          Executive Officer        1997           (3)
      Robert Gioia(2)              1999    331,500(6)  269,344       428(4)                 3,540(9)
          Director                 1998    325,314      25,000                              3,540(9)
                                   1997     80,664(7)   12,500(8)
      Richard Griffith(10)         1999    304,500      64,706                             48,407(12)
          Director                 1998    315,246      48,387                             18,918(12)
                                   1997    300,000     196,200(11)                          7,015(12)
      Eric Ek                      1999    202,000     172,550       200(4)                14,162(14)
          Chief Financial Officer  1998    198,950      23,556                              8,506(14)
                                   1997    151,884     120,100(13)                          7,015(14)
      Jeffry Kohlhoff              1999    150,000     121,875       150(4)
          Senior Vice President    1998    149,400      75,000                              6,050(15)
          Operations               1997    130,450     140,000(13)
      David Cohen                  1999    127,165     103,321       367(4)                13,337(17)
          Director                 1998    166,792      25,000                             13,337(17)
                                   1997     58,882(16)  12,500(8)                           3,000(17)

<FN>

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

(2)  Robert Gioia was President and Chief Executive Officer of the Company until
     June 30, 1998. For 1999,  amounts  include his salary through June 30, 1998
     and  thereafter  amounts  payable  under  his  consulting  agreement.   See
     "Employment Contracts".

(3)  Became an employee of the Company in March 1998. During 1998,  compensation
     included base salary of $325,000 since his start date of March 18, 1998 and
     a signing bonus of $75,000.

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

(5)  Consists of $14,400 car allowance and $1,500 excess term life insurance.

(6)  Effective  April 1, 1999 Mr.  Gioia's  compensation  under  his  consulting
     agreement will be $125,000 per year.

(7)  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 was $325,000.

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

(9)  Consists of $3,540 excess term life insurance for both 1999 and 1998.

(10) Richard  Griffith was the President and Chief  Executive  Officer of Custom
     Foods until his retirement on June 30, 1998. Effective July 1, 1998 through
     December  31,  1999,  Mr.  Griffith  agreed  to  be  available  to  provide
     consulting services if requested by the Company.  For 1999, amounts include
     his salary through June 30, 1998 and thereafter  amounts  payable under the
     employment agreement. See "Employment Contracts".

(11) 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.

(12) For 1999: Consists of $20,300 car allowance and a $28,107 payout in accrued
     vacation.  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.

(13) 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.

(14) For 1999:  Consists of $8,400 for car  allowance,  $4,742  excess term life
     insurance and $1,020 in disability insurance.  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
     $2,100 of car allowance.

(15) Consists of $6,050 in disability insurance.

(16) 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.

(17) For 1999: Consists of $12,000 for car allowance and $1,337 excess term life
     insurance.  For 1998:  Consists of $1,337  excess term life  insurance  and
     $12,000 car allowance. For 1997: Consists of $3,000 car allowance.
</FN>
</TABLE>

                                       33
<PAGE>


                                            OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>

                                    The  following  table sets forth the options
                           granted to the Named  Executive  Officers  during the
                           last fiscal year under the 1998 stock option plan.
<CAPTION>
                                                             Percent
                                                             of Total
                                                             Options                                     Potential
                                                 Number of   Granted                                Realizable Value at
                                                Securities      to                                    Assumed Annual
                                                Underlying   Employees    Exercise of                 Rates of Stock
                                                 Options     in Fiscal    Base Price    Expiration   Price Appreciation
                                                 Granted       Year        ($/Sh)         Date       for Option Term
                                                 -------       ----        ------         ----      5% ($)     10% ($)
                                                                                                    ------     -------
<S>                                              <C>             <C>           <C>     <C>          <C>        <C>
                           William Del Chiaro    1,289/300       27.9%         289.02  7-15-2008/   $288,822   $731,931
                                                                                       12-4-2008
                           Robert Gioia                428        7.5%         693.96  7-15-2008          $0   $23,833

                           Eric Ek                     200        3.5%         289.02  12-4-2008     $36,353   $92,125

                           Jeffry Kohlhoff             150        2.6%         289.02  12-4-2008     $27,264   $69,094

                           David Cohen              317/50        6.4%  693.96/289.02  7-15-2008/         $0   $40,683
                                                                                       12-4-2008
</TABLE>

                                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                        AND FISCAL YEAR-END OPTION 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>
                                                                                                              Value of
                                                                                           Number of         Unexercised
                                                                                          Securities        In-The-Money
                                                                                      Underlying Options     Options At
                                                                                              at           March 31, 1999
                                                             Shares         Value       March 31, 1999         ($)(1)
                                                          Acquired on     Realized       Exercisable /      Exercisable /
                                                            Exercise         ($)         Unexercisable      Unexercisable
                                                            --------         ---         -------------      -------------
<S>                                                            <C>           <C>            <C>                  <C>
                           William G. Del Chiaro               --            --             0/1,589              0/0
                           Robert Gioia                        --            --              0/428               0/0
                           Richard Griffith                    --            --             1,149/0              0/0
                           Eric Ek                             --            --             444/200              0/0
                           Jeffry Kohlhoff                     --            --             230/150              0/0
                           David Cohen                         --            --              0/367               0/0
<FN>

                           (1)      Based on the  assumed  fair market  value of the Common  Stock at March 31, 1999
                                    ($289.02 per share or less), as determined by the Company's Board of Directors.
</FN>
</TABLE>

                           Compensation of Directors

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

                           Compensation   Committee   Interlocks   and   Insider
                           Participation

                                    The  Compensation  Committee is comprised of
                           Roberto Buaron, Chairman of CFP Group and James Long,
                           Vice  Chairman  and  Treasurer



                                       34
<PAGE>

                           of  CFP  Group.   See   "Transaction   with   Certain
                           Stockholders."

                           Employment Contracts

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

                                    The Company has  entered  into a  consulting
                           agreement  with  Mr.  Gioia  (the  "Gioia  Consulting
                           Agreement")  that  expires on December 31, 2001 or on
                           an earlier date in  accordance  with the terms of the
                           Gioia Consulting  Agreement.  Base compensation under
                           the Gioia Consulting Agreement through March 31, 1999
                           was   $331,500.   Effective   April  1,  1999,   base
                           compensation is $125,000 per year. Mr. Gioia was also
                           eligible to participate in the Company's  annual cash
                           bonus plan for the fiscal year ended March 31,  1999,
                           which was based  upon the  Company's  achievement  of
                           certain annual performance targets.  Under this plan,
                           Mr. Gioia  received a bonus of $239,344.  The Company
                           may  terminate  Mr.  Gioia at any time for "cause" or
                           after a specified period upon a "disability" (as such
                           terms are defined in the Gioia Consulting Agreement).
                           If the Company  terminates Mr. Gioia "without  cause"
                           (as such  term is  defined  in the  Gioia  Employment
                           Agreement),  Mr. Gioia is entitled to receive,  among
                           other things,  the aggregate of his annual consulting
                           fee  through  the later of  December  31,  2001 or 18
                           months from the date of  termination  by the Company.
                           In  accordance  with  Mr.  Gioia's  prior  Employment
                           Agreement, with the adoption of the 1998 Stock Option
                           Plan,  Mr. Gioia was granted  options to purchase 428
                           shares of Class B Nonvoting  Common  Stock,  $.01 par
                           value,  of CFP Group (the "Class B  Nonvoting  Common
                           Stock").

