<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K

MARK (ONE)
     [X]  Annual Report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 For the fiscal year ended December 31, 1997

                                       OR

     [ ]  Transition Report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

          For the transition period from _________________ to________________

                         Commission file number 0-26096

                             THE UNIMARK GROUP, INC.
             (Exact name of registrant as specified in its charter)

             TEXAS                                      75-2436543
(State of incorporation or organization)    (I.R.S. Employer Identification No.)

       UNIMARK HOUSE
      124 MCMAKIN ROAD
     BARTONVILLE, TEXAS                                     76226
(Address of principal executive offices)                  (Zip Code)

       Registrant's telephone number, including area code: (817) 491-2992

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

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

                          COMMON STOCK, $.01 PAR VALUE
                                (Title of class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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

         The approximate aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold as
of March 20, 1998 was $34,356,584. The number of shares of common stock
outstanding as of March 20, 1998 was 8,598,833.

                      DOCUMENTS INCORPORATED BY REFERENCE:

         The UniMark Group, Inc.'s 1998 Proxy Statement contains much of the
information required in Part III of this Form 10-K, and portions of the 1998
Proxy Statement are incorporated by reference herein from the applicable
sections thereof. The Items of this Form 10-K, where applicable, specify which
portions of the 1998 Proxy Statement are incorporated by reference. The portions
of the 1998 Proxy Statement that are not incorporated by reference shall not be
deemed to be filed with the Commission as part of this Form 10-K.

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            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    The discussion in this Annual Report on Form 10-K contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ significantly from those discussed herein. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," as well as those discussed elsewhere in
this report. Statements contained in this report that are not historical facts
are forward-looking statements that are subject to the safe harbor created by
the Private Securities Litigation Reform Act of 1995. A number of important
factors could cause the Company's actual results for 1998 and beyond to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company. These factors include, without limitation: growth and
integration of new businesses; uncertainty of new product development and market
acceptance of new products; dependence upon availability and price of fresh
fruit; competition; dependence upon significant customers; seasonality and
quarterly fluctuations; risk related to product liability and recall; limited
intellectual property protection; government regulation; dependence on key
management; economic, political and social conditions in Mexico; exchange rate
fluctuations and inflation; and labor relations and costs. These factors are
listed under "Risk Factors" in the Company's prospectus dated June 14, 1996.


                                     PART I

ITEM 1.   BUSINESS.

GENERAL

    The UniMark Group, Inc. a Texas corporation ("UniMark" or the "Company"), is
a vertically integrated citrus and tropical fruit growing, processing, marketing
and distribution company with operations in Mexico, the United States, Canada
and the United Kingdom . The UniMark Group, Inc. was organized in 1992 to
combine the operations of Industrias Citricolas de Montemorelos S.A. de C.V.
("ICMOSA"), a Mexican citrus and tropical fruit processor which commenced
operations in 1974, with UniMark Foods, Inc. ("UniMark Foods"), a company that
marketed and distributed ICMOSA's products in the United States. The Company
focuses on niche citrus and tropical fruit products including fresh, chilled,
frozen and canned cut fruits and other specialty food ingredients. In addition,
as a result of its acquisition of Grupo Industrial Santa Engracia S.A. de C.V.
("GISE"), UniMark is a major Mexican producer of citrus concentrate, oils and
juices. The Company processes and packages its products at eight plants in
Mexico, one in California, and one in Quebec, Canada. The Company's Mexican and
Californian plants are strategically located in major fruit growing regions. The
Company utilizes food brokers and distributors to market and distribute its cut
fruit products, under the brand names SUNFRESH(R), Fruits of Four Seasons(R),
Flavor Fresh(TM) and Kledor(R) and under various private labels to supermarket
chains, foodservice distributors, wholesale clubs, specialty grocery stores and
industrial users throughout the United States and Canada. In addition, the
Company has developed and utilizes a unique processing method that separates
cold-peeled citrus fruit into individual juice-containing "cell-sacs." These
cell-sac products are sold to food and soft drink manufacturers in Japan to
enhance the flavor and texture of fruit juices and desserts. Sales to the
Company's Japanese consumers are facilitated through Japanese trading companies.
The Company's citrus concentrate and single strength citrus juices are sold
directly to major juice importers and distributors in North America, Europe and
the Pacific Rim.

STRATEGY

    UniMark's strategic objective is to become the leading vertically integrated
grower, processor, marketer and distributor of niche fruit and other selected
agricultural products. To achieve this objective, the key elements of UniMark's
operating and acquisition strategies are as follows:



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Operating Strategy

     Expand vertical integration of growing, processing, marketing and
     distribution operations. UniMark intends to continue its vertical
     integration strategy. UniMark believes that by vertically integrating its
     growing, processing, marketing and distribution operations, the Company can
     effectively control the availability, cost and quality of its products.

     Expand fruit growing operations in Mexico. To ensure the availability of
     the highest quality raw materials, UniMark intends to expand its fruit
     growing operations in Mexico, utilizing advanced agricultural practices.
     UniMark believes that Mexico's favorable climate and soil conditions,
     coupled with competitive labor and land costs, offer significant
     opportunities to grow high quality fruits in a cost effective manner.

     Capitalize on brand awareness and market penetration. In the retail market,
     UniMark intends to capitalize on the brand awareness and market penetration
     attained by its SUNFRESH(R) brand name products. Utilizing its "Fruit Made
     Easy(R)" concept, UniMark plans to expand its line of specialty chilled,
     frozen and canned "ready-to-eat" pre-cut fruit that offers the benefits of
     healthy, low-fat foods with a multitude of vitamins to the increasingly
     health conscious consumer.

     Introduce New Cut Fruit Products. UniMark believes that a significant
     opportunity exists for the introduction of new cut fruit products. In 1998,
     the Company plans to introduce or expand introduction of three new product
     categories:

         Canned Products. Initial market test of the Company's canned citrus
         and  tropical  fruit products was met with positive reaction from
         retailers and consumers. During 1988, the Company intends to expand
         these canned products into broad scale distribution.

         Fruit Jelite. In the second quarter of 1998, UniMark plans to
         reintroduce its Fruit Jelite(R) line of chilled gelatin snack products.
         The first test in 1997 indicated that some product modifications were
         necessary including the introduction of multi-pack units.

         Frozen to Fresh. Utilizing the Company's cryogenic freezing
         technology, UniMark plans to introduce two product lines, one for food
         service and one for retail, of "frozen to fresh" single-serve cups. At
         the same time, the Company intends to improve its initial IQF food
         service concepts. UniMark's product development and commercialization
         efforts are subject to all of the risks inherent in the development of
         new products.

     Expand Into New Markets. In the fall of 1997, UniMark opened a trading
     office in the United Kingdom, under the name of UniMark Foods Europe, Ltd.
     ("UniMark Europe"). This subsidiary focuses on the sales and marketing of
     UniMark's frozen products within the United Kingdom and Europe. The Company
     currently has market tests running in several food service establishments
     within the UK. The Company expects to start tests in retail stores in the
     second quarter of 1998. UniMark Europe has entered into an agreement with
     The Fruit Store, Ltd. ("Fruit Store") under which UniMark Europe can use
     Fruit Store facilities for re-packing, storage and shipping of products. In
     addition, Fruit Store provides administrative services to UniMark Europe.

