<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                   FORM 10-K/A

               [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 28, 2001

                                       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.
                               1049 AVENUE H EAST
                               ARLINGTON, TX 76011
                                 (817) 385-3000

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

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

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

     Title of Each Class               Name of Each Exchange on Which Registered
     -------------------               -----------------------------------------
 Common Stock, $0.01 Par Value                           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 proceeding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                    Yes  X   No
                                        ---

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

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrants was $1,824,103 as of March 22, 2002. For
purposes of the above statement, all directors and officers of the registrant
are presumed to be affiliates.

The number of common shares outstanding of the registrant was 8,410,098 as of
March 22, 2002.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

<PAGE>


                                     PART I

ITEM 1. BUSINESS.

Fresh America Corp. ("Fresh America", or the "Company", "we", "us", or "our"), a
Texas corporation founded in 1989, provides procurement, processing/repacking,
warehousing and distribution services of fresh produce and other refrigerated
food products for a wide variety of customers in the retail, food service and
food distribution businesses. Additional services, such as inventory planning
and customer support, are also provided as areas of unique specialization.
Because of the perishable nature of fresh fruits and vegetables, distribution
requires specialists such as Fresh America that can maintain the "cold chain" of
distribution to ensure safety, quality and yield for the wide variety of
products available in today's marketplace. The Company serves over 1,900
customers in 37 states through eight distribution facilities and two sales and
marketing offices. The distribution facilities are located in Arlington and
Houston, Texas; Atlanta, Georgia; Scranton and Wilkes-Barre, Pennsylvania;
Richmond, Indiana; Chicago, Illinois and Los Angeles, California. The sales and
marketing offices are located in Walnut Creek and Visalia, California. In
November 2001, the Company moved all central office operations from Dallas,
Texas to its existing facility in Arlington, Texas.

Products

The Company provides and procures approximately 500 items in several product
categories, including fresh produce, refrigerated prepackaged produce, and
processed foods. Fresh produce includes staple items such as apples, lemons,
lettuce, bananas, oranges, grapefruit, onions, tomatoes, potatoes and garlic,
and seasonal items such as strawberries, papayas, cherries, grapes, peaches,
plums, avocados and watermelons.

Refrigerated prepackaged produce includes presliced fruits and vegetables,
including party trays of fresh, precut vegetables. The Company also provides
certain specialty types of produce.

At each of its locations, the Company provides fresh produce and related
products and services in three primary areas of specialization: program
distribution, wholesale and processing/repacking. An expanded description of
these areas of specialization follows:

Program Distribution. Due to the handling requirements associated with fresh
fruits and vegetables and Fresh America's integrated distribution network and
related services, Fresh America offers specialized services to various retail,
food service and supply businesses in the industry. These services allow
customers, such as Dole Fresh Vegetables, Inc. to outsource certain aspects of
their fresh produce distribution function to Fresh America. These services
include category management, product consolidation and freight forwarding.

Wholesale. The Company procures certain items from all major growing areas in
order to sell and provide services to national and regional retail and food
service accounts. These accounts include supermarkets, independent grocers and
broad-line food service distributors.

Processing/Repacking. The Company performs certain value-added functions for
customers that complement the other services it provides. These functions
include produce ripening and repackaging functions: the assembly and preparation
of fruit baskets and party trays of precut vegetables; and the processing and
packing of various produce items. Certain locations employ highly specialized
ripening, sorting and packing equipment designed to increase efficiencies and
decrease costs.

Facilities and Personnel

The Company currently conducts its operations out of eight distribution
facilities located in California, Georgia, Illinois, Indiana, Pennsylvania and
Texas and two sales and marketing offices in California. In addition to these
facilities, in 2001 the Company had a location in Canada which was sold in March
2001, a location in Arizona which was sold in April 2001, and a Florida location
which was closed in May 2001. The Company maintains its headquarters in
Arlington, Texas.

                                       1

<PAGE>

Each distribution center employs between 9 and 116 employees, most of whom are
involved in receiving and shipping, as well as driving the vehicles in the
Company's transportation fleet. The distribution centers are designed for
receiving, cold storage, sorting and shipping and are positioned to allow the
Company to distribute perishable products by truck to its customers throughout
the respective regional geographical area. Fresh America operates from
approximately 758 thousand square feet of warehousing and processing space. See
"Item 2. Properties."

Fresh America's products are delivered from its distribution centers to
customers utilizing Fresh America's fleet of leased and owned tractors,
refrigerated trailers and refrigerated trucks, as well as third party trucking
companies.

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. As of March 22, 2002 the Company
employed a total of approximately 374 full-time associates and 4 part-time
associates, including approximately 33 corporate associates and 345 regional
associates. The Company's operations in Scranton, Pennsylvania and Los Angeles,
California have collective bargaining agreements with their warehouse
associates.

Strategy

As discussed below in "Acquisitions/Divestitures", during 1999 through 2001, the
Company divested all locations viewed as non-strategic or non-profitable,
including specialty food service operations. Today, the Company is focusing on
enhancing areas of proven performance, and in the near term, the Company will
pursue a slower, more controlled pace of growth than in prior years. Fresh
America intends to take advantage of its existing infrastructure and enhance
efficiencies in its current operations. The Company's strategic initiatives
include:

      .     Integration. To create efficiencies and enhance control, management
            has designated the integration of all current facilities as a key
            initiative beginning in the fall of 2001 and continuing into 2002.
            The two primary components of this integration are the
            centralization of accounting and administrative functions and the
            implementation of an industry-specific software system at all
            locations. We believe these initiatives will allow the Company to
            further reduce administrative headcount, as well as improve the
            Company's ability to analyze and effectuate operational improvements
            in margin and expense control.

      .     Quality Control. The Company focuses on quality and freshness at
            each step of the receipt, processing and distribution process.
            Because most of the products delivered by the Company are
            perishable, proper handling, including maintenance of constant
            temperature and humidity, is critical to the control of product
            spoilage. 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. On average, inventory is turned
            in approximately three days.

                                       2

<PAGE>

      .     Purchasing. The Company has established a preferred supplier network
            for core items which is facilitated through its central procurement
            department. With this system the Company selects its preferred
            suppliers and regularly monitors their ability to provide quality
            price and service. Through the volume of purchases in this program,
            the Company is able to obtain fresh produce of premium size, quality
            and appearance at competitive costs. In addition, in most of its
            operating locations, Fresh America employs purchasing agents who
            purchase produce directly from growers, shippers and grower
            cooperatives. 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.
            Although purchases by Fresh America frequently constitute a
            significant portion of a particular supplier's sales, no single
            supplier accounts for more than 10% 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. The Company estimates approximately 15% of the volume of
            purchases are done through the Company's central procurement
            department.

      .     Brand Equity. As a result of acquisitions during 1995 through 1998,
            the Company began operating under various business names at certain
            locations. One key component of our integration initiative
            identified during 2001 was to have all locations operate under the
            name "Fresh America", except where we believed there was significant
            brand equity from the existing name. After analyzing this item, the
            Company believes three locations have this level of brand equity:
            Perricone Citrus (Visalia, CA), Jos. Notarianni & Co. (Scranton, PA)
            and Francisco Distributing (Los Angeles, CA). Each of these
            locations is currently continuing to operate under these specified
            names with the extension of "A Division of Fresh America".

            Additionally, in October 2001, Fresh America signed a five-year
            agreement with the Sholl Group to become the exclusive licensee
            packer of Green Giant Fresh tomatoes and bell peppers. This
            agreement supports our strategic retail branding strategy. As a
            result, Fresh America is the only tomato and pepper repacker to have
            the ability to offer national retailers three brand choices:
            industry, private and consumer. Green Giant Fresh also complements
            our food safety, packaging and procurement initiatives and this
            exclusive agreement has the potential to enhance Fresh America's
            success as a repacker in the industry.

      .     Contracts and Business Arrangements. Fresh America's business
            relationships with its customers are established on the basis of
            daily orders as well as program and service arrangements. Daily
            orders are typically priced to customers on the basis of cost to the
            Company plus a pre-determined margin. Daily orders range in duration
            from one day to one month. Anything in excess of one month in
            duration is considered to be a program and service arrangement. The
            program and service arrangements are priced to customers as either
            pre-determined margin contracts, like those used for daily orders,
            or fee for service contracts where the price remains constant and
            the Company's margin fluctuates with the changes in the market
            prices at which the product is purchased. Due to the perishable
            nature of the Company's products and fluctuating commodity prices,
            the Company's program and service arrangements are usually
            negotiated on a seasonal basis, with an average duration of three to
            six months. If renewed at the end of a term, the program and service
            arrangements are typically renegotiated based on market conditions
            existing at that time. Each contract is set up individually and
            depending on the contract, the Company has a varying level of
            ability to increase or decrease prices consistent with fluctuations
            in the market. When the Company enters into fee for service
            contracts, which do not provide for the ability to change prices to
            correspond with market fluctuations, the Company attempts to
            negotiate corresponding fixed price agreements with
            growers/shippers. This matching process will reduce the Company's
            exposure during markets of increasing commodity prices.

Customers, Competition and Seasonality

Customer Concentration. Sam's Club, a division of Wal-Mart Stores, Inc.
("Sam's") accounted for 7.1% of sales in 2001, 30.0% of sales in 2000 and 30.5%
in 1999. The reduction in sales to Sam's in 2001 stems from the expiration of a
distribution agreement with the Company. The sales to Sam's in 2001 were
comprised solely of value-added processing/repacking. See Item 1 - "Acquisitions
and Divestitures".

                                       3

<PAGE>

Back Log Orders.  The Company did not have any backlog orders at year end.

Competition. The Company operates in highly competitive markets, and its success
will be largely dependent on its ability to manage product from source to
customer. The produce industry is highly fragmented and is primarily comprised
of small, family-owned operations serving local and regional markets. The
Company also competes with national food service and wholesale food distribution
companies. Due to the commodity nature of certain of our products, we operate in
highly competitive markets, and our success will be largely dependent on our
ability to provide quality products and services at a value to our customers.
Only a few well-established companies operate on both a national and regional
basis. We face strong competition from these as well as smaller regional
companies in all of our product lines. Competitive considerations include:

      .     some competitors may have substantially greater financial resources
            and operating flexibility to react to changes in the marketplace;

      .     some of our products compete with imports and private label products
            and are sensitive to competition from regional brands; and

      .     we cannot predict the pricing or promotional actions of our
            competitors and if we do not respond appropriately to reduced
            pricing or discounts or if we raise prices, we could lose market
            share.

Seasonality. See Item 7-MD&A under the caption "Quarterly Results and
Seasonality" for information about the seasonality of the Company's business.

Acquisitions/Divestitures

The Company commenced operations in 1989 by delivering produce to one Sam's
location. The success of the initial venture in Houston, Texas allowed the
Company to rapidly expand its relationship with Sam's and provide produce for
375 Sam's locations in the Midwest, Northeast, Southeast and Southwest at the
peak of its distribution arrangement with Sam's. The Company's distribution
agreement with Sam's (the "Sam's Agreement") was governed by a written contract
which expired on October 24, 2000. Thereafter, Sam's began internal distribution
of produce for all of its' clubs; however, the Company continues to supply
certain produce items to Sam's on a non-contractual basis.

Because the Company understood the Sam's Agreement would expire in 2000, in 1995
the Company began to implement a strategy to attract new customers over a wider
geographical area and diversify its customer base into other areas of produce
distribution. In executing its strategy, the Company completed 16 acquisitions
from 1995 through 1998 and added various customer alliances involving fresh
produce procurement, warehousing, distribution and/or marketing. Through these
acquisitions and new customer relationships, the Company expanded its cold chain
distribution network to become national in scope, diversified its customer and
supplier relationships and expanded its value-added processing capabilities. Six
of these acquisitions in the specialty food service business never achieved
sufficient market presence and were closed or sold during the period from
September 1999 to May 2001.

The table below identifies the acquisitions, their primary area(s) of
distribution and specialization and, where appropriate, the date divested:

<TABLE>
<CAPTION>
                                                                                   Primary
Date Acquired                         Company                      Location        Services/a/ Date Divested
-------------                         -------                      --------        ---------   -------------
<S>                <C>                                       <C>                   <C>         <C>
September 1995     Lone Star Produce, Inc.                   Austin, TX                1       November 1999
November 1996      Produce Plus, Inc./b/                     Houston, TX               1                -
January 1997       Chef's Produce Team                       Los Angeles, CA           1       October 1999
March 1997         One More Tomato, Inc./b/                  Houston, TX               3                -
May 1997           Pittman Produce of Orlando, Inc.          Orlando, FL               1       September1999
August 1997        C. Kalil Fruit & Vegetable, Inc./b/       Houston, TX              2,3               -
September 1997     Bano Quality Produce, Inc.                Baton Rouge, LA          1,3      November 1999
December 1997      Premier Produce, Inc.                     San Antonio, TX           1       October 1999
</TABLE>

                                        4

<PAGE>

<TABLE>
<S>                  <C>                                           <C>                     <C>      <C>
December 1997        Tomahawk Produce, Inc.                        Atlanta, GA             1,2,3    September 1999/g/
January 1998         Hereford Haven, Inc. d/b/a Martin Bros.       Dallas, TX               2,3              -
February 1998        Francisco Distributing Co.                    Los Angeles, CA           2               -
March 1998           Ontario Tree Fruits Ltd. and Affiliates       Toronto, Ontario          2      March 2001/d/
August 1998          Jos. Notarianni & Co.                         Scranton, PA             2,3              -
October 1998         King's Onion House                            Phoenix, AZ              2,3     April 2001/e/
October 1998         Thompson's Produce Company                    Pensacola, FL            1,3     May 2001/f/
November 1998        Sam Perricone Citrus Company                  Los Angeles, CA           2      February 2000/c/
</TABLE>

/a/   Primary Services: 1. Specialty Food Service; 2. Retail/Wholesale; 3.
      Value-Added.
/b/   Subsequent to their acquisition dates, these companies were integrated
      into one location in Houston, Texas in order to reduce costs and increase
      efficiencies.
/c/   Perricone closed its market operation in Los Angeles, California and
      continues to operate its brokerage business in Walnut Creek and Visalia,
      California.
/d/   The operating assets of Ontario Tree Fruits, Ltd. and its affiliates were
      sold in March 2001.
/e/   All outstanding common stock for King's Onion House was sold in April
      2001.
/f/   Original asset purchase rescinded by legal arbitration in May 2001.
/g/   The Company relocated Tomahawk's remaining tomato repacking operation to
      its distribution facility in Atlanta.

In March 2001, the Company sold the operating assets of its Canadian operation
to better focus on its domestic opportunities. When a major Canadian customer
was lost during 1999, the Company was not able to replace the lost business and
the Canadian operations did not fit well with the Company's focus on value-added
services and products. The Canadian operations incurred losses of $2.0 million
during fiscal 2000 and $2.0 million in the first quarter 2001. However, by
taking advantage of the import knowledge gained through the Canadian operations,
the Company continues to provide its customers with imported produce through its
other operating divisions.

In April 2001, the Company sold all of the outstanding capital stock of King's
Onion House. The Company was not able to achieve profitable operations in fiscal
2000 and did not believe Phoenix represented a strategic market for the Company.
King's Onion House incurred losses of $5.5 million during fiscal 2000.

Through an arbitration, the original October 1998 purchase by Fresh America of
the assets of Thompson's Produce Company was rescinded, effective May 12, 2001.
As a result, the Company was relieved of its real property lease obligations in
Pensacola, Florida (total future rental payments of $5.4 million) in exchange
for the return of net assets totaling $1.4 million. This location was a
non-performing asset for the Company, with losses totaling $3.3 million during
fiscal 2000 and approximately $850,000 in the first quarter of 2001.

In August 2001, the Company sold the assets of Bacchus Fresh International,
which was acquired in connection with the Canadian operations in March 1998, and
an idle real estate property at Cutten Road in Houston, Texas. The net proceeds
from these asset sales of approximately $871,000 were used to repay a portion of
the Company's senior term debt.

A table illustrating the performance of ongoing and divested operations for
fiscal 2001 is included in Item 7 - MDA.

Financial Restructuring

Throughout its operational restructuring during the past three years, the
Company has pursued various financing opportunities in an effort to restructure
its senior bank and subordinated debt. In September 2001, the Company completed
a financial restructuring whereby North Texas Opportunity Fund LP, ("NTOF")
purchased 50,000 shares of the Company's Series D cumulative redeemable
preferred stock and warrants exercisable for 84,100,980 shares of our common
stock for total cash proceeds of $5 million. Arthur Hollingsworth, an affiliate
of NTOF and the Company's Chairman of the Board, subsequently purchased from
NTOF, for the same price as paid by NTOF, 3,500 shares of Series D preferred
stock and warrants exercisable for 5,887,069 shares of our common stock. In
connection with the NTOF investment in the Company, John Hancock Life Insurance
Company, John Hancock Variable Life Insurance Company, Signature 1A (Cayman),
Ltd. and Signature 3

                                       5

<PAGE>

Limited (collectively, the "Hancock Entities") exchanged $20 million of
subordinated debt, warrants to purchase 576,134 shares of the Company's common
stock, 50,000 shares of Series C cumulative redeemable preferred stock and all
accrued interest and dividends for 27,000 shares of the Company's Series D
cumulative redeemable preferred stock and warrants exercisable for 45,414,529
shares of our common stock. The warrants are exercisable for a ten-year period
that commenced on August 14, 2001 and ends August 14, 2011. The exercise price
of the warrants is $.0001 per share and the warrants are subject to
anti-dilution provisions providing adjustment in the event of any
recapitalization, stock dividend, stock split, reorganization, merger or similar
transaction or certain issuances of shares below their market value.

The warrants issued to NTOF, Mr. Hollingsworth and the Hancock Entities cannot
be exercised until the Company's articles of incorporation are amended to
increase the Company's authorized common stock from 10 million shares to 250
million shares and decrease the common stock's stated par value from $.01 to
$.0001 per share (the "Charter Amendment"). In connection with the financial
restructuring, the Company held a special meeting of its shareholders which was
adjourned on December 28, 2001, and reconvened on December 29, 2001. The
Company's shareholders were asked to approve the Charter Amendment. At the
special meeting, the Charter Amendment failed to receive the necessary approval
of the holders of a supermajority of the shares of the issued and outstanding
stock; therefore, the Company's articles of incorporation have not been amended
and the warrants issued to NTOF, Mr. Hollingsworth and the Hancock Entities are
not exercisable.

Because the Charter Amendment was not approved, the holders of the Series D
preferred stock received increased rights under the terms of the Series D
preferred stock. Initially, each share of the 77,000 shares of Series D
preferred stock had the right to receive cumulative dividends, payable monthly
in cash and calculated on the basis of an annual dividend rate of $8 for each
share plus interest on any accrued but unpaid dividends. Because the Charter
Amendment was not approved at the special meeting, the annual dividend rate
increased to $18 per share on December 31, 2001. However, the Company has
obtained a waiver for the enhanced dividend amount from the Series D preferred
shareholders for the period from December 29, 2001 until January 3, 2003.
Therefore, the annual dividend rate will not increase to $18 per share during
this period, but will remain at the original annual dividend rate of $8 for each
share of preferred stock. The Company may not declare a dividend on any other
class of capital stock so long as any accrued dividends for the preferred stock
have not been paid. If the Company pays a dividend to holders of any other class
of the Company's capital stock, then the Company will pay a dilution fee to the
holders of the preferred stock.

When the Charter Amendment was not approved at the special meeting, the holders
of preferred stock also became entitled to vote as a separate class for all
matters on which the holders of common stock are entitled to vote, with each
share entitled to one vote per share; however, where applicable law prevents
class voting, holders of the preferred stock are entitled to vote together with
the holders of common stock with each share of preferred stock entitled to 250
votes per share, being 11,625,000 votes for NTOF, 875,000 for Mr. Hollingsworth
and 6,750,000 for the Hancock Entities.

The Series D preferred shareholders have a put right on the Series D preferred
stock after August 14, 2004, and immediately upon any breach by the Company of
the financial restructuring agreements or any sale, merger or change of control
of the Company at $100 per share plus accrued and unpaid dividends. Because the
requisite shareholder approval for the Charter Amendment was not obtained, the
holders of Series D preferred stock have the right to exercise their put right
at three times the face value of the preferred stock ($300 per share), such
amount being $13,950,000 for NTOF, $1,050,000 for Mr. Hollingsworth and
$8,100,000 for the Hancock Entities plus accrued and unpaid dividends.
Additionally, the holders of the Series D preferred stock, have the right to
redeem their shares of Series D preferred stock on the same terms of the put
right after April 30, 2007 or immediately upon the occurrence of any sale,
merger or change of control of the Company, any qualified public offering with
net proceeds of at least $20,000,000 or any private equity financing with net
proceeds of at least $20,000,000.

Each share of Series D preferred stock has a preference upon liquidation,
dissolution, winding up or sale of the Company equal to $100 per share plus
accrued and unpaid interest. Because the requisite shareholder approval for the
Charter Amendment was not obtained, the holders of the preferred stock have the
right to a liquidation preference payment equal to the face value of the
preferred stock plus 90% of the fair market value of the

                                       6

<PAGE>

remaining property of the Company and the holders of the Company's common stock
will have the right to a liquidation preference payment equal to the remaining
10% of the fair market value of the remaining property of the Company.

