UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

               [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                    FOR THE FISCAL YEAR ENDED JANUARY 3, 1997

                                       OR

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

                        COMMISSION FILE NUMBER 000-24124

                               FRESH AMERICA CORP.
                ONE LINCOLN CENTRE, 5400 LBJ FREEWAY, SUITE 1025
                                DALLAS, TX 75240
                                  (972)774-0575

                                                                IRS EMPLOYER
INCORPORATED IN:                                             IDENTIFICATION NO.:
TEXAS                                                            76-0281274

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

Title of Each Class                   Name of Each Exchange on Which Registered
-------------------                   -----------------------------------------
Common Stock, $0.01 Par Value                   Nasdaq National Market

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 such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                                 Yes [X] No [ ]

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

Based on the closing price reported on the Nasdaq National Market on March 26,
1997, the aggregate market value of common stock held by nonaffiliates of the
registrant was approximately $50 million.

The number of common shares outstanding of the registrant was 3,740,890 as of
March 26, 1997.

                      DOCUMENTS INCORPORATED BY REFERENCES:

Proxy statement for 1997 annual meeting of shareholders tentatively scheduled
for June 19, 1997.                                                      Part III
<PAGE>
                                     PART I

ITEM 1.  BUSINESS.

GENERAL

    Fresh America Corp. ("Fresh America" or the "Company") is an integrated food
distribution management company that operates in 38 states through twelve
distribution and processing facilities. The Company's core business is the
procurement, warehousing and distribution of fresh produce and other perishable
products to Sam's Club ("Sam's" or "Sam's Club"), a division of Wal-Mart Stores,
Inc. ("Wal-Mart"). Beginning in the latter part of 1995, the Company began
diversifying its customer base through the development of new business
opportunities and acquisitions as described below.

    The Company was founded in 1989 under the name Gourmet Packing, Inc. to
distribute produce and other perishables exclusively to Sam's Club. Initially,
the Company sold its products to individual Sam's Clubs on a purchase order
basis. After delivery of the products to the receiving area of each club, the
products became the property and responsibility of Sam's, which resold the
products to Sam's Club members. Shortly after it began operations, the Company
expanded the program by providing personnel in each club to operate the produce
department and by installing Company-owned upright coolers for refrigerated
products. Beginning April 1991, Sam's licensed the Company to operate produce
departments in selected clubs on a full service, turn-key basis, and such
arrangement continued into November 1995. Effective November 1995, the Company
commenced operations under a five year distribution agreement (the "Agreement")
with Sam's Club whereby Sam's Club takes ownership of the produce as it enters
the clubs and resells to its club members. See further discussion and more
detail below under the caption "SAM'S CLUB DISTRIBUTION SINCE NOVEMBER 1995."

    On September 8, 1995, the Company acquired the assets and business of Lone
Star Produce, Inc. ("Lone Star Produce") a food service distribution company
based in Austin, Texas. Lone Star Produce currently services more than 250
customers in the Austin and Central Texas area. Lone Star Produce principally
distributes produce and fresh vegetables to restaurants, hotels, government
agencies and other institutions.

    In January 1996, the Company commenced a program to provide purchasing,
systems, logistical support and distribution services for a portion of Alliant
Foodservice's existing produce business. Also, in January 1996, the Company
entered into an arrangement with Dole Fresh Vegetables, Inc. to provide enhanced
regional distribution capabilities for Dole brand fresh-cut salads.

    On November 4, 1996, the Company acquired the assets and business of Produce
Plus, Inc. ("Produce Plus") a specialty food service distribution company based
in Houston, Texas, serving more than 250 customers comprised of restaurants,
schools, hospitals and other institutions primarily in the greater Houston area.

    On November 6, 1996, the Company acquired a minority interest in Henri
Morris & Associates, Inc., a provider of standardized and custom software and
technology to the produce and grocery industry, serving clients throughout the
United States and Canada.

    On January 22, 1997, the Company acquired substantially all of the operating
assets of CPT Enterprises, Inc., d/b/a Chef's Produce Team ("CPT") with
locations in Los Angeles and San Francisco, California. CPT, with approximately
100 customers, provides primarily specialty produce and vegetables to upscale
restaurants and hotels located throughout California and parts of Nevada.

                                       2
<PAGE>
    On February 28, 1997, the Company entered into a five year agreement with
Fast Food Merchandiser's, Inc. ("FFM") and Hardee's Food Systems, Inc. to supply
the 12 existing FFM distribution centers with produce for further distribution
to Hardee's restaurants. Coinciding with such agreement, the Company acquired
the FFM food processing facility in Richmond, Indiana.

    On March 7, 1997, certain assets of One More Tomato, Inc. ("OMT"), a
Houston-based tomato repacker, were acquired by the Company. OMT's customers
primarily consist of grocery chains and restaurants.

    SAM'S CLUB DISTRIBUTION - SINCE NOVEMBER 1995. Effective November 1995, the
Company commenced operations under a five year Agreement with Sam's Club. The
Agreement replaced the Company's pre-existing license agreement, which was
scheduled to expire on November 30, 1995 (see SAM'S CLUB OPERATIONS - PRIOR TO
NOVEMBER 1995). Under the Agreement, Sam's Club takes ownership of the product
as it enters the clubs and resells to Sam's Club members. Fresh America invoices
Sam's Club for product delivered to the clubs in accordance with purchase orders
issued by Sam's Club. Further, Sam's has complete operational authority within
the produce departments of each club. Accordingly, Sam's has assumed all costs
and liabilities related to the operation of the departments, including all
in-club personnel costs, merchandising and sales costs, customer returns and
credits, and product shrink. Under the prior agreement, Fresh America was
responsible for such costs and maintained ownership of the product until it was
sold directly to Sam's Club members. Under the current Agreement, Sam's Club has
placed a Sam's associate in each of the Company's distribution centers to
monitor quality issues, participate in the coordination of Sam's orders to Fresh
America and advise and consult with the Company's representatives as to Sam's
future requirements.

    Under the Agreement, the Company's distribution arrangement with Sam's has
expanded into the midwestern, central and southern Florida regions of the United
States where the Company has exclusive territories that it services through six
regional distribution centers. The addition of these territories increased the
number of clubs served by the Company from 190 immediately prior to the
expansion to 375 clubs as of March 1, 1997, which represents approximately 86%
of the 436 Sam's Clubs in operation. Of the additional 185 clubs added by these
territories, 26 clubs in southern Florida were added in early November 1995, 153
clubs in the central and midwestern United States were added on January 2, 1996
and 6 clubs were added subsequently. In late March or April 1997, the Company
anticipates a reduction in the number of clubs it services for Sam's by forty in
the Florida area. See further discussion under the caption, "RELATIONSHIP WITH
SAM'S."

    SAM'S CLUB OPERATIONS - PRIOR TO NOVEMBER 1995. Under the pre-existing
license agreement with Sam's Club, the Company operated fresh produce
departments within Sam's Clubs, through which the Company offered a variety of
fresh fruit and vegetables, refrigerated pre-packed produce and selected
processed foods to Sam's Club members. Under the license agreement, Fresh
America staffed its produce departments with its own employees, owned the
inventory and maintained responsibility for purchasing, distribution and
merchandising. Members paid for the Company's products at the Sam's check-out
counter, and Sam's remitted the sales proceeds to the Company on a weekly basis,
after deducting a license fee payable to Sam's under the license agreement.

     Growth in the number of Sam's Clubs served by the Company since its
inception resulted primarily from an increase in the number of Sam's Clubs
within Fresh America's operating territory, the addition of produce departments
in pre-existing Sam's Clubs that previously did not offer produce, and the
expansion of Fresh America's operating territory, which allowed Fresh America to
assume produce operations previously conducted by other vendors or licensees of
Sam's. As a result of these three factors, the number of produce departments
operated by Fresh America increased from 90 at the end of 1991, to 126 at the
end of 1992, 157 at the end of 1993, 187 at the end of 1994, and 190 prior to
the conversion to the Agreement.

                                       3
<PAGE>
    CATALOG SALES. During 1994, the Company entered into a venture with Sam's
Club to be a supplier to and coordinate the fulfillment activity for the Sam's
Club Gift Express Catalog. During 1995, the venture arrangement was discontinued
and the Company continued as a supplier to the catalog and expanded its role
within the catalog to being a consolidator for shipments of other products
offered in the catalog. The discontinuance of the equity venture relationship
with Sam's Club allowed Fresh America to expand its gift division in other
directions and allowed Sam's to market the catalog for other means without
consideration of the needs of a venture partner. The catalog program provided
only minimal sales in 1996. Currently, the Company has elected not to pursue
additional customers or new business under this program and will be fulfilling
only existing commitments to provide such service in the future.

    SALES TO WAL-MART STORES. The Company continues to pursue opportunities to
increase sales to Wal-Mart stores independent of its Agreement with Sam's.
During 1995, the Company's efforts evolved into developing seasonal and special
promotions with Wal-Mart to offer holiday and gift items containing fresh
produce during the peak holiday periods. The Company delivers these products
from its distribution centers directly to the individual Wal-Mart stores on a
purchase order basis. The Company cannot predict whether it will be successful
in continuing or expanding the scope of the program or the number of Wal-Mart
stores that might participate. During 1996, such program generated only minimal
sales.

    ALLIANT FOODSERVICE PROGRAM. In January 1996, the Company commenced a test
program to provide purchasing, systems and logistical support, and distribution
services for a portion of the existing produce business of Alliant Foodservice
("Alliant"). Alliant is the second largest broad-line food service distributor
in the United States, serving a nationwide network of food service customers
through 39 districts across the United States. Under its agreement with Alliant,
the Company coordinates the purchase, transportation and consolidation of
produce for certain Alliant districts based on the requirements of each
district. Fresh America purchases the produce and coordinates the shipment
directly to an Alliant district, when volume dictates, or receives the produce
into the Company's distribution centers where it is combined with other produce
and shipped to the Alliant district by Company truck or third-party carrier. The
successful initial phase of the test program utilized the Company's Wilkes-Barre
distribution center; subsequently the Company has expanded the program and is
currently servicing 27 Alliant districts.

    DOLE PROGRAM. In January 1996, the Company entered into an arrangement with
Dole Fresh Vegetables, Inc. ("Dole") to provide enhanced regional distribution
capabilities for Dole brand fresh-cut salads. Dole Fresh Vegetables, Inc., a
division of Dole Food Company, Inc., is the world's largest producer and
marketer of high quality vegetables, including a full line of fresh-cut salads.
The initial phase of the arrangement commenced in early February 1996 out of the
Company's Chicago distribution center with service to the midwestern United
States. Dole has placed a representative in the Company's distribution center to
coordinate with the Company's personnel the ordering of product from Dole,
in-bound transportation from Dole and the outbound shipment of product to Dole's
customers. A similar arrangement was established in the Company's Atlanta
distribution center in late summer 1996.

    OTHER GROWTH OPPORTUNITIES. Management believes that the Company has
developed the systems and facilities necessary to successfully distribute a wide
range of produce and other perishable products on a competitive basis.
Consistent with its business and growth strategy, management has explored
opportunities to apply its expertise to markets in need of full service,
integrated produce and other perishable product distribution management
services. Management believes that niche customers such as hospitals, restaurant
chains, caterers and other retailers and institutions could be potential
customers for these services. The Company intends to continue to pursue
selective acquisitions of other produce companies. There can be no assurance
that the Company will be successful in pursuing potential growth opportunities.
See "Outlook and Uncertainties -- Risks Associated with New Business
Opportunities."