     Expand position as a leading Mexican juice exporter to U.S., European and
     Asian markets. With the 1996 acquisition of GISE, the Company is a major
     Mexican producer of citrus concentrate. The Company's goal is to expand its
     position as a leading exporter of high quality Mexican citrus juices to the
     U.S., European and Asian markets. Because of the high quality of Mexican
     citrus juice, it is often blended with juices from other citrus producing
     regions to enhance the quality of these other juices.

RESTRUCTURING INITIATIVES

    In a concerted effort to maximize production efficiencies and improve
profitability, the Company initiated several changes in its US and Mexican
operations during the second half of 1997.

     In July, 1997 the Company discontinued chilled fruit production at its
Lawrence, Massachusetts facility, consolidating this production at its more
efficient facilities in Mexico. In September, 1997, the remaining fresh cut
production was discontinued at the Lawrence facility because of insufficient
contribution margin


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to sustain this production, and the facility was limited in use to a warehousing
and distribution center. By utilizing the larger capacity of the Company's new
warehouse facility in McAllen, Texas and its strategic alliance with a national
shipping and logistics company, the Company was able to further reduce costs by
closing the Lawrence facility in January, 1998. The Company plans to sub-lease
this facility.

     In August, 1997 the Company transferred its operations from its 20,000
square foot warehouse in Hidalgo, Texas to its recently acquired 110,000 square
foot warehouse facility in McAllen, Texas that provides dry, chilled and frozen
storage capacity. In addition, the Company entered into a strategic alliance
with an independent shipping company to provide logistical and shipping services
in an effort to ensure reliable, on time delivery and improve customer service.

     At its Los Angeles, California facility, the Company has made certain
management changes including replacing the general manager and office manager.
In addition, an employee leasing arrangement for production line workers has
been eliminated and improvements in production processes have been implemented.
The Company has also recently added two new high volume accounts.

     In Mexico, the Company has segregated its repacking operations and
consolidated its production activities allowing for more efficient, specialized
operations and improved utilization of plant capacity. In the fourth quarter of
1997, the Company began operating its new repack facility to mix and package all
its mixed fruit salads. The facility is strategically located within the
Company's new warehouse facility in Montemorelos, Mexico allowing for direct
access of the preprocessed ingredients, improved response time and fresher
products. This in turn allows the Company's existing production lines to
concentrate solely on fruit processing. Because of this increase in capacity,
the Company was able to shutdown its production lines at its Zamora and San
Rafael plant facilities and to eliminate the need to outsource fruit processing
to co-packers in 1998. During 1997, approximately five million pounds of fruit
were processed by co-packers. These initiatives in Mexico have resulted in
personnel reductions of approximately 600 people while improving productivity
and plant utilization levels.

CURRENT PRODUCTS

    The Company's principal products are derived from citrus and tropical
fruits. The Company has focused on applying its knowledge of fruit growing and
processing with its international marketing and distribution capabilities to
develop four key product categories. These categories include cut fruits,
juices, specialty food ingredients and fresh fruit. The following is a
description of each of these categories and their specific products:

     CUT FRUITS. Under the brand names of SUNFRESH(R), Fruits of Four
     Seasons(R), Kledor(R), Flavor Fresh(TM) and under various private labels,
     UniMark markets:

          Chilled fruit. The chilled fruit line includes mango slices,
          grapefruit segments, orange segments, pineapple chunks, sliced papaya,
          and a variety of fruit salads. These products are packed for retail,
          wholesale club and food service customers.

          IQF citrus and tropical fruit. UniMark is expanding its retail and
          foodservice business by marketing citrus and tropical fruit products
          utilizing its individual quick frozen ("IQF") process. UniMark
          believes that this IQF process allows it to process fruits at the peak
          of their season while preserving the fresh-like texture and taste of
          the fruit. The frozen line of fruit includes melon, mango, orange,
          grapefruit, papaya, pineapple and various combinations of products
          packed for food service and industrial customers.

          Canned fruit. The canned fruit line includes orange segments and
          grapefruit segments as well as citrus and tropical salads packed for
          retail and foodservice customers.



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     JUICES. The Company, through GISE, markets directly to major industrial
     users a full line of citrus juice products including citrus concentrates
     and single strength juices:

          Citrus concentrate. Citrus juice concentrates are produced from
          oranges, grapefruits, tangerines, Persian limes and lemons.

          Single strength juices. Citrus juices are produced from oranges.

     SPECIALTY FOOD INGREDIENTS. UniMark believes that significant market
     opportunities exist in providing customers with specialty food ingredient
     products that can be derived from processing citrus and tropical fruits.
     Presently, UniMark's specialty food ingredients include:

          Citrus cell-sacs. The Company has developed and utilizes a unique
          processing method that separates cold-peeled citrus fruit into
          individual juice-containing cell-sacs. These cell-sac products are
          sold to food and soft drink manufacturers in Japan to enhance the
          flavor and texture of fruit juices and desserts.

          Citrus oils. Citrus oils are extracted from oranges, grapefruits,
          tangerines, Persian limes and lemons. These oils are primarily used by
          the Company's customers in beverages, perfumes and other scented
          products.

     FRESH FRUIT. In 1997 the Company began marketing of fresh pineapple under
     the Simply Fresh(R) brand name.

MARKETING, SALES AND DISTRIBUTION

    MARKETING. UniMark's marketing department develops brand strategies for the
Company's products, including product development, pricing strategy, consumer
and trade promotion, advertising, publicity and package design. This
department's responsibilities include determining the allocation of resources
between consumer and trade spending programs, pricing and profitability
analysis, as well as product and packaging designs.

    In the retail and wholesale club markets, the Company's primary focus has
been on the chilled fruit category. UniMark intends to capitalize and strengthen
the brand awareness and market penetration attained by its SUNFRESH(R) and
Flavor Fresh(TM) brands in the United States and the Kledor(R) brand in Canada.
Under its "Fruit Made Easy(R)" slogan, UniMark's marketing strategy includes
continued expansion of its comprehensive line of brand name specialty chilled,
frozen and canned "ready-to-eat" pre-cut fruit that offers the benefits of
healthy, low-fat foods with a multitude of vitamins to the health conscious
consumer. The Company's marketing objectives include increasing "impulse buying"
of its retail products by building greater product visibility through
"eye-catching" package designs, innovative rack systems and trial package
promotions. In addition, the Company utilizes trade promotions, such as
quarterly price allowances, to generate "feature promotion activity" for its
products. The SUNFRESH(R)



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product line also receives substantial advertising support in trade publications
and national food shows throughout the year.