                                    The Company has entered  into an  employment
                           agreement with Mr. Griffith (the "Griffith Employment
                           Agreement")  that  provided  for an  employment  term
                           through  December  31,  1999  or an  earlier  date in
                           accordance with the terms of the Griffith  Employment
                           Agreement.  Base  compensation  under Mr.  Griffith's
                           Employment  Agreement  was  $304,500  per  year.  Mr.
                           Griffith  participated  in the Company's  annual cash
                           bonus plan,  which was based upon the  achievement of
                           certain annual  performance  targets  prorata for the
                           period  through June 30, 1998.  Under this plan,  Mr.
                           Griffith  received a bonus of $64,706.  In connection
                           with Mr.  Griffith's  termination of employment,  Mr.
                           Griffith  is  entitled  to



                                       35
<PAGE>

                           receive compensation and benefits as specified in the
                           Griffith  Employment  Agreement  through December 31,
                           1999  and  has  agreed  to be  available  to  provide
                           consulting  services to the Company.  The Company may
                           continue Mr. Griffith as a Consultant  after December
                           31, 1999 for an annual payment of $75,000 per year.

                                    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
                           the   achievement  of  certain   annual   performance
                           targets,  subject  to the right to  receive a minimum
                           annual  cash  bonus  of  $50,000.   The  Company  may
                           terminate  Mr. Cohen at any time for "cause" or after
                           a specified period upon a "disability" (as such terms
                           are defined in the Cohen  Employment  Agreement).  If
                           the Company  terminates Mr. Cohen "without cause" (as
                           such  term  is  defined   in  the  Cohen   Employment
                           Agreement),  Mr. Cohen is entitled to receive,  among
                           other  things,  the  aggregate of his base salary and
                           the pro rata  portion  of his  minimum  annual  bonus
                           through the later of  December  31, 2001 or 18 months
                           from  the  date of  termination  by the  Company.  In
                           accordance with the Cohen Employment  Agreement,  and
                           in  conjunction  with the  adoption of the 1998 Stock
                           Option  Plan,  Mr.  Cohen  was  granted   options  to
                           purchase up to 367 shares of Class B Nonvoting Common
                           Stock of CFP Group.

                                    The Company has entered  into an  employment
                           agreement  with Mr. Ek 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 $203,000 per year plus an
                           annual  adjustment  beginning  in July  of each  year
                           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  the   Company's
                           achievement  of certain annual  performance  targets.
                           The  Company  may  terminate  Mr.  Ek at any time for
                           "cause"   or  after  a   specified   period   upon  a
                           "disability"  (as such  terms are  defined  in the Ek
                           Employment Agreement).  If the Company terminates Mr.
                           Ek "without cause" (as such term is defined in the Ek
                           Employment Agreement), Mr. Ek is entitled to receive,
                           among other things,  the aggregate of his base salary
                           payable for 12 months from the date of termination by
                           the  Company  and the pro rata  portion of his annual
                           bonus for the fiscal  year in which such  termination
                           occurred.

                           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



                                       36
<PAGE>

                           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  debt  instruments 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  indebtedness  of
                           CFP Group and its subsidiaries. See "Item 13. Certain
                           Relationships  and  Related  Transactions  -  Certain
                           Transactions - Stockholders Agreement."

                           EMPLOYEE STOCK OPTION PLAN

                           1995 Stock Option Plan

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

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

                                       37
<PAGE>

                                    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  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


                                       38
<PAGE>

                           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  a  new  incentive  stock  option
                           program  (the  "1998  Stock  Option   Plan"),   which
                           provides  for  the  grant  of  both  incentive  stock
                           options  ("ISOs") and  non-qualifying  stock  options
                           ("NSOs")  to   directors   and   employees   of,  and
                           independent   consultants  and  contractors  to,  the
                           Company and its subsidiaries. A total of 5,525 shares
                           of  Nonvoting  Common Stock has been  authorized  and
                           reserved for issuance under the 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 the grant  (110%
                           of  fair  market   value  if  the   employee  is  the
                           beneficial owner of 10% or more of CFP Group's voting
                           securities),  (b) the exercise  price must be paid in
                           cash,   by   personal  or   certified   check  or  by
                           surrendering  previously  owned  shares of  nonvoting
                           common stock upon the exercise of the option, (c) the
                           term of the  option may not exceed ten years (or five
                           years in the case of an ISO  granted  to an  employee
                           who is the  beneficial  owner  of 10% or  more of CFP
                           Group's   voting   securities),   (d)  no  option  is
                           transferable  other  than  by  will  or the  laws  of
                           descent  and  distribution  and (e) no option  may be
                           granted by a member of the Committee.

                                    Upon  the   termination   of  an  optionee's
                           employment (other than by death or disability),  such
                           person's   options  may  be   exercised   during  the
                           three-month   period   following  the  date  of  such
                           termination.  In the event of the death or disability
                           of an  optionee,  the option may be exercised by such
                           person or his personal  representative during the six
                           month period  following the date the optionee  ceases
                           to be an  employee  of the  Company



                                       39
<PAGE>

                           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  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 dates of grant of such  ISO,  the  employee  will
                           generally  recognize a long-term capital gain or loss
                           equal to the  difference,  if any,  between  the sale
                           prices of such shares and the 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



                                       40
<PAGE>

                           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.

         Item 12.          Security ownership  of  certain beneficial owners and
                           management

                           PRINCIPAL STOCKHOLDERS
<TABLE>

                                    The  following   table  sets  forth  certain
                           information  regarding  the  ownership of the capital
                           stock of CFP Group as of June 18,  1999 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 shares  beneficially  owned.  Unless
                           otherwise indicated, the address for each stockholder
                           is  c/o   CFP   Group,   Inc.,   5501   Tabor   Road,
                           Philadelphia, Pennsylvania 19120.
<CAPTION>

                                                              Shares of                                         Percentage of
                                                                Voting      Percentage                           All Classes
                                                                Common       of Voting    Shares of Nonvoting     of Common
                               Name and Address of             Stock(1)       Common        Common Stock(1)      Stock (Fully
                                 Beneficial Owner              Class A         Stock       Class A    CLASS B     -Diluted)
<S>                                                             <C>            <C>          <C>        <C>          <C>
                           Atlantic Equity Partners, L.P. (2)   14,293         97.2%          -          -          38.0%
                           Roberto Buaron (3)                   14,293         97.2%          -          -          38.0%
                           William Del Chiaro                                                                        4.2%
                           Richard Griffith (4)                   -              -          3,161        -          11.6%
                           Robert Gioia (5)                       -              -            -        1,081         4.0%
                           Eric Ek                                -              -          1,095        -           4.6%
                           David Cohen (6)                        -              -            -        1,081         3.9%
                           James Long (7)                         173           1.2%          -          -            *
                           Jeffry Kohlhoff                        -              -            459        -           2.2%
                           All officers and directors
                             as a group (9 persons)            14,466          98.4%        4,715      2,162        69.0%
<FN>
                           *        Less than one percent.