OPERATIONS

    DISTRIBUTION CENTERS. Fresh America conducts its operations out of twelve
operating facilities. Six of these facilities are distribution centers that
primarily serve Sam's Club and are located in Dallas and Houston, Texas; Atlanta
,Georgia; Chicago, Illinois; Cincinnati, Ohio; and Wilkes-Barre, Pennsylvania.

                                       4
<PAGE>
The other operating facilities are located in Texas, California and Indiana, and
primarily serve the customers of the recently acquired operations discussed
previously. In addition, the Company maintains executive offices in Dallas,
Texas where its senior management is based and an administrative and accounting
office in Houston, Texas.

    PURCHASING. Fresh America employs purchasing agents in each of its operating
locations, who purchase produce directly from growers and shippers and
cooperatives representing growers. The Company selects its suppliers carefully
and regularly monitors their ability to provide quality products at competitive
prices. As a result of its substantial volume of purchases, the Company is able
to obtain fresh produce of premium size, quality and appearance at very
competitive costs. In many cases, the Company purchases produce only from
selected warehouses within a supplier's system, based on management's assessment
of the quality provided by the particular warehouses. Produce is usually
acquired for delivery within four days, and the Company generally does not
operate under contractual supply agreements for its produce. Although purchases
by Fresh America frequently constitute a significant portion of a particular
supplier's sales, no single supplier accounts for more than ten percent of Fresh
America's costs of goods sold. Management believes that all of the items stocked
in its inventory are available from numerous suppliers at competitive prices.

    In addition, the Company established a central buying department in its
Dallas distribution center in 1996 to handle the particular requirements of the
Alliant program.

    WAREHOUSING AND DISTRIBUTION. For Sam's activity, produce is delivered to
the Company's six regional distribution centers. Each distribution center
employs approximately 35 - 50 people, most of whom are involved in receiving and
shipping, as well as driving the Company's transportation fleet. The
distribution centers are designed for high volume receiving, cold storage,
sorting and shipping, and are located to allow the Company to distribute
perishable products by truck to Sam's throughout the respective regional
geographical area.

    Fresh America's products are delivered from its distribution centers to
customers using Fresh America's fleet of 32 leased tractors and refrigerated
trailers, as well as third party trucking companies. Deliveries from the
Company's Dallas and Houston distribution centers are made primarily with the
Company's own trucks, while the Atlanta, Chicago, Cincinnati, Richmond and
Wilkes-Barre centers rely primarily on dedicated third party carriers.

    For the Company's food service distribution operations in Texas and
California that serve primarily restaurants, hotels, schools, hospital and other
institutions, the warehouse facilities are generally smaller in scale from those
serving Sam's, but have the same capabilities. Staffing is substantially lower
on average in the shipping and receiving areas while drivers are more numerous
to handle the much larger number of customers and relative deliveries made.
Deliveries from these facilities to their respective customers are made by
fleets of refrigerated bobtail trucks leased and/or owned by the Company.

    VALUE-ADDED CAPABILITIES.The Company performs certain value added functions
at many of its locations, including the assembly and preparation of fruit
baskets and party trays of pre-cut vegetables arranged around a vegetable dip.
In early 1997, the Company extended its value added capabilities through the
purchase of a facility in Richmond, Indiana and the acquisition of OMT. The
Richmond facility employs high technology equipment to cut and package fresh
vegetables. It also employs ripening, computer sorting and packing equipment for
tomatoes. At the OMT facility, tomatoes are ripened, sorted by size and quality,
then are repackaged and distributed to customers.

    MERCHANDISING AND MARKETING. The Company attempts to maximize sales under
the Agreement through developing and coordinating with Sam's special promotions
in the clubs. Further, the Company and its wholly-owned produce distribution
subsidiaries are developing regional and nationwide programs designed to service
the produce requirements of regional and national restaurant, hotel, hospital
and other chains. Such programs would use the Company's existing facilities.

    QUALITY CONTROL. The Company focuses on quality and freshness at each step
of the receipt, processing and distribution process. Because the products
delivered by the Company are perishable, proper handling, 

                                       5
<PAGE>
including maintenance of constant temperature and humidity, is critical to the
control of product spoilage. Equally important is the Company's ability to
accurately order the correct quantity of each product to meet the demands of its
customers. Although the nature of the Company's business is such that some
amount of its inventory will be lost through spoilage, management attempts to
minimize this expense. Produce is transported to and from the Company's
operating locations in refrigerated, temperature monitored trucks. When produce
is to be received, the Company's personnel inspect the products to ensure that
quality specifications have been satisfied. Accepted items are immediately
stored in product specific, temperature controlled environments. Purchased
product typically spends no more than three days in the Company's facilities
before delivery to a specific customer.

    PERSONNEL. Fresh America refers to its employees as "associates" and
attempts to maintain a team spirit among all of its associates. Management
believes that the Company's relations with its associates are good. None of the
Company's associates are represented by a labor union with the exception of a
nominal amount of drivers in a certain region. As of March 1, 1997, the Company
employed a total of approximately 462 full-time associates and 14 part-time
associates, including approximately 43 corporate associates and 433 regional
associates.

    COMPETITION. The Company operates in highly competitive markets, and its
success will be largely dependent on its ability to provide quality products at
the lowest possible prices. The Company competes with food service companies,
produce distribution companies and wholesale food distribution companies, some
of which have substantially greater financial resources than the Company.

SAM'S CLUB

    Sam's Club is a division of Wal-Mart Stores, Inc., which is the nation's
largest retailer. Sam's Clubs generally range in size between 90,000 and 120,000
square feet of building space and offer bulk displays of name brand hard good
merchandise, selected soft goods and institutional size grocery items, as well
as produce and other perishable items. Sam's Clubs also generally offer jewelry,
sporting goods, toys, tires, electronics, appliances, tools, office supplies,
books and other items. Sam's Clubs are membership-only operations.

    The produce departments located within Sam's Clubs are adjacent to the other
food items offered by Sam's. Most of the clubs have been upgraded by Sam's to
include expanded departments, which offer a larger selection of products, as
well as meat and bakery departments.

    PRODUCTS. To serve the needs of Sam's Club, the Company provides
approximately 60 items in three product categories - fresh produce, refrigerated
pre-packed produce and processed foods. Consistent with the overall approach of
Sam's membership warehouse clubs, Sam's offers a relatively limited selection of
high volume items that are packed in bulk or institutional quantities.
Management believes that Sam's produce departments offer approximately one-third
as many different products as a typical retail grocery store, but that the
products offered by Sam's would account for more than two-thirds of such a
grocery store's produce department sales. Sam's Club produce is displayed in
coolers and open bins appropriate for the warehouse club atmosphere.

    Sam's fresh produce includes staple items such as apples, lemons, bananas,
oranges, grapefruit, onions, tomatoes, potatoes and garlic, and seasonal items
such as strawberries, blueberries, cherries, grapes, peaches, plums, avocados
and watermelons. Refrigerated pre-packed produce includes chopped lettuce and
pre-sliced fruits and vegetables, including party trays of fresh, pre-cut
vegetables arranged around a vegetable dip. Processed foods include prepackaged
salads, prepared salads and a limited selection of salad dressings.

    CUSTOMERS. Sam's Club customers include individuals purchasing for their own
use and small businesses, such as restaurants and catering firms, and
governmental institutions such as prisons and schools. For these customers, the
primary alternatives to Sam's Club produce departments are traditional retail
grocery stores. For the restaurants, catering firms and other businesses that
purchase produce in Sam's Clubs, the primary alternatives are grocery stores,
farmers markets and wholesale food distribution companies.

                                       6
<PAGE>
    COMPETITION. Within the Sam's Club system, the Company competes for
expansion opportunities with other companies that distribute to Sam's in other
geographic regions. Following the initial term of the Agreement, Sam's might
decide to allow a competing company to distribute, or might distribute itself,
any or all of the produce departments currently being serviced by the Company.

RELATIONSHIP WITH SAM'S

    Fresh America's relationship with Sam's is governed by the terms and
conditions of the Agreement between Sam's and the Company. The Agreement, which
became effective December 1, 1995, has a term of five years ending on December
1, 2000. The Agreement gives Fresh America the exclusive right to distribute
fresh fruit and vegetables, refrigerated pre-packed produce and produce-related
refrigerated processed foods to Sam's Clubs located within the area currently
served by the Company's regional distribution centers. Sam's is not required to
purchase any particular quantity of produce under the Agreement. The Company
electronically invoices Sam's Club based on deliveries to each club and payment
is due from Sam's Club 19 days after receipt of invoice.

    The Agreement may be terminated for cause if the Company commits a material
breach under the Agreement or there are material documented problems with the
distribution of products by the Company (after notice from Sam's and a 30 day
opportunity to cure), if the Company loses its permit to operate under the
Perishable Agricultural Commodities Act, or if the Company becomes bankrupt or
insolvent or fails to pay its suppliers. Further, upon 120 days notice, Sam's
may terminate the Agreement with respect to no more than 40 clubs per year
within the Company's exclusive territory if a Wal-Mart or Sam's Club
distribution center that is opened to service Wal-Mart Supercenters and/or Sam's
Club elects to distribute produce to such clubs and is capable of doing so in
the ordinary course of its business. During the third, fourth and fifth years of
the term, the limit of 40 clubs per year will apply on a cumulative basis.
Management believes that the Company is in compliance with all of the terms of
the Agreement. The Agreement is generally not assignable by the Company without
the consent of Sam's Club.

    In February 1997, Sam's advised the Company that as a result of the opening
of its new Wal-Mart Supercenter Distribution Center in Winterhaven, Florida, it
elected to exercise the existing option under the Agreement to distribute
produce directly with respect to 40 clubs from such new location. It is expected
that this transition will occur in late March or April 1997. The Company
believes that this event will not have a material adverse effect on its
financial condition.

ITEM 2.  PROPERTIES.

    The Company's headquarters and executive offices occupy 5,200 square feet of
leased space in an office building in Dallas, Texas. Its administrative and
accounting office and Houston distribution center is located in a building of
approximately 50,000 square feet owned by the Company on a 5.25 acre tract of
land in Houston, Texas.

    The Company leases its five remaining regional distribution centers, which
are located in Dallas, Texas; Atlanta, Georgia; Chicago, Illinois; Cincinnati,
Ohio; and Wilkes-Barre, Pennsylvania. The Dallas distribution center occupies
approximately 105,000 square feet and is leased under a five year lease ending
in March 2001. The Atlanta distribution center occupies approximately 64,000
square feet and is leased under a seven year lease ending in March 2001. The
Chicago distribution center occupies approximately 73,000 square feet and is
leased under a ten year lease ending in December 2005. The Cincinnati
distribution center occupies approximately 47,000 square feet and is leased
under a ten year lease ending in December 2005. The Wilkes-Barre distribution
center occupies approximately 50,000 square feet and is leased under a seven
year lease ending in November 1999.

    The Company's wholly-owned subsidiary, Lone Star Produce, is based in
Austin, Texas in a building of approximately 12,500 square feet owned by Lone
Star Produce on a 1.96 acre tract of land. Lone Star Produce also operates a
small processing facility in Austin, Texas occupying approximately 6,400 square
feet under a three year lease ending in April 1997.