    In the foodservice arena, the focus is on securing market leadership in the
chilled fruit category, primarily through private label programs with major
foodservice distributors, and a strong branded approach utilizing the
SUNFRESH(R) and Fruits of Four Seasons(R) labels in the United States and the
Kledor(R) brand in Canada. Marketing efforts in these channels are directed
toward trade usage programs and yearly trade rebates.

    SALES. UniMark's sales organization consists of six sales management teams
primarily focusing on the management of independent food brokers or
international representatives that directly interface with the customer. These
teams are: retail sales, Japanese sales, wholesale club sales, foodservice
sales, European sales and Canadian sales.

    The retail team is led by a sales manager and consists of four regional
managers, each with geographic responsibility for approximately 25 percent of
the United States. The Company's Japanese exports are directed by an export
sales manager located in Mexico City who deals with agents primarily from
Japanese trading companies. In addition, relationships with the Company's
Japanese customers are handled by the Company's senior executives. The wholesale
club market has one sales manager interfacing directly with key wholesale club
distributors. The foodservice team is guided by a vice president of foodservice
sales and four regional managers. In Europe, the Company is represented by a
sales and marketing manager that works directly with the Company's customers.
The Company's Canadian sales team operates out of Les Produits Deli-Bon Inc.
("Deli-Bon") utilizing independent food brokers throughout Canada although its
primary focus is within the Province of Quebec.

    The following table shows, for the last three years, the amount and
percentage of net sales contributed by the various market segments for the
Company's products:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                             -----------------------------------------------------------------
                                                    1995                   1996                    1997
                                             -------------------    -------------------    -------------------
                                               NET                    NET                    NET
                                              SALES      PERCENT     SALES      PERCENT     SALES      PERCENT
                                             -------     -------    -------     -------    -------     -------
                                                                   (DOLLARS IN THOUSANDS)
<S>                                          <C>            <C>     <C>            <C>     <C>            <C>
Retail sales ...........................     $12,537        34.0%   $18,190        27.9%   $27,202        33.5%
Foodservice sales ......................         861         2.3     15,122        23.2     23,042        28.3
Citrus juice and oil sales .............          --          --     12,376        19.0     13,679        16.8
Japan sales ............................      12,116        32.9      7,367        11.3      3,393         4.2
Wholesale club sales ...................       7,061        19.2      7,894        12.1     11,303        13.9
Industrial and other sales .............       4,291        11.6      4,289         6.5      2,665         3.3
                                             -------     -------    -------     -------    -------     -------
          Total ........................     $36,866       100.0%   $65,238       100.0%   $81,284       100.0%
                                             =======     =======    =======     =======    =======     =======
</TABLE>

    Retail sales. UniMark markets its products to more than 200 regional and
national supermarket chains and wholesalers throughout the United States and
Canada. In conjunction with its own national sales force, UniMark utilizes over
50 independent food brokers and distributors to sell its products.

    Food service sales. Sales to the United States government, fast food chains,
restaurants, hospitals and other food service customers are made either directly
to or through food service distributors by the Company's foodservice sales
force. The Company is represented by more than 40 food service brokers.

    Japanese sales. UniMark exports a line of pasteurized citrus products and
juice-containing citrus cell-sac products to Japan for use in the food and
beverage industries. Although sales to industrial customers in Japan are
facilitated through Japanese trading companies, the Company maintains direct
relationships with its industrial customers. During 1995, 1996 and 1997 sales to
the Company's Japanese customers, through


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Mitsui Foods, Inc., a Japanese trading company, accounted for approximately
27.5%, 8.9% and 3.9%, respectively, of the Company's net sales. In 1998, the
Company expects a reversal in the declining sales trend to Japan.

    Wholesale club sales. UniMark indirectly sells products to Sam's Wholesale
Clubs and other wholesale clubs throughout the United States. During 1995, 1996
and 1997 indirect sales to Sam's Wholesale Clubs accounted for approximately
17.6%, 8.3% and 6.6%, respectively, of the Company's net sales.

    European sales. UniMark sells products directly to industrial users of IQF
products, including orange, pineapple, mango and papaya products. The Company
also sells its single serve "Frozen to Fresh" single serve cups to foodservice
operators through certain foodservice distributors. Similar product concepts
will be introduced this year to major retailers in the UK. In the UK, the
Company uses its Flavor Fresh(TM) trade name.

    Industrial and other sales. Industrial and other sales consist primarily of
IQF sales to industrial users in the United States for re-packing or further
processing. UniMark utilizes independent food brokers to sell its products to
industrial users in the United States.

    DISTRIBUTION. UniMark operates its own trucking fleet to transport finished
cut fruit products from its Mexican processing facilities to its new
distribution center in McAllen, Texas. From there, deliveries are made through
an arrangement the Company has with England Logistics, Inc. ("England"), a
division of C.R. England & Sons of Salt Lake City, Utah. In March 1998, the
Company has entered into a letter of intent for England to take over the
management of the Company's warehouse operations in McAllen, Texas. In Canada,
deliveries are made to customers by independent trucking companies from
Deli-Bon's facilities. Products exported to Japan are shipped directly from
Mexico. Products sold by UniMark Europe are either shipped directly to its
customers or through a facility owned by Fruit Store. GISE transports finished
product by common carrier to North American customers.
Products to overseas customers are shipped directly in containers.

PROCUREMENT

    Currently, a substantial quantity of the fruit processed by the Company is
purchased from third parties. However, the Company's Mexican grapefruit growing
operations supply over 80% of the Company's grapefruit demand. In addition, the
Company purchases grapefruit from growers in the Texas Rio Grande Valley for
processing at its ICMOSA plant. For the 1997-98 growing season, the Company has
entered into agreements with Mexican growers of mangos to supply the Company's
anticipated demand. Substantially all of the oranges and melons used in the
Company's operations are purchased from third-party growers throughout Mexico.
UniMark has commenced a significant pineapple growing project. Initial
production from this project began in 1997 and UniMark intends to expand this
project until the Company has sufficient supply for its own processing needs.
UniMark believes that production from this project not only will provide UniMark
with a high quality supply of pineapples for processing but also will produce a
significant amount of pineapple for the North American fresh fruit market.

    The Company purchases citrus from growers throughout Mexico. GISE's two
juice plants are located in Cd. Victoria, Tamaulipas, Mexico and Poza Rica,
Veracruz, Mexico in the heart of Mexico's two major citrus growing regions. The
State of Veracruz, located along the east coast of Mexico, is Mexico's largest
orange producing state followed by the neighboring states of Tamaulipas and San
Luis Potosi. Citrus from this region is available for processing at GISE's
Veracruz facility early in the season because of this region's southern
location. GISE's Cd. Victoria plant processes fruit grown primarily in the
northeastern region of Mexico. The fruit is transported by common carrier to
GISE's two plants located in Mexico.