Under the terms of the Series D preferred stock and the Shareholders Agreement
dated August 14, 2001 by and among the Company, NTOF and the Hancock Entities,
NTOF has the right to appoint three directors to the Board of Directors and the
Hancock Entities have the right to collectively appoint one director to the
Board of Directors, unless they waive such right. Because the Hancock Entities
waived their right to appoint a director, NTOF appointed four members to the
Company's Board of Directors in October 2001. The current Board of Directors
consists of five members. In addition, NTOF and the Hancock Entities each have
the right to designate one observer to attend all meetings of the Board of
Directors. Under the Shareholders Agreement, the Company granted each holder of
preferred stock the preemptive right to purchase, pro rata, all or any part of
new securities offered by the Company. The Shareholders Agreement also grants
each holder of Series D preferred stock the right of first offer and co-sale
rights in the event another holder of Series D preferred stock elects to sell
its stock. Prior to a public offering with net proceeds of at least $20,000,000,
if the holder of 50% or more of the outstanding capital stock of the Company
elects to sell all of its shares, then the holder will have pull-along rights
with respect to the non-selling holders of preferred stock.

Under the Securities Exchange and Purchase Agreement dated August 14, 2001 (the
"Purchase Agreement") by and among the Company, NTOF and the Hancock Entities,
the Company has granted registration rights to NTOF and the Hancock Entities.
The registration rights granted include two rights to demand that the Company
register the holder's shares for resale to the public pursuant to the Securities
Act of 1933, an unlimited number of rights to register the holder's shares for
resale to the public pursuant to other public offerings and, upon the Company's
eligibility for use of Form S-3 under the Securities Act of 1933, an unlimited
number of rights to register the holder's shares for resale to the public on
Form S-3.

The Purchase Agreement also requires the Company to obtain NTOF's and/or the
Hancock Entities' consent prior to taking certain actions in the operation of
its business, other than pursuant to the terms of the financial restructuring.
These actions include, but are not limited to, amending the Company's
organizational documents adversely to NTOF and the Hancock Entities, declaring
any dividends, selling or leasing any assets of the Company outside of the
ordinary course of business, selling any additional capital stock of the Company
(except pursuant to existing warrants and under the Company's stock option plan
for employees), entering into any transactions with affiliates (other than in
arms-length transactions), paying any management or consulting fees, acquiring
any debt or equity interest in another entity, increasing the compensation of
any executive officer by 5% or more, terminating any key employee, adopting a
new employee benefit plan or employment agreement, acquiring any property for
more than $500,000 or making any capital expenditure greater than $250,000
individually or $1,000,000 in the aggregate.

The Company intends to submit the Charter Amendment to the Company's
shareholders at its 2002 Annual Meeting of Shareholders. The Series D preferred
stock represents 68% of the combined voting power of the Company's capital stock
entitled to vote on the Charter Amendment and therefore holds a sufficient
number of shares needed to approve the Charter Amendment without any other
shareholder vote in favor of the Charter Amendment. The Company believes that
the holders of the Series D preferred stock currently intend to vote their
shares in favor of the Charter Amendment.

The Shareholders Agreement also requires the Company, upon receiving an
"unlocking proposal" as defined, representing a bona fide offer from an
unrelated third party to enter into a sale transaction, and upon receiving
notice from either NTOF or the Hancock Entities, to use good faith and
commercially reasonable efforts to consummate the proposed transaction or, if
the Company fails to accept the unlocking proposal, the holder will have the
right to require the Company to purchase such shareholder's capital stock based
upon the price that would have been paid to such holder in the sale transaction.

The following table sets forth information concerning the beneficial ownership
of the Company's capital stock if the Charter Amendment is approved at the 2002
Annual Meeting of Shareholders.

                                       7

<PAGE>

                            Post Charter Amendment
                             Security Ownership
<TABLE>
<CAPTION>
                                                Number of Shares         Percent of       Number of Shares of   Percent
Beneficial Owner                                of Common Stock         of Class (1)      Series D Preferred    of Class
----------------                                ----------------        ------------      -------------------   --------
<S>                                             <C>                     <C>                <C>                  <C>
NTOF                                            78,213,911(2)              46.5%              46,500             60.4%
Existing shareholders other than management      8,378,416(5)               5.0%
Hancock Entities                                45,414,529                 27.0%              27,000             35.1%
Arthur Hollingsworth                             5,887,069(6)               3.5%               3,500              4.5%
Management share distribution:
     Darren Miles                                2,724,872(4)               1.6%
     Steve Finberg                               2,751,372(4)(7)            1.6%
     Cheryl Taylor                               2,724,872(4)               1.6%
     Colon Washburn                              1,122,435(8)               0.7%
Existing warrants                                  300,000                  0.2%
Options under stock option plans not held by       146,250                  0.1%
        management
Option pool to be issued to existing associates  7,450,000                  4.4%
Option pool to be issued to future associates    13,088,234                 7.8%
</TABLE>

(1) Percentages are based upon 8,410,098 shares (the total number of shares of
common stock outstanding as of March 22, 2002) plus the total number of shares
underlying all outstanding options and warrants regardless of whether such
options or warrants are currently exercisable or subject to contingency.

(2) Represents warrants to purchase 78,213,911 shares of common stock owned by
NTOF which becomes exercisable upon approval of the Charter Amendment.

(3) Represents warrants to purchase 45,414,529 shares of common stock owned by
the Hancock Entities which becomes exercisable upon approval of the Charter
Amendment.

(4) Represents options to purchase 2,724,872 shares of common stock which the
Company intends to issue upon the approval of the Charter Amendment.

(5) Includes 3,166,694 shares of common stock held by Larry Martin. Mr. Martin
retired from the Company's employment and resigned as a director effective
December 1, 2001.

(6) Represents warrants to purchase 5,887,069 shares of common stock owned by
Arthur Hollingsworth which become exercisable upon approval of the Charter
Amendment.

(7) Includes options to purchase 26,500 shares of common stock which are
currently exercisable.

(8) Includes options to purchase 1,000,000 shares of common stock which the
Company intends to issue upon approval of the Charter Amendment. Includes
options to purchase 90,753 shares of common stock which are currently
exercisable.

At the time of the restructuring the Company's senior lender, Bank of America,
agreed to an extension of the maturity date of the Company's term credit
facility until January 2, 2002. Subsequent to the financial restructuring, Bank
of America assigned its interest in the term credit facility to Endeavour, LLC
(the "Senior Lender") and the Senior Lender further extended the term credit
facility to January 6, 2003. The Company is pursuing a revolving credit facility
with a new lender to replace the existing term facility with a revolving credit
facility prior to the maturity of the term loan. There can be no assurance that
the Company will be able to replace its Senior Lender as anticipated or extend
its senior credit facility beyond January 2003, if that becomes necessary. See
"Liquidity and Capital Resources" under Item 7 - MD&A.

Management believes that the combination of the effects of the financial
restructure completed in September 2001, cash generated from ongoing operating
activities, and the realization of recent reductions in operating expense will
enable the Company to meet its obligations as they come due during the 2002
fiscal year.

                                       8

<PAGE>

ITEM 2.  PROPERTIES.

The Company's headquarters and executive offices occupy approximately 8,200
square feet of space in its Arlington, Texas facility. The Company moved all
central office operations to its facility in Arlington, Texas during 2001. As of
March 22, 2002, the Company conducts its operations from the following
facilities:

<TABLE>
<CAPTION>

                                                                           Lease Expiration
                                          Square           Owned/          ----------------
            Location                      Footage          Leased                 Date
----------------------------------        -------          ------               --------
<S>                                       <C>              <C>             <C>
Arlington, TX                             104,948          Leased               03/31/06
Atlanta, GA                                64,000          Leased               06/30/06
Chicago, IL                               145,289          Leased               07/31/07
Houston, TX                                80,496          Leased               04/30/08
Los Angeles, CA - Blackburn Street         60,000          Leased               08/31/03
Los Angeles, CA - Leyva Street            110,000          Leased               08/31/03
Richmond, IN                               37,000          Owned                      --
Scranton, PA - (2 buildings)              105,249          Owned                      --
Wilkes-Barre, PA                           50,000          Leased               07/01/05
Visalia, California                         1,040          Leased               08/31/02
Walnut Creek, California                      363          Leased               01/31/04
</TABLE>

The Company owns or is obligated by lease on certain properties related to sold
or closed operations. Such properties are not listed above, as they are not
currently being used in operations, but aggregate approximately 20,000 square
feet of leased space (with a lease expiration date of May 31,2002 and which has
been subleased below the rental amount the Company is paying) and 2,984 square
feet of owned space, which the Company is currently leasing. The Company's owned
facilities are pledged to the Senior Lender as collateral security for its
senior credit facility. See discussion of debt arrangements under the caption
"Liquidity and Capital Resources" in Item 7 - MD&A.

Management believes that its existing facilities are adequate for the Company's
present level of operations. The Company is generally capable of accommodating
growth within each existing geographic territory.

ITEM 3.  LEGAL PROCEEDINGS.

From time to time, the Company is a party to 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 Company's financial position, results of
operations or liquidity.

Through an arbitration in May 2001, the original October 1998 purchase of the
assets of Thompson's Produce Company was rescinded, and the Company was relieved
of its real property lease obligations in Pensacola, Florida (total future
rental payments of $5.4 million) in exchange for the return of net assets
totaling $1.4 million.

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

                                       9

<PAGE>

On December 28, 2001, the Company held a special meeting of its shareholders
following the filing of a definitive proxy statement pursuant to Section 14(a)
of the Securities Exchange Act of 1934. The meeting was adjourned on December
28, 2001 and reconvened on December 29, 2001. The purpose of the meeting was to
obtain shareholder approval of (i) an amendment to the Company's articles of
incorporation to increase the number of authorized shares of its common stock
from 10 million to 250 million shares and to decrease the stated par value of
its common stock from $.01 to $.0001 per share ("Proposal One"), and (ii) the
Company's 2001 Stock Option Plan ("Proposal Two"). 5,209,221 votes (61.9%) were
cast in favor of the Proposal One, 498,804 votes (5.9%) were cast against the
Proposal One or were withheld, and 18,650 votes (0.2%) were counted as broker
non-votes or abstentions. 4,843,231 votes (57.6%) were cast in favor of the
Proposal Two, 860,124 votes (10.2%) were cast against the Proposal Two or were
withheld, and 23,650 votes (0.3%) were counted as broker non-votes or
abstentions. Because 66.67% of the outstanding shares entitled to vote in person
or by proxy at the special meeting were required to vote in favor of Proposal
One, the amendment to the Company's articles of incorporation was not approved.
Because a simple majority of the votes cast were required in order to approve
Proposal Two, the 2001 Stock Option Plan was approved.

                                     PART II

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

As of March 15, 2002, the Company had 60 holders of record for its common stock.
The Company estimates that there were in excess of 1,000 beneficial owners of
its common stock as of that date. The Company's common stock is currently quoted
OTC under the symbol FRES. On April 25, 2001, the Company received notice from
The Nasdaq Stock Market, Inc. that its common stock had failed to maintain the
continued listing standards as required by Nasdaq rules. After a hearing on May
10, 2001, the Company was notified that the Nasdaq staff had determined the
Company's stock would be de-listed and the stock began trading on the Pink
Sheets as of May 25, 2001. Once the Company's SEC reporting obligations were
fulfilled during the third quarter of 2001, the Company was moved to the
Over-the-Counter Bulletin Board.

The OTC quotes reflect inter-dealer prices, without retail markup, markdown or
commission and may not necessarily represent actual transactions. The high and
low sales prices for the common stock on the Nasdaq Stock Market, Pink Sheets,
and OTC for each quarter of fiscal 2001 and 2000 are shown below:

                                High          Low
                               -------------------
2001

         First Quarter         $1.63         $1.00
         Second Quarter        $1.38         $0.15
         Third Quarter         $0.34         $0.11
         Fourth Quarter        $0.30         $0.03

2000

         First Quarter         $5.38         $3.25
         Second Quarter        $3.75         $1.13
         Third Quarter         $2.75         $1.50
         Fourth Quarter        $2.19         $0.88

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

Each share of the Company's 77,000 shares of Series D preferred stock has the
right to receive cumulative dividends, payable monthly in cash and calculated on
the basis of an annual dividend rate of $8 for each share plus interest on any
accrued but unpaid dividends. Because the Charter Amendment was not approved in
2002,

                                       10

<PAGE>

the Series D preferred shareholders received the right to dividends at an annual
dividend rate of $18 per share, but the Series D preferred shareholders agreed
to waive such increased dividend right for 2002. The Company may not declare a
dividend on any other class of capital stock so long as any accrued dividends
for the preferred stock have not been paid. If the Company pays a dividend to
holders of any other class of the Company's capital stock, then the Company will
pay a dilution fee to the holders of the Series D preferred stock. In addition,
the Company's current senior credit facility prohibits the payment of cash
dividends on any of its capital stock. See material under the subheading
"Financial Restructuring" in "Item 1 Business".

For non-registered issuances of common stock during the prior three years,
please see discussion of July 2000 and April 2001 issuances in Item 7 - MD&A
under caption "Financial Restructuring" under the subheading "Acquisitions".

ITEM 6.  SELECTED FINANCIAL AND OPERATING DATA.

The following selected consolidated financial and operating data should be read
in conjunction with Item 7 - MD&A and Item 8-Financial Statements and
Supplementary Data contained herein. The consolidated statement of operations
and consolidated balance sheet data for each of the fiscal years in the
five-year period ended December 28, 2001 are derived from the audited financial
statements of the Company.

<TABLE>
<CAPTION>

                                                 ---------------------------------------------------------------------
                                                 Dec. 28, 2001 Dec. 29, 2000  Dec.31, 1999  Jan. 1, 1999  Jan. 2, 1998
                                                 ---------------------------------------------------------------------
<S>                                              <C>           <C>            <C>           <C>           <C>
Consolidated Statement of Operations Data:
Net sales                                          $257,860       $554,554       $669,875      $609,490      $429,524
Cost of sales                                       229,687        496,169        591,977       537,556       386,161
                                                   --------       --------       --------      --------      --------
   Gross profit                                      28,173         58,385         77,898        71,934        43,363
                                                   --------       --------       --------      --------      --------
Selling, general and administrative expenses         37,563         54,023         66,756        51,936        32,734
Bad debt expense                                        (53)         1,912          6,031         1,230            82
Depreciation and amortization                         3,151          5,506          6,244         3,987         1,805
Disposition costs and impairment of long-lived
 assets                                               9,549         12,791         13,520           --            --
Transaction costs                                       --             --           3,850         1,395           --

Settlements of lawsuits                                 --           1,222            805           --            --
                                                   --------       --------       --------      --------      --------
   Total operating costs and expenses                50,210         75,454         97,206        58,548        34,621
                                                   --------       --------       --------      --------      --------
Operating income (loss)                             (22,037)       (17,069)       (19,308)       13,386         8,742
Other income (expense)                               (3,565)        (4,940)        (5,313)       (2,123)          389
                                                   --------       --------       --------      --------      --------
Income (loss) before taxes and
 extraordinary item                                 (25,602)       (22,009)       (24,621)       11,263         9,131
Income tax expense (benefit)                           (497)           833         (2,630)        5,041         3,921
                                                   --------       --------       --------      --------      --------
Income (loss) before extraordinary item             (25,105)       (22,842)       (21,991)        6,222         5,210
Extraordinary gain on extinguishment of debt         23,776          1,905            --            --            --
                                                   --------       --------       --------      --------      --------
   Net income (loss)                                 (1,329)       (20,937        (21,991)     $  6,222      $  5,210
Accretion of preferred stock                          1,593            698            --            --            --
                                                   --------       --------       --------      --------      --------
   Net income (loss) applicable to common
    shareholders                                   $ (2,922)      $(21,635)      $(21,991)     $  6,222      $  5,210
                                                   ========       ========       =========     ========      ========
Earnings (loss) per share - basic                  $  (0.39)      $  (4.13)      $  (4.20)     $   1.27      $   1.19
                                                   ========       ========       =========     ========      ========
Earnings (loss) per share - diluted                $  (0.39)      $  (4.13)      $  (4.20)     $   1.20      $   1.12
                                                   ========       ========       ========      ========      ========

                                                 ---------------------------------------------------------------------
                                                 Dec. 28, 2001 Dec. 29, 2000  Dec.31, 1999  Jan. 1, 1999  Jan. 2, 1998
                                                 ---------------------------------------------------------------------
</TABLE>

                                       11

<PAGE>

<TABLE>
<S>                                   <C>      <C>      <C>       <C>       <C>
Consolidated Balance Sheet Data:
Working capital                       $  1,170 $  2,590 $  12,246 $  28,474 $ 11,219
Property and equipment, net              6,924    9,944    24,440    23,900   13,581
Total assets                            50,958   87,261   134,481   158,099   79,964
Long-term debt, less current portion     6,226   24,950    32,843    35,985    6,193
Shareholders' equity                    15,522    9,402    29,771    50,562   29,335
</TABLE>


(1)      The Company's fiscal year is a 52-week or 53-week period ending on the
         Friday closest to calendar year end. Fiscal 1997 through fiscal 2001
         are 52-week periods.
(2)      As discussed in Item 1 - Business, the Company made acquisitions from
         1995 through 1998 and divestitures in 1999 through 2001 that affect the
         comparability of information reflected in the selected financial data.

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

Results of Operations

The following table presents the components of the consolidated statements of
operations as a percentage of sales for the periods indicated and includes the
results of operations for all acquired companies from their date of acquisition,
except that Ontario Tree Fruits Ltd.'s ("OTF") results of operations are
included for all periods since it has been accounted for as a pooling of
interests. The fiscal years ended December 28, 2001 (fiscal 2001), December 29,
2000 (fiscal 2000) and December 31, 1999 (fiscal 1999) are all 52-week periods.

<TABLE>
<CAPTION>
                                                                         Fiscal Year Ended
                                                         ------------------------------------------
                                                         December 28,    December 29,  December 31,
                                                             2001             2000           1999
                                                         ------------    ------------  ------------
<S>                                                       <C>                <C>             <C>
Net sales                                                 100.0%             100.0%          100.0%
Cost of sales                                              89.1               89.5            88.4
                                                         ------------    ------------  ------------
   Gross profit                                            10.9               10.5           11.6
                                                         ------------    ------------  ------------
Selling, general and administrative expenses               14.6                9.7           10.0
Bad debt expense                                             --                0.4            0.9
Depreciation and amortization                               1.2                1.0            0.9
Disposition costs and impairment of long-lived assets       3.7                2.3            2.0
Transaction costs                                            --                 --            0.6
Settlements of lawsuits                                      --                0.2            0.1
                                                         ------------    ------------  ------------
   Total operating costs and expenses                      19.5               13.6           14.5
                                                         ------------    ------------  ------------
Operating income (loss)                                    (8.6)              (3.1)          (2.9)
Other income (expense)                                     (1.4)              (0.9)          (0.8)
                                                         ------------    ------------  ------------
Income (loss) before income taxes and extraordinary       (10.0)              (4.0)          (3.7)
item
Income tax expense (benefit)                               (0.3)              (0.1)          (0.4)
                                                         ------------    ------------  ------------
Income (loss) before extraordinary item                    (9.7)              (4.1)          (3.3)
Extraordinary gain on extinguishment of debt                9.2                0.3             --
                                                         ------------    -----------   ------------
   Net income (loss)                                       (0.5)              (3.8)          (3.3)
Accretion of preferred stock                                0.6                0.1             --
                                                         ------------    ------------  ------------
   Net income (loss) applicable to common shareholders    (1.1%)              (3.9%)          (3.3%)
</TABLE>

The following table presents the components of the Company's Consolidated
Statements of Operations, through the operating loss calculation for the year
ended December 28, 2001. The columns presented illustrate performance for the
Company's ongoing operation, as well as the results of the operations divested
during the year.

                                         Ongoing     Divested    Consolidated
                                        --------    ---------    ------------

Net Sales                              $ 227,302    $  30,558     $ 257,860
Cost of Goods Sold                       200,158       29,529       229,687
                                       ---------    ---------     ---------
Gross Profit                              27,144        1,029        28,173
                                       ---------    ---------     ---------

                                       12

<PAGE>

<TABLE>
<S>                                                           <C>            <C>        <C>
Selling, general and administrative expenses                28,445         9,118     37,563
Bad debt expense                                              (525)          472        (53)
Depreciation and Amortization                                3,085            66      3,151
Disposition costs and impairment of long-lived assets
                                                             9,549(a)         --      9,549
Transaction costs                                               --            --         --
Settlements and lawsuits                                        --            --         --
                                                         ---------     ---------  ---------
Total operating costs and expenses                          40,554         9,656     50,210
  Operating loss                                         $ (13,410)    $  (8,627) $ (22,037)
                                                         =========     =========  =========
</TABLE>


(a)   In the fourth quarter of 2001, the Company recorded an impairment charge
      related to property and equipment and goodwill of $8.3 million and a $1.2
      million charge was recorded for lease commitments on idle facilities.