                                       7
<PAGE>
    Produce Plus, a wholly-owned subsidiary based in Houston, Texas currently
leases approximately 30,000 square feet on a month-to-month basis. The Company
intends to relocate Produce Plus to a new facility in Houston as soon as it is
practical.

    CPT, a wholly owned subsidiary, has facilities in Los Angeles and San
Francisco, California. The Los Angeles operation occupies approximately 10,000
square feet and is leased on a month-to-month basis. The lease is currently
being renegotiated. The San Francisco operation occupies approximately 14,000
square feet under a six-year lease that expires March 2003.

    The Richmond, Indiana processing plant and distribution facility sits on an
approximate 10 acre tract acquired with the plant that has a total of
approximately 37,000 square feet.

    OMT, a wholly owned subsidiary located in Houston, Texas, occupies
approximately 13,500 square feet under a lease that expires in January 1998.

    Management believes that its existing facilities are adequate for the
Company's present level of operations and will be capable of accommodating the
Company's anticipated internal growth within its existing geographic
territories. Expansion into a new geographic territory would require the Company
to open one or more additional operating facilities.

ITEM 3.  LEGAL PROCEEDINGS.

    The Company is party to, from time to time, various claims, disputes, legal
actions and other proceedings involving product liability, contracts, equal
employment opportunity, occupational safety and various other matters. In the
opinion of management, the outcome of any pending matters should not have a
material adverse effect on the financial condition of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    None.

                                       8
<PAGE>
                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS.

    The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol FRES. As of March 26, 1997, the Company had 68 holders of record for its
common stock. The Company estimates that there were in excess of one thousand
beneficial owners of its common stock as of that date. The high and low sales
prices for the common stock on the Nasdaq National Market for each quarter of
fiscal 1995 and 1996 are shown below:

                           COMMON STOCK PRICE RANGE

                                            High                   Low
                                            ----------       -------------
    1995
           First Quarter                      7 7/8              4 3/16
           Second Quarter                     6 5/8              4 3/8
           Third Quarter                      8 3/4              4 7/8
           Fourth Quarter                     9 3/4              7 7/16
    1996
           First Quarter                     15                  9 1/2
           Second Quarter                    16 3/8             12 3/4
           Third Quarter                     21                 10 1/2
           Fourth Quarter                    22 3/4             16

    The Company has never declared or paid cash dividends on its common stock.
The Company currently intends to retain any earnings to support operations and
to finance expansion, and therefore, does not anticipate paying cash dividends
in the foreseeable future. The payment of cash dividends in the future will
depend upon such factors as the Company's earnings, capital requirements,
financial condition, contractual restrictions and other factors deemed relevant
by the Board of Directors. In addition, the Company's revolving credit facility
prohibits the payment of cash dividends by the Company.

RECENT SALES OF UNREGISTERED SECURITIES

    On November 4, 1996, the Company acquired substantially all of the business
and net operating assets of Produce Plus, Inc. ("Produce Plus"), a privately
owned specialty food service distribution company based in Houston, Texas.
Consideration for the net assets received consisted of $829,000 in cash, 14,118
shares of Company stock valued at $18.88 per share and a contingent convertible
promissory note to be valued at an amount no greater than $600,000, such future
value being determined by certain agreed upon levels of pretax earnings of
Produce Plus for the two years ended January 1, 1999. Seventy-five percent of
the value, if any, of such note may be paid (at Produce Plus' option) in the
form of Company stock at $21.25 per share. The Company issued the Common Stock
and the note in reliance on the exemption provided in Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act").

    On November 6, 1996, the Company acquired a minority interest in convertible
preferred stock in Henri Morris & Associates, Inc. ("Henri Morris") and an
option to purchase Henri Morris common stock in exchange for a cash payment of
$250,000. In connection with its investment in Henri Morris, the Company issued
to the majority owner of Henri Morris a warrant to purchase 5,000 restricted
shares of the Company's Common Stock at a price of $19.75 per share. See Notes
to the Company's Consolidated Financial Statements. The Company issued the
warrant in reliance on the exemption provided in Section 4(2) of the Securities
Act.

                                       9
<PAGE>
ITEM 6.  SELECTED FINANCIAL AND OPERATING DATA.

    The following selected consolidated financial and operating data should be
read in conjunction with Item 7-Management's Discussion and Analysis of
Financial Condition and Results of Operations and Item 8-Financial Statements
and Supplementary Data contained herein. The statement of operations and balance
sheet data for each of the five fiscal years ended January 3, 1997 are derived
from the audited financial statements of the Company.

<TABLE>
<CAPTION>
                                                    FISCAL YEAR ENDED (1)
                                      ---------------------------------------------------------
                                      JAN. 3,     JAN. 2,    JAN. 1,      JAN. 5,    JAN. 3,
                                        1993        1994       1995         1996       1997
                                      ---------------------------------------------------------
                                               (In thousands, except per share amounts)
<S>                                   <C>          <C>        <C>         <C>         <C>      
STATEMENT OF OPERATIONS DATA:                              
Net sales                             $  63,909    $ 89,433   $ 115,927   $ 124,837   $ 239,177
Cost of goods sold, excluding
depreciation and

     amortization                        52,142     73,655      95,366     103,118     215,927
                                      ----------  ---------  ----------   ---------  ----------
Gross profit                             11,767     15,778      20,561      21,719      23,250
Selling, general and administrative      11,843     14,361      17,645      18,711      17,254
                                      ----------  ---------  ----------   ---------  ----------
Operating income (loss)                     (76)     1,417       2,916       3,008       5,996
Other income (expense)(2)                (1,092)      (166)        282         427         361
                                      ----------  ---------  ----------   ---------  ----------
Income (loss) before taxes               (1,168)     1,251       3,198       3,435       6,357
Provision for income taxes                    -        200       1,125       1,135       2,314
                                      ----------  ---------  ----------   ---------  ----------
Net income (loss)                      $ (1,168)   $ 1,051    $  2,073    $  2,300   $   4,043
                                      ==========  =========  ==========   =========  ==========

Earnings per share                                           $    0.65    $   0.63  $     1.05
                                                             ==========   ========= ===========
Pro forma earnings per share (3)                  $   0.43
                                                  =========

                                       ------------------------------------------------------
                                       JAN. 3,     JAN.       JAN. 1,     JAN.      JAN. 3,
                                         1993      2, 1994      1995      5, 1996     1997
                                       ------------------------------------------------------
BALANCE SHEET DATA:                                       (in thousands)

Working capital (deficit)             $  (1,812)  $   (756)   $ 10,661    $ 11,490  $ 14,171
Property, plant and equipment, net        2,459      2,379       3,385      4,795      5,920

Total assets                              8,091      9,336      22,958     29,832     35,207
Long-term debt and capital leases,
     less current portion                 1,260      1,150         213        610        547
Convertible preferred stock               2,500      2,500           -          -

Shareholders' equity (deficit)           (2,842)    (1,700)     14,195     16,497     21,252
</TABLE>
(1) Fiscal years 1992-1994, the Company's fiscal year was a 52 or 53 week period
    ending on the first Sunday in January. Beginning with fiscal 1995 the
    Company's fiscal year is a 52 week or 53 week period ending on the first
    Friday in January. Consequently, 1995 is a 52 week and 5 day period.
(2) Other income (expense) for fiscal 1992 includes a loss of $875,397 relating
    to settlement of a lawsuit.
(3) Due to the significant change in capitalization on and prior to closing of
    the Company's initial public offering (see Note 4 of Notes to Consolidated
    Financial Statements), historical earnings per share have not been presented
    for fiscal 1992 and 1993. Pro forma earnings per share for fiscal 1993 have
    been calculated as if all dilutive securities (including options and
    warrants) were converted to common stock (subject to the use of the treasury
    stock method) at January 4, 1993. For purposes of this pro forma
    presentation, it was assumed that the Common Stock had a fair value of $9.00
    per share, its initial public offering price.

                                       10
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

    The following table sets forth, for the periods indicated, the components of
the consolidated statements of operations as a percentage of net sales.

                                                      Fiscal Year Ended
                                               --------------------------------
                                               January     January     January
                                               1, 1995     5, 1996     3, 1997
                                               --------    --------    --------
Net sales ..................................      100.0%      100.0%      100.0%
Cost of goods sold .........................       82.3        82.6        90.3
                                               --------    --------    --------
Gross profit ...............................       17.7        17.4         9.7
Selling, general and
   administrative expenses .................       15.2        15.0         7.2
                                               --------    --------    --------
Operating income ...........................        2.5         2.4         2.5
Other income (expense) .....................        0.3         0.4         0.2
                                               --------    --------    --------
Income before taxes ........................        2.8         2.8         2.7
Provision for income taxes .................        1.0         1.0         1.0
                                               ========    ========    ========
Net income .................................        1.8%        1.8%        1.7%
                                               ========    ========    ========

GENERAL

    As discussed in Item 1 - Business, the Agreement with Sam's resulted in a
revised revenue and cost structure for the Company which is not directly
comparable with periods prior to November 1995. The following discussion
identifies the major categories of costs which are affected by the transition to
the current Agreement.

     Prior to fiscal 1995, the Company's fiscal year was a 52 or 53 week period
ending on the first Sunday in January. Commencing with fiscal 1995, the
Company's fiscal year is a 52 week or 53 week period ending on the first Friday
in January. Consequently, fiscal 1995 is a 52 week and five day period ended
January 5, 1996 as a result of this change. The fiscal years ended January 3,
1997 and January 1, 1995 are 52 week periods.

COMPARISON OF FISCAL 1996 TO FISCAL 1995

    NET SALES. Net sales increased $114.3 million, or 91.6%, from $124.8 million
in fiscal 1995 to $239.2 million in fiscal 1996. The increase in net sales was
the result of several factors, including (a) the expansion of the Company's
operating territory under the Agreement and the resulting addition of 184 Sam's
clubs within the Company's operating territory subsequent to November of 1995
(b) the acquisitions of Lone Star Produce and Produce Plus and (c) the
commencement of contracts with Alliant and Dole in January 1996. These increases
were partially offset by the revised revenue structure under the Agreement and
the decrease in the number of operating days in fiscal 1996.

    Under the Agreement, the Company became a wholesale distributor whereas
under the previous agreement with Sam's Club, the Company was selling at retail
to the Sam's Club members. As a consequence, the 97% increase in the number of
Sam's clubs serviced by the Company in fiscal 1996 as compared to fiscal 1995
was the primary contributor to the increase in revenues. The acquisitions of
Lone Star Produce in September 1995 and Produce Plus in November of 1996, and
additional business opportunities with Alliant Foodservice and Dole Fresh
Vegetables, increased revenues by approximately $21.2 million from fiscal 1995
compared to fiscal 1996. Partially offsetting these increases was a decrease in
the net sales of approximately $3.9 million attributable to the five less days
of operation in fiscal 1996.

    COST OF GOODS SOLD. Cost of goods sold increased by $112.8 million, or
109.4% from $103.1 million in fiscal 1995 to $215.9 million in fiscal 1996,
primarily reflecting the increase in net sales and the change in the Company's
cost structure under the Agreement. As a percentage of net sales, cost of goods
sold increased from 82.6% to 90.3%.