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PROCESSING

    Cut Fruit. Upon arrival at the Company's processing plants, the fruit is
inspected and washed. On the production line, the fruit is peeled and cut into
various presentations (slices, sections, chunks, balls). Following this process,
some fruits are further processed into juice-containing cell-sacs. In addition,
some processed fruits are frozen utilizing the Company's IQF process. Other
processed fruits are transferred directly into bulk storage or final product
packaging (pails, jars and cans). After further processing, the juice-containing
cell-sacs are canned while the frozen products are packaged in plastic bags or
trays. The ICMOSA plant is the Company's main plant and serves as the hub for
the Company's other Mexican processing plants, which primarily produce
semi-processed product. At the ICMOSA plant, products are labeled and packaged
for final shipment. ICMOSA also delivers bulk raw materials to Deli-Bon and
Simply Fresh for packing into final presentations. Only limited processing takes
place at Deli-Bon. While Simply Fresh relies mostly on raw materials from
California growing regions some raw materials are provided by ICMOSA. The
Company cans fruit at its ICMOSA and Puebla plants.

    Juice. GISE's operations are substantially automated. Once the fruit arrives
at a plant, it is unloaded onto rollers. The fruit is then washed and inspected.
Bruised and damaged fruit is removed by hand and the remaining fruit is then
routed to rollers with short needles, which extract the oil from the peel. Once
the oil is removed, the fruit is sorted by size and sent to slicing and
squeezing machines. These machines slice the fruit and squeeze the juice and
pulp completely from the peel. The juice is then separated from the pulp and the
water is extracted from the juice. Upon further processing, the juice and juice
concentrate are stored on site until it is shipped directly to customers.

RESEARCH AND DEVELOPMENT

    The Company's research and development department provides product,
packaging and process development, analytical and microbiological services, as
well as agricultural research.

EMPLOYEES

    As of March 1, 1998, UniMark employed approximately 3,900 full-time
employees, most of whom were located in Mexico. In Mexico, labor relations are
governed by separate collective labor agreements between UniMark and the unions
representing the particular group of employees. All of UniMark's employees in
Mexico, whether seasonal or permanent, are affiliated with labor unions which
are generally affiliated with a national confederation. Consistent with other
labor practices in Mexico, wages are negotiated every year while other terms are
negotiated every two years.

    In the United States and Canada, UniMark's employees are not covered by
collective bargaining agreements. UniMark believes that its relations with all
of its employees are good.

COMPETITION

    The food industry, including each of the markets in which the Company
competes, is highly competitive with respect to price and quality (including
taste, texture, healthfulness and nutritional value). The Company faces direct
competition from citrus processors with respect to its existing product lines
and faces potential competition from numerous, well established competitors
possessing substantially greater financial, marketing, personnel and other
resources than the Company. The Company's fruit juice products compete broadly
with all beverages available to consumers. In addition, the food industry is
characterized by frequent introduction of new products, accompanied by
substantial promotional campaigns. In recent years, numerous companies have
introduced products positioned to capitalize on growing consumer preference for
fresh fruit products. It can be expected that the Company will be subject to
increasing competition from companies whose products or marketing strategies
address these consumer preferences.



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ENVIRONMENTAL MATTERS

    As a result of its agricultural, food and juice processing activities, the
Company is subject to numerous foreign and domestic environmental laws and
regulations.

    The operations of UniMark in Mexico are subject to Mexican federal and state
laws and regulations relating to the protection of the environment. The
principal legislation is the federal General Law of Ecological Balance and
Environmental Protection (the "Ecological Law"), which is enforced by the
Ministry of Social Development ("Sedesol"). Under the Ecological Law, rules have
been promulgated concerning water pollution, air pollution, noise pollution and
hazardous substances. Sedesol can bring administrative and criminal proceedings
against companies that violate these environmental laws, and can also close non-
complying facilities. The operations of UniMark in Canada are subject to
Canadian federal and provincial laws and regulations relating to the protection
of the environment including An Act Respecting Occupational Health and Safety
(Quebec), the Canadian Environmental Protection Act (Canada), and the
Environment Quality Act (Quebec). Similarly, the operations of UniMark in the
United States are subject to United States federal and state laws and
regulations relating to the protection of the environment. Although the Company
believes that its facilities currently are in compliance with all applicable
environmental laws, failure to comply with any such laws could have a material
adverse effect on the Company.

GOVERNMENT REGULATION

    The manufacture, processing, packing, storage, distribution and labeling of
food and juice products are subject to extensive regulations enforced by, among
others, the FDA and state, local and foreign equivalents thereof and to
inspection by the United States Department of Agriculture and other federal,
state, local and foreign agencies. Applicable statutes and regulations governing
food products include "standards of identity" for the content of specific types
of foods, nutritional labeling and serving size requirements and under "Good
Manufacturing Practices" with respect to production processes. The Company
believes that its products satisfy, and its new products will satisfy, all
applicable regulations and that all of the ingredients used in its products are
"Generally Recognized as Safe" by the FDA for the intended purposes for which
they will be used. The Company, on a daily basis, tests its products at its
internal laboratories and, from time to time, submits samples of its products to
independent laboratories for analysis. Failure to comply with applicable laws
and regulations could subject the Company to civil remedies, including fines,
injunctions, recalls or seizures, as well as potential criminal sanctions, which
could have a material adverse effect on the Company.

PRODUCT LIABILITY AND PRODUCT RECALL

    The testing, marketing, distribution and sale of food and beverage products
entails an inherent risk of product liability and product recall. There can be
no assurance that product liability claims will not be asserted against the
Company or that the Company will not be obligated to recall its products.
Although the Company maintains product liability insurance coverage in the
amount of $5,000,000 per occurrence, there can be no assurance that this level
of coverage is adequate. A product recall or a partially or completely uninsured
judgment against the Company could have a material adverse effect on the
Company.

INTELLECTUAL PROPERTY RIGHTS

    The Company regards its trademarks, trade dress, trade secrets and similar
intellectual property as important to its success. The Company has been issued a
registered trademark for its SUNFRESH(R), Fruits of Four Seasons(R), Jalapeno
Sam(R), Fruit Made Easy(R), Fruit Jelite(R), Simply Fresh(R) and Kledor(R)
trademarks. The Company also utilizes the Flavor Fresh(TM) tradename. In
addition, the Company holds patent rights with respect to certain fruit cutting
machinery and a non-assignable, exclusive license to manufacture and sell
certain fruit products in the US, Canada and Mexico.



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ITEM 2.   PROPERTIES.

GROWING OPERATIONS

    To ensure the availability of the highest quality raw materials, UniMark
intends to expand its fruit growing operations in Mexico, utilizing advanced
agricultural practices. UniMark believes that Mexico's favorable climate and
soil conditions, coupled with competitive labor and land costs, offer
significant opportunities to grow high quality fruits in a cost effective
manner. Presently, a majority of the Company's raw materials are provided by
growers under various arrangements, including operating agreements and
individual fixed price contracts to purchase entire production. The following
table sets forth the Company's various agricultural projects:

<TABLE>
<CAPTION>
                                                                                                PROPERTY
              NAME                      LOCATION            ACREAGE             CROP            INTEREST
    -----------------------        -------------------     ---------      -----------------     ---------
<S>                                <C>                     <C>            <C>                   <C>
    Loma Bonita I Grove.........   Loma Bonita,            190 acres      White grapefruit      Leased
                                   Oaxaca, Mexico

    Loma Bonita II Grove (1)....   Loma Bonita, Oaxaca,    625 acres      Pink grapefruit,      Leased
                                   Mexico                                 pineapple, hearts
                                                                          of palm.