Comparison of Fiscal 2001 to Fiscal 2000

Net sales. Net sales decreased $296.7 million, or 53.5%, to $257.9 million in
fiscal 2001 from $554.6 million in fiscal 2000. Approximately $167.7 million of
this decrease in revenues is attributable to the termination of the Sam's
Agreement in October 2000. In addition, divestitures of certain operations
resulted in decreased sales during 2001 as compared to 2000. These divestitures
included OTF, which was sold in March 2001, resulting in a decrease of $51.3
million; King's Onion House ("King's") which was sold in April 2001, resulting
in a decrease of $30.6 million; and other less significant divestitures
resulting in a decrease of $14.0 million, in the aggregate. In addition, in May
2001, a decision was reached, via arbitration to rescind the original purchase
agreement of the Company's Florida location, Thompson's Produce. This resulted
in a decrease in sales of $10.0 million compared to the corresponding period of
2000. The rescission of the purchase agreement did not subject the Company to
any penalties. The Company also experienced a decrease in sales of approximately
$29.0 million at its Los Angeles facility. This decrease was primarily
attributable to the loss of key sales persons at this location who controlled a
significant portion of sales, primarily yams, citrus and chili peppers. The
Company is in process of replacing the sales persons and re-establishing
customer relationships for each product line that was interrupted at this
location. Additionally, because a significant portion of the Company's revenues
are produced from sales to restaurants, which experienced a decline in business
in the months following September 11, 2001, the Company was negatively impacted
by the economic downturn and the events of September 11. The Company's decreases
in sales mentioned above aggregating $302.6 million were partially offset by
increased sales throughout the Company, primarily related to incremental
business from national and regional sales programs.

Cost of Sales. Cost of sales decreased $266.5 million, or 53.7% to $229.7
million in fiscal 2001 from $496.2 million in fiscal 2000. As a percentage of
net sales, cost of sales decreased to 89.1% in 2001 from 89.5% in 2000 resulting
in a gross profit margin of 10.9% in 2001 as compared to 10.5% in 2000. The
Company's gross profit increase was primarily attributable to the termination of
the Sam's Agreement, under which produce was typically sold at lower margins in
comparison to other business. The gross margin as a percentage of sales in 2001
for ongoing operations was 11.9% as compared to 3.4% for divested operations.
The Company enters into arrangements with its customers on either a fee for
service basis or a pre-determined margin basis. In cases where the Company
provides its products to the customer on a fee for service basis, when there is
an oversupply of product available, prices decrease, as there is too much
product in the market for the relatively flat demand. During these times, Fresh
America must sell product at a lower price to remain competitive. Sales dollars
decrease as the same quantity of product is purchased at the lower price. Cost
of sales and gross profit are primarily impacted due to the fact that the
operational costs needed to process the product do not decrease. Therefore the
cost of sales increases as a percentage of sales and the gross profit declines.
Where possible, the Company attempts to reduce the risk of fluctuating commodity
prices in such arrangements by negotiating corresponding fee for service
arrangements with its growers and/or shippers.

Pre-determined margin contracts provide the Company with greater flexibility to
hold or decrease prices to customers when commodity prices fall or hold or to
increase prices to customers when commodity prices rise. During fiscal year
2000, approximately 67.2% of the Company's arrangements with its customers were
on a pre-determined margin basis and approximately 32.8% of such arrangements
were on a fee for service basis. This is compared with fiscal year 2001, during
which approximately 15.4% of the Company's arrangements with

                                       13

<PAGE>

customers were on a pre-determined margin basis and approximately 84.6% of such
arrangements were on a fee for services basis.

Selling, general and administrative expenses. Selling, general and
administrative ("SG&A") expenses decreased by $16.4 million, or 30.5% to $37.6
million in fiscal 2001 from $54.0 million in fiscal 2000. Approximately $3.7
million of the decrease relates to the four distribution centers where the
Company significantly reduced overhead and operating expenses when the Sam's
Agreement ended in October 2000. In addition, approximately $7.1 million of the
decrease relates to the divestitures of OTF, King's, and Thompson's Produce as
discussed above. The remaining $5.6 million decrease resulted from reduction of
headcount and Company-wide cost reduction initiatives that began to take effect
during the second quarter of 2001 and continued throughout the year. Selling,
general and administrative expenses in fiscal 2001 for ongoing operations as a
percentage of sales was 12.5% as compared to 29.8% for divested operations.

Bad debt expense. The Company's provision for bad debt decreased $2.0 million to
a credit of $53,000 in fiscal 2001 from $1.9 million in fiscal 2000. The
decrease is primarily attributable to additional reserves recorded in 2000 for
uncollectable receivables associated with closed operations and the reduction in
recorded reserves in 2001 due to significant improvements in the collection of
accounts receivable in 2001 as compared to the previous year.

Depreciation and amortization. Depreciation and amortization decreased $2.3
million or 42.8% to $3.2 million in fiscal 2001 from $5.5 million in fiscal
2000, primarily related to the divestitures in 2001, discussed elsewhere herein.

Disposition costs and impairment of long-lived assets. In fiscal 2001, the
Company recorded impairment charges to reduce the carrying value of property and
equipment and related allocated goodwill of $152,000 and $8.2 million
respectively, related to non-performing operations. An additional $1.2 million
charge was recorded for lease commitments on idle facilities.

Settlement of Lawsuits. The original purchase for the assets of Thompson's
Produce in October 1998, which was in litigation, was rescinded pursuant to
arbitration and, as a result, the Company recorded a charge of $1.2 million in
fiscal 2000 related to assets returned to the former owners in settlement of
this contingency.

Operating income (loss). As a result of the foregoing factors, the Company
incurred an operating loss of $22.2 million in fiscal 2001 compared to $17.1
million in fiscal 2000.

Income tax expense (benefit). Income tax benefit for fiscal 2001 relates
principally to a Canadian income tax benefit from the loss of OTF prior to its
sale, and income tax expense for fiscal 2000 relates principally to state income
taxes, partially offset by a Canadian income tax benefit attributable to the
loss of OTF. There is no federal income tax expense on the extraordinary gain
arising from the September 2001 and 2000 restructurings because the Company has
sufficient current fiscal year and prior year net operating losses to offset the
gain. No U.S. federal income tax benefit was provided in fiscal 2001 and 2000
because the Company cannot carryback U.S. losses to recover any prior year
federal income taxes.

Extraordinary gain on extinguishment of debt. The Company completed financial
restructurings in the third quarters of both 2001 and 2000 which resulted in
extraordinary gains from the retirement of debt. See Note 4 to the unaudited
consolidated financial statements for discussion of the restructurings.

Preferred dividends and accretion. The increase in preferred stock dividends and
accretion in fiscal 2001 compared to the prior year is principally due to the
fair value of the Series D cumulative redeemable preferred stock issued pursuant
to the financial restructuring on September 5, 2001 being substantially less
than the face amount, and issuance costs which further reduced the initially
recorded value. As a result, the accretion of the carrying value exceeds the
accretion recorded on the previously outstanding Series C cumulative redeemable
preferred stock.

                                       14

<PAGE>

Net income (loss) applicable to common shareholders. As a result of the
foregoing factors, the Company incurred a net loss applicable to common
shareholders of $2.9 million in fiscal 2001 compared to net loss of $21.6
million in fiscal 2000.

Comparison of Fiscal 2000 to Fiscal 1999

Net sales. Net sales decreased $115.3 million, or 17.2% to $554.6 million in
fiscal 2000 from $669.9 million in fiscal 1999. Approximately $67.0 million of
this decrease was attributable to the 1999 divestiture of seven of the Company's
direct food service distribution operations and the first quarter 2000 closure
of the Sam Perricone Citrus market operations. Approximately $41.0 million of
the decrease was related to OTF, the Company's Canadian operations. The Canadian
operation experienced increased revenues in 1999 as the result of a citrus
freeze in the U.S. Additionally, a major customer of OTF which had accounted for
approximately 65% of the Canadian operation revenues was lost during 1999.
Fourth quarter sales decreased to $109.9 million compared to $151.1 million in
the comparable 1999 period. Sam's represented the Company's largest customer in
2000 and 1999. Sam's accounted for 30.0% of net sales in fiscal 2000 compared to
30.5% in fiscal 1999. The Company's contract with Sam's expired in October 2000.
See Note 2 to the consolidated financial statements elsewhere herein.

Cost of Sales. Cost of sales decreased $95.8 million, or 16.2% to $496.2 million
in fiscal 2000 from $592.0 million in fiscal 1999. The decrease is primarily
related to fourth quarter 1999 divestitures of the Company's direct food service
distribution operation and decreased business volume in the OTF operation. As a
percentage of net sales, cost of sales increased to 89.5% from 88.4%, which in
turn decreased the Company's gross profit percentage to 10.5% from 11.6%. The
Company's margins were negatively impacted by fluctuating commodity markets, the
effects of which the Company was unable to fully recover through increased
prices to customers associated with the Company's core items, including
tomatoes, melons, onions and citrus, in those instances where the Company was
unable to renegotiate such prices with its customers. The Company enters into
arrangements with its customers on either a fee for service basis or a
pre-determined margin basis. In cases where the Company provides its products to
the customer on a fee for service basis, when there is an oversupply of product
available, prices decrease, as there is too much product in the market for the
relatively flat demand. During these times, Fresh America must sell product at a
lower price to remain competitive. Sales dollars decrease as the same quantity
of product is purchased at the lower price. Cost of sales and gross profit are
primarily impacted due to the fact that the operational costs needed to process
the product do not decrease. Therefore the cost of sales increases as a
percentage of sales and the gross profit declines. Where possible, the Company
attempts to reduce the risk of fluctuating commodity prices in such arrangements
by negotiating corresponding fee for service arrangements with its growers
and/or shippers.

Pre-determined margin contracts provide the Company with greater flexibility to
hold or decrease prices to customers when commodity prices fall or hold or to
increase prices to customers when commodity prices rise. During fiscal year
1999, approximately 66.5% of the Company's arrangements with its customers were
on a pre-determined margin basis and approximately 33.5% of such arrangements
were on a fee for service basis. This is compared with fiscal year 2000, during
which approximately 67.2% of the Company's arrangements with customers were on a
pre-determined margin basis and approximately 32.8% of such arrangements were on
a fee for services basis.

Selling, general and administrative expenses. Selling, general and
administrative ("SG&A") expenses decreased by $12.7 million, or 19.1% to $54.0
million in fiscal 2000 from $66.8 million in fiscal 1999. The majority of the
decrease in SG&A is primarily attributable to a reduction in operating expenses
of approximately $9.0 million caused by the closing of poorly performing
operations in the latter part of 1999 and the first quarter of 2000.
Additionally, salaries and benefits decreased at the Company's corporate office
and certain other locations as a result of improved efficiencies and
restructurings.

Bad debt expense. The Company's provision for bad debt decreased $4.1 million to
$1.9 million in fiscal 2000 from $6.0 million in fiscal 1999. In fiscal 1999,
the Company recorded an additional provision for bad debt amounting to $1.9
million related to certain past due customer balances at seven of its divested
food service operations for which management determined further collection
efforts would not be successful. In 1999, the Company also recorded charges

                                       15

<PAGE>

totaling $2.1 million principally related to certain distribution agreements
under which the Company did not fully recover amounts due from other parties
associated with terminated business arrangements.

Depreciation and amortization. Depreciation and amortization decreased by
$700,000 or 11.3% to $5.5 million in fiscal 2000 from $6.2 million in fiscal
1999, primarily related to the food service divestitures in 1999 and 2000
previously mentioned.

Disposition costs and impairment of long-lived assets. During the fourth quarter
of 2000, the Company recorded impairment charges to reduce the carrying value of
property and equipment and related allocated goodwill of $10.6 million and $2.2
million respectively, related to non-performing operations. The Company recorded
goodwill impairment charges of $10.6 million and other disposition costs
aggregating $2.9 million in 1999 related to non-performing operations. See Note
6 to the accompanying consolidated financial statements elsewhere herein.

Settlement of Lawsuits. In May 2001, the original purchase for the assets of
Thompson's Produce in October 1998 was rescinded pursuant to arbitration and, as
a result, the Company recorded a charge of $1.2 million in December 2000.

Operating income (loss). As a result of the foregoing factors, the Company
incurred an operating loss of $17.1 million in fiscal 2000 compared to $19.3
million in fiscal 1999.

Other income (expense). Interest expense decreased $0.6 million to $5.2 million
in fiscal 2000 from $5.8 million in fiscal 1999 due to reductions of debt for
borrowed money.

Income tax expense (benefit). Income tax expense for fiscal 2000 relates
principally to state income taxes, partially offset by a Canadian income tax
benefit attributable to the loss of OTF. The effective tax rate for fiscal 2000
was (4.2%) compared to 10.7% in fiscal 1999. The difference in these effective
tax rates compared to the statutory U.S. federal rate of 35% is primarily
attributable to increases in the valuation allowance that were recorded against
the Company's deferred tax assets in both fiscal years and the impairment of
non-deductible goodwill in fiscal 1999.

Extraordinary gain on extinguishment of debt. In July 2000, the Company entered
into an agreement amending the stock purchase agreement and restructuring
certain notes payable related to the Company's November 1998 acquisition of
Perricone Citrus Company. The restructuring resulted in an extraordinary gain in
the third quarter of 2000 of $1.9 million. See "Liquidity and Capital Resources"
in Item 7 - MD & A.

Net income (loss). As a result of the foregoing factors, the Company incurred a
net loss of $20.9 million in fiscal 2000 compared to net loss of $22.0 million
in fiscal 1999.

Liquidity and Capital Resources

Cash provided by operating activities was $31,000 for fiscal 2001 compared to
$19.2 million in fiscal 2000. This decrease of $19.2 million is primarily
attributable to the termination of the Sam's Agreement and the resulting loss of
operating income subsequent to October 2000. In addition, there was less cash
provided from the net changes in accounts receivable, accounts payable,
inventories and accrued expenses during the current period compared to the prior
year period. The decreases in these balances are due to the termination of the
Sam's Agreement in October 2000 and divestiture of non-performing operations.
Cash provided by investing activities was $3.3 million in fiscal 2001 as
compared to cash used in investing activities of $703,000 in fiscal 2000. The
increase of $4.0 million primarily relates to proceeds of $2.5 million from the
King's Onion House sale in April 2001, proceeds of $2.1 million from the sales
of Cutten Road and OTF, and a reduction in capital expenditures in fiscal 2001
as compared to the same period of 2000. Cash used in financing activities was
$4.9 million in fiscal 2001 compared to $16.4 million in 2000. This decrease is
primarily due to the reduction of net payments on short-term indebtedness in
fiscal 2001 as compared to fiscal 2000.

                                       16

<PAGE>

On December 28, 2001 the Company had working capital of $2.9 million compared to
working capital of $2.6 million at December 29, 2000. The increase of $0.3
million in working capital is primarily due to the substantial decreases in
accounts receivable and inventory, partially offset by reductions in short-term
debt and accounts payable. These decreases primarily resulted from the reduced
scope of business operations after the termination of the Sam's Agreement in
October 2000 and from the divestiture of non-performing operations. The Company
believes its current level of working capital is sufficient to meet its
requirements, and the Company expects to meet its obligations as they come due
in fiscal 2002.

As of December 28, 2001 the Company has $7.7 million of debt of which $1.5
million is due during 2002 and substantially all of the remainder is due in
January 2003. In addition, the Company has redeemable preferred stock with
redemption value of $7.7 million. The Series D preferred shareholders have a put
right on the Series D preferred stock after August 14, 2004, and immediately
upon any breach by the Company of the financial restructuring agreements or any
sale, merger or change of control of the Company at $100 per share plus accrued
and unpaid dividends. Because the requisite shareholder approval for the Charter
Amendment was not obtained, the holders of Series D preferred stock have the
right to exercise their put right at three times the face value of the preferred
stock, such amount being $13,950,000 for NTOF, $1,050,000 for Mr. Hollingsworth
and $8,100,000 for the Hancock Entities plus accrued and unpaid dividends.
Additionally, the holders of the preferred stock, have the right to redeem their
shares of preferred stock on the same terms as the put right after April 30,
2007 or immediately upon the occurrence of any sale, merger or change of control
of the Company, any qualified public offering with net proceeds of at least
$20,000,000 or any private equity financing with net proceeds of at least
$20,000,000. If the Company is unable to generate sufficient cash flow to
service such debt or preferred stock or refinance the senior term debt when it
matures in January 2003, the Company may have to reduce or divest certain
operations, restructure its preferred stock or seek additional equity capital.
There can be no assurance that the Company will be able to generate sufficient
cash flow or raise additional debt or equity capital on satisfactory terms in
order to refinance its senior term debt and expand its business. Changes in
interest rates, market liquidity, stock prices and general market conditions may
affect the Company's ability to raise funds or refinance senior term debt. The
Company's ability to make scheduled payments with respect to indebtedness and
refinance our debt will depend upon, among other things: the Company's ability
to sustain cash flow and implement its business strategy.

Financial Restructuring

Throughout its operational restructuring during the past three years, the
Company has pursued various financing opportunities in an effort to restructure
its senior bank and subordinated debt. In September 2001, the Company completed
a financial restructuring whereby North Texas Opportunity Fund LP, ("NTOF")
purchased 50,000 shares of the Company's Series D cumulative redeemable
preferred stock and warrants exercisable for 84,100,980 shares of our common
stock for total cash proceeds of $5 million. Arthur Hollingsworth, an affiliate
of NTOF and the Company's Chairman of the Board, subsequently purchased from
NTOF for the same price as paid by NTOF, 3,500 shares of Series D preferred
stock and warrants exercisable for 5,887,069 shares of our common stock. In
connection with the NTOF investment in the Company, John Hancock Life Insurance
Company, John Hancock Variable Life Insurance Company, Signature 1A (Cayman),
Ltd. and Signature 3 Limited (collectively, the "Hancock Entities") exchanged
$20 million of subordinated debt, warrants to purchase 576,134 shares of the
Company's common stock, 50,000 shares of Series D cumulative redeemable
preferred stock and all accrued interest and dividends for 27,000 shares of the
Company's Series D cumulative redeemable preferred stock and warrants
exercisable for 45,414,529 shares of our common stock.

Other Debt Arrangements

Bank Debt. In conjunction with this restructuring the Company's senior lender,
Bank of America agreed to an extension of the maturity date of the Company's
term credit facility until January 2, 2002 and a revised payment schedule.
Subsequent to the financial restructuring, Bank of America assigned its interest
in the credit facility to Endeavour, LLC (the "Senior Lender") and the Senior
Lender extended the due date to January 6, 2003. The Company is pursuing a
revolving credit facility with a new lender to replace the existing facility
prior to its maturity date. There can be no assurance that the Company will be
able to replace its Senior Lender as anticipated or extend its senior credit
facility beyond January 2003, if that becomes necessary.

                                       17

<PAGE>

Prior to its sale in March 2001, OTF had a demand agreement with Royal Bank of
Canada to provide revolving credit facilities, which were collateralized by
substantially all assets of OTF. This outstanding balance was fully repaid in
March 2001 in conjunction with the sale of OTF's operating assets.

Acquisitions. In July 2000, the Company entered into an agreement amending the
stock purchase agreement relating to the Company's November 1998 acquisition of
Perricone Citrus Company. As part of the amended agreement, unsecured promissory
notes owed by the Company totaling $3.5 million and the accrued and unpaid
interest therein were restructured whereby the Company agreed to the following:
payments totaling $100,000 upon execution of the amended agreement; lump-sum
payments of $350,000 and $150,000 on January 1, 2002 and July 1, 2002,
respectively; and 24 monthly installment payments of $37,500 totaling $900,000.
The promissory notes accrue interest at 10% per annum. However, all accrued
interest will be forgiven if scheduled principal payments are made timely.
Additionally, the Company issued the note holders 300,000 warrants to purchase
common shares of the Company at an exercise price of $2.50 per share. The
warrants are exercisable for the duration of seven years. The issuances of these
securities were exempt from registration under the Securities Act under
Regulation D. The restructuring of the promissory notes and related accrued
interest resulted in an extraordinary gain to the Company of $1.9 million in the
third quarter of 2000. In February 2002, the Company and the note holders agreed
to amend the agreement to change the due date of all remaining payments to the
earlier of (i) January 7, 2003 or (ii) the repayment or refinancing of the
Company's term note with the Senior Lender. In addition, all previous accrued
interest was forgiven, and the remaining principal balance began accruing
interest at an annual rate of 10% in January 2002.

Under the terms of the purchase agreement for the acquisition of Jos. Notarianni
& Co. ("Notarianni"), a portion of the purchase price was contingent upon
Notarianni's earnings subsequent to its acquisitions. The contingent payment for
Notarianni was equal to 1.4 times Notarianni's average annual pretax earnings
over a three-year period from October 3, 1998 to October 3, 2001. On February 5,
2002, the Company issued an unsecured promissory note to Mr. Joseph Cognetti in
the amount of $1,233,043 (the "Cognetti Note"). The Cognetti Note bears interest
of 5% per annum, which interest is payable in quarterly installments, and
becomes due and payable on the earlier of (i) January 7, 2003 or (ii) the
repayment or refinancing of the Company's term note with the Senior Lender.

The Company's purchase agreement with Hereford Haven Inc. d/b/a Martin Bros.
("Martin Bros.") also contains a contingent payment component in the purchase
price. The Martin Bros. contingent payment was equal to 4 times the average
annual pretax earnings for the three-year period from January 3, 1998 to January
3, 2001. The total contingent payment was $5.0 million. The payment was due
March 31, 2001 and was payable in either cash, common stock or a combination of
cash and common stock to the extent of 75% at the Company's option and 25% at
the selling shareholder's option. In satisfaction of 75% of the contingent
payment, in April 2001, the Company issued 3,166,694 shares of its common stock
to Larry Martin, the former owner of Martin Bros. The issuance of these
securities to Mr. Martin was exempt from registration under the Securities Act
under Regulation D. At the time of issuance, the shares represented a 38%
ownership interest in the Company. These shares were valued at $1.17 per share,
the market value of the Company's common stock at the time of the transaction.
The remaining $1.2 million of contingent consideration was evidenced by a
promissory note and was restructured as part of the financial restructuring
discussed above. It is payable in cash subject to the approval of the Company's
Senior Lender. This note is due in January 2003 bears interest at an annual rate
of 5%, payable quarterly.