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

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

                                       41
<PAGE>

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

                           (4)      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
                                    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.  These  shares  are within the shares
                                    totaling  412 owned by  present  and  former
                                    employees of First Atlantic.
</FN>
</TABLE>

         Item 13.          Certain relationships and related transactions

                           CERTAIN TRANSACTIONS

                           Transactions with Certain Stockholders

                                    Effective  December  31,  1996,  the Company
                           entered into a new  management  consulting  agreement
                           with First  Atlantic  which  provides  for the annual
                           payment of  compensation  in the  amount of  $600,000
                           plus out of  pocket  expenses  to First  Atlantic  in
                           exchange for providing management consulting services
                           to the Company and its  subsidiaries.  Payments under
                           this  agreement  during  fiscal years 1997,  1998 and
                           1999   were   $157,000,    $666,000   and   $698,000,
                           respectively.  Such  agreement  will  continue  until
                           December  31,  2003 unless  extended  pursuant to its
                           terms.

                           Stockholders' Agreement

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

                                    The Corporation and the  Stockholders  shall
                           use its and their best



                                       42
<PAGE>

                           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 eight directors (or such other number as a
                           Majority in Interest of AEP  Stockholders (as defined
                           in the  Stockholders  Agreement) shall determine) and
                           to provide that,  notwithstanding any vacancies,  any
                           corporate   action   taken   by  the   Board  of  the
                           Corporation   must  be  approved  by  at  least  five
                           directors (or such larger number as shall  constitute
                           a majority of the Board).

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



                                       43
<PAGE>

                           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:

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

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

                                       44
<PAGE>

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

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

                                    3.5      Amended and Restated Certificate of
                                             Incorporation of QFAC (incorporated
                                             by  reference to Exhibit 3.5 of the
                                             S-4 Registration Statement).

                                    3.6      By-laws  of QFAC  (incorporated  by
                                             reference to Exhibit 3.6 of the S-4
                                             Registration Statement).

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

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

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

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

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

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

                                    10.3     Employment Agreement dated December
                                             31, 1996  between CFP  Holdings and
                                             Eric   W.   Ek   (incorporated   by
                                             reference  to  Exhibit  10.3 of the
                                             S-4 Registration Statement).

                                    10.4     Employment Agreement dated December
                                             31, 1996  between CFP  Holdings and
                                             Robert D. Gioia (incorporated by



                                       45
<PAGE>

                                             reference  to  Exhibit  10.4 of the
                                             S-4 Registration Statement).

                                    10.5     Employment Agreement dated December
                                             31, 1996  between CFP  Holdings and
                                             Richard W.  Griffith  (incorporated
                                             by reference to Exhibit 10.5 of the
                                             S-4 Registration Statement).

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

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

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

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

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

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

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

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

                                       46
<PAGE>

                                    10.15    Loan and Security  Agreement  Dated
                                             May 5, 1998 between  Fleet  Capital
                                             Corporation and CFP Holdings,  Inc.
                                             (incorporated   by   reference   to
                                             Exhibit  10.1  of  the  Registrants
                                             Form 10-K for the year ended  March
                                             31, 1998).

                                    10.16    Trademark    Collateral    Security
                                             Agreement dated May 5, 1998 between
                                             QF Acquisition Corp. (d/b/a Quality
                                             Foods),     and    Fleet    Capital
                                             Corporation (Filed herewith).

                                    10.17    Patent     Collateral      Security
                                             Agreement dated May 5, 1998 between
                                             QF Acquisition Corp. (d/b/a Quality
                                             Foods and Fleet Capital Corporation
                                             (Filed herewith).

                                    10.18    Patent Assignment of Security dated
                                             May 5, 1998 between QF  Acquisition
                                             Corp. and Fleet Capital Corporation
                                             (Filed herewith).

                                    10.19    Pledge  Agreement dated May 5, 1998
                                             between  CFP  Holdings,   Inc.  and
                                             Fleet  Capital  Corporation  (Filed
                                             herewith).

                                    10.20    Pledge  Agreement dated May 5, 1998
                                             between CFP Group,  Inc.  and Fleet
                                             Capital      Corporation     (Filed
                                             herewith).

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

                                    10.22    CFP   Holdings,   Inc.  1995  Stock
                                             Option  Plan  dated  March 1,  1995
                                             (Filed herewith).

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

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

                                    21       Subsidiaries of the CFP Group, Inc.

                                             CFP Holdings, Inc., A Delaware
                                               Corporation
                                             Custom Food Products, Inc., a
                                               California Corporation
                                             QF Acquisition Corp., a Delaware
                                               Corporation

                                    23.1     Consent  of  Deloitte  & Touche LP,
                                             Independent     auditors     (Filed
                                             herewith).

                                    27       Financial   Data  Schedule   (Filed
                                             herewith).

                                       47

<PAGE>


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

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

                                    5.       SUPPLEMENTAL   INFORMATION   TO  BE
                                             FURNISHED    WITH   REPORTS   FILED
                                             PURSUANT  TO  SECTION  15(d) OF THE
                                             ACT BY  REGISTRANTS  WHICH HAVE NOT
                                             REGISTERED  SECURITIES  PURSUANT TO
                                             SECTION 12 OF THE ACT.

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

                                       48
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the ____ day of
June, 1999.
                                      CFP GROUP, INC.
                                      By:

                                          --------------------------------------
                                                  William G. Del Chiaro
                                          President and Chief Executive Officer


         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the _____ day of June, 1999, by the following  persons
in the capacities indicated:


                  Name                                    Title
                  ----                                    -----


____________________________________        Chairman of the Board and Director
           Roberto Buaron


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


____________________________________        Director
           Robert Gioia


____________________________________        Senior Vice President, Chief
            Eric W. Ek                      Financial Officer, Secretary and
                                            Director (Principal Financial
                                            Officer and Principal
                                            Accounting Officer)


____________________________________        Director
       Richard W. Griffith


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


____________________________________        Director
          David Cohen


____________________________________        Director
          Andrew Kohn


                                       49
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the ____ day of
June, 1999.
                                   CFP HOLDINGS, INC.
                                   By:

                                         --------------------------------------
                                                 William G. Del Chiaro
                                         President and Chief Executive Officer

         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the _____ day of June, 1999, by the following  persons
in the capacities indicated:


                  Name                                   Title
                  ----                                   -----


____________________________________        Chairman of the Board and Director
          Roberto Buaron


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


____________________________________        Director
           Robert Gioia


____________________________________        Senior Vice President, Chief
            Eric W. Ek                      Financial Officer, Secretary and
                                            Director (Principal Financial
                                            Officer and Principal
                                            Accounting Officer)


____________________________________        Director
       Richard W. Griffith


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


____________________________________        Director
           David Cohen


____________________________________        Director
           Andrew Kohn

                                       50
<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the ____ day of
June, 1999.
                                  CUSTOM FOOD PRODUCTS, INC.
                                  By:

                                          --------------------------------------
                                               William G. Del Chiaro
                                          President and Chief Executive Officer

         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the _____ day of June, 1999, by the following  persons
in the capacities indicated:


                Name                                   Title
                ----                                   -----


____________________________________        Director
          Roberto Buaron


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


____________________________________        Director
          Robert Gioia


____________________________________        Senior Vice President, Chief
           Eric W. Ek                       Financial Officer, Secretary and
                                            Director (Principal Financial
                                            Officer and Principal
                                            Accounting Officer)


____________________________________        Director
       Richard W. Griffith


____________________________________        Chairman of the Board and Director
         James A. Long


                                       51
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the ____ day of
June, 1999.
                                      QF ACQUISITION CORP.
                                      By:

                                          --------------------------------------
                                                 William G. Del Chiaro
                                          President and Chief Executive Officer

         Pursuant to the  requirements of Securities  Exchange Act of 1934, this
report has been signed on the _____ day of June, 1999, by the following  persons
in the capacities indicated:


                Name                                    Title
                ----                                    -----


____________________________________        Director
          Roberto Buaron


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


____________________________________        Director
           Robert Gioia


____________________________________        Senior Vice President, Chief
            Eric W. Ek                      Financial Officer, Secretary and
                                            Director (Principal Financial
                                            Officer and Principal
                                            Accounting Officer)


____________________________________        Chairman of the Board and Director
          James A. Long


____________________________________        Vice Chairman of the Board and
           David Cohen                      Director

                                       52

<PAGE>

--------------------------------------------------------------------------------
    CFP Group, Inc.
    Consolidated Financial Statements for the Year Ended September 30, 1996, the
    Six Months  Ended March 31, 1997 and the Years Ended March 31, 1998 and 1999
    and Independent Auditors' Report



<PAGE>


INDEPENDENT AUDITORS' REPORT


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

We have audited the accompanying  consolidated balance sheets of CFP Group, Inc.
and subsidiaries  (the "Company") as of March 31, 1998 and 1999, and the related
consolidated  statements of operations,  stockholders' equity (deficiency),  and
cash flows for the year ended September 30, 1996, the six months ended March 31,
1997,  and the years ended March 31, 1998 and 1999. Our audits also included the
financial  statement schedule listed at Item 14. These financial  statements and
financial statement schedule 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial  position of the Company as of March 31, 1998
and 1999,  and the  results  of its  operations  and its cash flows for the year
ended  September  30, 1996,  the six months ended March 31, 1997,  and the years
ended March 31, 1998 and 1999 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,  presents  fairly in all  material  respects  the  information  set forth
therein.





June 3, 1999



<PAGE>
<TABLE>

CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND 1999
----------------------------------------------------------------------------------------------------
<CAPTION>
                                                                                     March 31,
                                                                                --------------------
ASSETS                                                                            1998       1999
                                                                                   (In Thousands)
<S>                                                                             <C>        <C>
CURRENT ASSETS:
  Cash                                                                          $  1,344   $  1,820
  Accounts receivable, net of allowance for doubtful accounts of $115,000 and
    $369,000 at March 31, 1998 and 1999, respectively (Note 2)                    12,007     15,448
  Inventories (Notes 2 and 4)                                                     15,584     16,839
  Prepaid expenses and other current assets                                          890        692
                                                                                --------   --------

            Total current assets                                                  29,825     34,799

PROPERTY AND EQUIPMENT, Net (Notes 2 and 5)                                       27,138     29,922

COSTS IN EXCESS OF NET ASSETS ACQUIRED,                                           68,608     65,195
  Net (Notes 2 and 3)

INTANGIBLE AND OTHER ASSETS, Net (Notes 2 and 6)                                   7,508      6,488
                                                                                --------   --------

TOTAL                                                                           $133,079   $136,404
                                                                                ========   ========
</TABLE>

<PAGE>
<TABLE>

CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND 1999
----------------------------------------------------------------------------------------------------
<CAPTION>
                                                                                     March 31,
                                                                                --------------------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                          1998       1999
                                                                                   (In Thousands)
<S>                                                                             <C>        <C>
CURRENT LIABILITIES:

Current portion of long-term obligations (Note 7)                               $  2,232   $  1,113

Accounts payable                                                                   6,816      8,904

Accrued expenses and other current liabilities                                     5,404      6,689
                                                                                --------   --------

     Total current liabilities                                                    14,452     16,706
                                                                                --------   --------

LONG-TERM OBLIGATIONS (Note 7)                                                   141,267    145,895
                                                                                --------   --------
COMMITMENTS AND CONTINGENCIES (Notes 12)

REDEEMABLE COMMON STOCK (Note 9)                                                   2,319      2,319
                                                                                --------   --------
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 shares (inclusive of 3,011 shares classified as
  redeemable common stock) issued and outstanding                                  2,204      2,204
Nonvoting common stock - Class B, $.01 par value; 25,000 shares
  authorized; 3,059 shares (inclusive of 2,162 shares classified as
  redeemable common stock) issued and outstanding                                    623        623
Stockholders' notes receivable                                                      (203)      (203)
Accumulated deficit                                                              (30,779)   (34,336)
                                                                                --------   --------

     Total stockholders' deficiency                                              (24,959)   (28,516)
                                                                                --------   --------

TOTAL                                                                           $133,079   $136,404
                                                                                ========   ========
</TABLE>


<PAGE>
<TABLE>

CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996, SIX MONTHS ENDED MARCH 31, 1997 AND
YEARS ENDED MARCH 31, 1998 AND 1999
-----------------------------------------------------------------------------------------
<CAPTION>
                                                       Six
                                                      Months           Year Ended
                                       Year Ended     Ended             March 31,
                                      September 30,  March 31,    ---------------------
                                          1996         1997         1998        1999
                                                       (In Thousands)
<S>                                     <C>          <C>          <C>          <C>
SALES (Note 2)                          $  65,996    $  60,529    $ 181,378    $ 183,164

COST OF SALES                              53,818       52,276      152,484      147,518
                                        ---------    ---------    ---------    ---------

GROSS PROFIT                               12,178        8,253       28,894       35,646

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES (Note 8 and 13)                  5,512        7,474       17,156       20,411

OTHER CHARGES (Note 8)                      4,996
                                        ---------    ---------    ---------    ---------

INCOME FROM OPERATIONS                      1,670          779       11,738       15,235

INTEREST EXPENSE (Note 7)                   3,232        4,681       17,236       17,322
                                        ---------    ---------    ---------    ---------

LOSS BEFORE (BENEFIT) PROVISION FOR
  INCOME TAXES AND EXTRAORDINARY ITEM      (1,562)      (3,902)      (5,498)      (2,087)

(BENEFIT) PROVISION FOR INCOME
  TAXES (Notes 2 and 11)                     (409)        (541)          30          467
                                        ---------    ---------    ---------    ---------

LOSS BEFORE EXTRAORDINARY ITEM             (1,153)      (3,361)      (5,528)      (2,554)

EXTRAORDINARY LOSS ON EARLY
  EXTINGUISHMENT OF DEBT (Note 7)                       (4,489)                   (1,003)
                                        ---------    ---------    ---------    ---------

NET LOSS                                $  (1,153)   $  (7,850)   $  (5,528)   $  (3,557)
                                        =========    =========    =========    =========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
                                          - 3 -
<PAGE>
<TABLE>

CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLERS' EQUITY (DEFICIENCY)
YEAR ENDED SEPTEMBER 30, 1996, SIX MONTHS ENDED MARCH 31, 1997 AND
YEARS ENDED MARCH 31, 1998 AND 1999
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                       Nonvoting-       Nonvoting-
                                   Voting Class A-      Class A         Class B                     Retained
                                    Common Stock     Common Stock     Common Stock    Shareholder   Earnings
                                    ------------     ------------     ------------      Notes      (Accumulated
                                  Shares   Amount   Shares   Amount  Shares   Amount  Reveivable      Deficit)       Total
                                                                    (Dollars in Thousands)
<S>                               <C>      <C>      <C>      <C>     <C>      <C>       <C>         <C>            <C>
BALANCE, SEPTEMBER 30, 1995       14,705   $3,196    2,725   $  592                                 $  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       14,705    3,196    2,725      592                                      232          4,020