                                       11
<PAGE>
    As mentioned in Item 1 - Business, under the Agreement, Sam's Club takes
ownership of the product as it enters the clubs and resells the product to Sam's
Club members. Accordingly, Sam's Club has assumed all costs and liabilities
related to the operation of the departments, including all in-club personnel
costs, merchandising and sales costs, customer returns and credits, and product
shrink. Under the prior license agreement, Fresh America was responsible for
such costs and maintained ownership of the product until it was sold directly to
Sam's Club members. The elimination of these costs and related risks to Fresh
America is the principal factor explaining the Company's lower gross profit
margins under the Agreement.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses decreased by $1.5 million or 7.8% from $18.7
million in fiscal 1995 to $17.3 million in fiscal 1996. As a percentage of net
sales, SG&A expenses decreased from 15.0% to 7.2%. The major decline in SG&A
expenses was attributable to salaries and related costs, which decreased $3.5
million, or 26.0% from $13.4 million in fiscal 1995 to $9.9 million in fiscal
1996. The decrease in salaries and related costs was directly related to the
reduction in labor at the club and club management levels attributable to the
Agreement. Under the Agreement, the Company no longer operates the produce
departments in the Sam's Clubs and the Company reduced personnel associated with
these operations in the fourth quarter of 1995. Offsetting these reductions in
SG&A expense was an increase in rent, maintenance and related costs of $1.7
million, or 104.6% from $1.7 million in fiscal 1995 to $3.4 million in fiscal
1996. This increase is primarily attributable to the addition of two new
distribution centers in Chicago and Cincinnati which are operating out of leased
facilities.

    OPERATING INCOME. As a result of the foregoing factors, operating income
increased by $3.0 million from $3.0 million in fiscal 1995 to $6.0 million in
fiscal 1996. As a percentage of net sales, operating income increased from 2.4%
in fiscal 1995 to 2.5% in fiscal 1996.

    PROVISION FOR INCOME TAXES. In each of the fiscal years 1995 and 1996, the
provisions for income taxes reflect the full utilization of $193,000 of the
Company's available net operating loss carryforward. At the end of fiscal 1996,
the Company had approximately $677,000 of net operating loss carryforward
available to reduce future income taxes. However, because an "ownership change"
occurred for federal income tax purposes in 1992, the Company may use no more
than $193,000 of its net operating loss carryforwards during fiscal 1996 and
each year in the future until fully utilized.

    NET INCOME. As a result of the foregoing factors, net income increased by
$1.7 million from $2.3 million in fiscal 1995 to $4.0 million in fiscal 1996.

COMPARISON OF FISCAL 1995 TO FISCAL 1994

        NET SALES. Net sales increased by $8.9 million, or 7.7%, from $115.9
million in fiscal 1994 to $124.8 million in fiscal 1995. The increase in net
sales is attributable to several factors, including (a) the effect of an
additional five days sales in fiscal 1995, (b) the expansion to an additional
179 Sam's Clubs in southern Florida and the central and midwestern United States
under the Agreement, (c) other Sam's Club additions during fiscal 1994 and 1995,
(d) gift division sales, and (e) the acquisition of Lone Star Produce. The
increase in sales was partially offset by the effect of the new Agreement on the
Company's pricing structure and certain club closings by Sam's Club.

    Approximately $1.5 million of the increase in net sales was attributable to
the additional five days of operations in fiscal 1995.

                                       12
<PAGE>
    Approximately $3.4 million of the increase is due to the expansion of the
Company's territory under the new Agreement. In early November, the Company
expanded to 26 Sam's Clubs in southern Florida and on January 2, 1996 the
Company expanded to an additional 153 clubs in the central and midwestern United
States. An additional $3.4 million of the increase is due to the addition of 38
other Sam's Clubs serviced by the Company since January 2, 1994. Included in the
38 new Sam's Clubs opened since January 2, 1994 are 23 clubs that Fresh America
began to operate in January 1994, which were formerly Pace Membership Clubs
acquired by Sam's from K-mart Corporation during the fourth quarter of 1993.
Offsetting the opening of new clubs, the Company elected to discontinue its
service of the Sam's Club in Hawaii in August 1994 and, in December 1994, Sam's
closed certain under-performing clubs throughout the country, four of which were
in the Company's area of operations. These club closings accounted for a
reduction in revenue of approximately $3.3 million.

    The Company estimates that revenues were reduced $1.8 million in 1995 as
compared to 1994 as a result of the revenue and cost structure under the new
Agreement. Revenues are lower under the Agreement because the Company sells its
product directly to Sam's Club (rather than to the Sam's Club member) at prices
that reflect the fact that Sam's is now responsible for the costs of product
shrink and in-club operations. Consequently, the reduction in revenue is
associated with a reduction in cost of goods sold and operating expenses under
the new Agreement.

    Approximately $6.0 million of the increase in revenues is attributable to
the acquisition of Lone Star Produce in September 1995 and the Company's gift
division operations.

    COST OF GOODS SOLD. Cost of goods sold increased by $7.8 million, or 8.1%,
from $95.4 million in fiscal 1994 to $103.1 million in fiscal 1995, primarily
reflecting the increase in net sales. As a percentage of net sales, cost of
goods sold increased from 82.3% to 82.6%. The relationship between cost of goods
sold and revenues is affected by the new Agreement as the Company is no longer
responsible for product shrink or in-club operations. Therefore, the increase in
cost of goods sold as a percentage of net sales is directly impacted by the $1.8
million reduction in revenue attributable to the revenue and cost structure
provided for under the new Agreement as described above.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased by
$1.1 million, or 6.0%, from $17.6 million in fiscal 1994 to $18.7 million in
fiscal 1995. As a percentage of sales, SG&A expenses decreased from 15.2% in
fiscal 1994 to 15.0% in fiscal 1995, in part as a result of efficiencies
produced by the higher level of net sales.

    The major portion of SG&A expenses was attributable to salaries and related
costs, which increased $0.5 million, or 3.8%, from $12.9 million in fiscal 1994
to $13.4 million in fiscal 1995. The increase is primarily related to the
acquisition of Lone Star Produce and the Company's gift division operations. The
increase was partially offset by the reduction in personnel associated with
in-club operations which occurred as the Company transitioned its operations to
the new Agreement. The Company reduced personnel levels from 749, immediately
prior to the transition to the new Agreement, to 259 associates as of January 5,
1996.

    Rent, maintenance and related costs increased by 6.9%, from $1.5 million in
fiscal 1994 to $1.7 million in fiscal 1995 primarily as a result of the
acquisition of Lone Star Produce. Insurance expense increased $0.2 million, or
20.3%, from $0.9 million in fiscal 1994 to $1.1 million in fiscal 1995. The
increase is attributable to a $150,000 non-recurring reduction in insurance
expense related to settlement of a dispute over Texas worker's compensation
insurance premiums recorded in 1994.

    OPERATING INCOME. As a result of the foregoing factors, operating income
increased by $0.1 million, from $2.9 million in fiscal 1994 to $3.0 million in
fiscal 1995. As a percentage of net sales, operating income decreased from 2.5%
in fiscal 1994 to 2.4% in fiscal 1995.

    INTEREST INCOME (EXPENSE). Interest income increased to $454,000 in 1995
from $265,000 in 1994 as a result of investing the unused proceeds from the
Company's initial public offering in May 1994. Similarly, interest expense
decreased from $170,000 in 1994 to $54,000 in 1995 as a result of the Company
retiring substantially all of its debt from the proceeds of the Company's
initial public offering.

                                       13
<PAGE>
    PROVISION FOR INCOME TAXES. In both 1994 and 1995, the Company used
approximately $193,000 of net operating loss carryforwards to offset income for
federal income tax purposes. Utilization of the net operating loss carryforwards
and additional tax exempt interest earned in 1995 is the primary reason for the
effective tax rates of 35.2% in fiscal 1994 and 33.0% in fiscal 1995. At the end
of fiscal 1995, the Company had $0.9 million of net operating loss carryforwards
available to reduce future income taxes. However, because an "ownership change"
occurred for federal income tax purposes in 1992, the Company may use no more
than $193,000 of its net operating loss carryforwards during fiscal 1996 and
each year in the future.

    NET INCOME. As a result of the foregoing factors, net income increased by
$0.2 million, from $2.1 million in fiscal 1994 to $2.3 million in fiscal 1995.
As a percentage of net sales, net income was 1.8% in both fiscal 1994 and 1995.

LIQUIDITY AND CAPITAL RESOURCES

    Cash provided by operating activities was $5.7 million for fiscal 1996, as
compared to cash used by operations of $8.6 million in fiscal 1995. The
difference is primarily due to higher profitability in 1996 and a lower use of
cash for working capital. The Company's use of cash for working capital purposes
in fiscal 1995 was principally related to the new Agreement with Sam's Club and
the transition to the new Agreement. The Company experienced transition delays
in billing under the Agreement that resulted in extended receivables from Sam's
Club at January 5, 1996. The delays were resolved in late fiscal 1995 and,
subsequent to January 5, 1996, the Company has substantially reduced the
extended receivables from Sam's Club. Also, affecting cash flow was the change
to a payment term of 19 days under the new Agreement compared to seven days
under the previous agreement.

    Cash used for investing activities was $2.5 million in 1996 compared to $1.6
million in 1995, an increase of $0.9 million. The increase is due to increased
cash used for acquisitions and investments in other companies, and increases in
additions to property, plant and equipment arising from equipment and other
facility related costs from the addition of two new distribution facilities in
Cincinnati and Chicago and expansion of other facilities required to service the
Agreement with Sam's.

    At January 3, 1997 the Company had working capital of $14.2 million compared
to $11.5 million at January 5, 1996. The Company has a $5.0 million bank
revolving line of credit, under which the maximum level of borrowing was
$1,000,000 in fiscal 1995 and 1996. As of March 26, 1997, the Company has
outstanding borrowing of $2.5 million on its revolving line of credit.

    Management believes that the combination of cash generated from operating
activities, availability under the existing bank line of credit and the use of
operating leases where appropriate and available is sufficient to meet its
operating requirements and normal capital expenditure needs. The Company intends
to continue its expansion activities and will require additional capital to meet
such requirements. The Company believes that it has access to the capital
markets and can obtain additional credit from financial institutions in order to
raise the capital necessary to fund such expansion.

QUARTERLY RESULTS AND SEASONALITY

    The Company's business is seasonal, with its greatest quarterly sales volume
occurring in the fourth quarter. A substantial portion of the Company's produce
sales consists of staple items such as apples, oranges, grapefruit, potatoes and
onions, which are strongest during the fall, winter and spring. The supply and
quality of these items declines during the summer, although lost sales are
replaced to some extent by more seasonal products such as peaches, plums,
nectarines, strawberries and melons. Sales of refrigerated, pre-packed products,
such as vegetable trays, are strongest during the fourth quarter holiday season.
Because the Company's results of operations depend significantly on sales
generated during the fourth quarter, any adverse development affecting the
Company's operations during this period, such as the unavailability of high
quality produce, harsh weather conditions, or product costs, could have a
disproportionate impact on the Company's results of operations for the full
year. Under the Agreement, management believes the Company's quarterly net sales
will continue to be impacted by a similar pattern of seasonality. The following
table sets forth certain quarterly information for the Company's two most recent
fiscal years (in thousands):

                                       14
<PAGE>
<TABLE>
<CAPTION>
                                FISCAL 1995(A)                                          FISCAL 1996(B)
             ----------------------------------------------------    ----------------------------------------------------
             FIRST QTR.    SECOND QTR.   THIRD QTR.    FOURTH QTR.   FIRST QTR.    SECOND QTR.   THIRD QTR.    FOURTH QTR.
             ----------    ----------    ----------    ----------    ----------    ----------    ----------    ----------
<S>          <C>           <C>           <C>           <C>           <C>           <C>           <C>           <C>       
Net sales    $   25,815    $   31,846    $   28,256    $   38,919    $   46,195    $   64,721    $   59,726    $   68,535

Gross
profit ...        4,687         5,937         5,273         5,822         4,238         6,325         5,299         7,388

Gross
margin ...         18.2%         18.6%         18.7%         15.0%          9.2%          9.8%          8.9%         10.8%

Net income   $      182    $      790    $      324    $    1,004    $      348    $    1,407    $      810    $    1,478
</TABLE>
------------
(a) The 52 week and five day year is spread 12 weeks and 5 days, 13 weeks, 13
    weeks and 14 weeks respectively.
(b) The 52 week year is spread 12, 13, 13 and 14 weeks respectively.