Equipment Financing. The Company is party to a master lease agreement with
SunTrust Bank that has been used to provide equipment financing for several of
the Company's operating units. The Company's aggregate future commitment under
the master lease agreement, which expires in December 2007, is approximately
$3.3 million. The Company was not in compliance with certain financial covenants
under the terms of the lease at December 28, 2001 and received waivers for
noncompliance through January 6, 2003. There can be no assurance that the
Company will be in compliance with such covenants subsequent to the waiver
period or will be successful in renegotiating the covenants.

Off-Balance Sheet Transactions or Arrangements.  None.

Critical Accounting Policies

                                       18

<PAGE>

The Company follows certain significant accounting policies when preparing its
consolidated financial statements. A complete summary of these policies is
included in Note 1 to the accompanying Consolidated Financial Statements.

Certain of the policies require management to make significant and subjective
estimates which are sensitive to deviations of actual results from management's
assumptions. In particular, management makes estimates regarding future
undiscounted cash flows of acquired operations in assessing impairment of
goodwill and estimates regarding future undiscounted cash flows from the future
use of long-lived assets whenever events or changes in circumstances indicate
that the carrying amount of a long-lived asset may not be recoverable.

In assessing impairment of goodwill and the impairment of long-lived assets
where there has been a change in circumstances indicating the carrying value of
a long-lived asset may not be recoverable, the Company has estimated future
undiscounted net cash flows from the acquired operations and from use of the
asset, respectively, based on actual historical results and expectations about
future economic circumstances including future business volume, finished product
prices and operating costs. The estimate of future net cash flows from the
acquired operations and use of the asset could change if actual prices and costs
differ due to industry conditions or other factors affecting the level of
business volume or the Company's performance.

Recently Issued Accounting Standards

Recently, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 141, Business Combinations (Statement 141),
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (Statement 142) Statement of Financial Accounting Standards
No. 143, Accounting for Asset Retirement Obligations (Statement 143) and
Statement of Financial Accounting Standards No. 144, Accounting for Impairment
or Disposal of Long-Lived Assets (Statement 144).


Statement 141 requires that all business combinations initiated after June 30,
2001 be accounted for under the purchase method. Statement 141 also specifies
the criteria that intangible assets acquired in a business combination must meet
to be recognized and reported apart from goodwill. The Company does not believe
Statement 141 will have a significant impact on its consolidated financial
statement. Statement 142 requires that goodwill and intangible assets with
indefinite lives no longer be amortized, but instead be tested for impairment at
least annually. Statement 142 also requires that intangible assets with
estimated useful lives be amortized over their respective useful lives to their
estimated residual values and reviewed for impairment. Statement 142 is
effective for fiscal years beginning after December 15, 2001. Amortization
expense related to goodwill that will not be amortized under Statement 142 was
$1,667,000, $1,404,000 and $1,979,000 for Fiscal 2001, 2000 and 1999,
respectively. Because of the extensive effort needed to comply with adopting
Statement 142, it is not practicable to reasonably estimate the impact of
adopting this standard at the date of this report, including whether the Company
will be required to recognize any transitional impairment losses as the
cumulative effect of a change in account principle.

Statement 143 establishes requirements for the accounting for removal costs
associated with asset retirements and is effective for fiscal years beginning
after June 15, 2002, with earlier adoption encouraged. The Company is currently
assessing the impact of Statement 143 on its consolidated financial statements.
Statement 144 supercedes Statement 121, Accounting for the Impairment of Long
Lived Assets and for Long Lived Assets to be Disposed Of, and the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30, Reporting
the Results of Operations, Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions. Statement 144 retains the fundamental provisions of Statement 121
but eliminates the requirement to allocate goodwill to long lived assets to be
tested for impairment. Statement 144 also requires discontinued operations to be
carried at the lower of cost or fair value less costs to sell and broadens the
presentation of discontinued operations to include a component of an entity
rather than a segment of a business. Statement 144 is effective for fiscal years
beginning after December 15, 2001 and interim periods within those years with
early adoption encouraged. The Company does not expect the adoption of Statement
144 to have a material impact on its consolidated financial statements.

                                       19

<PAGE>

Quarterly Results and Seasonality

The Company's business is somewhat seasonal, with its greatest quarterly sales
volume historically occurring in the fourth quarter. With the change in the
current mix of business resulting from the Company's divestitures of certain
specialty food service operations, the termination of the Sam's Agreement in
October 2000 and the increasing effect of global sourcing, the Company believes
the extent of seasonal fluctuations has decreased since 1999. There are
decreases in availability of product during periods of transition from one
growing region to the next. In any given quarter, an adverse development 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. See Note 12 to the accompanying Consolidated Financial Statements for
certain quarterly information for the Company's two most recent fiscal years.

Inflation

Although the Company cannot determine the precise effects of inflation,
management does not believe inflation has had a material effect on its sales or
results of operations. However, independent of normal inflationary pressures,
the Company's products are subject to fluctuating prices which result from
factors discussed above in the section titled "Quarterly Results and
Seasonality".

Forward-Looking Statements

This Annual Report and the information incorporated by reference in this Annual
Report contain forward-looking statements. Statements that are not historical
facts, including statements about Fresh America's beliefs or expectations, are
forward-looking statements. These statements are based on plans, estimates and
projections at the time we make the statements, and you should not place undue
reliance on them. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "anticipates," "plans,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of such terms and other comparable terminology. These statements are only
predictions. Actual events or results may differ materially. In evaluating these
statements, you should specifically consider various factors, including the
risks outlined below. These factors may cause our actual results to differ
materially from those expressed in forward-looking statements made or
incorporated by reference in this Annual Report, or in any other SEC filings or
public statements we may make.

The Company is subject to a number of risks, including those discussed below:

Our Debt Leverage Could Adversely Affect Our Business. The degree to which we
are leveraged could have adverse consequences, such as:

      .     limiting or impairing our ability to obtain refinancing for our
            senior term debt at favorable rates;

      .     limiting or impairing our ability to obtain additional financing in
            the future for working capital, capital expenditures or general
            corporate purposes;

      .     requiring us to dedicate a portion of our cash flow to the payment
            of principal and interest on our indebtedness and dividends on our
            preferred stock, which reduces the availability of cash flow to fund
            working capital, capital expenditures and growth opportunities; and

      .     increasing our vulnerability to economic downturns, limiting our
            ability to withstand competitive pressures and reducing our
            flexibility in responding to changing business and economic
            conditions.

As of March 22, 2002, we had $7.7 million of debt consisting primarily of our
senior bank term note. In addition, the Company has redeemable preferred stock
with redemption value of $7.7 million, which increased to $23.1 million, plus
accrued and unpaid dividends effective December 31, 2001 due to the Charter
Amendment not receiving the approval of our shareholders as discussed elsewhere
herein.

We Will Require a Significant Amount of Cash to Service Our Debt Over the Next
Twelve Months and Beyond; Our Ability to Generate Cash Depends on Many Factors
Beyond Our Control. If we are unable to generate sufficient cash flow to service
our debt or Series D preferred stock or refinance our term debt when it matures
in

                                       20

<PAGE>

January 2003, we may have to reduce or divest certain operations, restructure
our Series D preferred stock or seek additional equity capital. There can be no
assurance that we will be able to generate sufficient cash flow or raise
additional debt or equity capital on satisfactory terms to refinance our term
debt and expand our business. Changes in interest rates, market liquidity, stock
prices and general market conditions may all affect our ability to raise funds
or refinance our term debt.

Our ability to make scheduled payments with respect to indebtedness and
refinance our debt will depend upon, among other things:

      .     our ability to sustain cash flow;

      .     produce commodity pricing; and

      .     our ability to implement our business strategy.

Each of these factors is affected by economic, financial, competitive and other
factors, many of which are beyond our control.

Our Efforts To Implement Our Business Strategy May Fail. Our management has
stated its intention to expand and diversify our customer base, market
penetration and service offerings. This strategy poses risks associated with our
ability to reduce costs, reach targeted customers, increase sales in higher
margin products and increase product distribution through high-volume
warehouses. These challenges will be subject to the risk of intense competition,
lack of sufficient customer demand or change in customer tastes, inadequate
assured sources of quality product supply and unforeseen complications, delays
and cost increases. Some of our prior acquisitions were not previously
integrated into our business and there can be no assurance that we will succeed
in implementing our strategy to integrate these operations.

Our Debt and Preferred Stock Covenants Restrict Our Operating Flexibility. A
breach of the covenants in our senior secured term debt could result in a
default, in which event, the lender could elect to declare the outstanding
principal amount or our senior secured debt to be immediately due and payable.
Our agreements with our Series D preferred shareholders also contain various
restrictions, which if not complied with could cause our Series D preferred
shareholders to have a put right on their preferred stock at $300 per share (as
described more fully in Item 1 above under the heading "Financial
Restructuring") plus accrued and unpaid dividends. The terms and conditions of
our senior secured debt and agreements with our Series D preferred shareholders
impose restrictions that affect, among other things, our ability to incur debt,
make capital expenditures, merge, sell assets, make distributions, or create or
incur liens. There can be no assurance that we will be able to comply with the
provisions of the credit agreement or the agreements with our Series D preferred
shareholders.

Price and Quality Fluctuations Could Adversely Affect Our Operating Income.
Prices of high quality fresh produce are volatile based on available supply,
which can be significantly affected by factors such as weather, disease and
level of agricultural production. Both our sales and profitability could be
negatively affected during periods of exceptionally high, low or volatile prices
or when we cannot obtain sufficient high quality produce. During periods of
lower produce prices, our operating income is adversely affected because we have
less gross margin to cover operating expenses.

We Operate in Highly Competitive Markets. Due to the commodity nature of certain
of our products, we operate in highly competitive markets. Many companies
compete in the food service produce distribution and wholesale food distribution
categories. However, only a few well-established companies operate on both a
national and regional basis. We face strong competition from these as well as
smaller regional companies in all of our product lines. There can be no
assurance that we will be able to compete successfully with current or future
competitors. Competitive considerations include:

      .     some competitors may have substantially greater financial resources
            and operating flexibility to react to changes in the marketplace;

                                       21

<PAGE>

      .     some of our products compete with imports and private label products
            and are sensitive to competition from regional brands; and

      .     the Company cannot predict the pricing or promotional actions of our
            competitors and if we do not respond appropriately to reduced
            pricing or discounts or if we raise prices, we could lose market
            share.

Severe Weather Conditions and Natural Disasters Can Affect the Availability of
Produce and Reduce Our Operating Results. Severe weather conditions and natural
disasters, such as floods, droughts, frosts, earthquakes or pestilence, may
affect the supply of our products. These events can result in reduced supplies
of fresh produce and higher costs of products.

Our Operating Results Are Seasonal. Interference With Our Production Schedule
During Peak Months Could Negatively Impact Our Operating Results. Our working
capital requirements are seasonal and are most significant in the second and
fourth quarters. Our sales tend to peak in the fourth fiscal quarter each year,
mainly as a result of the holiday period in November and December. By contrast,
in the third fiscal quarter of each year, sales generally decline, mainly due to
less promotional activity and the availability of fresh produce. Any adverse
development affecting our operations during this period, such as the
unavailability of high quality produce or harsh weather conditions, could have a
disproportionate impact on our results of operations for the full year.

Our Common Stock Has Recently Experienced Reduced Liquidity and Market Coverage.
Our common stock has been delisted from the Nasdaq National Market and is
currently traded on the Over-the-Counter Bulletin Board. There has been less
trading activity in our common stock as a result of this move. Also, our common
stock is currently suffering from a lack of coverage by investment
professionals.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. As of December 28, 2001 our senior secured debt accrued
interest at a market rate at the time of borrowing plus an applicable margin on
certain borrowings. The interest rate is based on the lending bank's prime rate
plus 3%. The impact on the Company's results of operations of a one-percentage
point interest rate change on the outstanding balance of the variable rate debt
as of December 28, 2001 would be $44,000.

Commodity Pricing Risk. For reasons discussed previously, prices of high quality
produce can be extremely volatile. In order to reduce the impact of these
factors, we generally set our prices based on current delivered cost.

ITEM 8.  FINANCIAL STATEMENT AND SUPPLEMENTARY DATA.

Index to Consolidated Financial Statements and Financial Statement Schedules.

<TABLE>
                                                                                    Page

<S>                                                                                   <C>
Independent Auditors' Report                                                        F-2

Consolidated Balance Sheets as of December 28, 2001 and December 29, 2000           F-3

Consolidated Statements of Operations for fiscal years ended December 28, 2001,
   December 29, 2000 and December 31, 1999                                          F-4

Consolidated Statements of Shareholders' Equity for fiscal years ended December
   28, 2001, December 29, 2000 and December 31, 1999                                F-5

Consolidated Statements of Cash Flows for fiscal years ended December 28, 2001,
   December 29, 2000 and December 31, 1999                                          F-6

Notes to Consolidated Financial Statements                                          F-7
</TABLE>

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.

Not Applicable.

                                       22

<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table sets forth biographical information concerning the executive
officers and directors of the Company as of March 22, 2002. On October 15, 2001,
the NTOF designees, Arthur W. Hollingsworth, Luke M. Sweetser, Gregory A.
Campbell and Darren L. Miles became members of our Board of Directors.

<TABLE>
<CAPTION>
                                                                                              Director    Term to
                                                                                              --------    -------
Name                             Age   Position with the Company                                Since      Expire
----                             ---   -------------------------                              --------    -------
<S>                              <C>   <C>                                                      <C>         <C>
Darren L. Miles                  43    President, Chief Executive Officer and Director          2001        2002
Arthur W. Hollingsworth          39    Chairman of the Board of Directors                       2001        2002
Colon O. Washburn                56    Director                                                 1993        2002
Luke M. Sweetser                 30    Director                                                 2001        2002
Gregory A. Campbell              49    Director                                                 2001        2002
Steven C. Finberg                32    Executive Vice President - Business Development
Cheryl A. Taylor                 33    Executive Vice President, Chief Financial Officer
                                       and Secretary
Helen Mihas                      35    Vice President, Treasurer, Controller and Assistant
                                       Secretary
Eric Janke                       40    Vice President - Procurement/Services
Jerry Campbell                   41    Vice President - Information Technology
</TABLE>

Darren L. Miles. Since October 2001, Mr. Miles has served as a member of our
Board of Directors. In August 2001, Mr. Miles was appointed President and Chief
Executive Officer of the Company. Since 2000, Mr. Miles has been a director of
Lewis Hollingsworth LP, a venture capital/private equity firm in Dallas, TX.
From 1998 to 2000, Mr. Miles was Chief Financial Officer and Executive Vice
President of ACS Incorporated, a commodity distribution company. From 1984 to
1998, Mr. Miles was Chief Financial Officer, Executive Vice President, and a
Principal of Hutson Companies Inc., a privately held wholesale/retail
distribution company. ACS Incorporated filed for bankruptcy protection on
February 4, 2000.

Steven C. Finberg. In October 1999, Mr. Finberg was promoted to Vice President
of Sales and Marketing. Previously, Mr. Finberg had been the Director of
Merchandising since 1997. From 1989 to 1997, Mr. Finberg had a variety of upper
management and executive roles within the Company including Regional Director of
Operations.

Cheryl A. Taylor. Ms. Taylor serves the Company as its Chief Financial Officer,
Executive Vice President and Secretary. Ms. Taylor joined the Company in April
2001. From 1994 until joining the Company, Ms. Taylor was employed by The Great
Train Store Company, a nation-wide specialty retailer. Since 1996, Ms. Taylor
served The Great Train Stores as its Chief Financial Officer and Vice
President-Finance and Administration. From 1989 to 1994, Ms. Taylor served as a
certified public accountant with Coopers & Lybrand LLP, an international
accounting and auditing firm. The Great Train Store Company filed for bankruptcy
protection on February 28, 2000.

Helen Mihas. In April 2001, Ms. Mihas was promoted to Controller, Vice President
and Assistant Secretary. She had been with the Company since March 2000 as its
Assistant Controller. From 1993 until 2000, Ms. Mihas was employed by Columbia
and Tenet Healthcare Corporations, two major national healthcare corporations,
in various financial positions. From 1988 to 1993, Ms. Mihas held an accounting
position at McNeil Real Estate Management.

Eric Janke. Mr. Janke currently serves the Company as its Vice President -
Procurement/Services. Mr. Janke has been with the Company since October 1996 and
has been in the industry for 26 years. His experience within the food industry
includes sales, marketing and procurement throughout retail management to
foodservice distribution along with brokerage and fresh cut processing.

Jerry Campbell. Mr. Campbell currently serves the Company as its Vice President
- Information Technology. Mr. Campbell has been with the company for over 10


                                       23

<PAGE>

years and brings into his current position a great deal of expertise in both
corporate and filed operations. He has held various operations and sales
positions within the Company prior to becoming the Director of Information
Technology. Before joining Fresh America, Mr. Campbell advanced to Store Manager
during his 15 year career in the grocery industry with Brookshire Bros.

Colon O. Washburn. Mr. Washburn resigned his position as our Chief Executive
Officer in August 2001. Mr. Washburn had been appointed Chief Executive Officer
in October 1999. Since his resignation, Mr. Washburn has remained with the
Company as a member of our Board of Directors and continues to serve as an
advisor to management. Mr. Washburn has been a director of the Company since
July 1993. From 1971 until January 1993, Mr. Washburn was employed by Wal-Mart
Stores, Inc. ("Wal-Mart"), where he served most recently as Executive Vice
President of Sam's Wholesale Club, a division of Wal-Mart, and also as Senior
Vice President of Wal-Mart. Since February 1993, Mr. Washburn has been President
of Beau Chene Farms, a real estate development company. Additionally, Mr.
Washburn serves as a director of Tandycrafts, Inc.

Arthur W. Hollingsworth. Since October 2001, Mr. Hollingsworth has been the
Chairman of our Board of Directors. Since August 2000, Mr. Hollingsworth has
been a Co-founder and Partner of North Texas Opportunity Fund LP, a venture
capital/private equity firm located in Dallas, TX. From 1989 to the present, Mr.
Hollingsworth has also been a Partner of Lewis Hollingsworth LP, a venture
capital/private equity firm located in Dallas, TX. Mr. Hollingsworth is Chairman
of the Boards of Belding Hausman Incorporated (textile manufacturer) and Instaff
Personnel, Inc. (temporary staffing services), and is also Co-Chairman of
BillMatrix Corporation (payment processing). In addition, Mr. Hollingsworth
serves on the Board of Directors of Hollingsworth & Vose Company (paper
manufacturing), Irving Holdings, Inc. (Yellow Cab of Dallas) and the Zale Lipshy
University Medical Center, Inc. (healthcare).

Gregory A. Campbell. Since October 2001, Mr. Campbell has served as a member of
our Board of Directors. Since August 2000, Mr. Campbell has been a Co-founder
and Partner of North Texas Opportunity Fund LP, a venture capital/private equity
firm in Dallas, TX. Since September 1988, Mr. Campbell has served as President
of Campbell Consulting Group, a strategic management consulting group. In
addition, Mr. Campbell presently serves as a director on the boards of
PrimeSource Foodservice Equipment, Inc. (foodservice equipment distribution),
InStaff Personnel, Inc. (temporary staffing services), IBIS Communications and
MLN Holding Corporation.

Luke M. Sweetser. Since October 2001, Mr. Sweetser has served as a member of our
Board of Directors. Since August 2000, Mr. Sweetser has been a Co-founder and
Partner of North Texas Opportunity Fund LP, a venture capital/private equity
firm located in Dallas, TX. From 1994 to the present, Mr. Sweetser has been a
Managing Director of Lewis Hollingsworth LP, a venture capital/private equity
firm located in Dallas, TX. Mr. Sweetser is a director of InStaff Personnel
(temporary staffing services), PrimeSource Foodservice Equipment, Inc.
(foodservice equipment distribution) and the Dallas-Ft. Worth Private Equity
Forum. Mr. Sweetser has served as a director for the City of Dallas Housing
Finance Corporation since 1994 and has served as its Chief Investment Officer
since 1996. Mr. Sweetser holds the designation of Chartered Financial Analyst
from the Association of Investment Management and Research.

Former 2001 Directors & Officers

Mark R. Gier. From April 2001 until October 15, 2001, Mr. Gier was a Director of
the Company. Mr. Gier formed Diversified Management Services, LLC in November
2000. Mr. Gier is also a faculty member of The Refrigeration Research and
Education Foundation annual institute and served as a former Chairman of the
Finance and Administration, Investments, and Insurance Committees of the World
Food Logistics Organization from 1993 to 1998. Upon the closing of the NTOF
transaction, Mr. Gier tendered his resignation from the Board. Such resignation
was accepted by the Company.

Larry Martin. Mr. Martin served as a Director of the Company from April 2001
through August 2001. Mr. Martin was the former owner of Martin Bros. in
Arlington, Texas which was acquired by the Company in January 1998. After the
acquisition he served as the General Manager of the Arlington facility until his
retirement in December 2001.