 Net loss                                                                                             (7,850)        (7,850)
 Redeembale preferred dividends                                                                          (27)           (27)
 Increanse in carrying value of stock
   warrant purchase obligations                                                                         (207)          (207)
 Exercise of stock warrants                          4,538    1,723                                                   1,723
 Exercise of stock options                           7,487    2,163                                                   2,163
 Issuance of common stock                                1        1   3,321   $2,305    $ (343)                       1,963
 Repayment of stock notes                                                                    6                            6
 Repurchase of common stock                         (3,510)  (1,456)                                                 (1,456)
 Distribution to stockholders                                                                        (17,399)       (17,399)
 Shares reclassified to redeemable
   common stock                                     (3,011)    (819) (2,162)  (1,500)                                (2,319)
                                  ------   ------    -----   ------     ---    -----    ------      --------        --------

BALANCE, MARCH 31, 1997           14,705    3,196    8,230    2,204   1,159      805      (337)      (25,251)       (19,383)

 Issuance of common stock and
   grant of note receivable                                              72       50       (35)                          15
 Repurchase of common stock and
   cancellation of note receivable                                     (334)    (232)      169                          (63)
 Net loss                                                                                             (5,528)        (5,528)
                                  ------   ------    -----   ------     ---    -----    ------      --------        --------
BALANCE, MARCH 31, 1998           14,705    3,196    8,230    2,204     897      623      (203)      (30,779)       (24,959)

 Net loss                                                                                             (3,557)        (3,557)
                                  ------   ------    -----   ------     ---    -----    ------      --------        --------

BALANCE, MARCH 31, 1999           14,705   $3,196    8,230   $2,204     897   $  623    $ (203)     $(34,336)      $(28,516)
                                  ======   ======    =====   ======     ===    =====    ======      ========        ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>


                                                            - 4 -

<PAGE>
<TABLE>

CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1996, SIX MONTHS ENDED MARCH 31, 1997 AND
YEARS ENDED MARCH 31, 1998 AND 1999
---------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                            Six
                                                                          Months          Year Ended
                                                             Year Ended    Ended           March 31,
                                                            September 30, March 31, ---------------------
                                                              1996         1997       1998        1999
<S>                                                         <C>         <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                  $ (1,153)   $ (7,850)   $ (5,528)   $ (3,557)
  Adjustments to reconcile net loss to net cash
    provided by operating activities:
    Depreciation and amortization                              2,088       2,236       6,732       6,733
    Amortization of deferred financing costs and
      original issue discount                                    630         389       1,283       1,199
    Deferred income taxes                                        (10)       (546)
    Loss (gain) on sale of equipment                                                      15          (9)
    Extraordinary loss on early extinguishment of debt                     4,489                   1,003
    Changes in assets and liabilities, net of the effects
      from the acquisition of Quality Foods LP:
      Accounts receivable                                       (658)       (170)     (1,288)     (3,441)
      Inventories                                               (479)      1,802      (4,378)     (1,255)
      Prepaid expenses and other current assets                  324        (963)      1,636         198
      Accounts payable                                            84         289       1,852       2,088
      Accrued expenses and other current liabilities            (691)      3,801         337       1,285
                                                              ------     -------      ------      ------
           Net cash provided by operating activities             135       3,477         661       4,244
                                                              ------     -------      ------      ------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment                       (1,432)     (1,674)     (4,497)     (6,104)
  Proceeds from sale of property and equipment                                44       1,137           9
  Acquisition of Quality Foods LP                                        (65,647)
  Other assets                                                  (379)        (16)       (394)       (548)
                                                              ------     -------      ------      ------
           Net cash used in investing activities              (1,811)    (67,293)     (3,754)     (6,643)
                                                              ------     -------      ------      ------
<FN>
See accompanying notes to consolidated financing statements.
</FN>
</TABLE>

                                          - 5 -
<PAGE>
<TABLE>
CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1996, SIX MONTHS ENDED MARCH 31, 1997 AND
YEARS ENDED MARCH 31, 1998 AND 1999
-------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                     Six
                                                                     Months         Year Ended
                                                      Year Ended     Ended           March 31,
                                                     September 30,  March 31,   ----------------------
                                                        1996          1997          1998           1999
                                                                        (In Thousands)
<S>                                                   <C>          <C>          <C>          <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under revolving loan facility            $   9,725    $  14,821    $  23,000    $  21,263
  Repayment of revolving loan facilities                 (9,975)     (15,821)     (18,500)     (20,500)
  Proceeds from issuance of long-term debt                5,681      218,500                    12,500
  Repayment of long-term debt and capitalized lease
    obligations                                          (3,120)    (122,847)      (1,847)      (9,754)
  Deferred financing costs                                           (11,455)        (308)        (634)
  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 provided by financing activities       2,168       65,462        2,298        2,875
                                                      ---------    ---------    ---------    ---------

NET INCREASE (DECREASE) IN CASH                             492        1,646         (795)         476

CASH, BEGINNING OF PERIOD                                     1          493        2,139        1,344
                                                      ---------    ---------    ---------    ---------

CASH, END OF PERIOD                                   $     493    $   2,139    $   1,344    $   1,820
                                                      =========    =========    =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION -
  Cash paid (received) during the year for:
    Interest                                          $   2,265    $   2,099    $  15,386    $  16,128
    Income taxes                                                         (93)          33          403

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

                                          - 6 -
<PAGE>
<TABLE>

CFP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1996, SIX MONTHS ENDED MARCH 31, 1997 AND
YEARS ENDED MARCH 31, 1998 AND 1999
------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                                  Six
                                                                                 Months          Year Ended
                                                                Year Ended       Ended            March 31,
                                                               September 30,   March 31,   ----------------------
                                                                  1996            1997         1998          1999
                                                                                   (In Thousands)
<S>                                                             <C>             <C>         <C>
SUPPLEMENTAL DISCLOSURES OF NONCASH
  INVESTING AND FINANCING ACTIVITY:
  Acquisition of property and equipment through
    capital leases                                              $ 1,577                     $ 1,019
  Accrued dividends on redeemable preferred stock                    94        $    27
  Issuance of common stock in exchange for equity
    interest in Quality Foods LP                                                 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


<FN>

  During the year ended  September  30, 1996 and the six months  ended March 31,
  1997, the carrying value of 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 LP 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)
</FN>
</TABLE>

                                          - 7 -
<PAGE>

CFP GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED SEPTEMBER 30, 1996, SIX MONTHS ENDED MARCH 31, 1997 AND
YEARS ENDED MARCH 31, 1998 AND 1999
--------------------------------------------------------------------------------


1.    BUSINESS

      CFP Group,  Inc. (the "Company") was  incorporated on November 26, 1996 as
      New CFP  Holdings,  Inc. and  subsequently  changed its name to CFP Group,
      Inc. The Company was formed to recapitalize CFP Holdings, Inc. On December
      31, 1996,  each person owning capital stock (or options to acquire capital
      stock) of CFP  Holdings,  Inc.  exchanged  his/her  equity  interests  for
      equivalent  interests  of capital  stock (or  options  to acquire  capital
      stock)  of  the  Company.   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  LP.  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).

2.    SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

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

      Fiscal Periods - 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.