    Villa Azueta I Grove (2)....   Villa Azueta,           84 acres       Pineapple growing     Leased
                                   Veracruz, Mexico                       and packing.

    Villa Azueta II Grove.......   Villa Azueta,           610 acres      Pineapple             Owned
                                   Veracruz, Mexico

    Azteca Grove (3)............   Montemorelos, Nuevo     144 acres      White and Rio Red     Leased
                                   Leon, Mexico                           grapefruit

    Las Tunas Grove.............   Isla,                   120 acres      White and pink        Leased
                                   Veracruz, Mexico                       grapefruit

    Victoria Grove..............   Cd. Victoria,           240 acres      Oranges and           Owned
                                   Tamaulipas, Mexico                     Italian lemons

    Victoria Grove II...........   Cd. Victoria,           120 acres      Italian lemons        Owned
                                   Tamaulipas, Mexico

    Victoria Grove III..........   Cd. Victoria,           264 acres      Italian lemons        Owned
                                   Tamaulipas, Mexico

    Victoria Grove IV...........   Cd. Victoria,           1,680 acres    Italian lemons        Owned
                                   Tamaulipas, Mexico                     (50% planted)

    Victoria Grove V............   Cd. Victoria,           4,080 acres    Italian lemons to     Purchase
                                   Tamaulipas, Mexico                     be planted.           pending.
</TABLE>

---------

(1)  Presently, this grove consists of approximately 240 acres of pink
     grapefruit, 300 acres of pineapple and 60 acres of hearts of palm.

(2)  Villa Azueta is the southern headquarters of UniMark's agricultural
     operations. The agricultural headquarters is used for the development of
     pineapple seedlings, as well as other agricultural crops, and the packing
     of fresh pineapple. In 1995, the Company entered into a 10-year lease for
     this facility and has an option to purchase the facility for fair market
     value determined at the time such option is exercised.

(3)  In 1994, ICMOSA entered into a 10-year operating agreement with the owners
     of this grove, which is located near the ICMOSA plant in Montemorelos.
     Pursuant to the agreement, ICMOSA operates the grove and purchases all the
     grapefruit at a formula price tied to the price of grapefruit purchased
     from unrelated third parties. The grove consists of approximately 13,000
     grapefruit trees and incorporates advanced agricultural technology. Each
     tree has a watering and feeding system which can also be utilized as an
     anti-freeze system utilizing mist generated by three 500 horsepower
     boilers.

    In October, 1996, GISE and The Coca-Cola Export Corporation ("Coca-Cola"),
an affiliate of The Coca-Cola Company, entered into a ten year Supply Contract,
with a ten year renewal option, for production of Italian lemons. Pursuant to
the terms of this Supply Contract, GISE will plant and grow approximately 12,000
acres of Italian lemons for sale to Coca-Cola at pre-determined prices The
Supply


                                       10
<PAGE>   11

Contract requires Coca-Cola to provide, free of charge, 750,000 lemon trees,
enough to plant approximately 7,200 acres. In addition, the Supply Contract
requires Coca-Cola to purchase all the production from the project. GISE
subsequently negotiated an agreement to extract lemon oil from such lemons for
Coca-Cola. UniMark believes that this arrangement will afford GISE with
operational benefits by allowing GISE to process lemons during the off season
and significantly expand the Company's agricultural operations in Mexico.

FACILITIES

    The Company's principal processing facilities are described below:

<TABLE>
<CAPTION>
                                                                                     APPROXIMATE
                                                                                      NUMBER OF
                                                                    APPROXIMATE       EMPLOYEES
                                                                      SQUARE        (AS OF MARCH
            NAME                           LOCATION                   FOOTAGE          1, 1998)     INTEREST
 -----------------------------  --------------------------------    ----------      -------------  -----------
<S>                             <C>                                 <C>             <C>            <C>
 FRUIT PROCESSING OPERATIONS
 ICMOSA Plant ................  Montemorelos, Nuevo Leon, Mexico      80,000            1,100      Owned (1)

 IHMSA Plant..................  Montemorelos, Nuevo Leon, Mexico      40,000              800      Leased (2)

 Azteca Plant.................  Montemorelos, Nuevo Leon, Mexico      50,000              320      Leased (2)

 Puebla Plant.................  Tlatlauquipec, Puebla, Mexico         50,000              500      Owned

 Isla Plant...................  Isla, Veracruz, Mexico                32,000              300      Leased (3)

 San Rafael Plant (6).........  San Rafael, Veracruz, Mexico          28,500              400      Leased

 Zamora Plant (6).............  Zamora, Michoacan, Mexico             41,000              120      Leased (4)

 Deli-Bon Plant...............  Quebec City, Quebec, Canada           16,800               36      Owned

 Simply Fresh Plant...........  Los Angeles, California               45,000              148      Leased (5)

 Flavor Fresh Plant (6).......  Lawrence, Massachusetts               60,000              100      Leased (2)

 JUICE AND OIL OPERATIONS
 Victoria Juice Plant.........  Cd. Victoria, Tamaulipas, Mexico      65,700              199      Owned (1)

 Frutalamo Juice Plant........  Alamo, Veracruz, Mexico               27,700              107      Leased

 Veracruz Juice Plant.........  Poza Rica, Veracruz, Mexico           22,900               76      Owned
</TABLE>

----------

(1) This property is subject to individual mortgages with the real estate as
    collateral.

(2) The agreement pursuant to which this facility is leased by the Company
    grants the Company the option to purchase the facility prior to the
    expiration of such agreement at a purchase price equal to the then current
    fair market value of the facility.

(3) The agreement pursuant to which this facility is leased by the Company
    grants the Company the option to purchase the facility during the first
    three years of such agreement expiring on June 30, 1998 for a purchase price
    of $850,000.

(4) The agreement pursuant to which this facility is leased by the Company
    grants the Company the option to purchase the facility during the first
    three years of such agreement expiring on March 31, 1999 for a purchase
    price of $1.4 million.

(5) The agreement pursuant to which this facility is leased by the Company
    grants the Company the option to purchase the facility through August 14,
    1998 for a purchase price of $4.8 million.

(6) These plants are idle and are being offered for sub-lease.



                                       11
<PAGE>   12
    The Company's other supporting facilities are described below:

    In addition to the properties described above the Company maintains its
corporate headquarters in Bartonville, Texas; a distribution center in McAllen,
Texas; and a lodging facility in Cd. Victoria, Tamaulipas, Mexico.