                                       24

<PAGE>

Keith McKinney. From April 2001 until October 15, 2001, Mr. McKinney was a
Director of the Company. Mr. McKinney is a private investor who retired in 1992
as President, CEO and Vice Chairman of Intertrans Corporation, a public,
international transportation and logistics company. Prior to co-founding
Intertrans in 1978, Mr. McKinney held several positions with Circle
International, a public international freight forwarder, customs broker and
logistics company and with Texas Instruments in various capacities, including
International Traffic Manager. Upon the closing of the NTOF transaction, Mr.
McKinney tendered his resignation from the Board. Such resignation was accepted
by the Company.

Gary D. Wiener. Mr. Wiener joined the Company in 1993. In March 2000, Mr. Wiener
was appointed Executive Vice President and Chief Operating Officer. From 1996 to
1999, Mr. Wiener served as the Corporate Vice President of Operations. Mr.
Wiener resigned from the Company in January 2002.

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities
(collectively, the "Reporting Persons") to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and to furnish the
Company with copies of these reports. Based solely on our review of the copies
of such forms received by us, we believe that, during 2001, our executive
officers, directors and greater than 10% beneficial owners have complied with
all applicable filing requirements with respect to our equity securities, except
that one statement of changes in beneficial ownership of securities (Form 4), in
which one transaction was not reported, and an annual report (Form 5), in which
the same transaction was not reported, were not filed by Mr. Larry Martin, a
former director and holder of 37.7% of our issued and outstanding Common Stock.

Family Relationships

None.

ITEM 11.  EXECUTIVE COMPENSATION.

The following table sets forth certain information regarding compensation paid
during each of the last three fiscal years to the Company's Chief Executive
Officer and each of the Company's other executive officers (the "named executive
officers").

<TABLE>
<CAPTION>

                                                                       Long-Term
                                                                     Compensation
                                                                     ------------
                                            Annual Compensation         Shares
        Name and                      -----------------------------   Underlying      All Other
   Principal Position        Year      Salary      Bonus     Other   Options/SARs   Compensation(1)
-------------------------    ----     -------     ------    -------  ------------   ---------------
<S>                          <C>      <C>         <C>       <C>      <C>            <C>
Colon O. Washburn(2)         2001     220,385        --        --           --          2,146
 Chief Executive Officer,    2000     240,000        --        --        60,000         2,215
 Chairman of the Board
 and President               1999      56,308        --      4,940        5,000           --

Gary D. Wiener(3)            2001     150,769        --     13,302          --          3,421
 Executive Vice President    2000     138,051        --        --        25,000         2,233
 and Chief Operating Officer 1999     113,473        --        --           --          1,777

Steven C. Finberg            2001     131,154        --        --           --          1,996
 Executive Vice President-   2000     113,424        --        --        20,000         3,201
 Business Development        1999      96,750     11,500       --           --          4,191

</TABLE>

                                       25


<PAGE>
<TABLE>
<S>                                  <C>         <C>         <C>       <C>           <C>     <C>
John H. Gray(4)                      2001         78,269        --         --        --      1,423
   Executive Vice President, Chief   2000        175,000        --         --        --      4,586
   Financial Officer and Secretary   1999        165,000        --         --        --      1,333

Darren L. Miles(5)                   2001            --      50,000    142,500       --        --
   Chief Executive Officer,
   Director and President

Cheryl A. Taylor(6)                  2001         40,385        --     137,531       --        --
   Executive Vice President, Chief
   Financial Office and Secretary

Eric Janke (7)                       2001        110,076     12,433        --        --      3,302
   Vice President -                  2000        106,734        --      22,800       --      3,202
Procurement/Services                 1999         90,772      3,000     16,470       --      2,813

Jerry Campbell (8)                   2001        125,000        --      12,500       --      3,125
   Vice President - Information      2000         98,654     47,500        --        --      1,973
   Technology                        1999         88,706     10,499        --        --      1,692
</TABLE>
----------------
(1)   These amounts consist of contributions by the Company to a 401(k) plan on
      behalf of the named executive.
(2)   Effective October 1999, Mr. Washburn was appointed CEO of the Company. Mr.
      Washburn's annual base compensation was $240,000. Effective August 2001,
      Mr. Washburn resigned his position as Chief Executive Officer and Darren
      Miles became Chief Executive Officer.
(3)   Mr. Wiener received $13,301 during fiscal 2001 related to moving expenses.
(4)   Effective May 2001, Mr. Gray resigned as Executive Vice President, Chief
      Financial Officer, and Secretary. Effective April 2001, Cheryl Taylor
      became Executive Vice President, Chief Financial Officer, and Secretary.
(5)   Effective August 2001, Mr. Miles became Chief Executive Officer and
      President. Mr. Miles is compensated as a consultant to the Company.
(6)   Effective April 2001, Ms. Taylor became Executive Vice President, Chief
      Financial Officer and Secretary. Beginning in October 2001, Ms. Taylor
      became an employee of the Company. Prior to this time she was compensated
      as a consultant.
(7)   Mr. Janke received $22,800 and $16,410 during fiscal 2001 and 2000,
      respectively related to moving expenses.

(8)   Mr. Campbell received $12,500 during fiscal 2001 related to moving
      expenses.

Option Grants In Last Fiscal Year

No option grants were made during the 2001 fiscal year. If the Charter Amendment
is approved at the 2002 Annual Meeting of Shareholders, the Company intends to
issue options to purchase common stock under the Company's 2001 Stock Option
Plan to associates of the Company, including the Company's officers and
directors. See "Post Charter Amendment Security Ownership" in Item 1.

Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-End Option
Values

There were no options exercised by the named executive officers during the 2001
fiscal year.

401(k) Plan


The Company maintains a 401(k) Profit Sharing Plan, a tax-qualified retirement
plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Company's 401(k) Plan provides

                                       26

<PAGE>

participants with retirement benefits and may also provide benefits upon death,
disability or termination of employment with the Company. Employees are eligible
to participate in the Company's 401(k) Plan following the completion of three
(3) months of employment. In addition, employees must be at least twenty-one
(21) years of age to be eligible for participation in the 401(k) Plan.
Participants may make elective salary reduction contributions to the 401(k) Plan
up to the lesser of 15% of the participant's compensation or the legally
permissible limit (currently $11,000) imposed by the Code. The Company may, in
its sole discretion make a matching employer contribution for employees of the
amount of the percentage of each employee contribution up to a maximum
contribution of 3% of the contributing employee's compensation. In addition, the
Company may, in its sole discretion, make non-elective contributions to the
401(k) Plan for participants who are not considered to be "highly compensated
employees" under the Plan. Contributions by the Company vest over a period of
five (5) years. Enrollment in the 401(k) Profit Sharing Plan may be effected on
the first day of the month following the date the employee meets the eligibility
requirements of the Plan.

Compensation Committee Interlocks and Insider Participation

Mr. Washburn, our former Chief Executive Officer, served on our Compensation
Committee until February 2001. From February until September 2001, the
Compensation Committee consisted of Keith McKinney and Mark Gier, and there were
no Compensation Committee interlocks. From October 2001 to present, our
Compensation Committee is composed of Arthur Hollingsworth and Greg Campbell and
there are no Compensation Committee interlocks.

                         COMPENSATION COMMITTEE'S REPORT
                            ON EXECUTIVE COMPENSATION

Since its formation in 1994, the Compensation Committee has been responsible for
recommending bonuses and any increase in base salaries for the Company's
executive officers.

The Compensation Committee believes that, in order for the Company to succeed,
it must be able to attract and retain qualified executive officers. In
determining the type and amount of executive officer compensation, the
objectives of the Compensation Committee are to provide levels of base
compensation, bonuses and long-term incentives (in the form of stock options or
other plans) that will attract and retain talented executive officers and align
their interests with the success of the Company. The Company's executive officer
compensation program currently is comprised of base salary, bonus plan,
long-term incentive compensation (in the form of stock options) and various
benefits generally available to employees of the Company (such as health and
disability insurance). Under the supervision of the Compensation Committee and
the Board of Directors, the Company has developed and implemented compensation
policies, plans and programs that seek to enhance the profitability of the
Company and increase shareholder value.

Base Salaries

The Company's policy is to maintain base salaries competitive with salaries paid
to similarly situated executive officers of companies of similar size in
comparable industries. Although neither the Board of Directors nor the
Compensation Committee has conducted a formal review of base salaries paid to
similarly situated executive officers, the Company believes that the base
salaries payable to its executive officers are comparable to those paid by
similar companies located in the Company's geographical area and engaged in
industries comparable to the Company's. The Compensation Committee anticipates
that adjustments to base compensation will generally be made based upon assigned
responsibility and performance and successful attainment of specific goals and
objectives of the Company and individual employees.

Bonuses

Year-end cash bonuses are designed to motivate the Company's executive officers
to achieve specific annual financial goals and to achieve favorable returns for
the Company's shareholders. At the end of each fiscal year, the Compensation
Committee will assess each executive's contributions to the Company as well as
the degree to which specific annual financial, strategic, and operating
objectives were met by the Company.

                                       27

<PAGE>

Long-Term Incentives

Stock option grants under the Company's stock option plans form the basis of the
Company's long-term incentive compensation for executive officers and employees.
The specific objective of the Company's stock option plans is to align the
long-term interests of the Company's executive officers and employees with those
of shareholders by creating a strong link between executive pay and shareholder
returns. The Company encourages its executive officers and employees to develop
and maintain a significant, long-term stock ownership position in the Company's
Common Stock. Stock options are awarded to executive officers and employees in
order to encourage future management actions aimed at improving the Company's
sales efforts, product quality and profitability. The Company believes that
success in these endeavors will increase the value of the Company's Common Stock
for shareholders. Recipients of stock options will have the opportunity to share
in the increased value that results from their efforts. The Plan Administration
Committee makes specific awards of options based on an individual's ability to
impact Company-wide performance and in light of the total compensation
appropriate for the individual's position. The Compensation Committee may also
consider other bonus or long-term incentives at their discretion.

Chief Executive Officer Compensation

Mr. Colon Washburn was the Company's CEO for the period of January 2001 until
August 2001. Mr. Washburn resigned in 2001 as the Company's Chief Executive
Officer. Mr. Washburn is a director of the Company and continues to be employed
with the Company as an Executive Consultant pursuant to an employment agreement,
which provides for a one-year term commencing on October 5, 2001, and which may
be renewed for up to three successive one-year periods thereafter. In approving
Mr. Washburn's compensation, the Board of Directors at that time evaluated and
compared Mr. Washburn's duties, responsibilities and performance results, and
the overall results of the Company, to industry norms to determine his base
compensation. See subheading "Employment Agreements" under this Item 11.

Mr. Darren Miles joined the Company in August 2001 as the Chief Executive
Officer. Mr. Miles is compensated as a consultant at an annual amount of
$250,000. In approving Mr. Miles' compensation, the Board of Directors at that
time evaluated and compared Mr. Miles' duties, responsibilities and performance
results, and the overall results of the Company, to industry norms to determine
his base compensation. During October 2001, the Compensation Committee reviewed
Mr. Miles performance and recommended a cash bonus of $50,000 for fiscal 2001.

In November 2000, the Company entered into a resignation agreement and contract
for services with Mr. David Sheinfeld, the former Chief Executive Officer of the
Company. Pursuant to the agreement, the Company paid Mr. Sheinfeld $33,333 per
month for the six months of January through June 2001. The payments decreased to
$8,333 for the last six months of 2001. See subheading "Severance Agreements"
under this Item 11.

This Report is submitted by the members of the Compensation Committee of the
Board of Directors.

        Arthur Hollingsworth                           Greg Campbell

Employment Agreements

The Company has entered into employment agreements with Steven Finberg, Cheryl
Taylor and Colon Washburn. These employment agreements set forth the basic terms
of Mr. Finberg's, Ms. Taylor's and Mr. Washburn's employment with the Company,
and also contain provisions regarding non-competition, non-solicitation of
Company employees, non-solicitation of Company customers, and confidentiality of
certain Company information.

Mr. Finberg's agreement for employment with the Company as a Vice President
Sales and Marketing has a term of three years, commencing on October 5, 2001.
The term of the employment agreement may be extended by a written extension
agreement signed by both parties. Mr. Finberg is obligated under the agreement
to devote his full professional working time to the Company and shall not
otherwise be employed or otherwise engaged in any other business or enterprise
without the written permission of the Company. The agreement provides for a base
salary of $145,000 per year, which is to be reviewed annually by the Company,
but which may not be decreased. In addition to the base salary, the agreement
provides for, among other things, participation in

                                       28

<PAGE>

benefit plans and other fringe benefits applicable to similarly situated
officers and managers, reimbursement for business expenses in accordance with
Company policy, and eligibility to receive a performance-based annual bonus. The
bonus will be awarded beginning on the first day of the calendar year following
October 5, 2001, only if the economic performance of the Company during twelve
consecutive months has achieved or exceeded an "adjusted target budget" as
determined by the Board of Directors and subject to adjustment as set forth in
the agreement. The agreement provides that the Company may terminate Mr. Finberg
for cause (as defined in the agreement) at any time. The agreement terminates
automatically in the event of disability (as defined in the agreement) and also
terminates automatically upon death. Termination by either the employee or the
Company (except for in the event of death) requires two weeks' written notice.

Ms. Taylor's agreement for employment with the Company as an Executive Vice
President and the Chief Financial Officer has a term of three years, commencing
on October 5, 2001. The term of the employment agreement may be extended by a
written extension agreement signed by both parties. Ms. Taylor is obligated
under the agreement to devote her full professional working time to the Company
and shall not otherwise be employed or otherwise engaged in any other business
or enterprise without the written permission of the Company. The agreement
provides for a base salary of $175,000 per year, which is to be reviewed
annually by the Company, but which may not be decreased. In addition to the base
salary, the agreement provides for, among other things, participation in benefit
plans and other fringe benefits applicable to similarly situated officers and
managers, reimbursement for business expenses in accordance with Company policy,
and eligibility to receive a performance-based annual bonus. The bonus will be
awarded beginning on the first day of the calendar year following October 5,
2001, only if the economic performance of the Company during twelve consecutive
months has achieved or exceeded an "adjusted target budget" as determined by the
Board of Directors and subject to adjustment as set forth in the agreement. The
agreement provides that the Company may terminate Ms. Taylor for cause (as
defined in the agreement) at any time. The agreement terminates automatically in
the event of disability (as defined in the agreement) and also terminates
automatically upon death. Termination by either the employee or the Company
(except for in the event of death) requires two weeks' written notice.

Mr. Washburn's agreement for employment with the Company as an Executive
Consultant provides for a one-year term commencing on October 5, 2001, which may
be renewed for up to three successive one-year periods thereafter. Renewal is
automatic unless either party gives thirty days' notice prior to the expiration
of the term. During Mr. Washburn's term of employment, he may continue the
business relationships he already has, and any new consulting or part-time
employment arrangements as may arise. He otherwise agrees to devote his full
professional working time to the Company and shall not otherwise be employed or
otherwise engaged in any other business or enterprise without the written
permission of the Company. The agreement provides that Mr. Washburn shall
receive consulting fees of $150,000 per year, which will be reviewed and
modified from time to time, but which shall not be decreased. In addition to the
base salary, the agreement provides for, among other things, participation in
benefit plans and other fringe benefits applicable to similarly situated
employees and reimbursement for business expenses in accordance with Company
policy. The agreements provides for termination by the Company for cause (as
defined in the agreement), at any time. The agreement terminates automatically
in the event of disability as defined in the agreement, and also terminates
automatically upon death. Termination by either the employee or the Company
(except for death) requires two weeks' written notice.

Each of Mr. Finberg's, Ms. Taylor's and Mr. Washburn's employment agreements
further provide that during the employment term, each of them shall observe a
non-competition clause, and shall not without prior written consent directly or
indirectly engage in or have a financial interest in any other business,
continue or assume any other corporate affiliations, or pursue any other
commercial activities which would in any way compete with the Company or result
in a conflict of interest for the employee. For one year after termination of
employment, each of them agrees not to compete with the Company or have any
financial interest in any entity competing with the Company or an affiliate of
the Company for which the employee performed services, within any region or
locality in which the Company is then doing business or marketing its products.
They further agree to non-solicitation of Company employees, non-solicitation of
Company customers, and to maintain the confidentiality of the Company's
confidential information (as defined in the agreement), both during their
employment and for one year after termination.

                                       29

<PAGE>

Severance Agreements

On January 25, 2002 Mr. Gary Weiner resigned from his position as the Company's
Chief Operating Officer. His employment agreement with the Company was
terminated as of the date of his resignation. In connection with his
resignation, the Company entered into a Resignation Agreement. Pursuant to the
Resignation Agreement, Mr. Weiner will receive $53,334 to be paid $6,667
bi-weekly for eight pay periods.

On November 9, 2000, the Company and Mr. David Sheinfeld entered into a
Resignation Agreement and Contract for Services in connection with Mr.
Sheinfeld's resignation as Chairman of the Board of Directors and an employee of
the Company. The agreement contemplates that Mr. Sheinfeld would be engaged as
an independent contractor to the Company for a period commencing on November 9,
2000 and ending December 31, 2001, unless terminated earlier pursuant to the
agreement. Pursuant to the Resignation Agreement, the Company paid Mr. Sheinfeld
$33,333 per month for the six months of January through June 2001. The payments
decreased to $8,333 for the last six months of 2001. Under the terms of the
Agreement, Mr. Sheinfeld was entitled to receive a severance payment of $50,000,
$25,000 of which was paid on November 9, 2000 with the remaining $25,000 paid on
February 1, 2001. In addition, Mr. Sheinfeld was eligible to receive a bonus in
the amount of $25,000 on December 31, 2001, if, in the reasonable judgment of
the Company, Mr. Sheinfeld had satisfactorily performed the services required by
the Company. The Company determined that Mr. Sheinfeld was not eligible to
receive a bonus in 2001. Further, the Company agreed to forgive Mr. Sheinfeld's
debt to the Company in the amount of $300,000. The Company also agreed to extend
the period during which Mr. Sheinfeld may exercise his stock options to purchase
105,537 shares of the Company's Common Stock from November 9, 2000 to November
9, 2001. These options have now expired and Mr. Sheinfeld has no options.

Corporate Performance Graph

The Company's Common Stock currently is quoted on the Over-the-Counter Bulletin
Board under the symbol FRES. On April 25, 2001, the Company received notice from
The Nasdaq Stock Market, Inc. that its common stock had failed to maintain the
continued listing standards as required by Nasdaq rules. After a hearing on May
10, 2001, the Company was notified that the Nasdaq staff had determined the
Company's stock would be de-listed and the stock began trading on the Pink
Sheets as of May 25, 2001. Once the Company's SEC reporting obligations were
fulfilled during the third quarter of 2001, the Company was moved to the
Over-the-Counter Bulletin Board.

The following graph shows a five-year comparison of shareholder return on the
Company's Common Stock based on the market price of the Common Stock (assuming
reinvestment of dividends), the cumulative total returns of companies on the
Nasdaq Stock Market Index of U.S. Companies and companies with standard industry
classifications (SIC codes) with the same range as Fresh America's. The data was
supplied by Media General Financial Services.

                                       30

<PAGE>

                             [GRAPHIC APPEARS HERE]

<TABLE>
<CAPTION>
                                                                           Period Ending
                                                      ---------------------------------------------------------
Index                                                 12/1996  12/1997  12/1998  12/1999   12/2000   12/2001
---------------------------------------------------------------------------------------------------------------
<S>                                                   <C>      <C>      <C>      <C>       <C>       <C>
Fresh America Corp.                                    100.00  120.68   100.75     29.32      6.77       .48
Groceries and Related Products (SIC 5140-5149)         100.00  133.57   150.60    168.69    231.53    231.80
NASDAQ Market Index (US Companies)                     100.00  122.32   172.52    304.29    191.25    152.46
</TABLE>



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

The following table sets forth certain information believed by the Company to be
accurate based on information provided to it concerning the beneficial ownership
of Common Stock by (a) each shareholder who is known by the Company to own
beneficially in excess of 5% of the outstanding Common Stock, (b) each director,
(c) the Company's Chief Executive Officer, (d) each of the Company's other named
executive officers and (e) all executive officers and directors as a group, as
of March 15, 2002.