OUTLOOK AND UNCERTAINTIES

    Certain information in this Annual Report may contain "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. In some cases, forward-looking statements can be identified by
the use of terminology such as "may," "will," "expects," "plans," "anticipates,"
"estimates," "potential" or "continue," or the negative thereof, and other
variations thereon or comparable terminology. Such statements are subject to
inherent risks and uncertainties, including the following risk factors:

    DEPENDENCE ON SAM'S CLUB. Sam's Club is the Company's primary customer and
accounted for approximately 99%, 98% and 90% of the Company's sales for fiscal
years 1994, 1995 and 1996, respectively. Sam's is not required to purchase any
particular quantity of produce from the Company under the Agreement. Any adverse
development affecting Sam's or any decision by Sam's to close existing clubs,
reduce the number of new clubs that it opens or reduce the number of clubs that
offer fresh produce and related products could have a material adverse effect on
the Company. The Company's current Agreement with Sam's terminates on December
1, 2000, and may be terminated by Sam's prior to such time under certain
circumstances, for example, if the Company commits a material breach under the
Agreement or there are material documented problems that continue unresolved
with the distribution of products by the Company. Sam's may also further reduce
the number of clubs within the Company's territory by forty per year under
certain specified circumstances as previously described under ITEM 1 - BUSINESS.

    RISKS ASSOCIATED WITH NEW BUSINESS OPPORTUNITIES. Management of the Company
has stated its intention to diversify the Company's customer base through the
development of new business opportunities and through selected acquisitions. The
pursuit of such opportunities will require a significant investment of funds and
management attention by the Company. Any such opportunities will be subject to
all of the risks inherent in the establishment of a new product or service
offering, including competition, lack of sufficient customer demand,
unavailability of experienced management and unforeseen complications, delays
and costs increases. The Company may incur costs in connection with pursuing new
growth opportunities that it cannot recover.

    ACCESS TO CAPITAL MARKETS. In order to fulfill its intention to diversify
its customer base and make selected acquisitions, the Company will need to raise
additional capital funds. There can be no assurance that the Company will be
able to access the capital markets or obtain credit from financial institutions
when such a need arises. Changes in interest rates, market liquidity, stock
prices and general market conditions may all affect the Company's ability to
raise funds.

    VOLATILITY OF PRICES AND QUALITY. Prices of high quality fresh produce are
extremely volatile based on available supply, which can be significantly
affected by factors such as weather, disease and level of agricultural
production. Both sales and profitability could be negatively affected during
periods of exceptionally high, low or volatile prices.

                                       15
<PAGE>
    COMPETITION. The Company operates in highly competitive markets, and its
success will be largely dependent on its ability to provide quality products at
the lowest possible prices. The Company competes with food service companies,
produce distribution companies and wholesale food distribution companies, some
of which have substantially greater financial resources than the Company. There
can be no assurance that the Company will be able to compete successfully with
current or future competitors.

    DEPENDENCE ON KEY PERSONNEL. The future success of the Company will depend
to a significant extent on the efforts and abilities of its senior management.
The loss of the services of one or more of the Company's senior management
personnel could have a material adverse effect on the Company.

    SEASONALITY. The Company's business is seasonal, with its highest sales and
net income historically occurring during the fourth quarter. Any adverse
development affecting the Company's operations during this period, such as the
unavailability of high quality produce or harsh weather conditions, could have a
disproportionate impact on the Company's results of operations for the full
year.

ITEM 8.  FINANCIAL STATEMENT AND SUPPLEMENTARY DATA.

Index to Consolidated Financial Statements and Financial Statement Schedules

                                                                       Page
                                                                      ------
       Independent Auditors' Report .................................   F-1
       Consolidated Balance Sheets as of the last day of fiscal years
          1995 and 1996 .............................................   F-2
       Consolidated Statements of Operations for fiscal years 1994,
          1995 and 1996 .............................................   F-3
       Consolidated Statements of Shareholders' Equity for fiscal
          years 1994, 1995 and 1996 .................................   F-4
       Consolidated Statements of Cash Flows for fiscal years 1994,
          1995 and 1996 .............................................   F-5
       Notes to Consolidated Financial Statements ...................   F-6

Financial Statement schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements or
related notes.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE.

    None.

                                       16
<PAGE>
                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    Information relating to the directors and executive officers of the Company
is set forth under the caption "Executive Officers and Directors" in the
Company's definitive Proxy Statement for the Annual Meeting of Shareholders
tentatively scheduled for June 19, 1997 (the "Proxy Statement"). Such
information is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION.

    Information relating to executive compensation is set forth under the
caption "Executive Compensation and Other Information" in the Company's Proxy
Statement. Such information is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    Information relating to ownership of equity securities of the Company by
certain beneficial owners and management is set forth under the caption
"Security Ownership of Certain Beneficial Owners and Management" in the
Company's Proxy Statement. Such information is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    Information relating to certain relationships and related transactions is
set forth under the caption "Certain Relationships and Related Transactions" in
the Company's Proxy Statement. Such information is incorporated herein by
reference.

                                     PART IV

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

A.  Documents filed as a part of this report.

    1.  Financial Statements

    2.  Financial Statement Schedules - None.

    3.  Exhibits

        The exhibits listed in the accompanying Exhibit Index are filed or
incorporated by reference as part of this report.

B.  Reports on Form 8-K.

        No reports on Form 8-K were filed during the fourth quarter of 1996,
which ended on January 3, 1997.

                                       17
<PAGE>
                                  EXHIBIT INDEX

Exhibit
Number                                      Description
------                                      -----------
 3.1    Restated Articles of Incorporation of Fresh America (Incorporated by
        reference exhibit 3.1 to the Company's Registration Statement on Form
        S-1 [Commission File Number 33-77620]).

 3.2    Restated Bylaws of Fresh America Corp. (Incorporated by reference to
        exhibit 3.2 to the Company's Registration Statement on Form S-1
        [Commission File Number 33-77620]).

*4.1    Specimen of Common Stock Certificate. (Incorporated by reference to
        exhibit 4.1 to the Company's Registration Statement on Form S-1
        [Commission File Number 33-77620]).

10.1

        Amended License Agreement between the Company and Sam's Wholesale Club,
        dated November 23, 1992 (Incorporated by reference to exhibit 10.1 to
        the Company's Registration Statement on Form S-1 [Commission File Number
        33-77620]).

10.3    Fresh America Corp. 1993 Stock Option Award Plan (Incorporated by
        reference to exhibit 10.3 to the Company's Registration Statement on
        Form S-1 [Commission File Number 33-77620]).

10.4    Form of Option Agreement entered into pursuant to the Stock Option Plan
        (Incorporated by reference to exhibit 10.4 to the Company's Registration
        Statement on Form S-1 [Commission File Number 33-77620]).

10.6    Lease between the Company and Gwinnett 316 Associates, dated as of
        December 22, 1993 (Incorporated by reference to exhibit 10.6 to the
        Company's Registration Statement on Form S-1 [Commission File Number
        33-77620]).

10.7    Agreement Regarding Tenant Improvements between the Company and Gwinnett
        316 Associates, dated as of December 22, 1993 (Incorporated by reference
        to exhibit 10.7 to the Company's Registration Statement on Form S-1
        [Commission File Number 33-77620]).

10.8    Lease between the Company and The Trustees of the Estate of James
        Campbell, dated as of March 17, 1991 (Incorporated by reference to
        exhibit 10.8 to the Company's Registration Statement on Form S-1
        [Commission File Number 33-77620]).

10.9    Industrial Lease Agreement between the Company and Keyco Distributors,
        Inc., dated as of December 1, 1992 (Incorporated by reference to exhibit
        10.9 to the Company's Registration Statement on Form S-1 [Commission
        File Number 33-77620]).

10.10   Warranty Deed between the Company and Thomas M. Hubbard dated as of
        April 8, 1992 (Incorporated by reference to exhibit 10.10 to the
        Company's Registration Statement on Form S-1 [Commission File Number
        33-77620]).

                                       18
<PAGE>
Exhibit
Number                                      Description
------                                      -----------
10.11   Agreement, dated as of August 28, 1995 between Sam's Club, a division of
        Wal-Mart Stores, Inc. And Fresh America Corp. (Incorporated by reference
        to exhibit 10.1 to the Company's Form 10-Q for the quarterly period
        ended September 29, 1995).

10.12   Purchase Agreement, dated as of September 8, 1995, among Lone Star
        Produce Acquisition Corp., Fresh America Corp., Lone Star Produce Inc.,
        and William P. Boone (Incorporated by reference to exhibit 10.2 to the
        Company's Report on Form 10-Q for the quarterly period ended September
        29, 1995).

10.13   Form of Agreement dated as of April 30, 1995 between Fresh America Corp.
        and David I. Sheinfeld, Steve R. Grinstead and Marc K. Rieke
        (Incorporated by reference to exhibit 10.3 to the Company's Report on
        Form 10-Q for the quarterly period ended September 29, 1995).

10.14   Industrial Lease Agreement between the Company and Industrial
        Developments International, Inc., dated as of November 15, 1995
        (Incorporated by reference to exhibit 10.14 to the Company's Form 10-K
        for the fiscal year ended January 5, 1996).

10.15   Industrial Lease Agreement between the Company and Industrial
        Developments International, Inc., dated as of December 27, 1995
        (Incorporated by reference to exhibit 10.15 to the Company's Form 10-K
        for the fiscal year ended January 5, 1996).

10.16   Credit Agreement between the Company and NationsBank, dated as of July
        1, 1996 (Incorporated by reference to exhibit 10.1 to the Company's Form
        10-Q for the quarterly period ended June 28, 1996).

10.17   Extension and Modification of Lease between the Estate of James Campbell
        and the Company (Incorporated by reference to exhibit 10.2 to the
        Company's Form 10-Q for the quarterly period ended June 28, 1996).

10.16   Fresh America Corp. 1996 Stock Option Award Plan (Incorporated by
        reference to exhibit 10.1 to the Company's Form 10-Q for the quarterly
        period ended September 27, 1996).