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

      Concentration  of Credit Risk -  Financial  instruments  that  subject the
      Company to credit  risk  consist  primarily  of accounts  receivable.  The
      Company performs ongoing credit evaluations of its customers and maintains
      an allowance for potential credit losses.  The Company has one significant
      customer  that  accounted  for more than 10% of its  sales.  Sales to this
      customer  totaled 40%,  23%, 15% and 13% of total sales for the year ended
      September  30, 1996,  the six months  ended March 31, 1997,  and the years
      ended March 31, 1998 and 1999, respectively. Accounts receivable from this
      customer totaled 7% and 9% of total accounts  receivable at March 31, 1998
      and  1999,  respectively.   In  addition,  pursuant  to  franchise  supply
      agreements with two different international  franchising  operations,  the
      Company sells



                                     - 8 -
<PAGE>

      products to authorized  distributors,  who in turn sell these  products to
      two franchising operations.  During the year ended September 30, 1996, the
      six months  ended March 31,  1997,  and the years ended March 31, 1998 and
      1999, approximately 45%, 46%, 46% and 46% of sales, respectively,  were to
      such distributors.

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

      Property and Equipment - Property and  equipment  are stated at cost.  The
      Company uses the straight-line method of depreciation and amortization for
      buildings  and  leasehold  improvements  and  both the  straight-line  and
      double-declining   methods   for  all  other   property   and   equipment.
      Depreciation  is  provided  for over  the  estimated  useful  lives of the
      related assets,  ranging from 3 to 10 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 $5,332,000 and $8,745,000 as of March 31, 1998 and 1999,
      respectively (see Note 3).

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

      Fair  Value  of  Financial  Instruments  - The  fair  value  of  financial
      instruments,   other  than  long-term  debt,  closely  approximates  their
      carrying values because of their short-term  maturity.  The estimated fair
      value of long-term debt, including current maturities, based on references
      to quoted  market  prices was below its  carrying  value by  approximately
      $18.9   million  and  $1.2   million  as  of  March  31,  1999  and  1998,
      respectively.

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

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


                                     - 9 -
<PAGE>

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.

4.    INVENTORIES

      Inventories consisted of the following:

                                               March 31,
                                        -------------------------
                                          1998           1999
                                            (In Thousands)

     Raw materials                     $  5,655       $  5,820
     Work-in-process                      3,470          3,773
     Finished goods                       6,710          7,918
                                       --------       --------

     Total                               15,835         17,511
     Reserve                               (251)          (672)
                                       --------       --------

     Inventory, net                    $ 15,584       $ 16,839
                                       ========       ========

                                     - 10 -
<PAGE>


5.    PROPERTY AND EQUIPMENT

      Property and equipment consisted of the following:

                                                March 31,
                                         ---------------------
                                           1998        1999
                                             (In Thousands)

         Land                            $    376    $    376
         Building                          19,171      19,550
         Machinery and equipment           11,269      15,872
         Office furniture and fixtures        759       1,288
         Leasehold improvements             2,531       2,110
         Construction in progress              80         371
                                         --------    --------

         Total                             34,186      39,567
         Accumulated depreciation          (7,048)     (9,645)
                                         --------    --------
         Property and equipment, net     $ 27,138    $ 29,922



6.    INTANGIBLES AND OTHER ASSETS

      Intangible and other assets consisted of the following:

                                                  March 31,
                                            ---------------------
                                              1998         1999
                                                (In Thousands)

         Deferred financing costs           $ 12,539    $  7,835
         Other assets                            568       1,116
                                            --------    --------
         Total                                13,107       8,951
         Accumulated amortization             (5,599)     (2,463)
                                            --------    --------
         Intangible and other assets, net   $  7,508    $  6,488


                                     - 11 -
<PAGE>

7.    LONG-TERM OBLIGATIONS
<TABLE>
      Long-term obligations consisted of the following:
<CAPTION>
                                                                                               March 31,
                                                                                        -----------------------
                                                                                           1998          1999
                                                                                             (In Thousands)
<S>                                                                                      <C>          <C>
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 (7.75% at March 31, 1999) or
  eurodollar rate (5.06% at March 31, 1999) plus 2.25%, interest payable monthly,
  principal payable on May 1, 2002                                                           9,000       10,000
Revolving loan payable to a bank, interest at a reference rate (7.75% at
  March 31, 1999) or eurodollar rate (5.06% at March 31, 1999)
  plus 2.25%,  interest payable monthly, expires May 1, 2002                                 5,000        5,763
Term note payable to a bank, interest at a reference rate (7.75% at March 31, 1999) or
  eurodollar rate (5.06%) at March 31,1999) plus 2.25%, interest payable monthly,
  principal quarterly at $89,285.72, principal payable January through February 2006                      2,500
Revenue bond payable to a government financing authority, interest at a
  reference rate (5.0% at March 31, 1999) not to exceed 18%, payable monthly,
  principal payable annually at $100,000, increasing to $400,000 through
  December 2014                                                                              4,200        4,100
Notes payable to a government agency, interest at 2%, payable monthly
  through April 2012, collateralized in a second position on the Company's
  Philadelphia facility                                                                      1,649        1,545
Note payable to a government agency, interest at 0.5%, payable monthly
  beginning February 1999 through July 2005, principal and interest payable
  in equal monthly installments from August 2005 through January 2012,
  collateralized in a shared third position on the Company's Philadelphia
  facility                                                                                   1,000        1,000
Notes payable to a government agency, interest at 5.25%, payable monthly
  with principal through March 2012, collateralized in a shared first
  position on the Company's Philadelphia facility                                              710          678
Notes payable to a government agency, interest at 2%, payable with principal
  monthly through April 2001                                                                   306          206
Capital lease obligations payable in varying monthly installments through 2021,
  collateralized by buildings and equipment with a net book value of $6,317,000
  and $5,787,000 at March 31, 1998 and 1999, respectively                                    6,634        6,216
                                                                                         ---------    ---------
Total                                                                                      143,499      147,008
Current portion                                                                             (2,232)      (1,113)
                                                                                         ---------    ---------
Long-term debt                                                                           $ 141,267    $ 145,895
                                                                                         =========    =========
</TABLE>

      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


                                     - 12 -
<PAGE>

      debt,   payments  to   stockholders,   capital  stock   transactions   and
      transactions with affiliates. At March 31, 1999, no amounts were available
      for dividend payments. The Company may redeem the notes prior to maturity,
      subject to certain  redemption  premiums.  The senior  notes  payable  are
      obligations   of  CFP   Holdings   and   are,   jointly   and   severally,
      unconditionally  guaranteed in full by CFP Group and each of CFP Holdings'
      subsidiaries.

      In May 1998,  the Company  entered into a $40.0  million loan and security
      agreement (the "Loan and Security Agreement") with a financial institution
      providing  for  revolving  credit  loans  (the  "Revolver")  and term loan
      options.  Maximum  borrowings  under  the  Revolver  cannot  exceed  $40.0
      million,  limited to a  borrowing  base and other  limitations,  including
      amounts  outstanding  under  term  loans,  letters  of  credit  and  other
      borrowing instruments under the Loan and Security Agreement.  At March 31,
      1999,  the Company had $5.76  million  outstanding  under the revolver and
      $10.0 million  outstanding under term loans. All amounts outstanding under
      the Loan and Security Agreement become due and payable in May 2002.

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

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

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

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

      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, 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.

                                     - 13 -
<PAGE>

      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.