                                       31

<PAGE>

<TABLE>
<CAPTION>
                                                     COMMON STOCK                                   SERIES D
                                                                                                PREFERRED STOCK
                                                  ----------------------------------    -----------------------------------
Beneficial Owner                                  Amount and Nature of    Percent of    Amount and Nature of     Percent of
----------------                                                          ----------                             ==========
                                                  Beneficial Ownership     Class(1)     Beneficial Ownership      Class
                                                  --------------------    ---------     --------------------      -----
<S>                                               <C>                     <C>           <C>                      <C>
North Texas Opportunity Fund LP                         -0-(2)               *               46,500(3)              60.4%
13355 Noel Road, Suite 2210
Dallas, TX                                                                                                         75240

North Texas Opportunity Fund Capital                    -0-(2)               *               46,500(3)              60.4%
Partners, LP
13355 Noel Road, Suite 2210
Dallas, TX 75240

NTOF LLC                                                -0-(2)               *               46,500(3)              60.4%
13355 Noel Road, Suite 2210
Dallas, TX 75240

North Texas Investment Advisors LLC                     -0-(2)               *               46,500(3)              60.4%
13355 Noel Road, Suite 2210
Dallas, TX 75240

John Hancock Financial Services, Inc.                   -0-(4)               *               27,000                 35.1%
John Hancock Place, P.O. Box 111
Boston, MA 02117

Larry Martin                                      3,166,694(5)            37.7%                 -0-                    *
2729 Sunrise Drive
Arlington, TX 76006

Gruber & McBaine Capital Management                 892,400(6)            10.6%                 -0-                    *
50 Osgood Place
San Francisco, CA 94133

DiMare Homestead, Inc.                              528,300(7)             6.3%                 -0-                    *
258 NW 1st Avenue
Florida City, FL 33034

Arthur Hollingsworth                                    -0-(8)               *               50,000(3)              64.9%

Greg Campbell                                           -0-                  *               46,500(3)              60.4%

Luke Sweetser                                           -0-                  *               46,500(3)              60.4%

Darren L. Miles                                         -0-                  *                  -0-                    *

Colon O. Washburn                                   122,435(9)             1.4%                 -0-                    *

Cheryl Taylor                                           -0-                  *                  -0-                    *

Gary D. Wiener                                       29,600(10)              *                  -0-                    *

Steven C. Finberg                                    26,500                  *                  -0-                    *

Eric Janke                                            2,000                  *                  -0-                    *

Jerry Campbell                                        7,000                  *                  -0-                    *

All Directors and Executive Officers as a
Group (10 persons)                                  164,935(11)            1.9%                 -0-                    *
</TABLE>


------------------
*Does not exceed 1% of the outstanding common stock.

                                       32

<PAGE>

(1)   Percentages with respect to each person or group of persons have been
      calculated on the basis of 8,410,098 shares, the total number of shares of
      Common Stock outstanding as of March 15, 2002, plus the number of shares
      of Common Stock which such person or group of persons has the right to
      acquire, without contingency, within 60 days after the record date.

(2)   Does not include warrants to purchase 78,213,911 shares of Common Stock
      beneficially owned by NTOF due to the existence of a material contingency
      (the need for shareholder approval of the Charter Amendment) that is not
      within NTOF's control and that is required to be satisfied prior to
      exercise of the warrants.

(3)   North Texas Opportunity Fund LP ("NTOF") is a direct beneficial owner of
      46,500 shares of Preferred Stock. North Texas Opportunity Fund Capital
      Partners LP ("NTOF Partners") is an indirect beneficial owner of this
      Preferred Stock because NTOF Partners is the general partner of NTOF. NTOF
      LLC ("NTOF LLC") is an indirect beneficial owner of this Preferred Stock
      because NTOF LLC is the general partner of NTOF Partners. North Texas
      Investment Advisors LLC ("NT Advisors") is an indirect beneficial owner of
      this Preferred Stock because NT Advisors is the investment manager of
      NTOF. Arthur Hollingsworth ("Hollingsworth") is the direct beneficial
      owner of 3,500 shares of Preferred Stock, and is an indirect beneficial
      owner of NTOF's 46,500 shares of Preferred Stock because Hollingsworth is
      a manager of NTOF LLC and NT Advisors. Luke Sweetser ("Sweetser") and
      Gregory Campbell ("Campbell") are both indirect beneficial owners of
      NTOF's 46,500 shares of Preferred Stock because Sweetser is a manager of
      NTOF LLC and of NT Advisors and because Campbell is a manager of NTOF LLC
      and of NT Advisors.

(4)   Does not include warrants to purchase 45,414,529 shares of Common Stock
      beneficially owned by the Hancock Entities and reported by the Hancock
      Entities in a Schedule 13D filed with the SEC on September 17, 2001, due
      to the existence of a material contingency (the need for shareholder
      approval of the Charter Amendment) that is not within the Hancock
      Entities' control and that is required to be satisfied prior to exercise
      of the warrants.

(5)   Based on information set forth in a Schedule 13D filed with the SEC on
      April 24, 2001, Mr. Martin beneficially owns 3,166,694 shares of Common
      Stock.

(6)   Based on information provided to the Company by Gruber & McBaine Capital
      Management, LLC ("GMCM"), Jon D. Gruber ("Gruber"), J. Patterson McBaine
      ("McBaine") and Thomas O. Lloyd-Butler ("Lloyd-Butler"). This group
      informed the Company that it beneficially owned 892,400 shares of Common
      Stock and that the voting and dispositive power among such group's members
      is as follows:

                                             Voting and Dispositive Power
                                      ------------------------------------------
Name                                          Sole                  Shared
----------------------------------    -------------------    -------------------
GMCM                                             --                689,300
Gruber                                       94,500                689,300
McBaine                                     108,600                689,300
Lloyd-Butler                                     --                689,300

(7)   Based on information set forth in a Schedule 13D filed with the SEC on
      June 16, 2000, by DiMare Homestead, Inc. ("DiMare"). Paul DiMare,
      President of DiMare, Inc., has sole voting and dispositive power with
      regard to the 528,300 shares of Common Stock beneficially owned by DiMare,
      a wholly-owned subsidiary of DiMare, Inc.

(8)   Does not include warrants to purchase 5,887,069 shares of Common Stock
      beneficially owned by Arthur Hollingsworth due to the existence of a
      material contingency (the need for shareholder approval of the Charter
      Amendment) that is not within NTOF's control and that is required to be
      satisfied prior to exercise of the warrants.

(9)   Includes 90,753 shares subject to options issued to Mr. Colon Washburn
      that are exercisable within 60 days.

(10)  Includes options to acquire 29,500 shares of Common Stock that are
      exercisable within 60 days. Mr. Wiener resigned from the Company on
      January 25, 2002 and his 29,500 options expire on April 25, 2002, 90 days
      after his resignation.

(11)  Includes 133,523 shares subject to options issued to certain directors and
      executive officers of the Company that are exercisable within 60 days.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company entered into a six-month consulting agreement with Mr. Thomas
Hubbard effective October 1, 1999, at which time Mr. Hubbard was a director of
the Company. The agreement paid Mr. Hubbard $8,000 per month. The agreement
called for Mr. Hubbard to provide managerial oversight of King's Onion House, a
former subsidiary of the Company. The agreement was extended for an additional
twelve-month period, which ended April 1, 2001

                                       33

<PAGE>

On September 5, 2001, the Company entered into a monitoring agreement with North
Texas Investment Advisors ("NT Advisors"), an affiliate of NTOF, as a condition
to the Series D preferred stock and warrant agreements between NTOF and the
Company. In conjunction with the monitoring agreement, NT Advisors monitors the
Company's progress and performance and the Company pays NT Advisors a fee of
$20,000 per month. Messrs. Hollingsworth, Campbell and Sweetser hold positions
as managers of NT Advisors, as well as being partners in NTOF and directors of
the Company. The terms of the monitoring agreement provide that affiliates of NT
Advisors or NTOF will not be paid compensation as directors of the Company.

On September 5, 2001, the Company issued an unsecured promissory note (as
amended and restated, the "Martin Note") to Larry Martin, a former director and
a shareholder owning more than 5% of our outstanding common stock, in the amount
of $1,239,233. The Martin Note originally bore no interest and was due and
payable on the earlier of (i) January 3, 2002 or (ii) upon repayment of the
Company's term note with the Senior Lender. On January 3, 2002, the Martin Note
was amended and restated and now bears interest at the rate of 5% per annum,
which interest is payable quarterly, and is due and payable on the earlier of
(i) January 7, 2003 or (ii) the repayment or refinancing of the Company's term
note with the Senior Lender. The Martin Note evidences a deferred purchase price
payment owed to Mr. Martin pursuant to a Stock Purchase Agreement entered into
with Mr. Martin on December 17, 1997 pursuant to which the Company acquired
Martin Bros.

In August, 2001 the Company entered into a staffing agreement with Instaff
Personnel, Inc. ("Instaff"), a company in which NTOF is a significant
shareholder whereby, Instaff would furnish all hourly production employees at
two locations. These two locations transitioned to the Instaff agreement during
the fourth quarter of 2001. Arthur W. Hollingsworth is Chairman of the Board of
Instaff and Gregory A. Campbell and Luke M. Sweetser serve on Instaff's Board of
Directors. Fees paid to Instaff during 2001 were approximately $ 388,000.

                                     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 2001, which
     ended on December 29, 2001.

                                 EXHIBITS INDEX

Exhibit
Number                            Description
------                            -----------

  3.1    Restated Articles of Incorporation of Fresh America Corp. (Incorporated
         by reference to 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 Form 10-Q for the quarterly period ended
         September 28, 2001).

  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]).

  4.2    Statement of Designation for Series D Cumulative Redeemable Preferred
         Stock (Incorporated by reference to Exhibit 4.1 to the Company's Form
         8-K filed with the Securities and Exchange Commission on September 20,
         2001).

                                       34

<PAGE>

 10.1    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]).

 10.2    Fresh America Corp 1996 Stock Option and Award Plan as Amended and
         Restated effective May 22, 1998 (Incorporated by reference to exhibit
         4.3 to the Company's Form S-8 filed with the Securities and Exchange
         Commission on August 4, 1998 [Commission File Number 333-60601]).

 10.3    Fresh America Corp. 2001 Stock Option Plan (Incorporated by reference
         to Appendix B to the Company's Definitive Proxy Statement filed with
         the Securities and Exchange Commission on December 3, 2001).

*10.4    Second Amendment to Stock Purchase Documents dated February 21, 2002
         between Fresh America Corp. and Sam Perricone, Sr., Henry Beyer, and
         the Sam Perricone Children's Trust.

 10.5    Amended and Restated Promissory Notes in the aggregate amount of
         $450,000.00 dated July 28, 2000 with respect to Promissory Notes dated
         as of November 1, 1998 by Fresh America Corp. and issued to Sam
         Perricone, Sr., Henry Beyer, and the Sam Perricone Children's Trust
         (Incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q
         for the quarterly period ended June 29, 2000).

 10.6    Common Stock Purchase Warrant Agreements dated July 28, 2000 between
         Fresh America Corp. and individually, Sam Perricone, Sr., Henry Beyer,
         and the Sam Perricone Children's Trust (Incorporated by reference to
         Exhibit 10.3 to the Company's Form 10-Q for the quarterly period ended
         June 29, 2000).

*10.7    Promissory Note in the amount of $1,233,043.00 dated February 5, 2002
         by Fresh America Corp. and issued to Mr. Joseph Cognetti.

*10.8    Amended and Restated Promissory Note in the amount of $1,239,233.00
         dated January 3, 2002 by Fresh America Corp. and issued to Mr. Larry
         Martin.

 10.9    Securities Exchange and Purchase Agreement, dated August 14, 2001, by
         and among Fresh America Corp., North Texas Opportunity Fund LP and each
         of John Hancock Life Insurance Company, John Hancock Variable Life
         Insurance Company, Signature 1A (Cayman), Ltd., Signature 3 Limited and
         Investors Partner Life Insurance Company (Incorporated by reference to
         exhibit 10.1 to the Company's Form 8-K filed with the Securities and
         Exchange Commission on September 20, 2001).

 10.10   Shareholders Agreement, dated August 14, 2001, by and among Fresh
         America Corp., North Texas Opportunity Fund LP and each of John Hancock
         Life Insurance Company, John Hancock Variable Life Insurance Company,
         Signature 1A (Cayman), Ltd., Signature 3 Limited and Investors Partner
         Life Insurance Company (Incorporated by reference to exhibit 10.2 to
         the Company's Form 8-K filed with the Securities and Exchange
         Commission on September 20, 2001).

 10.11   Post-Closing Agreement dated as of September 5, 2001, by and among
         Fresh America Corp., North Texas Opportunity Fund LP, John Hancock Life
         Insurance Company, John Hancock Variable Life Insurance Company,
         Signature 1A (Cayman), Ltd., Signature 3 Limited and Investors Partner
         Life Insurance Company (Incorporated by reference to exhibit 10.3 to
         the Company's Form 8-K filed with the Securities and Exchange
         Commission on September 20, 2001).

 10.12   Employment Agreement for Colon O. Washburn (Incorporated by reference
         to Exhibit 10.11 to Company's Form 10-Q filed with the Securities and
         Exchange Commission on November 13, 2001).

 10.13   Employment Agreement for Steven C. Finberg (Incorporated by reference
         to Exhibit 10.12 to Company's Form 10-Q filed with the Securities and
         Exchange Commission on November 13, 2001).

                                       35

<PAGE>

*10.14   Resignation Agreement between Mr. Gary D. Weiner and Fresh America
         Corp. dated as of January 25, 2002.

 10.15   Employment Agreement for Cheryl A. Taylor (Incorporated by reference to
         Exhibit 10.14 to Company's Form 10-Q filed with the Securities and
         Exchange Commission on November 13, 2001).

 10.16   Restated Business Loan Agreement between Fresh America Corp. and Bank
         of America Texas, N.A. dated as of February 2, 1998 (Incorporated by
         reference to Exhibit 99.1 to the Company's Form 8-K filed with the
         Securities and Exchange Commission on February 17, 1998).

 10.17   Second Amendment to the Restated Business Loan Agreement between Fresh
         America Corp. and Bank of America Texas, N.A. dated as of May 14, 1998
         (Incorporated by reference to Exhibit 10.4 to the Company's 10-Q filed
         with the Securities and Exchange Commission on August 17, 1998).

 10.18   Eighth Amendment to the Restated Business Loan Agreement between Fresh
         America Corp. and Bank of America Texas, N.A. dated as of October 31,
         1999 (Incorporated by reference to Exhibit 10.12 to the Company's 10-K
         filed with the Securities and Exchange Commission on April 14, 2000).

 10.19   Ninth Amendment to the Restated Business Loan Agreement between Fresh
         America Corp. and Bank of America Texas, N.A. dated as of November 15,
         1999 (Incorporated by reference to Exhibit 10.13 to the Company's 10-K
         filed with the Securities and Exchange Commission on April 14, 2000).

 10.20   Tenth Amendment to the Restated Business Loan Agreement between Fresh
         America Corp. and Bank of America Texas, N.A. dated as of March 31,
         2000 (Incorporated by reference to Exhibit 10.4 to the Company's 10-K/A
         filed with the Securities and Exchange Commission on May 8, 2000).

 10.21   Eleventh Amendment to the Restated Business Loan Agreement between
         Fresh America Corp. and Bank of America Texas, N.A. dated as of January
         26, 2001(Incorporated by reference to Exhibit 10.19 to the Company's
         10-K filed with the Securities and Exchange Commission on September 12,
         2001).

 10.22   Twelfth Amendment to the Restated Business Loan Agreement between Fresh
         America Corp. and Bank of America Texas, N.A. dated as of March 15,
         2001(Incorporated by reference to Exhibit 10.20 to the Company's 10-K
         filed with the Securities and Exchange Commission on September 12,
         2001).

 10.23   Thirteenth Amendment to the Restated Business Loan Agreement between
         Fresh America Corp. and Bank of America Texas, N.A. dated as of
         September 5, 2001 (Incorporated by reference to Exhibit 10.21 to the
         Company's 10-K filed with the Securities and Exchange Commission on
         September 12, 2001).

*10.24   Fourteenth Amendment to the Restated Business Loan Agreement between
         Fresh America Corp. and Bank of America Texas, N.A. dated as of January
         2, 2002.

 12.1    Statement regarding computation of per share earnings (Incorporated by
         reference to Note 1 to the Financial Statements included herein).

*21.1    List of Subsidiary Corporations.

*23.1    Consent of KPMG LLP.

*Filed herewith.

                                       36

<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:  June 12, 2002                            By /s/ DARREN L. MILES
                                                   ----------------------------
                                                   Darren L. Miles
                                                   President 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/ DARREN L. MILES                             Date:    June 12, 2002
-----------------------------------------
Darren L. Miles
President and Chief Executive Officer
(principal executive officer)


/s/ CHERYL A. TAYLOR                            Date:    June 12, 2002
-----------------------------------------
Cheryl A. Taylor
Executive Vice President,
Chief Financial Officer and Secretary
(principal financial and accounting officer)


/s/ ARTHUR W. HOLLINGSWORTH                     Date:    June 12, 2002
-----------------------------------------
Arthur W. Hollingsworth
Chairman of the Board

/s/ LUKE M. SWEETSER                            Date:    June 12, 2002
-----------------------------------------
Luke M. Sweetser
Director

/s/ GREGORY A. CAMPBELL                         Date:    June 12, 2002
-----------------------------------------
Gregory A. Campbell
Director

                                                Date:
-----------------------------------------
Colon O. Washburn
Director

                                       37

<PAGE>

                                    FINANCIAL

                                   STATEMENTS

                                       F1

<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 December 28, 2001 and December 29, 2000, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the years in the three-year period ended December 28, 2001.
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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits 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 December 28, 2001 and December 29, 2000, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 28, 2001, in conformity with accounting principles
generally accepted in the United States of America.

                                           KPMG LLP

Dallas, Texas
March 22, 2002

                                       F2

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)
                            December 28, December 29,

<TABLE>
<CAPTION>

                                                                                                       December 28,     December 29,
                                                                                                           2001              2000
                                                                                                         --------         --------
<S>                                                                                                    <C>              <C>
                                     ASSETS

Current Assets:
   Cash and cash equivalents                                                                             $  3,742         $  4,880
   Accounts receivable, net                                                                                18,124           36,306
   Inventories                                                                                              2,545            6,849
   Prepaid expenses                                                                                         1,010            1,138

   Deferred income taxes                                                                                       --              297
   Income tax receivable                                                                                    2,086            1,084
                                                                                                         --------         --------
     Total Current Assets                                                                                  27,507           50,554
Property and equipment, net                                                                                 6,924            9,944
Goodwill, net of accumulated amortization of $5,322 and $3,655, respectively                               16,141           24,843
Other assets                                                                                                  386            1,920
                                                                                                         --------         --------
Total Assets                                                                                             $ 50,958         $ 87,261
                                                                                                         ========         ========

                        LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
   Notes payable and current portion of long-term debt                                                   $  1,474         $ 13,788
   Accounts payable                                                                                        20,580           27,785
   Accrued salaries and wages                                                                               1,075            2,489
   Other accrued expenses                                                                                   3,208            3,902
                                                                                                         --------         --------
     Total Current Liabilities                                                                             26,337           47,964
Long-term debt, less current portion                                                                        6,226           24,950
Other liabilities                                                                                             444              499
                                                                                                         --------         --------
     Total Liabilities                                                                                     33,007           73,413
                                                                                                         --------         --------

8% Series D cumulative redeemable preferred stock, $1.00 par value (77,000
shares authorized and issued); liquidation value of $7,700 plus accrued and
     unpaid dividends                                                                                       2,429               --

12% Series C redeemable cumulative preferred stock, $1.00 par value (50,000
shares authorized and issued); liquidation value of $5,000
plus accrued and unpaid dividends                                                                              --            4,446

Shareholders' Equity:
   Common stock $.01 par value (authorized 10,000,000 shares; issued 8,410,098
   and 5,243,404 shares, respectively)                                                                         84               52
   Additional paid-in capital                                                                              40,512           33,564
   Foreign currency translation adjustment                                                                     --             (469)
   Accumulated deficit                                                                                    (25,074)         (23,745)
                                                                                                         --------         --------
     Total shareholders' equity                                                                            15,522            9,402
Commitments and Contingencies
                                                                                                         --------         --------
Total Liabilities and Shareholders' Equity                                                               $ 50,958         $ 87,261
                                                                                                         ========         ========
</TABLE>

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

                                       F3

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                              Fiscal Year Ended
                                                                -----------------------------------------------
                                                                December 28,      December 29,     December 31,
                                                                    2001              2000             1999
                                                                -----------       ------------     -----------
<S>                                                             <C>               <C>              <C>
Net sales                                                       $   257,860       $  554,554       $   669,875
Cost of sales                                                       229,687          496,169           591,977
                                                                -----------       ----------       -----------
      Gross profit                                                   28,173           58,385            77,898
                                                                -----------       ----------       -----------
Selling, general and administrative expenses                         37,563           54,023            66,756
Bad debt expense                                                        (53)           1,912             6,031
Depreciation and amortization                                         3,151            5,506             6,244
Disposition costs and impairment of long-lived assets                 9,549           12,791            13,520
Transaction costs                                                        --               --             3,850
Settlements of lawsuits                                                  --            1,222               805
                                                                -----------       ----------       -----------
   Total operating costs and expenses                                50,210           75,454            97,206
                                                                -----------       ----------       -----------
      Operating loss                                                (22,037)         (17,069)          (19,308)
                                                                -----------       ----------       -----------
Other expense:
   Interest expense                                                  (2,768)          (5,238)           (5,783)
   Interest income                                                       63              374               340
   Other, net                                                          (860)             (76)              130
                                                                -----------       ----------       -----------
                                                                     (3,565)          (4,940)           (5,313)
                                                                -----------       ----------       -----------
Loss before income taxes and extraordinary item                     (25,602)         (22,009)          (24,621)
Income tax expense (benefit)                                           (497)             833            (2,630)
                                                                -----------       ----------       -----------
Loss before extraordinary item                                      (25,105)         (22,842)          (21,991)
Extraordinary gain on extinguishment of debt                         23,776            1,905                --
                                                                -----------       ----------       -----------
Net loss                                                        $    (1,329)      $  (20,937)      $   (21,991)
Accretion of preferred stock                                          1,593              698                --
                                                                -----------       ----------       -----------
Net loss applicable to common shareholders                      $    (2,922)      $  (21,635)      $   (21,991)
                                                                ===========       ==========       ===========
Basic loss per share:
      Loss before extraordinary item                            $     (3.57)      $    (4.49)      $     (4.20)
      Extraordinary gain on extinguishment of debt                     3.18              .36                --
                                                                -----------       ----------       -----------
      Net loss applicable to common shareholders                $      (.39)      $    (4.13)      $     (4.20)
                                                                ===========       ==========       ===========