    Corporate Headquarters. UniMark leases approximately 13,000 square feet of
office space for its corporate headquarters in Bartonville, Texas (located 20
miles from the Dallas/Fort Worth International Airport) from an entity
controlled by Jorn Budde, the Company's President, Chief Executive Officer and
Chairman of the Board prior to his resignation in February, 1998. As of March 1,
1998, UniMark employed 31 people at this facility with space well utilized for
the corporate headquarters.

    McAllen Distribution Center. The Company's recently acquired refrigerated
distribution center began operations in August, 1997 in McAllen, Texas (on the
Texas/Mexico border) which consists of approximately 110,000 square feet and is
fully utilized. As of March 1, 1998, 15 people were employed at this
company-owned facility.

    Hidalgo Distribution Center. The Company's previous refrigerated
distribution center in Hidalgo, Texas consists of approximately 20,000 square
feet and is currently vacant and being offered for sale.

    The GISE Conference Facility. In connection with the GISE Acquisition in May
1996, the Company acquired an "hacienda" which has been declared a historic
landmark. This lodging facility is located near GISE's plant in Cd. Victoria,
Tamaulipas, Mexico, occupies approximately 90,000 square feet and is situated on
approximately 10 acres. The Company utilizes this facility, in part, as a
conference center.

ITEM 3.   LEGAL PROCEEDINGS.

    From time to time the Company is involved in litigation relating to claims
arising from its operations in the normal course of business or otherwise the
outcome of which is not expected to have a materially adverse affect on the
Company's results of operations or financial condition.

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

    There were no matters submitted to a vote of security holders during the
quarter ended December 31, 1997.

    At the Company's Annual Meeting of Shareholders held on June 6, 1997, the
entire eight member Board of Directors was re-elected in a non-contested vote
and the selection of Ernst & Young, LLP as the Company's independent public
accountants for the year ended December 31, 1997 was ratified. In addition, a
proposal to amend the Company's 1994 Employee Stock Option Plan to reserve an
additional 340,000 shares of common stock for issuance thereunder was approved.
This proposal received 6,595,817 affirmative votes, 340,545 negative votes and
32,425 votes were withheld. A proposal to amend the Company's Articles of
Incorporation to authorize a new class of preferred stock was not approved. This
proposal received 1,834,288 affirmative votes, 1,238,882 negative votes and
3,895,617 votes were withheld. Approval for this proposal required 5,722,555
affirmative votes.


                                       12
<PAGE>   13
                                     PART II

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

    The Common Stock is quoted on the Nasdaq National Market under the symbol
"UNMG". The following table sets forth, for the periods indicated, the high and
low sale prices as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
                                                                HIGH        LOW
                                                                ----        ---
<S>                                                          <C>           <C>
Year Ended December 31, 1996:
    First Quarter.......................................      $16  5/8    $11  7/8

    Second Quarter......................................       17  7/8     13  3/4

    Third Quarter.......................................       17  3/4     10  5/8

    Fourth Quarter......................................       12  1/2      7   --

Year Ended December 31, 1997:
    First Quarter.......................................       10  5/8      6   --

    Second Quarter......................................        8  7/8      4  5/8

    Third Quarter.......................................        9  1/8      7   --

    Fourth Quarter......................................        8  1/4      2  3/4
</TABLE>

----------

    The quotations in the tables above reflect inter-dealer prices without
retail markups, markdowns or commissions. On March 20, 1998, the last reported
sale price for the Common Stock on the Nasdaq National Market was $4.75. As of
March 20, 1998 there were 153 shareholders of record of the Common Stock and in
excess of 2,200 beneficial shareholders.

    The Company has not paid any cash dividends since its inception and for the
foreseeable future intends to follow a policy of retaining all of its earnings,
if any, to finance the development and continued expansion of its business.
There can be no assurance that dividends will ever be paid by the Company.
Additionally, the Company's loan agreements with Cooperatieve Centrale
Raiffeisen-Boerenleenbank B. A. ("Rabobank Nederland") restrict the Company from
declaring or paying any dividends on its shares of Common Stock without the
prior written consent of Rabobank Nederland. Any future determination as to
payment of dividends will depend upon the Company's financial condition, results
of operations and such other factors as the Board of Directors deems relevant.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -Liquidity and Capital Resources."

ITEM 6.   SELECTED FINANCIAL DATA.

    The following table sets forth, for the periods and at the dates indicated,
selected historical consolidated financial data of the Company. The selected
historical consolidated financial data has been derived from the historical
consolidated financial statements of the Company and in the case of the fiscal
years ended December 31, 1995, 1996 and 1997 should be read in conjunction with
such financial statements and the notes thereto included elsewhere herein.


                                       13
<PAGE>   14

<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                       --------------------------------------------------------
                                                        1993        1994        1995       1996(1)      1997
                                                       -------     -------     -------     -------     --------
                                                            (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S>                                                    <C>         <C>         <C>         <C>         <C>
Net sales ........................................     $18,893     $25,346     $36,866     $65,238     $ 81,284
Gross profit .....................................       5,952       7,403      12,674      18,626       22,004
Income (loss) from operations ....................         633       1,530       4,251       1,027       (5,950)
Extraordinary gain ...............................          --          --          --         330          139
Net income (loss) ................................          73       1,015       2,947         543       (9,680)
Basic earnings (loss) per share:
  Income (loss) before extraordinary gain ........     $  0.02     $  0.28     $  0.57     $  0.03     $  (1.15)
  Extraordinary gain .............................          --          --          --        0.04          .02
                                                       -------     -------     -------     -------     --------
  Net income (loss) ..............................     $  0.02     $  0.28     $  0.57     $  0.07     $  (1.13)
                                                       =======     =======     =======     =======     ========
Diluted earnings (loss) per share:
  Income (loss) before extraordinary gain ........     $  0.02     $  0.28     $  0.53     $  0.03     $  (1.15)
  Extraordinary gain .............................          --          --          --        0.04          .02
                                                       -------     -------     -------     -------     --------
  Net income (loss) ..............................     $  0.02     $  0.28     $  0.53     $  0.07     $  (1.13)
                                                       =======     =======     =======     =======     ========
Shares used in per share calculations:
    Basic ........................................       3,000       3,642       5,213       7,450        8,590
    Diluted ......................................       3,000       3,642       5,571       7,796        8,590

Total assets .....................................     $ 4,007     $11,176     $26,498     $76,683     $ 94,616
Long-term debt ...................................         296         919         699       4,332        8,626
Stockholders' equity .............................         459       6,392      14,978      47,800       38,252

</TABLE>

--------

(1) Includes the results of operations of GISE and Simply Fresh since April 1,
1996, and Deli-Bon since January 3, 1996, the effective dates of these
acquisitions, as more fully explained in the Company's Notes to Consolidated
Financial Statements for the year ended December 31, 1997 contained elsewhere
herein.

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

INTRODUCTION

    The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto and "Selected Consolidated Financial
Data" included elsewhere in this Prospectus. This discussion does not include
the results of operations of Deli-Bon, GISE and Simply Fresh before their
respective acquisition dates.