      Minimum principal  payments of long-term  obligations as of March 31, 1999
      are as follows:

      Year Ending                                           1999
       March 31,                                       (In Thousands)

         2000                                             $ 1,113
         2001                                               1,106
         2002                                               1,064
         2003                                              16,571
         2004                                             115,818
         Thereafter                                        11,336
                                                        ---------
         Total                                          $ 147,008
                                                        =========


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
      $570,000 for the year ended  September 30, 1996.  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. 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  $400,000,  $292,000,
      $666,000 and $736,000,  including reimbursed expenses,  for the year ended
      September  30, 1996,  the six months  ended March 31, 1997,  and the years
      ended  March  31,  1998  and  1999,  respectively.  The  Company  paid  an
      investment  banking fee of $750,000 to the same affiliate of a stockholder
      upon consummation of a 1996 acquisition.

      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.


                                     - 14 -
<PAGE>

      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, 1999, was approximately $1.5 million through December
      2001.  Additionally,  the Company has entered into  consulting  agreements
      with key individuals, which expire at various dates through December 2001,
      and total commitment for future salaries of approximately $600,000.

9.    REDEEMABLE COMMON STOCK

      In December 1996, in connection  with the execution of certain  employment
      agreements (see Note 8), three  management  shareholders  were granted the
      right to sell certain  shares of common stock and shares to be issued upon
      the exercise of certain stock options back to the Company.  The management
      shareholders  have the right to sell these shares 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, 1999, no change in the carrying value
      was necessary.

10.   STOCK OPTION PLAN

      In connection with the recapitalization  (see Note 1), the Company assumed
      all  obligations  of CFP Holdings under the CFP Holdings Stock Option Plan
      (the "1995 Stock Option Plan").  Under the plan,  which is administered by
      the Board of  Directors,  11,586  shares of  nonvoting  common  stock were
      reserved for the issuance of incentive stock options or nonqualified stock
      options to directors, employees and consultants of the Company. The price,
      terms  and  conditions  of  each  issuance  are  determined  based  on the
      provisions of the plan.  During the year ended September 30, 1995,  11,239
      options  were  granted at an  exercise  price of $289 per share,  of which
      7,437 options were exercisable as of September 30, 1996. 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.  During
      fiscal  year 1999  there  were no  options  granted  or  shares  exercised
      relating to the 1995 Stock Option Plan. As of March 31, 1999, 2,206 vested
      options  at an  exercise  price of $289 per  share,  expiring  2002,  were
      outstanding.


                                     - 15 -
<PAGE>

      In June 1998 the  Company's  Board of  Directors,  adopted a new incentive
      stock option plan (the "1998 Stock Option  Plan"),  which allows the grant
      of both  incentive  stock  options and  nonqualified  stock options to key
      employees  of the Company.  A total of 5,525  shares of  nonvoting  common
      stock has been authorized and reserved for issuance under this plan. As of
      March 31, 1999,  4,862  options had been  granted at an exercise  price of
      either $289 or $694. As of March 31, 1999,  all stock options  granted and
      outstanding under the 1998 Stock Option Plan were unvested.

      The Company has adopted the  disclosure-only  provision  of  Statement  of
      Financial   Accounting   Standards  ("SFAS")  No.  123,   "Accounting  for
      Stock-Based  Compensation." As such, compensation cost has been recognized
      under its  stock-based  compensation  plans in accordance with APB No. 25,
      "Accounting  for Stock Issued to  Employees."  The estimated fair value of
      options granted under the 1995 Stock Option Plan and the 1998 Stock Option
      Plan pursuant to SFAS No. 123 was $664,000 and $50,000,  respectively. Had
      compensation  cost for the  Company's  stock  option plan been  determined
      based  on their  fair  value  at the  date of  grant  consistent  with the
      provisions  of SFAS No. 123, the  Company's  pro forma net loss would have
      been $1.3 million,  $8.0 million, $5.7 million and $3.7 for the year ended
      September  30,  1996,  the six months  ended  March 31, 1997 and the years
      ended March 31, 1998 and 1999, respectively. The fair value of each option
      grant was estimated using the Black-Scholes  option pricing model with the
      following assumptions for the 1995 and 1998 plans, respectively:  dividend
      yield and volatility of zero for both years, a risk-free  interest rate of
      6.28% and 5.48%, and expected option lives of 3.7 and 5 years.

11.   INCOME TAXES

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


                                                Six Months    Year Ended
                                    Year Ended    Ended        March 31
                                  September 30,  March 31   --------------
                                       1996        1997     1998     1999
                                                  (In Thousands)

         Current:
           Federal                    $(401)
           State                          2        $   5    $  30    $ 467
                                      -----        -----    -----    -----
                                       (399)           5       30      467
                                      -----        -----    -----    -----
         Deferred:
           Federal                       39         (427)
           State                        (49)        (119)
                                      -----        -----    -----    -----
                                        (10)        (546)
                                      -----        -----    -----    -----
         Total (benefit) provision    $(409)       $(541)   $  30    $ 467
                                      =====        =====    =====    =====


                                     - 16 -
<PAGE>
<TABLE>

      The major  elements  contributing  to the  difference  between the federal
      statutory  income tax rate and the  effective  income tax rate relating to
      loss before income taxes are as follows:
<CAPTION>
                                                            Six Months         Year Ended
                                              Year Ended      Ended             March 31,
                                             September 30,   March 31,     --------------------
                                                1996          1997          1998          1999
<S>                                            <C>           <C>           <C>           <C>
         Statutory rate                        (35.0)%       (35.0)%       (35.0)%       (35.0)%
         Officer's life insurance and other
           nondeductible expenses                4.0           1.0           2.0           0.6
         Goodwill amortization                   6.4           1.6           1.8           3.2
         State taxes, net                       (1.6)          2.6          (2.0)         10.6
         Valuation allowance                                  23.4          33.2          35.7
                                                ----          ----          ----          ----
         Effective tax rate                    (26.2)%        (6.4)%         0.0 %        15.1 %
                                                ====          ====          ====          ====
</TABLE>

<TABLE>

      Deferred income taxes consist of the following:
<CAPTION>
                                                                                        March 31,
                                                      September 30,   -------------------------------------------
                                                         1996           1997              1998             1999
                                                                             (In Thousands)
<S>                                                   <C>              <C>              <C>              <C>
         Deferred income tax assets:
           Federal net operating loss carryforwards                    $ 2,894          $ 4,747          $ 5,171
           State taxes                                $    26                               160              113
           Accrued vacation                                39              114              113              102
           Expense accruals                                21               38              485              767
           State net operating loss carryforwards          43              627              849              452
           AMT credit carryforward                        189              126              126
           Other                                                                                             106
           Valuation allowances                                         (3,149)          (5,333)          (4,785)
                                                      -------          -------          -------          -------
                                                      $   318          $   650          $ 1,147          $ 1,926
                                                      =======          =======          =======          =======

         Deferred income tax liabilities:
           Depreciation and amortization              $   681          $   405          $ 1,135          $ 1,905
           Prepaid expenses                                51              101               12
           Other                                          131              144                                21
                                                      -------          -------          -------          -------
                                                      $   863          $   650          $ 1,147          $ 1,926
                                                      =======          =======          =======          =======

</TABLE>
      At  March  31,  1999,   the  Company  had  federal  net   operating   loss
      carryforwards of approximately $14.8 million, of which $3.8 million expire
      in 2003 and the  remaining  $11 million  expire in 2013 through  2019.  At
      March  31,  1999,   the  Company  had  various   states   operating   loss
      carryforwards  of  approximately  $7.5 million,  which expire in the years
      2001 through 2019.

      During the six months  ended  March 31, 1997 and the years ended March 31,
      1998 and 1999, the Company  established a valuation allowance equal to the
      net deferred tax asset of $3.1 million,  $5.3  million,  and $4.8 million,
      respectively.