Diluted earnings (loss) per share:
      Loss before extraordinary item                            $     (3.57)      $    (4.49)      $     (4.20)
      Extraordinary gain on extinguishment of debt                     3.18              .36                --
                                                                -----------       ----------       -----------
      Net loss applicable to common shareholders                $      (.39)      $    (4.13)      $     (4.20)
                                                                ===========       ==========       ===========
</TABLE>

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

                                       F4

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                      Foreign     Retained
                                                                       Additional    Currency     Earnings        Total
                                                                        Paid-In    Translation   (Accumulated  Shareholders'
                                                         Common Stock   Capital     Adjustment    Deficit)       Equity
                                                         ------------  ----------  -----------   -----------   -------------
<S>                                                      <C>           <C>          <C>             <C>            <C>
Balances at January 1, 1999                                 $ 52        $ 31,672     $ (345)      $  19,183       $ 50,562
Stock issued in acquisitions                                  --             500         --              --            500
Exercise of employee stock options                            --              50         --              --             50
Repricing of an employee's options                            --             333         --              --            333
Net loss                                                      --              --         --         (21,991)       (21,991)
Foreign currency translation adjustments                      --              --        317              --            317
                                                                                                                  --------
   Comprehensive loss                                                                                              (21,674)
                                                            ----        --------     ------       ---------       --------
Balances at December 31, 1999                                 52          32,555        (28)         (2,808)        29,771
Issuance of warrants related to preferred
  Stock                                                       --           1,104         --              --          1,104
Issuance of warrants related to restructuring
  of subordinated debt                                        --             603         --              --            603
Accretion of preferred stock                                  --            (698)        --              --           (698)
Net loss                                                      --              --         --         (20,937)       (20,937)
Foreign currency translation adjustment                       --              --       (441)             --           (441)
                                                                                                                  --------
        Comprehensive loss                                                                                         (21,378)
                                                            ----        --------     ------       ---------       --------
Balances at December 29, 2000                                 52          33,564       (469)        (23,745)         9,402
Issuance of warrants related to restructuring                 --           4,855         --              --          4,855
Stock issued                                                  32           3,686         --              --          3,718
Accretion of preferred stock                                  --          (1,593)        --              --         (1,593)
Net loss                                                      --              --         --          (1,329)        (1,329)
Foreign currency translation adjustment                       --              --        469              --            469
                                                                                                                  --------
        Comprehensive loss                                                                                            (860)
                                                            ----        --------     ------       ---------       --------
Balances at December 28, 2001                               $ 84        $ 40,512     $   --       $ (25,074)      $ 15,522
                                                            ====        ========     ======       =========       ========
</TABLE>

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

                                       F5

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                   Fiscal Year Ended
                                                                                  -----------------------------------------------
                                                                                    December 28,      December 29,   December 31,
                                                                                        2001             2000           1999
                                                                                  ---------------    -------------  -------------
<S>                                                                              <C>                <C>            <C>
Cash flows from operating activities:
   Net loss                                                                           $ (1,329)       $(20,937)       $(21,991)
   Adjustments to reconcile net loss to net cash provided by
   operating activities, excluding the effects of
   acquisitions:
       Bad debt expense                                                                    (53)          1,912           6,031
       Extraordinary gain on extinguishment of debt                                    (23,776)         (1,905)             --
       Depreciation and amortization                                                     3,151           5,506           6,244
       Impairment of long-lived assets                                                   9,549          12,791          11,529
       Non-cash transaction costs and interest expense                                      --              --             888
       Deferred income taxes                                                               297            (592)           (437)
       Other                                                                               741             148             837
       Change in assets and liabilities:
           Accounts receivable                                                          11,302          23,702          15,998
           Inventories                                                                   2,606           3,775           1,047
           Prepaid expenses                                                                 84             480             343
           Income tax receivable and other assets                                         (532)          5,721          (5,852)
           Accounts payable                                                             (2,134)        (11,492)        (13,428)
           Accrued expenses and other current liabilities                                  125            (588)          3,833
                                                                                      --------        --------        --------
              Total adjustments                                                          1,360          40,147          26,344
                                                                                      --------        --------        --------
              Net cash provided by operating activities                                     31          19,210           4,353
                                                                                      --------        --------        --------

Cash flows from investing activities:
   Additions to property and equipment                                                  (1,290)         (1,491)         (6,731)
   Cost of acquisitions, exclusive of cash acquired                                         --              --          (2,644)
   Proceeds from sale of King's Onion House common stock                                 2,500              --              --
       Proceeds from sale of property and equipment                                      2,090             788           1,007
                                                                                      --------        --------        --------
              Net cash provided by (used in) investing activities                        3,300            (703)         (8,368)
                                                                                      --------        --------        --------
Cash flows from financing activities:
    Proceeds from Canadian revolving line of credit                                         --          40,826          89,079
    Repayments of Canadian revolving line of credit                                     (3,756)        (46,157)        (79,460)
    Payments of short-term indebtedness                                                   (989)        (15,288)         (3,459)
    Proceeds from long-term indebtedness                                                    --              --             748
    Payments of long-term indebtedness                                                  (3,888)           (458)           (982)
    Proceeds from issuance of preferred stock and warrants                               5,000           5,000              --
    Securities issuance costs                                                           (1,305)             --              --
    Payment of dividend on preferred stock                                                  --            (307)             --
    Net proceeds from exercise of employee stock options                                    --              --              50
                                                                                      --------        --------        --------
              Net cash provided by (used in) financing activities                       (4,938)        (16,384)          5,976
                                                                                      --------        --------        --------
Effect of exchange rate changes on cash                                                    469            (440)             65
                                                                                      --------        --------        --------
Net increase (decrease) in cash and cash equivalents                                    (1,138)          1,683           2,026
Cash and cash equivalents at beginning of year                                           4,880           3,197           1,171
                                                                                      --------        --------        --------
Cash and cash equivalents at end of year                                              $  3,742        $  4,880        $  3,197
                                                                                      ========        ========        ========

Supplemental disclosures of cash flow information:
   Cash paid for interest                                                             $    726        $  4,380        $  5,418
   Cash paid for income taxes                                                         $    296        $  1,660        $  3,809
</TABLE>

Non-cash Financing Activities:

As discussed in Note 4, the Company exchanged subordinated debt, cumulative
redeemable preferred stock and accrued interest and dividends for newly issued
cumulative redeemable preferred stock and warrants in its September 2001
financial restructuring, and issued common stock with a fair value of $3,718,000
as payment for a portion of a note payable to a shareholder in fiscal 2001.

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

                                       F6

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     December 28, 2001 and December 29, 2000

Note 1.  Description of Business and Summary of Significant Accounting Policies

Basis of Presentation and Consolidation
Fresh America Corp. and subsidiaries ("Fresh America", or the "Company")
provides procurement, processing, re-packing, warehousing and distribution
services of fresh produce and other refrigerated products for a wide variety of
customers in the retail, food service and food distribution businesses. The
Company was founded in 1989 and distributes throughout the United States and
Canada through 9 distribution facilities.

The Company's fiscal year is a 52-week or 53-week period ending on the Friday
closest to the calendar year end. The fiscal years ended December 28, 2001
(fiscal 2001), December 29, 2000 (fiscal 2000) and December 31, 1999 (fiscal
1999) were 52-week periods. The consolidated financial statements include the
accounts of Fresh America Corp. and its subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with original maturities of less than three months to be cash
equivalents.

Fair Value of Financial Instruments
The Company defines the fair value of a financial instrument as the amount at
which the instrument could be exchanged in a current transaction between willing
parties. Financial instruments included in the Company's financial statements
include cash and cash equivalents, accounts receivable, notes receivable from
shareholders, other assets, accounts payable and other current liabilities,
notes payable and long-term debt. Unless otherwise disclosed in the notes to the
consolidated financial statements, the carrying value of financial instruments
is considered to approximate fair value due to the short maturity and
characteristics of those instruments. The carrying value of long-term debt
approximates fair value as terms approximate those currently available for
similar debt instruments.

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

Property and Equipment
Depreciation of property and equipment is calculated on the straight-line method
over the estimated useful lives of the assets (from 5 to 40 years). Property 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
The Company reviews long-lived assets, including goodwill, and certain
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to undiscounted future net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of carrying amount or fair value less
costs to sell.

Goodwill
Goodwill, which represents the excess of purchase price over fair value of net
assets acquired, is amortized on a straight-line basis over the expected periods
to be benefited, generally 15 to 20 years. The Company assesses

                                       F7

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired operation. The
amount of goodwill impairment, if any, is measured based on projected discounted
future operating cash flows using a discount rate reflecting the Company's
average cost of funds. The assessment of the recoverability of goodwill will be
impacted if estimated future operating cash flows are not achieved.

Stock Option Plan
Compensation expense is recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. The Company provides
certain proforma disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method had been applied.

Revenue Recognition
Revenue is recognized at such time as the product has been delivered or the
service has been rendered.

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

Earnings (Loss) Per Share
Basic earnings (loss) per share ("EPS") is calculated by dividing net loss
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock.

Shares used in calculating basic and diluted EPS are as follows (in thousands):

                                                            2001   2000    1999
                                                           -----   -----   -----

Weighted average common shares outstanding - basic         7,471   5,243   5,243

Dilutive securities:
    Common stock option                                       --      --      --
    Contingent shares related to acquisitions                 --      --      --
                                                           -----   -----   -----
Weighted average shares common outstanding - diluted       7,471   5,243   5,243
                                                           =====   =====   =====

The number of weighted average common shares outstanding used in the computation
of diluted EPS includes the effect of dilutive options using the treasury stock
method. For fiscal years 2001, 2000 and 1999, there are 601,000, 1,484,000, and
497,000 options and warrants, respectively, to purchase common stock that were
not included in the computation of diluted EPS because to do so would have been
antidilutive for the fiscal years presented.

                                       F8

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reclassifications
Certain prior year balances have been reclassified to conform to current year
presentation.

Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
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


The Company's relationship with Sam's was governed by the terms and conditions
of a five-year agreement (the "Agreement"), which became effective December 1,
1995 and expired on October 24, 2000. Sam's began internal distribution of
produce for all of its' clubs subsequent to the expiration date. Therefore, the
Agreement was not renewed.


Sam's Club was the Company's largest customer during 2000 and 1999, and
accounted for approximately 30% and 31% of the Company's sales for fiscal years
2000 and 1999, respectively. Subsequent to the termination of the Sam's
Agreement the Company continues to have a relationship with Sam's which accounts
for less than 10% of the Company's sales. The sales to Sam's in 2001 were
comprised solely of value-added processing/repacking.


Note 3.  Termination of Merger


On May 3, 1999, the Company, and Dallas-based, privately held FreshPoint
Holdings, Inc. ("FreshPoint") entered into a definitive agreement pursuant to
which FreshPoint would have merged with and into the Company. The transaction
was to be accounted for as a reverse acquisition with FreshPoint as the
accounting acquirer. In October 1999, the agreement was terminated by the
Company and by FreshPoint. The Company and FreshPoint each agreed to pay their
respective expenses in connection with the contemplated transaction. The Company
incurred merger-related expenses of $3,850,000 in fiscal 1999. The expenses
consisted of legal and professional fees of $2,433,000, regulatory expenses of
$63,000, severance costs paid to employees who were terminated in contemplation
of the merger of $1,259,000, and stay-to-close payments, payments to such
terminated employees to remain with the Company on an interim basis in order to
enable the Company to re-align its administrative functions, and other costs,
aggregating $95,000.

Note 4. Debt and Liquidity

<TABLE>
<CAPTION>
                                                                        December 28,         December 29,
                                                                           2001                  2000
                                                                        ------------         ------------
<S>                                                                   <C>                  <C>
Subordinated note, net of unamortized discount of $411                    $    --               $19,589
Revolver                                                                    4,427                 8,596
Canadian Revolver                                                              --                 3,756
Notes related to acquisitions                                               3,197                 6,132
Various equipment loans with interest rates from 6.75% to 14%                  76                   665
                                                                          -------               -------
Total debt                                                                  7,700                38,738
                                                                          -------               -------
Current portion                                                             1,474                13,788
                                                                          -------               -------
Long-term debt, less current portion                                      $ 6,226               $24,950
                                                                          =======               =======
</TABLE>

                                       F9

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


In April 2000, the Company entered into an agreement with the Hancock Entities
(as defined below) to provide additional financing through the purchase of $5
million (50,000 shares) of the Company's 12% redeemable cumulative preferred
stock ("Hancock Preferred Stock"), and to restructure the then existing
subordinated notes. Cumulative preferred dividends accrued as of December 29,
2000 totaled $0.3 million or $6.04 per share of preferred stock. The Hancock
Preferred Stock, subordinated note agreement and accrued interest and dividends
were exchanged for preferred stock and warrants in September 2001, as discussed
below.

Throughout its operational restructuring during the past three years, the
Company has pursued various financing opportunities in an effort to restructure
its senior bank and subordinated debt. In September 2001, the Company completed
a financial restructuring whereby North Texas Opportunity Fund LP, ("NTOF")
purchased 50,000 shares of the Company's Series D cumulative redeemable
preferred stock and warrants exercisable for 84,100,980 shares of our common
stock for total cash proceeds of $5 million. Arthur Hollingsworth, an affiliate
of NTOF and the Company's Chairman of the Board, subsequently purchased from
NTOF for the same price as paid by NTOF, 3,500 shares of Series D preferred
stock and warrants exercisable for 5,887,069 shares of our common stock. In
connection with the NTOF investment in the Company, John Hancock Life Insurance
Company, John Hancock Variable Life Insurance Company, Signature 1A (Cayman),
Ltd. and Signature 3 Limited (collectively, the "Hancock Entities") exchanged
$20 million of subordinated debt, warrants to purchase 576,134 shares of the
Company's common stock, 50,000 shares of Series C cumulative redeemable
preferred stock and all accrued interest and dividends for 27,000 shares of the
Company's Series D cumulative redeemable preferred stock and warrants
exercisable for 45,414,529 shares of our common stock.

In conjunction with this restructuring the Company's senior lender, Bank of
America Texas, N.A. ("Bank of America"), agreed to an extension of the maturity
date of the Company's term credit facility until January 2, 2002 and a revised
payment schedule. Subsequent to the financial restructuring, Bank of America
assigned its interest in the credit facility to Endeavour, LLC (the "Senior
Lender") and the Senior Lender extended the due date to January 6, 2003. The
Company is pursuing a revolving credit facility with a new lender to replace the
existing facility prior to its maturity date. There can be no assurance that the
Company will be able to replace its Senior Lender as anticipated or extend its
senior credit facility beyond January 2003, if that becomes necessary. See Note
12 for additional information regarding the terms of the warrants, cumulative
redeemable preferred stock and other shareholder matters.

Prior to its sale in March 2001, OTF had a demand agreement with Royal Bank of
Canada to provide revolving credit facilities, which were collateralized by
substantially all assets of OTF. This outstanding balance was fully repaid in
March 2001 in conjunction with the sale of OTF's operating assets.

In July 2000, the Company entered into an agreement amending the stock purchase
agreement relating to the Company's November 1998 acquisition of Perricone
Citrus Company. As part of the amended agreement, unsecured promissory notes
owed by the Company totaling $3.5 million and the accrued and unpaid interest
therein were restructured whereby the Company agreed to the following: payments
totaling $100,000 upon execution of the amended agreement; lump-sum payments of
$350,000 and $150,000 on January 1, 2002 and July 1, 2002, respectively; and 24
monthly installment payments of $37,500 totaling $900,000. The promissory notes
accrue interest at 10% per annum. However, all accrued interest will be forgiven
if scheduled principal payments are made timely. Additionally, the Company
issued the note holders 300,000 warrants to purchase common shares of the
Company at an exercise price of $2.50 per share. The warrants are exercisable
for the duration of seven years. The issuances of these securities were exempt
from registration under the Securities Act under Regulation D. The restructuring
of the promissory notes and related accrued interest resulted in an
extraordinary gain to the Company of $1.9 million in the third quarter of 2000.
In February 2002, the Company and the note holders agreed to amend the agreement
to change the due date of all remaining payments to the earlier of (i) January
7, 2003 or (ii) the repayment or refinancing of the Company's term note with the
Senior Lender. In addition, all previous accrued interest was forgiven, and the
remaining principal balance began accruing interest at an annual rate of 10% in
January 2002.

                                      F10

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Under the terms of the purchase agreement for the acquisition of Jos. Notarianni
& Co. ("Notarianni"), a portion of the purchase price was contingent upon
Notarianni's earnings subsequent to its acquisitions. The contingent payment for
Notarianni was equal to 1.4 times Notarianni's average annual pretax earnings
over a three-year period from October 3, 1998 to October 3, 2001. On February 5,
2002, the Company issued an unsecured promissory note to Mr. Joseph Cognetti in
the amount of $1,233,043 (the "Cognetti Note"). The Cognetti Note bears interest
of 5% per annum, which interest is payable in quarterly installments, and
becomes due and payable on the earlier of (i) January 7, 2003 or (ii) the
repayment or refinancing of the Company's term note with the Senior Lender.

The Company's purchase agreement with Hereford Haven Inc. d/b/a Martin Bros.
("Martin Bros.") also contains a contingent payment component in the purchase
price. The Martin Bros. contingent payment was equal to 4 times the average
annual pretax earnings for the three-year period from January 3, 1998 to January
3, 2001. The total contingent payment was $5.0 million. The payment was due
March 31, 2001 and was payable in either cash, common stock or a combination of
cash and common stock to the extent of 75% at the Company's option and 25% at
the selling shareholder's option. In satisfaction of 75% of the contingent
payment, in April 2001, the Company issued 3,166,694 shares of its common stock
to Larry Martin, the former owner of Martin Bros. The issuance of these
securities to Mr. Martin was exempt from registration under the Securities Act
under Regulation D. At the time of issuance, the shares represented a 38%
ownership interest in the Company. These shares were valued at $1.17 per share,
the market value of the Company's common stock at the time of the transaction.
The remaining $1.2 million of contingent consideration was evidenced by a
promissory note and was restructured as part of the financial restructuring
discussed above. It is payable in cash subject to the approval of the Company's
Senior Lender. This note is due in January 2003 bears interest at an annual rate
of 5%, payable quarterly.

The Company is party to a master lease agreement with SunTrust Bank that has
been used to provide equipment financing for several of the Company's operating
units. The Company was not in compliance with certain financial covenants under
the terms of the lease at December 29, 2000 and received waivers for
noncompliance through January 6, 2003. There can be no assurance that the
Company will be in compliance with such covenants subsequent to the waiver
period or will be successful in renegotiating the covenants.

The aggregate maturities of long-term debt for the fiscal years subsequent to
December 29, 2001 are as follows (in thousands): 2002 - $1,474; 2003 - $6,226.

Note 5.  Disposition Costs and Impairment of Long-lived Assets

Subsequent to the termination of the merger discussed in Note 3, in the fourth
quarter of 1999 management of the Company initiated a process in conjunction
with its business strategy to improve its cost structure, streamline operations
and divest the Company of under-performing operations. The process continued
during 2000 and into 2001.

As a result of this ongoing process, the Company closed or sold several
under-performing operations in 1999, 2000 and 2001 as follows:

                            Fiscal 1999:
                                 Los Angeles and San Francisco, California
                                 Orlando, Florida
                                 Atlanta, Georgia
                                 Baton Rouge, Louisiana
                                 Austin and San Antonio, Texas

                            Fiscal 2000:

                                      F11

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                          Los Angeles, California Market Operation

                     Fiscal 2001:
                          King's Onion House, Phoenix, Arizona
                          Ontario Tree Fruits, Ontario, Canada
                          Thompson's Produce, Pensacola, Florida
                          Bacchus Fresh International, Chicago, Illinois

During 1999, the Company also decided to move its accounting and administrative
functions from Houston to Dallas, Texas. The move was completed in fiscal 2000,
and the related costs were charged to operations in that fiscal year.