11.1    Statement Regarding Computation of Per Share Earnings.

21.1    List of Subsidiary Corporations.
----------
*   Pursuant to Item 601(b)(4)(iii), the Company has not filed as exhibits
    instruments defining the rights of holders of long-term debt where the total
    amount of the securities authorized thereunder do not exceed 10% of the
    Company's and its subsidiaries' total assets on a consolidated basis. The
    Company agrees to furnish a copy of such instruments to the Commission upon
    request.

                                       19
<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.

                                                  FRESH AMERICA CORP.
                                                     (Registrant)

Date:  March 26, 1997                             By /s/  DAVID I. SHEINFELD
                                                  Chairman and
                                                  Chief Executive Officer

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


/s/ STEVE R. GRINSTEAD                                  Date:    MARCH 26, 1997
Steve R. Grinstead
President, Chief Operating Officer and Director

/s/ THOMAS M. HUBBARD                                   Date:    MARCH 26, 1997
Thomas M. Hubbard
Director

/s/ SHELDON I. STEIN                                    Date:    MARCH 26., 1997
Sheldon I. Stein
Director

/s/ COLON WASHBURN                                      Date:    MARCH 31, 1997
Colon Washburn, Director

/s/ ROBERT C. KIEHNLE                                   Date:    MARCH 26, 1997
Robert C. Kiehnle
Executive Vice President and Chief Financial
Officer

/s/ ROGER S. HUNTINGTON                                 Date:    MARCH 26, 1997
Principal Accounting Officer

                                       20
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Fresh America Corp.:


We have audited the accompanying consolidated balance sheets of Fresh America
Corp. and subsidiaries as of January 3, 1997 and January 5, 1996, and the
related consolidated statements of operations, shareholders' equity (deficit),
and cash flows for each of the years in the three-year period ended January 3,
1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Fresh America Corp.
and subsidiaries as of January 3, 1997 and January 5, 1996, and the results of
their operations and their cash flows for each of the years in the three
year-period ended January 3, 1997, in conformity with generally accepted
accounting principles.

                                                   KPMG Peat Marwick LLP

Houston, Texas
March 13, 1997

                                      F-1
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)

                                                               JANUARY   JANUARY
                                                               5, 1996   3, 1997
                                                               -------   -------
ASSETS
Current Assets:
    Cash and cash equivalents ................................ $ 1,851   $ 4,297
    Receivables:
       Trade accounts receivable .............................  19,675    20,912
       Other .................................................      67        39
                                                               -------   -------
          Total receivables ..................................  19,742    20,951
                                                               -------   -------
    Inventories:
       Produce ...............................................   1,746     1,680
       Supplies ..............................................     212       260
                                                               -------   -------
          Total inventories ..................................   1,958     1,940
                                                               -------   -------
    Prepaid expenses .........................................     664       391
                                                               -------   -------
          Total current assets ...............................  24,215    27,579
                                                               -------   -------

Property, plant and equipment, net ...........................   4,795     5,920
Notes receivable from shareholders ...........................     125       155
Other assets, net of amortization of $24 and $66,
respectively .................................................     697     1,553
                                                               -------   -------
                                                               $29,832   $35,207
                                                               =======   =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
    Notes payable ............................................ $ 1,000   $  --
    Current portion of long-term debt and capital leases .....      91       105
    Accounts payable .........................................  10,573    11,598
    Accrued salaries and wages ...............................     395       311
    Other accrued expenses ...................................     542     1,039
    Taxes payable ............................................     124       355
                                                               -------   -------
              Total current liabilities ......................  12,725    13,408
                                                               -------   -------
Long-term debt and capital leases, less current portion ......     610       547
                                                               -------   -------
Shareholders' Equity:
    Common stock $.01 par value. Authorized 10,000,000 shares:
              issued 3,518,585 and 3,711,795 respectively ....      35        37
    Additional paid-in capital ...............................  13,983    14,693
    Retained earnings ........................................   2,479     6,522
                                                               -------   -------
              Total shareholders' equity .....................  16,497    21,252
                                                               -------   -------
Commitments and contingencies
                                                               -------   -------
                                                               $29,832   $35,207
                                                               =======   =======

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

                                      F-2
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands except per share amounts)

<TABLE>
<CAPTION>
                                                         FISCAL YEAR ENDED
                                                -----------------------------------
                                                JANUARY 1,   JANUARY 5,   JANUARY 3,
                                                  1995         1996         1997
                                                ---------    ---------    ---------
<S>                                             <C>          <C>          <C>      
Net sales ...................................   $ 115,927    $ 124,837    $ 239,177
Cost of goods sold, excluding
    depreciation and amortization ...........      95,366      103,118      215,927
                                                ---------    ---------    ---------
              Gross profit ..................      20,561       21,719       23,250
                                                ---------    ---------    ---------
Selling, general and administrative expenses:
    Salaries and related costs ..............      12,918       13,404        9,913
    Rent, maintenance and related costs .....       1,547        1,654        3,384
    Insurance expense .......................         931        1,120          845
    Automobile, travel and related
costs .......................................         676          728          547
    Communication expense ...................         571          510          518
    Depreciation and amortization ...........         492          675        1,332
    Other ...................................         510          620          715
                                                ---------    ---------    ---------
                                                   17,645       18,711       17,254
                                                ---------    ---------    ---------
              Operating income ..............       2,916        3,008        5,996
                                                ---------    ---------    ---------
Other income (expense):
    Interest expense ........................        (170)         (54)         (89)
    Interest income .........................         265          454          265
    Other, net ..............................         187           27          185
                                                ---------    ---------    ---------
                                                      282          427          361
                                                ---------    ---------    ---------

Income before income taxes ..................       3,198        3,435        6,357
Provision for income taxes ..................       1,125        1,135        2,314
                                                ---------    ---------    ---------
              Net income ....................   $   2,073    $   2,300    $   4,043
                                                =========    =========    =========
Earnings per share ..........................   $    0.65    $    0.63    $    1.05
                                                =========    =========    =========
Weighted average common and common
     equivalent shares outstanding ..........       3,167        3,670        3,863
                                                =========    =========    =========
</TABLE>

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

                                      F-3
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                       (IN THOUSANDS EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                             RETAINED          TOTAL
                                             ADDITIONAL      EARNINGS      SHAREHOLDERS'
                                  COMMON      PAID-IN      (ACCUMULATED       EQUITY
                                   STOCK      CAPITAL        DEFICIT)        (DEFICIT)
                                  --------   ----------    ------------    -------------
<S>                               <C>        <C>           <C>             <C>           
Balances at January 2, 1994 ...   $     11   $      184    $     (1,894)   $      (1,699)
Issuance of 15,000 shares of
    Series B preferred stock ..       --            (90)           --                (90)
Conversion of Series A and
    Series B preferred stock ..         11        3,989            --              4,000
Exercise of employee stock
    options ...................       --             10            --                 10
Dividends on preferred stock ..       --           (112)           --               (112)
Issuance of 1,250,000 shares of
     common stock, net of
offering costs ................         13       10,000            --             10,013
Net income ....................       --           --             2,073            2,073
                                  --------   ----------    ------------    -------------
Balances at January 1, 1995 ...         35       13,981             179           14,195
Exercise of employee stock
     options ..................       --              2            --                  2
Net income ....................       --           --             2,300            2,300
                                  --------   ----------    ------------    -------------
Balances at January 5, 1996 ...         35       13,983           2,479           16,497
Exercise of warrants ..........          1         --              --                  1
Acquisitions ..................       --            266            --                266
Exercise of employee stock
     options ..................          1          444            --                445
Net income ....................       --           --             4,043            4,043
                                  ========   ==========    ============    =============
Balances at January 3, 1997 ...   $     37   $   14,693    $      6,522    $      21,252
                                  ========   ==========    ============    =============
</TABLE>

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

                                      F-4
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                            FISCAL YEAR ENDED
                                                                      -------------------------------
                                                                      JANUARY     JANUARY     JANUARY
                                                                      1, 1995     5, 1996     3, 1997
                                                                      --------    --------    -------
<S>                                                                   <C>         <C>         <C>    
Cash flows from operating activities:
      Net income ..................................................   $  2,073    $  2,300    $ 4,043
      Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
          Depreciation and amortization ...........................        492         675      1,332
          Loss on disposal of equipment ...........................       --            90         19
          Other ...................................................       --          --           22
          Change in assets and liabilities:
               Increase in accounts receivable ....................     (2,522)    (14,707)      (369)
               (Increase) decrease in inventories .................       (531)      1,268        134
               (Increase) decrease in prepaid expenses ............        283        (555)       (43)
               Increase in other assets ...........................        (46)        (42)      (444)
               Increase in accounts payable .......................      1,485       2,765        318
               Increase (decrease) in accrued expenses and
                    other current liabilities .....................        177        (354)       639
                                                                      --------    --------    -------
                    Total adjustments .............................       (662)    (10,860)     1,608
                                                                      --------    --------    -------
          Net cash provided by (used in) operating activities .....      1,411      (8,560)     5,651
                                                                      --------    --------    -------
Cash flows from investing activities:
      Additions to property, plant and equipment, net .............     (1,362)     (1,276)    (1,728)
      Cost of acquisition, exclusive of cash acquired .............       --          (498)      (829)
      Proceeds from sale of equipment .............................       --           141         17
                                                                      --------    --------    -------
          Net cash used in investing activities ...................     (1,362)     (1,633)    (2,540)
                                                                      --------    --------    -------
Cash flows from financing activities:
      Payments of notes payable, net of proceeds ..................       (300)       --       (1,000)
      Payments of long-term debt and capital leases ...............     (1,535)       (500)       (80)
      Additions to notes payable, long-term debt and capital leases        400       1,000       --
      Notes receivable from shareholders ..........................       (125)       --          (30)
      Dividends paid on preferred stock ...........................       (112)       --         --
      Net proceeds from exercise of employee stock options ........         10           2        445
      Net proceeds from private preferred stock placement .........      1,410        --         --
      Net proceeds from sale of common stock ......................     10,013        --         --
                                                                      --------    --------    -------
          Net cash provided by (used in) financing activities .....      9,761         502       (665)
                                                                      --------    --------    -------
          Net increase (decrease) in cash and cash equivalents ....      9,810      (9,691)     2,446
Cash and cash equivalents at beginning of year ....................      1,732      11,542      1,851
                                                                      ========    ========    =======
Cash and cash equivalents at end of year ..........................   $ 11,542    $  1,851    $ 4,297
                                                                      ========    ========    =======
Supplemental disclosures of cash flow information:
      Cash  paid for interest .....................................   $    170    $     54    $    58
      Cash  paid for income taxes .................................   $    853    $  1,483    $ 2,233
</TABLE>

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

                                      F-5
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

    Fresh America Corp. was incorporated in Texas in May 1989. Prior to November
1995, Fresh America Corp. was a licensee under contract with Sam's Club ("Sam's"
or "Sam's Club"), a division of Wal-Mart Stores, Inc., to operate fresh produce
departments in certain Sam's clubs. Under the terms of a five-year distribution
agreement (the "Agreement") with Sam's effective December 1, 1995, Fresh America
Corp. discontinued its service of operating the fresh produce department in
certain Sam's clubs and became a distributor of fresh produce and related
products primarily to Sam's (see Note 2).

    The following are the significant accounting policies followed by Fresh
America Corp. and subsidiaries (the "Company") in the preparation of the
consolidated financial statements.

    PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of Fresh America Corp. and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.