CONVERSION TO U.S. GAAP

    The Company conducts substantially all of its operations through its wholly
owned operating subsidiaries: UniMark Foods, UniMark International, Inc.,
ICMOSA, GISE, Simply Fresh and Deli-Bon. ICMOSA is a Mexican corporation with
its headquarters located in Montemorelos, Nuevo Leon, Mexico, whose principal
activities consist of operating five citrus processing plants and various citrus
groves throughout Mexico. GISE is a Mexican corporation with its headquarters
located in Victoria, Tamaulipas, Mexico, whose principal activities consist of
operating three citrus juice and oil processing plants. ICMOSA and GISE maintain
their accounting records in Mexican pesos and in accordance with Mexican
generally accepted accounting principles and are subject to Mexican income tax
laws. ICMOSA's and GISE's financial statements have been converted to United
States generally accepted accounting principles ("U.S. GAAP") and U.S. dollars.
Deli-Bon maintains its accounting records in Canadian dollars and in accordance
with Canadian generally accepted accounting principles and is subject to
Canadian income tax laws.

    Unless otherwise indicated, all dollar amounts included herein are set
forth in U.S. dollars in accordance with U.S. GAAP. The functional currency of
UniMark and its subsidiaries is the U.S. dollar.



                                       14
<PAGE>   15
RESULTS OF OPERATIONS

    The following table sets forth certain consolidated financial data expressed
as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              -----------------------------
                                                               1995        1996       1997
                                                              -----       -----       -----
<S>                                                           <C>         <C>         <C>
Net sales .............................................       100.0%      100.0%      100.0%
Cost of products sold .................................        65.6        71.4        72.9
                                                              -----       -----       -----
Gross profit ..........................................        34.4        28.6        27.1
Selling, general and administrative expenses ..........        22.9        27.0        34.4
                                                              -----       -----       -----
Income (loss) from operations .........................        11.5         1.6        (7.3)
Other income (expense):
  Interest expense ....................................        (0.9)       (2.2)       (4.1)
  Interest income .....................................         1.3         0.8         0.5
  Other ...............................................         0.6        (0.3)       (1.1)
                                                              -----       -----       -----
Income (loss) before income taxes and
  extraordinary gain ..................................        12.5        (0.1)      (12.0)
Income tax expense (benefit) ..........................         4.5        (0.4)        0.1
                                                              -----       -----       -----
Income (loss) before extraordinary gain ...............         8.0         0.3       (12.1)
Extraordinary gain, net of applicable income taxes ....         .--         0.5         0.2
                                                              -----       -----       -----
Net income (loss) .....................................         8.0%        0.8%      (11.9)%
                                                              =====       =====       =====
</TABLE>
Years Ended December 31, 1996 and 1997

    Net sales increased 24.6% from $65.2 million in 1996 to $81.3 million in
1997. This increase was primarily due to increases in foodservice sales, retail
sales and club sales. Foodservice sales increased 52.4% from $15.1 million in
1996 to $23.0 million in 1997. Retail sales increased 50.0% from $18.2 million
in 1996 to $27.2 million in 1997 and warehouse club sales increased 43.2% from
$7.9 million in 1996 to $11.3 million in 1997. These increases resulted from
increased distribution and expansion of product lines facilitated primarily by
the Company's acquisition of Simply Fresh effective March 31, 1996 and the
addition of new customers, particularly in the Northeast U.S. in August, 1996.
In addition, growth of existing product lines and new canned product
introductions contributed to these increases in 1997.

    The increase in net sales was adversely impacted by a decline in sales of
the Company's specialty food ingredient products in the Japanese market. Sales
to Japan decreased from $7.4 million in 1996 to $3.4 million in 1997 primarily
as a result of decreased demand in Japan for the Company's specialty food
ingredient products. The Company believes that this decrease in demand is due to
a decline in sales of the Japanese products containing the Company's specialty
food ingredients and resulting higher than anticipated inventory levels of the
Company's specialty food ingredients held by distributors in Japan. Present
indications are that inventory levels in Japan have been reduced. Based upon
present indications from Japan, the Company anticipates selling approximately
$5.0 million of specialty food ingredient products to Japan during the 1997-98
citrus processing season. In addition, the Company has delivered IQF product to
Japan and the United Kingdom for evaluation. The Company believes there are
significant opportunities in the Japanese and United Kingdom markets for frozen
citrus and tropical fruit products.

    The increase in net sales was also positively impacted by a 10.5% increase
in citrus juice and oil sales from $12.4 million in 1996 to $13.7 million in
1997. The Company acquired GISE, a citrus juice and oil processor in Mexico
effective March 31, 1996, therefore the 1996 sales amount represents only nine
months of operations compared with twelve months of operations in 1997.

Gross profit as a percentage of net sales decreased from 28.6% in 1996 to 27.1%
in 1997. The Company's results of operations were adversely impacted by an
increase in inflation in Mexico (15.7%) which was not offset by a corresponding
devaluation of the Mexico peso (2.5%), resulting in increased


                                       15
<PAGE>   16
wages, benefits and other operating expenses in US dollar terms. Gross profit on
cut fruit sales decreased from 31.0% in 1996 to 29.8% in 1997 while gross profit
on citrus juice and oil sales decreased from 18.1% in 1996 to 13.7% in 1997. The
decrease in gross profit on cut fruit sales resulted primarily from charges of
approximately $3.1 million in the fourth quarter of 1997 for additional costs
incurred associated with the closing of the Flavor Fresh, San Rafael and Zamora
plant facilities and the restructuring of production, warehousing and
distribution operations.

    Gross profit on cut fruit sales was adversely affected from the decline in
Japanese sales. Although the loss of Japanese production volume adversely
impacted the Company's 1997 operating results, the Company has taken affirmative
steps to replace the lost production volume. During 1997, these efforts included
the introduction of new canned product lines that accounted for approximately
$2.5 million of sales. In addition, the Company has implemented significant
operational changes to reduce costs, increase efficiency and improve
profitability and continues to evaluate and assess further changes to improve
operational efficiency. See "Restructuring Initiatives."

    Gross profit on citrus juice and oil sales were adversely affected by lower
than expected market prices but benefited from improved raw material costs.
Frozen concentrate orange juice futures prices remained depressed throughout
1997 but have shown favorable improvement in early 1998.

    Selling, general and administrative expenses ("SG&A") as a percentage of net
sales increased from 27.0% in 1996 to 34.4% in 1997. This increase resulted
primarily from charges of approximately $1.2 million in the fourth quarter of
1997 for costs associated with the closing of the Flavor Fresh, Zamora and San
Rafael plant facilities and certain licensing and product development costs.

    SG&A as a percentage of net sales was also adversely impacted by the
relative decrease in sales to Japan and juice and oil sales. Sales of the
Company's specialty food ingredient products are facilitated through independent
Japanese trading companies primarily on an FOB ICMOSA plant basis. The Company's
orange juice products are primarily sold direct to juice blenders primarily on
an FOB GISE plant basis. Therefore, the Company does not typically incur
delivery costs and sales commissions with respect to these sales. Consequently,
the relative decrease in these sales from 30.3% to 21.0% of net sales in 1996
and 1997, respectively, adversely impacted SG&A as a percentage of sales during
1997.