During this process, management evaluated the recoverability of the carrying
value of the long-lived assets and related allocable goodwill of these
operations. Impairment charges and other disposition costs recorded in fiscal
2001, 2000 and 1999 are as follows (in thousands):

                                                  2001     2000      1999
                                                -------   -------   -------
Impairment of property and equipment            $   152   $10,584   $  --
Impairment of goodwill                            8,213     2,207    10,553
Loss on disposition of property and equipment      --        --         976
Closure costs:
    Liability for future lease commitments        1,184      --       1,161
    Severance                                      --        --         412
    Other                                          --        --         418
                                                -------   -------   -------
                                                $ 9,549   $12,791   $13,520
                                                =======   =======   =======

Note 6.  Accounts Receivable

Accounts receivable consist of (in thousands):

                                        December 28,   December 29,
                                           2001            2000
                                       ------------    ------------
Accounts receivable                    $     18,414    $     37,843
Less allowance for doubtful accounts           (290)         (1,537)
                                       ------------    ------------
                                       $     18,124    $     36,306
                                       ============    ============



The following table summarizes the activity in the Company's allowance for
doubtful accounts in fiscal 1999 through 2001 (in thousands):

                Balance at
                Beginning        Bad Debt                      Balance at
 Fiscal Year     of Year         Expense        Write-offs     End of Year
 -----------     -------         -------        ----------     -----------
    2001         $ 1,537         $   (53)       $(1,194)       $   290
    2000           2,593           1,912         (2,968)         1,537
    1999           1,697           6,031         (5,135)         2,593

Note 7.  Property and Equipment

Property and equipment consist of (in thousands):

                                      F12

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


<TABLE>
<CAPTION>
                                                 December 28,       December 29,
                                                     2001               2000
                                                 -------------      ------------
<S>                                              <C>                <C>
Land                                               $    148           $    606
Buildings                                             3,310              4,375
Machinery, furniture, fixtures and equipment          5,188              6,740
Trucks and trailers                                   3,015              3,567
Leasehold improvements                                2,696              2,798
                                                   --------           --------
                                                     14,357             18,086
Less accumulated depreciation and amortization       (7,433)            (8,142)
                                                   --------           --------
Property and equipment, net                        $  6,924           $  9,944
                                                   ========           ========
</TABLE>


Note 8. Income Taxes
--------------------

The components of income tax expense (benefit) consisted of (in thousands):

<TABLE>
<CAPTION>
                                      Fiscal Year Ended
                    December 28,         December 29,      December 31,
                        2001                 2000             1999
                    ------------      -----------------    ------------
<S>                 <C>               <C>                  <C>
Current:
   Foreign           $(1,092)              $   542           $ 2,190
   Federal                --                   100            (3,979)
   State                 298                   783              (404)
Deferred                 297                  (592)             (437)
                     -------               -------           -------
                     $  (497)              $   833           $(2,630)
                     =======               =======           =======
</TABLE>

Income tax expense (benefit) differed from the amount computed by applying the
U.S. federal income tax rate to income (loss) before income taxes as a result of
the following (in thousands):

<TABLE>
<CAPTION>
                                                                      December 28,     December 29,     December 31,
                                                                          2001             2000            1999
                                                                      ------------     ------------    -------------
<S>                                                                     <C>            <C>             <C>
Federal income tax expense (benefit) at statutory rate                  $(8,960)         $(7,703)        $ (8,617)
Increase (reduction) in income taxes resulting from:
Change in the beginning-of-the-year balance of the valuation
allowance for deferred tax assets                                           257            7,698            4,586
Nondeductible goodwill amortization and impairment                          267              113            2,092
Tax rate and other differences related to Canadian
subsidiaries                                                               (154)              --              490
Reduction in tax attributes due to financial restructuring                7,424               --               --
State income taxes, net of federal income tax effect                        298              192             (262)
Adjustment to prior year's estimated provision and other                    371              533             (919)
                                                                        -------          -------         --------
                                                                        $  (497)         $   833         $ (2,630)
                                                                        =======          =======         ========
</TABLE>

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below (in
thousands):

                                      F13

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


                                                      December 28,  December 29,
                                                         2001           2000
                                                      ------------  ------------
Deferred tax assets:
   Net operating loss carry forwards                    $  6,490     $  9,360
   Property and equipment, principally
     depreciation and impairment                           1,501        1,780
   Other                                                   3,883          898
                                                        --------     ---------
      Total deferred tax assets                           11,874       12,038
   Less valuation allowance                              (11,874)     (11,617)
                                                        --------     ---------
   Net deferred tax asset                                     --          421
Deferred tax liabilities -
  income not currently taxable                                --          124
                                                        --------     ---------
Net deferred tax asset                                  $     --     $    297
                                                        ========     ========

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent primarily upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Based upon
current projections for future U.S. taxable income over the periods which the
deferred tax assets are deductible, management believes that it is more likely
than not that its deferred tax assets related to U.S. operations will not be
realized and a valuation allowance for such assets is required at December 28,
2001 and December 29, 2000.

At December 28, 2001, the Company has a net operating loss ("NOL") carry forward
for federal income tax purposes of approximately $18,500,000.

During 2001, the Company experienced two "ownership changes" as defined by the
Internal Revenue Code of 1986. After an ownership change, utilization of a loss
corporation's NOL carry forward is limited annually to a prescribed rate
multiplied by 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 proceeding the test date. Since the Company's stock had no
value for purposes of this calculation, none of the NOL carryforward will be
useable in future years.


Note 9.  Options
----------------

In July 1993, the Company adopted the Fresh America Corp. 1993 Stock Option and
Award Plan (the "1993 Plan"), which reserved 450,000 shares of the Company's
common stock for issuance to employees and directors. Effective May 22, 1998,
the 1993 Plan was frozen, which prevents any additional options from being
granted under the plan. In July 1996, the Company adopted the Fresh America
Corp. 1996 Stock Option and Award Plan (the "1996 Plan"), which reserved 150,000
shares of the Company's common stock for issuance to employees and directors.
Effective May 22, 1998, the Company amended and restated the 1996 Plan, which
increased the number of shares reserved from 150,000 to 625,000. At December 28,
2001 and December 29, 2000, options for 354,000 and 103,250 shares,
respectively, 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
independent director is automatically granted an option to purchase 5,000 shares
of

                                       F14

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 after 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
1999 through fiscal 2001:

<TABLE>
<CAPTION>
                                                                              Weighted
                                                                               Average
                                   Stock Options       Option Price Range     Exercise
                               Issued    Exercisable       Low      High       Price
                              --------   -----------     ------    ------     --------
<S>                           <C>        <C>             <C>       <C>        <C>
At January 1, 1999             373,699     315,199       $ 3.55    $25.50      $11.69
  Granted                       20,000                    13.75     13.75       13.75
  Exercised                     (5,353)                    3.55     14.00        9.41
  Canceled                     (54,250)                    5.00     17.75       13.63
                              --------
At December 31, 1999           334,096     319,096       $ 3.55    $25.50      $11.53
  Granted                      413,750                     2.00      4.50      $ 3.00
  Canceled                    (154,806)                    3.55     25.50      $ 9.66
At December 29, 2000           593,040     344,290       $ 2.00    $19.88      $ 5.83
  Granted                           --                       --        --          --
  Canceled                    (291,297)                    2.00     19.88        6.70
                              --------
At December 28, 2001           301,753     301,753       $ 2.00    $19.88      $ 4.99
                              ========
</TABLE>

The following table summarizes information about the Company's stock options
outstanding as of December 28, 2001:

<TABLE>
<CAPTION>
                                      Options Outstanding                Options Exercisable
                          ------------------------------------------    -----------------------
                             Number      Weighted-Average   Weighted-     Number      Weighted-
                          Outstanding       Remaining        Average    Exercisable    Average
     Range of              at Dec. 28,    Contractual       Exercise    at Dec. 28,    Exercise
  Exercise Prices             2001            Life            Price        2001         Price
--------------------      ------------   ----------------   ---------   -----------   ---------
<S>                       <C>            <C>                <C>         <C>           <C>
$ 2.00   to   $ 5.00        230,500           8.0            $ 2.96       230,500      $ 2.96
  5.01   to     7.00         26,253           3.9              6.79        26,253        6.79
  7.01   to     9.00          7,000           2.4              9.00         7,000        9.00
 11.01   to    13.00          9,500           4.5             11.75         9,500       11.75
 13.01   to    15.00         11,000           2.9             14.00        11,000       14.00
 17.01   to    19.00         12,500           6.2             17.25        12,500       17.25
 19.01   to    19.88          5,000           6.6             19.88         5,000       19.88
                            -------                                       -------
                            301,753                                       301,753
                            =======                                       =======
</TABLE>

The Company has adopted the disclosure-only provision of 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's net earnings (loss) and
earnings (loss) per share would have been reduced to the pro forma amounts
indicated below:

                                      F15

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


<TABLE>
<CAPTION>
                                                                                Fiscal Year
                                                                       (In thousands, except earnings
                                                                               per share data)
                                                                      ---------------------------------
                                                                       2001          2000        1999
                                                                      -------      --------    --------
<S>                                                                   <C>          <C>         <C>
Net income (loss) applicable to common shareholders - as reported     $(2,922)     $(21,635)   $(21,991)
Net income (loss) applicable to common shareholders - pro forma        (2,946)      (21,893)    (22,319)
Earnings (loss) per share - as reported:
  Basic                                                                  (.39)        (4.13)      (4.20)
  Diluted                                                                (.39)        (4.13)      (4.20)
Earnings (loss) per share - pro forma:
  Basic                                                                  (.39)        (4.18)      (4.26)
  Diluted                                                                (.39)        (4.18)      (4.26)
</TABLE>

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 2001, 2000 and 1999 for both plans: no dividend
yield; expected volatility of 58% in 2001, 58% in 2000 and 136% in 1999;
risk-free interest rates of 5.9% in 2001, 5.9% in 2000 and 4.2% in 1999; and
expected lives of three to five years. The weighted average fair value per share
of the options granted during fiscal 2001, 2000 and 1999 is estimated to be
$1.93, $1.93 and $12.23, respectively. As of December 28, 2001, the
weighted-average remaining contractual life of outstanding options was 7.2
years.


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 $220,000,
$272,000 and $343,000 for the fiscal years 2001, 2000 and 1999, respectively.


Note 11.  Contingencies 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 December 28, 2001 are (in thousands):

Fiscal years ending:
  2002                                               $ 4,793
  2003                                                 4,117
  2004                                                 2,975
  2005                                                 2,275
  2006                                                 1,417
  Thereafter                                             881
                                                     -------
    Total minimum lease payments                     $16,458
                                                     =======

Rental expense amounted to approximately $7,227,000, $10,114,000 and $12,569,000
for the fiscal years 2001, 2000 and 1999, of which approximately $2,499,000,
$3,978,000 and $5,653,000 relates to truck and trailer rental which is included
in cost of sales.

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, results of operations or liquidity.

                                      F16

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 12.  Shareholders' Equity
------------------------------

The warrants issued to NTOF, Mr. Hollingsworth and the Hancock Entities
discussed in Note 4 cannot be exercised until the Company's articles of
incorporation are amended to increase the Company's authorized common stock from
10 million shares to 250 million shares and decrease the common stock's stated
par value from $.01 to $.0001 per share (the "Charter Amendment"). In connection
with the financial restructuring, the Company held a special meeting of the
shareholders which was adjourned on December 28, 2001, and reconvened on
December 29, 2001. The Company's shareholders were asked to approve the Charter
Amendment. At the special meeting, the Charter Amendment failed to receive the
necessary approval of the holders of a supermajority of the shares of the issued
and outstanding stock; therefore, the Company's articles of incorporation were
not amended at the special meeting. Because the Charter Amendment was not
approved, the holders of the Series D preferred stock received increased rights
under the terms of the Series D preferred stock (as described below) and the
warrants are not exercisable. The Board of Directors has approved such amendment
but the holders of the Company's issued and outstanding capital stock entitled
to vote must approve it. The warrants are exercisable for a ten-year period that
commenced on August 14, 2001 and ends August 14, 2011. The exercise price of the
warrants is $.0001 per share and the warrants are subject to anti-dilution
provisions providing adjustment in the event of any recapitalization, stock
dividend, stock split, reorganization, merger or similar transaction or certain
issuances of shares below their market value.

Initially, each share of the 77,000 shares of Series D preferred stock had the
right to receive cumulative dividends, payable monthly in cash and calculated on
the basis of an annual dividend rate of $8 for each share plus interest on any
accrued but unpaid dividends. Because the Charter Amendment was not approved at
the special meeting, the annual dividend rate increased to $18 per share on
December 31, 2001. However, the Company has obtained a waiver for the enhanced
dividend amount from the Series D preferred stockholders for the period from
December 29, 2001 until January 3, 2003. Therefore, the annual dividend rate
will not increase to $18 per share during this period, but will remain at the
original annual dividend rate of $8 for each share of preferred stock. The
Company may not declare a dividend on any other class of capital stock so long
as any accrued dividends for the preferred stock have not been paid. If the
Company pays a dividend to holders of any other class of the Company's capital
stock, then the Company will pay a dilution fee to the holders of the preferred
stock. When the Charter Amendment was not approved at the special meeting, the
holders of preferred stock became entitled to vote as a separate class for all
matters on which the holders of common stock are entitled to vote, with each
share entitled to one vote per share; however, where applicable law prevents
class voting, holders of the preferred stock are entitled to vote together with
the holders of common stock with each share of preferred stock entitled to 250
votes per share, being 11,625,000 votes for NTOF, 875,000 for Mr. Hollingsworth
and 6,750,000 for the Hancock Entities.

The Series D preferred stockholders have a put right on the Series D preferred
stock after August 14, 2004, and immediately upon any breach by the Company of
the financial restructuring agreements or any sale, merger or change of control
of the Company at $100 per share plus accrued and unpaid dividends. Because the
requisite shareholder approval for the Charter Amendment was not obtained, the
holders of Series D preferred stock have the right to exercise their put right
at three times the face value of the preferred stock, such amount being
$13,950,000 for NTOF, $1,050,000 for Mr. Hollingsworth and $8,100,000 for the
Hancock Entities plus accrued and unpaid dividends. Additionally, the holders of
the preferred stock, have the right to redeem their shares of preferred stock on
the same terms of the put right after April 30, 2007 or immediately upon the
occurrence of any sale, merger or change of control of the Company, any
qualified public offering with net proceeds of at least $20,000,000 or any
private equity financing with net proceeds of at least $20,000,000.

Each share of Series D preferred stock has a preference upon liquidation,
dissolution, winding up or sale of the Company equal to $100.00 per share plus
accrued and unpaid interest. Because the requisite shareholder approval for the
Charter Amendment was not obtained, the holders of the preferred stock have the
right to a liquidation preference payment equal to the face value of the
preferred stock plus 90% of the fair market value of the remaining property of
the Company and the holders of the common stock will have the right to a

                                      F17

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


liquidation preference payment equal to the remaining 10% of the fair market
value of the remaining property of the Company.

Under the terms of the Series D preferred stock and the Shareholders Agreement
dated August 14, 2001 by and among the Company, NTOF and the Hancock Entities,
NTOF has the right to appoint three directors to the Board of Directors and the
Hancock Entities have the right to appoint one director to the Board of
Directors, unless it waives such right. Because the Hancock Entities waived its
right to appoint a director, NTOF appointed four members to the Company's Board
of Directors in October 2001. The current Board of Directors consists of five
members. In addition, NTOF and the Hancock Entities each have the right to
designate one observer to attend all meetings of the Board of Directors. Under
the Shareholders Agreement, the Company granted each holder of preferred stock
the preemptive right to purchase, pro rata, all or any part of new securities
offered by the Company. The Shareholders Agreement also grants each holder of
preferred stock the right of first offer and co-sale rights in the event another
holder of preferred stock elects to sell its stock. Prior to a public offering
with net proceeds of at least $20,000,000, if the holder of 50% or more of the
outstanding capital stock of the Company elects to sell all of its shares, then
the holder will have pull-along rights with respect to the non-selling holders
of preferred stock.

Under the Securities Exchange and Purchase Agreement dated August 14, 2001 (the
"Purchase Agreement") by and among the Company, NTOF and the Hancock Entities,
the Company has granted registration rights to NTOF and the Hancock Entities.
The registration rights granted include two rights to demand that the Company
register the holder's shares for resale to the public pursuant to the Securities
Act of 1933, an unlimited number of rights to register the holder's shares for
resale to the public pursuant to other public offerings and, upon the Company's
eligibility for use of Form S-3 under the Securities Act of 1933, an unlimited
number of rights to register the holder's shares for resale to the public on
Form S-3.

The Purchase Agreement also requires the Company to obtain NTOF's and/or the
Hancock Entities' consent prior to taking certain actions in the operation of
its business other than pursuant to the terms of the financial restructuring.
These actions include, but are not limited to, amending the Company's
organizational documents adversely to NTOF and the Hancock Entities, declaring
any dividends, selling or leasing any assets of the Company outside of the
ordinary course of business, selling any additional capital stock of the Company
(except pursuant to existing warrants and under the Company's stock option plan
for employees), entering into any transactions with affiliates (other than in
arms-length transactions), paying any management or consulting fees, acquiring
any debt or equity interest in another entity, increasing the compensation of
any executive officer by 5% or more, terminating any key employee, adopting a
new employee benefit plan or employment agreement, acquiring any property for
more than $500,000 or making any capital expenditure greater than $250,000
individually or $1,000,000 in the aggregate.

The Company intends to submit the Charter Amendment to the Company's
shareholders at its 2002 Annual Meeting of Shareholders. The Series D preferred
stock represents 68% of the combined voting power of the Company's capital stock
entitled to vote on the Charter Amendment and therefore holds a sufficient
number of shares needed to approve the Charter Amendment without any other
shareholder vote in favor of the Charter Amendment. The Company believes that
the holders of the Series D preferred stock currently intend to vote their
shares in favor of the Charter Amendment.

The Shareholders Agreement also requires the Company, upon receiving an
"unlocking proposal" as defined, representing a bona fide offer from an
unrelated third party to enter into a sale transaction, and upon receiving
notice from either NTOF or the Hancock Entities, to use good faith and
commercially reasonable efforts to consummate the proposed transaction or, if
the Company fails to accept the unlocking proposal, the holder will have the
right to require the Company to purchase such shareholder's capital stock based
upon the price that would have been paid to such holder in the sale transaction.


Note 13.  Quarterly Financial Data (Unaudited)
----------------------------------------------

                                      F18

<PAGE>

                      FRESH AMERICA CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

<TABLE>
<CAPTION>
                                 Fiscal 2001 (a)
---------------------------------------------------------------------------------------------
                                         First Qtr.   Second Qtr.    Third Qtr.   Fourth Qtr.
                                         ----------   -----------   ------------  -----------
<S>                                      <C>          <C>           <C>           <C>
Net sales                                 $ 86,901     $ 70,218      $ 52,544      $48,197
Gross profit                                 8,698        8,647         6,143        4,685
Gross margin                                  10.0%       12.30%        11.70%        9.72%
Net income (loss)                           (4,727)      (2,946)        20,219      (13,875)
Net income (loss) applicable to
  common shareholders                     $ (4,983)    $ (3,204)     $  19,808(b)  $(14,543)(c)
Earnings (loss) per share - basic             (.95)        (.41)          2.36        (1.73)
Earnings (loss) per share - diluted           (.95)        (.41)           .38        (1.73)
</TABLE>

<TABLE>
<CAPTION>
                                 Fiscal 2000 (a)
---------------------------------------------------------------------------------------------
                                         First Qtr.   Second Qtr.    Third Qtr.   Fourth Qtr.
                                         ----------   -----------    -----------  -----------
<S>                                      <C>          <C>            <C>          <C>
Net sales                                 $ 142,652    $163,585      $ 138,458     $109,859
Gross profit                                 15,149      18,507         14,074       10,655
Gross margin                                   10.6%       11.3%         10.16%        9.70%
Net income (loss)                            (1,881)        811           (596)     (19,271)
Net income (loss) applicable to
  common shareholders                     $  (1,881)   $    633      $    (856)    $(19,531)
Earnings per share - basic                     (.36)        .12           (.16)       (3.73)
Earnings per share - diluted                   (.36)        .08           (.16)       (3.73)
</TABLE>
------------
(a)  Each quarter in the 52-week year contains 13 weeks
(b)  The Company recorded an extraordinary gain of $ 23.8 million in the third
     quarter of 2001 related to its financial restructuring.

(c)  The Company recorded an impairment charge related to property and equipment
     and goodwill of $8.3 million and a $1.2 million charge for lease
     commitments on idle facilities in the fourth quarter of 2001.


Note 14.  Segment and Related Information

SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," establishes standards for the way public business enterprises
report information about products and services. Because of the general focus of
the Company's business of handling fresh produce and the interrelated nature of
the Company's business activities, all of which are generally conducted at each
of the Company's locations, management of the Company does not capture the
financial results of the interrelated business activities in its financial
information systems by type of activity at each location or for the Company as a
whole. The management of the Company measures performance based on the gross
margins and pretax income generated from each of the Company's operations.
Pretax income for the purpose of management's analysis does not include
corporate overhead such as selling, general and administrative expenses and
income tax expense. Since the business units have similar economic
characteristics and are engaged in procurement, processing and distribution of
produce, they have been aggregated into one reportable segment for reporting
purposes. See Note 2 - "Agreement with Sam's Club" for discussion of the
Company's major customer.

Summarized information regarding the Company's significant operations in
different geographic areas, including domestic operations, as of and for the
three fiscal years ended December 28, 2001 follows (in thousands):

                                           Long-Lived
                              Net Sales      Assets
                              ---------    ----------

December 28, 2001
  United States               $253,242      $ 23,451
  Canada                         4,618            --
                              --------      --------
    Total                     $257,860      $ 23,451
                              ========      ========

December 29, 2000
  United States               $498,665      $ 34,704
  Canada                        55,889         2,003
                              --------      --------
    Total                     $554,554      $ 36,707
                              ========      ========

December 31, 1999
  United States               $576,658      $ 46,976
  Canada                        93,217         3,985
                              --------      --------
    Total                     $669,875      $ 50,961
                              ========      ========
 -----------------------------------------------------------------------

                                       F19