    FISCAL YEAR - Prior to fiscal 1995, the Company's fiscal year was a 52 or 53
week period ending on the first Sunday in January. Commencing with fiscal 1995,
the Company's fiscal year is a 52 week or 53 week period ending on the first
Friday in January. Consequently, fiscal 1995 is a 52 week and five day period
ended January 5, 1996 as a result of this change. The fiscal year ended January
3, 1997 was a 52 week period.

    CASH AND CASH EQUIVALENTS - For purposes of the statements of cash flows,
the Company considers all highly liquid cash or equivalent assets with original
maturities of less than three months to be cash and cash equivalents.

    FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair value estimates of financial
instruments are made at discrete points in time based on relevant market
information. These estimates may be subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be
determined with precision. The Company believes that the carrying value of its
current assets and current liabilities approximate the fair value of such items.

    INVENTORIES - Inventories are stated at the lower of cost or market on a
first-in, first-out basis.

    PROPERTY, PLANT, AND EQUIPMENT - Depreciation on plant and equipment is
calculated on the straight line method over the estimated useful lives of the
assets (from 5 to 40 years). Plant and equipment held under capital leases and
leasehold improvements are amortized on the straight-line method over the
shorter of the lease term or estimated useful life of the asset.

    IMPAIRMENT OF LONG-LIVED ASSETS. Effective January 6, 1996, the Company
adopted Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
Accordingly, in the event that facts and circumstances indicate that long-lived
assets may be impaired, an evaluation of recoverability would be performed. If
an evaluation is required, the estimated cash flows associated with the asset is
compared to the asset's carrying amount to determine if a write-down is
necessary. Adoption of this standard did not have a material effect on the
financial position or results of operations of the Company.

    REVENUE RECOGNITION - Prior to November 1995, and under its license
agreement with Sam's, the Company retained ownership of all fresh produce and
related products until it passed through Sam's point-of-sale registers at which
time revenue was recognized. During November 1995, the Company commenced
operations under its current Agreement with Sam's and, as a consequence,
recognizes revenue upon delivery of product. For all other customers, revenue is
recognized at such time the product has been delivered or the service has been
rendered.

                                      F-6
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    START-UP COSTS - Under the license agreement, the Company capitalized
certain costs associated with the start-up of new Sam's Clubs and the expansion
of certain Sam's Clubs. In addition, the Company capitalizes certain costs
associated with the start-up of new distribution centers. The remaining
unamortized portion of such costs totaled $240,000 and $30,000, at January 5,
1996 and January 3, 1997, respectively. Such costs are generally amortized over
one year.

    INCOME TAXES - Deferred tax assets and liabilities are established for the
temporary differences between the financial reporting basis and the tax basis of
the Company's assets and liabilities, and for operating loss and tax credit
carryforwards, at enacted tax rates expected to be in effect when such amounts
are realized or settled. See Note 8 - Income Taxes for additional information .

    EARNINGS PER SHARE - Earnings per share have been calculated based upon the
weighted average number of common and common equivalent shares outstanding
during the period. Common stock equivalents consisting of stock options and
warrants are included in the computation of weighted average shares when their
effect is dilutive. Earnings per share are presented on a fully diluted basis.

    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 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.

NOTE 2.  AGREEMENT WITH SAM'S CLUB.

    In August 1995, the Company entered into a five-year distribution Agreement
with Sam's Club. This Agreement, which began on December 1, 1995, replaced the
Company's previously existing license agreement with Sam's Club which expired on
November 30, 1995. Under terms of the Agreement, the Company expanded its
distribution arrangement with Sam's into specified exclusive new territories
approximately doubling the number of Sam's clubs serviced by Fresh America. As a
result of this expansion, the Company commenced operations from two new
distribution centers in Chicago, Illinois and Cincinnati, Ohio on January 2,
1996. The Company and Sam's mutually agreed to begin the transition to the new
Agreement during November 1995. Expansion under the Agreement was effected on
January 2, 1996. Sam's clubs serviced increased from 190 clubs before expansion
to 375 clubs as of January 3, 1997.

    The Agreement gives Sam's ownership of the product as it enters the clubs
and complete operational authority within the produce departments of each club.
Accordingly, Sam's assumed all costs and liabilities related to the operation of
the departments, including all in-club personnel costs, merchandising and sales
costs, customer returns and credits, and product shrink. Under the Agreement,
the Company invoices Sam's for product delivered to the clubs in accordance with
purchase orders issued by Sam's. The Agreement also provides Sam's the option to
reduce the number of clubs within the Company's exclusive territory by forty per
year under certain circumstances and to discontinue service for clubs in which
Sam's elects not to offer produce, if any. See Note 13 for additional
information.

                                      F-7
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    Sam's Club is the Company's primary customer, and accounted for
approximately 99%, 98% and 90% of the Company's sales for the three fiscal years
ended January 3, 1997, respectively. Receivables from Sam's, included in trade
accounts receivable, as of January 5, 1996 and January 3, 1997 totaled
$19,514,000 and $15,584,000, respectively.

NOTE 3.  ACQUISITIONS AND INVESTMENTS.

    On September 8, 1995, the Company acquired substantially all of the business
and assets of Lone Star Produce, Inc. ("Lone Star Produce"), a privately-owned
food service distribution company based in Austin, Texas. As consideration for
the assets received, the Company paid $498,000 in cash, assumed liabilities of
approximately $1,566,000 and issued a convertible promissory note. The principal
of the convertible promissory note will be established as 2.5 times fiscal 1997
net income of Lone Star Produce adjusted for certain items defined in the
acquisition agreement. Further, the convertible promissory note will be
convertible into the Company's common stock at the rate of $6.49 per share up to
a principal balance of $500,000 and at the rate of the average closing price of
the Company's common stock for the last quarter of calendar 1997. If the
convertible promissory note is not converted into the Company's common stock by
March 31, 1998, the established principal will bear interest from March 31, 1998
at the rate of 10% per annum and will be due together with accrued interest on
December 31, 1999.

    On November 4, 1996, the Company acquired substantially all of the business
and net operating assets of Produce Plus, Inc. ("Produce Plus"), a privately
owned specialty food service distribution company based in Houston, Texas.
Consideration for the net assets received consisted of $829,000 in cash, 14,118
shares of Company stock valued at $18.88 per share and a contingent convertible
promissory note to be valued at an amount no greater than $600,000, such future
value being determined by certain agreed upon levels of pretax earnings of
Produce Plus for the two years ended January 1, 1999. Seventy-five percent of
the value, if any, of such note may be paid (at Produce Plus' option) in the
form of Company stock at $21.25 per share.

    These acquisitions were each accounted for as purchase transactions and
accordingly, have been included in the Company's consolidated results since
their respective dates of acquisition. The purchase price recorded to date in
each of these transactions exceeded the fair market value of the assets
acquired; hence total goodwill of $547,000 and $1,074,000 is included in the
consolidated balance sheet at January 5, 1996 and January 3, 1997, respectively,
less the amortization of such goodwill over a 15 year period.

    The pro forma effect of these acquisitions, as if they were acquired on
January 1, 1995, has not been presented as neither transaction is considered
material to the consolidated results for either of those two years.

    On November 6, 1996, the Company invested $250,000 in convertible preferred
stock, thus acquiring a minority interest in Henri Morris & Associates, Inc. a
privately-owned Houston-based computer software and technology company serving
primarily customers in the produce and grocery industry in the U.S. and Canada.
The preferred stock has a 4.5% cumulative dividend and is convertible into
common stock within a 5 year period, subject to certain agreed upon future
events. In connection with this investment, a warrant to purchase 5,000
restricted shares of the Company's common stock at a price of $19.75 per share
was issued to the majority owner of Henri Morris and Associates, Inc.

                                      F-8
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4.  INITIAL PUBLIC OFFERING.

    On June 3, 1994, the Company successfully completed its initial public
offering of Common Stock. In this offering the Company sold 1,250,000 shares of
Common Stock at the initial public offering price of $9.00 per share or a total
of $11,250,000 before the underwriting discount of $787,000 and related offering
costs of $450,000, resulting in net proceeds to the Company of $10,013,000. In
addition, 320,000 shares held by existing shareholders were also sold in the
offering.

NOTE 5.  PROPERTY, PLANT AND EQUIPMENT.

Property, plant and equipment consist of:

                                                         January 5,  January 3,
(In thousands)                                              1996        1997
                                                          --------    --------
Land ..................................................   $    363    $    363
Buildings .............................................      1,083       1,151
Machinery, furniture, fixtures and equipment ..........      2,959       3,595
Trucks and trailers ...................................        171         307
Leasehold improvements ................................      1,471       2,589
                                                          --------    --------
                                                             6,047       8,005
Less accumulated depreciation and amortization ........      1,252       2,085
                                                          ========    ========
Property, plant and equipment, net ....................   $  4,795    $  5,920
                                                          ========    ========
                                                                    
NOTE 6.  NOTES PAYABLE.

Notes payable consist of the following:

(In thousands)                                         January 5,   January 3,
                                                          1996         1997
                                                        --------     --------
Note payable to a bank ............................     $  1,000         --
                                                        ========     ========

    The note payable to a bank was drawn under a $5,000,000 revolving line of
credit with a maturity date of May 31, 1996. This facility was replaced by a new
$5,000,000 line of credit with a bank whose term ends July 31, 1998. Interest
payments under the line of credit are due monthly on the first day of each month
and accrue at the bank's prime rate which was 8.25% as of January 3, 1997. A
commitment fee of 1/4% per annum is due quarterly based on the average unused
portion of the revolving line of credit. The Company borrowed $1,000,000 on
December 28, 1995 as its only use of the line of credit during fiscal 1995 and
1996. The Company pledged its receivables and inventories as collateral for this
obligation. In addition, the Company's revolving credit facility prohibits the
payment of cash dividends by the Company.

                                      F-9
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7.  LONG-TERM DEBT.

Long-term debt consists of the following:

                                                         January 5, January 3,
(In thousands)                                              1996       1997
                                                          --------   --------
Mortgage note payable, prime plus 1/4% principal
payable based on a 10-year amortization schedule
due in monthly payments through March 2000;
secured by land and building ..........................   $    399   $    385

Unsecured obligation under settlement .................        216        235

Note payable, 10% payable in equal monthly
installments of $5,000 through September 1997 .........         86         32
                                                          --------   --------

Total long-term debt ..................................        701        652

Current portion of long-term debt .....................         91        105
                                                          --------   --------


Long-term portion of long-term debt ...................   $    610   $    547
                                                          ========   ========

     The aggregate maturities of long-term debt for the five fiscal years
subsequent to January 3, 1997 are as follows: 1997, $105,000; 1998, $43,000;
1999, $49,000; 2000, $375,000; 2001, $41,000 and $39,000 thereafter. .

NOTE 8. INCOME TAXES.