                                     - 17 -
<PAGE>

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 year ended  September  30, 1996,  the six months ended
      March 31, 1997, and the years ended March 31, 1998 and 1999, respectively.
      Certain of the leases  require  the  payment  of related  property  taxes,
      insurance, maintenance and other costs.

      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, 1999, are summarized as follows:

                                                         Capital    Operating
                                                         Leases       Leases
                                                         ------       ------
      March 31,                                             (In Thousands)

       2000                                              $ 1,240       $ 229
       2001                                                1,094         202
       2002                                                1,113         115
       2003                                                  844          53
       2004                                                  841          26
       Thereafter                                         13,754          10
                                                         -------       -----
       Total minimum lease payments                       18,886       $ 635
       Amount representing interest                      (12,670)      =====
                                                         -------
       Present value of net minimum lease payments       $ 6,216
                                                         =======



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

13.   BENEFIT PLAN

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

14.   SEGMENT INFORMATION

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

                                     - 18 -
<PAGE>

      Custom  Foods  Products  has  one  significant  customer  that  represents
      approximately $14 million, $28 million, and $24 million for the six months
      ended  March 31,  1997,  and the  years  ended  March  31,  1998 and 1999,
      respectively.  Additionally,  the Company  sells  products  to  authorized
      distributors,   who  in  turn  sell  these  products  to  two  franchising
      operations.  For Custom Food Products one of these franchising  operations
      is significant in total with $21 million, $47 million, and $45 million for
      the six months  ended March 31,  1997,  and the years ended March 31, 1998
      and 1999,  respectively.  Quality  Foods also has a  significant  customer
      franchise  with sales of $6  million,  $36 million and $39 million for the
      six months  ended March 31,  1997,  and the years ended March 31, 1998 and
      1999, respectively.

      The accounting  policies of these segments are the same as those described
      in the summary of significant accounting principles.  The Company does not
      maintain separate stand-alone  financial statements prepared in accordance
      with generally  accepted  accounting  principles for each of its operating
      segments.  In  accordance  with SFAS No. 131, the Company has prepared the
      following  tables,  which present  information  related to each  operating
      segment included in internal management reports.
<TABLE>

                                                     1999
                                                (In Thousands)

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


                                                     1998
                                                (In Thousands)


                                           Custom       Quality      Corporate
                                            Foods        Foods       and Other     Eliminations      Total

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

</TABLE>

                                                   - 19 -
<PAGE>

<TABLE>

                                                       1997
                                                  (In Thousands)

        Note:  Statement of Operations Information for the Six Months Ended March 31, 1997

<CAPTION>
                                          Custom       Quality      Corporate
                                           Foods        Foods       and Other     Eliminations      Total
<S>                                       <C>          <C>            <C>            <C>            <C>
Net sales to external customers           $ 42,254     $ 18,275                                     $ 60,529
Interest expense                             3,405           95       $  3,706       $ (2,525)         4,681
Depreciation and amortization
  expense                                    1,165          247          1,116           (292)         2,236
Extraordinary item                                                       4,489                         4,489
Segment profit (loss) from
  operations                                 3,215          294         (2,730)                          779
Long-lived assets                           28,988       21,018        137,767        (81,675)       106,098
Total segments assets                       40,751       34,163        139,583        (81,675)       132,822
Capital expenditures                         1,459          215                                        1,674

</TABLE>
There is no segment  disclosure for the year ended September 30, 1996, as Custom
Food  Products was the  Company's  only  segment  prior to the December 31, 1996
acquisition of Quality Foods.

15.   QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>

      Selected  financial  information  for the quarterly  periods for the years
      ended March 31, 1998 and 1999.

<CAPTION>
                                                                            1999
                                               -------------------------------------------------------------
                                                  June 30       September 30    December 31     March 31
                                                                       (In Thousands)
<S>                                                  <C>             <C>            <C>            <C>
Net sales                                            $ 44,276        $ 45,070       $ 46,137       $ 47,682
Gross profit                                            8,173           9,108          8,761          9,605
Income from operations                                  3,201           4,274          3,913          3,801
Loss before income taxes                               (1,142)            (79)          (393)          (472)
Net loss                                               (2,195)           (260)          (393)          (708)


                                                                            1998
                                               -------------------------------------------------------------
                                                  June 30       September 30    December 31     March 31
                                                                       (In Thousands)

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)

</TABLE>

                                                   - 20 -
<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, 1999 and 1998 is
      as follows:

<CAPTION>
                                                                             March 31, 1999
                                                     ----------------------------------------------------------
                                                        CFP
                                                      Holdings          CFP                        CFP Group,
                                                        Inc.           Group,                         Inc.
                                                    Consolidated        Inc.       Eliminations   Consolidated
                                                                          (In Thousands)
<S>                                                   <C>              <C>           <C>            <C>
Total current assets                                   $ 34,799                                      $ 34,799
Total noncurrent assets                                 101,605                                       101,605
Investment in subsidiary                                               $ 2,490       $ (2,490)
                                                      ---------        -------       --------       ---------
Total                                                 $ 136,404        $ 2,490       $ (2,490)      $ 136,404
                                                      =========        =======       ========       =========

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

</TABLE>

                                                   - 21 -
<PAGE>
<TABLE>
<CAPTION>
                                                                    Year Ended March 31, 1999
                                                   -------------------------------------------------------------
                                                            CFP
                                                         Holdings          CFP                      CFP Group,
                                                            Inc.          Group,                       Inc.
                                                        Consolidated       Inc.      Eliminations  Consolidated
                                                                            (In Thousands)
<S>                                                      <C>             <C>           <C>           <C>
Sales                                                    $ 183,164                                   $ 183,164
Cost of sales                                              147,518                                     147,518
                                                         ---------                                   ---------
Gross profit                                                35,646                                      35,646
Selling, general and administrative expenses                20,458                                      20,458
                                                         ---------                                   ---------
Income from operations                                      15,188                                      15,188
Equity in loss of subsidiary                                             $ (3,557)     $ 3,557
Interest expense                                            17,275                                      17,275
                                                         ---------       --------      -------       ---------
Loss before income taxes and
  extraordinary item                                        (2,087)        (3,557)       3,557          (2,087)
Provision for income taxes                                     467                                         467
                                                         ---------       --------      -------       ---------
Loss before extraordinary item                              (2,554)        (3,557)       3,557          (2,554)
Extraordinary loss on early
  extinguishment of debt                                    (1,003)                                     (1,003)
                                                         ---------       --------      -------       ---------
Net loss                                                 $  (3,557)      $ (3,557)     $ 3,557       $  (3,557)
                                                         =========       ========      =======       =========
</TABLE>

                                                   - 22 -
<PAGE>
<TABLE>
<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                              $  29,829       $     (4)                     $  29,825
Total noncurrent assets                             103,254                                       103,254
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
  Stockholder's 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>

                                                   - 23 -
<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>

                                     ******
(15045)



                                     - 24 -
<PAGE>


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

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

<CAPTION>
                                           Balance at                                                      Balance at
                                           beginning       Charged to      Charged to                          end
              Description                  of period        Expenses          Other         Deductions      of period
              -----------                  ---------        --------          -----         ----------      ---------
Accounts Receivable:                                                     (In Thousands)
<S>                                          <C>             <C>              <C>              <C>            <C>
Allowance for doubtful accounts

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

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

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

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

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

</TABLE>

                                         53