   The components of the provision for income taxes consisted of:

                                                      FISCAL YEAR ENDED
                                            ------------------------------------
                                            JANUARY 1,    JANUARY     JANUARY 3,
(In thousands)                                 1995       5, 1996        1997
                                             --------     --------     --------
Current:
     Federal ...........................     $    980     $    960     $  2,103
     State .............................          145          175          360
Deferred benefit .......................         --           --           (149)
                                             --------     --------     --------
                                             $  1,125     $  1,135     $  2,314
                                             ========     ========     ========


                                      F-10
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

            Income tax expense differed from the amount computed by applying the
U.S. federal income tax rate to income as a result of the following:

                                                       FISCAL YEAR ENDED
                                                 -------------------------------
                                                 JANUARY 1,  JANUARY    JANUARY
(In thousands)                                     1995      5, 1996    3, 1997
                                                  -------    -------    -------
Federal income taxes at statutory rates .......   $ 1,087    $ 1,168    $ 2,161
Increase (reduction) in income taxes
    resulting from:
Change in the beginning-of-the-year balance
        of the valuation allowance for
        deferred tax assets allocated to
        income tax expense ....................       (63)       (87)       (52)
State and local income taxes, net of
        federal income tax benefit ............        95        116        238
 Other ........................................         6        (62)       (33)
                                                  -------    -------    -------
                                                  $ 1,125    $ 1,135    $ 2,314
                                                  =======    =======    =======

        The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:
                                                           JANUARY     JANUARY
                                                           5, 1996     3, 1997
                                                           --------    --------
(In thousands)

Deferred tax assets:
     Net operating loss carryforwards ..................   $    296    $    268
     Accrued costs related to unusual legal settlement
          reported in fiscal 1992 ......................         80         100
     Stock option compensation expense .................         54          63
     Accruals not currently deductible .................       --            80
     Other .............................................         47          21
                                                           --------    --------
                   Total deferred tax assets ...........        477         532
                                                           --------    --------
Deferred tax liabilities:
     Property, plant and equipment depreciation ........        333         309
     Start-up costs ....................................         92          74
                                                           --------    --------
                          Total deferred tax liabilities        425         383
                                                           --------    --------
Net deferred tax asset .................................         52         149
Less valuation allowance ...............................        (52)       --
                                                           --------    --------
                                                           $   --      $    149
                                                           ========    ========

                                      F-11
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    At January 3, 1997 the Company has a net operating loss ("NOL") carryforward
for federal income tax purposes of approximately $677,000 available to reduce
future income taxes. If not utilized to offset future taxable income, the NOL
carryforward will expire in 2006 through 2007.

    During 1992, the Company experienced an "ownership change" as defined by the
Internal Revenue Code of 1986. After an ownership change, utilization of a loss
corporation's NOL carryforward is limited annually to a prescribed rate times
the value of the loss corporation's stock immediately before the ownership
change. In general, an ownership change occurs if ownership of more than 50% in
value of the stock of the loss corporation changes during the three-year period
preceding the test date. The Company's NOL carryforward is limited to the use of
approximately $193,000 on an annual basis.

NOTE 9.  OPTIONS AND WARRANTS.

    In connection with the Company's issuance of Preferred Stock in 1992,
five-year Common Stock Purchase Warrants (the "Warrants") entitling the holder
to purchase up to 143,656 shares of the Company's Common Stock at a price of
$4.89 per share were issued to the placement agent. On April 2, 1996, the
Company issued 90,134 shares of Common Stock in exchange for all of the
Warrants.

    In connection with the Company's acquisition of a minority ownership
interest in Henri Morris & Associates, Inc. on November 6, 1996, a warrant was
issued to purchase 5,000 restricted shares of the Company's common stock at a
price of $19.75 per share. The warrant expires in ten years if not exercised.

    The Company has two fixed options plans which reserve shares of common stock
for issuance to key employees and directors. The plans are described below. The
Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for the
stock option plans. Had compensation cost for the Company's two stock option
plans been determined for grant dates subsequent to January 1, 1995 based on the
fair value at the grant date of awards consistent with the provisions of SFAS
No. 123, the Company would have recognized compensation expense of $225,000 and
$420,000 in fiscal 1995 and 1996, respectively. The Company's net earnings and
earnings per share would have been reduced to the pro forma amounts indicated
below:

(In thousands except earnings per share data)                1995        1996
--------------------------------------------------------   ---------   ---------
Net income - as reported ...............................   $   2,300   $   4,043
Net income - pro forma .................................       2,161       3,783
Earnings per share - as reported .......................        0.63        1.05
Earnings per share - pro forma .........................        0.59        0.98
--------------------------------------------------------   ---------   ---------

    The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for fiscal 1995 and 1996 for both plans: no dividend yield;
expected volatility of 49%; risk-free interest rates of 6.2 to 6.4 percent; and
expected lives of three to five years. The weighted average fair value per share
of the options granted during fiscal 1995 and 1996 is estimated to be $2.11 and
$6.19, respectively.

    In July 1993, the Company adopted the Fresh America Corp. 1993 Stock Option
and Award Plan (the "1993 Plan"), which reserves 450,000 shares of the Company's
common stock for issuance to employees and directors. At January 5, 1996 and
January 3, 1997, options for 63,177 and 8,177 shares, respectively, were
available for issuance.

                                      F-12
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    In July 1996, the Company adopted the Fresh America Corp. 1996 Stock Option
and Award Plan (the "1996 Plan"), which reserves 150,000 shares of the Company's
common stock for issuance to employees and directors. At January 3, 1997,
options for 93,000 shares were available for issuance.

   Options under the 1993 and 1996 Plans are granted at an exercise price equal
to at least 100% of the fair market value of the Company's common stock on the
date of grant. Unless determined otherwise by the Company's Board of Directors,
each non-employee director is automatically granted an option to purchase 5,000
shares of common stock each year. Such option grants vest immediately and will
expire in ten years if not exercised. Options granted to employees generally
vest in one year from the date of grant and expire within ten years if not
exercised. The Plans restrict the rights to exercise based on employment status
and percentage of stock ownership in accordance with Section 422 of the Internal
Revenue Code.

The following table summarizes stock option activity under the Plans for fiscal
1994 through fiscal 1996:

<TABLE>
<CAPTION>
                                      STOCK OPTIONS             OPTION PRICE RANGE
                               -------------------------------------------------------
                                 Issued       Exercisable        Low         High
                               ------------   -------------   ----------   ----------
<S>                                <C>             <C>        <C>          <C>      
At January 2, 1994                 156,302         128,721    $    0.02    $    6.66
    Granted                        105,750                         8.75         9.90
    Exercised                      (11,856)                        0.02         3.55
    Canceled                        (6,729)                        4.89         9.00
                               ------------
At January 1, 1995                 243,467         140,962         0.02         9.90
    Granted                        140,000                         5.00         5.75
    Exercised                         (500)                        3.55         3.55
    Canceled                        (8,500)                        5.00         9.00
                               ------------
At January 5, 1996                 374,467         239,467         0.02         9.90
    Granted                        114,000                        11.75        17.75
    Exercised                      (88,958)                        0.02         9.00
    Canceled                        (2,000)                       11.75        11.75
                               ------------
At January 3, 1997                 397,509         305,509     $   0.02    $   17.75
                               ============
</TABLE>


NOTE 10.  EMPLOYEE BENEFIT PLAN.

    Effective January 1, 1992, the Company adopted the Fresh America Corp.
401(k) Profit Sharing Plan (the "Plan"), which provides for the Company, at its
option, to make a matching contribution of up to 6% of each qualifying
employee's annual earnings. The Company's matching contribution under the Plan
was $65,000, $125,000 and $81,000 for the fiscal years ended January 1, 1995,
January 5, 1996 and January 3, 1997, respectively.

NOTE 11.  CONTINGENT LIABILITIES AND COMMITMENTS.

    The Company is obligated under certain noncancelable operating leases (with
initial or remaining lease terms in excess of one year). The future minimum
lease payments under such leases as of January 3, 1997 are:

                                      F-13
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                 Fiscal years ending (In thousands):
                    1997 ...........................   $ 2,434
                    1998 ...........................     2,432
                    1999 ...........................     2,340
                    2000 ...........................     1,692
                    2001 ...........................     1,273
                    Thereafter .....................     2,335
                                                       =======
                       Total minimum lease payments    $12,506
                                                       =======

      Rental expense amounted to approximately $1,339,000 and $1,389,000 and
$2,430,000 for the fiscal years 1994, 1995 and 1996 respectively, of which
approximately $602,000, $895,000 and $863,000 relates to truck and trailer
rental which is included in costs of goods sold.

    The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position.

NOTE 12.  QUARTERLY FINANCIAL DATA (UNAUDITED).

   Summarized quarterly financial data is as follows (in thousands except
earnings per share data):

                                 FISCAL 1995(A)
-------------------------------------------------------------------------------
                                   First       Second        Third       Fourth
                                    Qtr.         Qtr.         Qtr.         Qtr.
                                 -------      -------      -------      -------
        Net sales ..........     $25,815      $31,846      $28,256      $38,919
        Gross profit .......       4,687        5,937        5,273        5,822
        Gross margin .......        18.2%        18.6%        18.7%        15.0%
        Net income .........     $   182      $   790      $   324      $ 1,004
        Earnings per
        share ..............        0.05         0.22         0.09         0.27

                                 FISCAL 1996(B)
-------------------------------------------------------------------------------
                                   First       Second        Third       Fourth
                                    Qtr.         Qtr.         Qtr.         Qtr.
                                 -------      -------      -------      -------
         Net sales .........     $46,195      $64,721      $59,726      $68,535
         Gross profit ......       4,238        6,325        5,299        7,388
         Gross margin ......         9.2%         9.8%         8.9%        10.8%
         Net income ........     $   348      $ 1,407      $   810      $ 1,478
         Earnings per
         share .............        0.09         0.36         0.21         0.38

    (a) The 52 week and five day year is spread 12 weeks and 5 days, 13 weeks,
        13 weeks and 14 weeks respectively.

    (b) The 52 week year is spread 12, 13, 13 and 14 weeks respectively.

                                      F-14
<PAGE>
                      FRESH AMERICA CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13.  SUBSEQUENT EVENTS (UNAUDITED).

    Subsequent to January 3, 1997, various transactions have occurred and are
described as follows:

    On January 22, 1997, the Company acquired substantially all of the net
operating assets and the business of CPT Enterprises, Inc. d/b/a/ Chef's Produce
Team, ("CPT") a Los Angeles-based food service company providing specialty
produce to upscale restaurants and hotels throughout California and Nevada. CPT,
with operating facilities in Los Angeles and San Francisco, was acquired for
approximately $1.5 million, with future additional consideration of up to $.5
million depending on the achievement of certain levels of pretax earnings over
the next three years. The transaction will be accounted for as an asset
purchase.

    In February 1997, the Company was advised by Sam's Club that it was
exercising the existing option under the Distribution Agreement and that Sam's
Club would begin to distribute directly to 40 clubs currently serviced by the
Company's Atlanta distribution center. Such transition is expected to occur in
late March and April 1997, and is expected to result in approximately $16 to $20
million less revenue for the 1997 fiscal year as compared to fiscal 1996. The
Company does not believe this action will have a material adverse effect on its
consolidated financial condition.

    On February 28, 1997, the Company entered into a five year agreement with
Fast Food Merchandiser's, Inc. ("FFM"), a wholly owned subsidiary of Hardee's
Food Systems, Inc. to source and distribute produce products to all FFM
distribution centers nationwide. Coinciding with the distribution agreement, the
Company acquired the produce production center in Richmond, Indiana from FFM for
approximately $2.9 million.

    On March 7, 1997, the Company acquired the business and substantially all of
the net operating assets of One More Tomato, Inc. ("OMT") for approximately
$570,000 in cash. OMT is a tomato repackaging and distribution company located
in Houston, Texas. The transaction will be accounted for as an asset purchase.

                                      F-15