    Interest expense increased from 2.2% of net sales in 1996 to 4.1% in 1997.
Actual interest expense increased from $1.4 million in 1996 to $3.3 million in
1997. This increase was primarily the result of increased levels of debt
necessary to support capital expenditures and increased levels of inventory and
trade receivables associated with the increase in sales volume.

    Interest income of $548,000 was earned in 1996 and $436,000 in 1997
primarily from the temporary cash investment of excess cash balances.

    A foreign currency translation net loss of $248,000 in 1996 and $944,000 in
1997 resulted primarily from the conversion of Company's foreign subsidiaries'
financial statements to U.S. GAAP.

    Income taxes. A consolidated income tax benefit of $272,000 in 1996 resulted
primarily from the recognition of future benefits from tax losses generated. A
consolidated income tax provision of $77,000 resulted primarily from the
recording of a valuation allowance to reduce the carrying amount of the
Company's deferred tax assets related to U.S. tax losses.

    Extraordinary gains, net of applicable taxes, of $330,000 and $139,000 were
realized in 1996 and 1997, respectively. In 1996, the Company reported a net
gain from the forgiveness of certain existing debt obligations with Mexican
banks pursuant to Mexican government programs to stimulate the economy and
support the banking system. In May, 1997, ICMOSA retired certain outstanding
long-term debt with Union de Credito Allende, a Mexican credit union, at a
discount of 50%. The discount was granted pursuant to a Mexican government
program, Acuerdo de Apoyo Financiero y Fomento a la Micro, Pequena

                                       16
<PAGE>   17
y Mediana Empresa ("FOPIME") and through the participation of Nacional
Financiera ("NAFINSA"), a Mexican development bank, to help provide liquidity to
the Mexican credit unions. The debt reduction amounted to approximately $2.0
million pesos or approximately US $248,000. Provisions for Mexican income taxes
and statutory employee profit sharing of 34% and 10%, respectively, have been
provided on these gains from debt forgiveness.

    As a result of the foregoing, the Company reported net income of $543,000 in
1996 while reporting a net loss of $9.7 million in 1997.

Years Ended December 31, 1995 and 1996

    Net sales increased 76.7% from $36.9 million in 1995 to $65.2 million in
1996. This increase was primarily due to increases in foodservice sales, the
commencement of citrus juice and oil sales and growth in retail sales.
Foodservice sales increased from $861,000 in 1995 to $15.1 million in 1996. This
increase was primarily a result of the Simply Fresh Acquisition and the addition
of new customers. Also in 1996, the Company acquired GISE, a citrus juice and
oil processor in Mexico. Citrus juice and oil sales totaled $12.3 million in
1996. Retail sales increased 45.6% from $12.5 million in 1995 to $18.2 million
in 1996 primarily as a result of increased distribution and demand for the
Company's retail chilled fruit product line.

    The increase in net sales was adversely impacted by a decline in sales of
the Company's specialty food ingredient products in the Japanese market. Sales
to Japan decreased 38.8% from $12.1 million in 1995 to $7.4 million in 1996
primarily as a result of decreased demand in Japan for the Company's specialty
food ingredient products. The Company believes that this decrease in demand was
due to a decline in sales of the Japanese products containing the Company's
specialty food ingredients and resulting higher than anticipated inventory
levels of the Company's specialty food ingredients held by distributors in
Japan. Although the Company anticipates a continued decline in sales of its
specialty food ingredient products to Japan during fiscal 1997, the Company
believes there are significant opportunities in the Japanese market for frozen
citrus and tropical fruit products because such products do not contain
additives or preservatives, an important feature for entry into the Japanese
market.

    Gross profit as a percentage of net sales decreased from 34.4% in 1995 to
28.6% in 1996. Gross profit on cut fruit sales decreased from 34.4% in 1995 to
31.0% in 1996 while gross profit on citrus juice and oil sales was 18.1% in
1996. The decline in gross profit on cut fruit sales resulted primarily from
increased processing costs due to, among other things, lower than anticipated
production volume resulting from the decline in Japanese sales, increased raw
materials costs and operational inefficiencies associated with the delay in
integrating the Company's new facilities into its existing operations. Although
the loss of Japanese production volume is anticipated to adversely impact the
Company's first quarter 1997 operating results, the Company is taking
affirmative steps to replace the lost production volume. In addition, the
Company believes that the integration of its newly acquired United States
production facilities with its existing operations will be completed in 1997.

    Gross profit on citrus juice and oil sales in 1996 were adversely affected
by a significant decline in market prices and increased production costs. During
the fourth quarter of 1996, frozen concentrate orange juice futures prices
declined approximately 30% primarily as a result of favorable production
forecasts from Brazil and Florida. In addition, the Company experienced
increased fruit prices and reduced production yields as a result of the drought
in northern Mexico in the summer of 1996. While the Company's increased costs of
inventories is estimated to adversely impact operations in the first quarter of
1997, citrus juice and oil operating profits are anticipated to improve over the
remainder of 1997 because of improved raw material costs.

    Selling, general and administrative expenses ("SG&A") as a percentage of net
sales increased from 22.9% in 1995 to 27.0% in 1996. This increase is primarily
the result of increased sales and marketing expenses associated with the
commencement of operations in Massachusetts, and increased general and
administrative expenses associated with the Acquisitions. Presently, the Company
is consolidating and integrating its United States administrative and accounting
functions. This restructuring is expected to positively impact SG&A.



                                       17
<PAGE>   18

    Interest expense increased from 0.9% of net sales in 1995 to 2.2% in 1996.
Actual interest expense increased from $318,000 in 1995 to $1.4 million in 1996.
This increase was primarily the result of increased levels of debt necessary to
support increased levels of inventory and trade receivables associated with the
increase in sales volume and distribution centers.

    Interest income of $470,000 was earned in 1995 primarily from the temporary
cash investment of proceeds from the exercise of warrants and excess cash
balances generated from operations, while $548,000 of interest income was earned
in 1996 primarily from the temporary cash investment of proceeds from the
Company's secondary public offering .

    A foreign currency translation net gain of $124,000 in 1995 and a net loss
of $248,000 in 1996 resulted from the conversion of ICMOSA's and GISE's Mexican
financial statements to U.S. GAAP.

    An extraordinary gain recognized on the forgiveness of debt in Mexico, net
of applicable income and employee profit sharing taxes of $289,000, resulted in
a net gain of $330,000 in 1996.

    Net income, as a result of the foregoing, decreased from $2.9 million in
1995 to $543,000 in 1996.

STATUTORY EMPLOYEE PROFIT SHARING

    All Mexican companies are required to pay their employees, in addition to
their agreed compensation benefits, profit sharing in an aggregate amount equal
to 10% of net income, calculated for employee profit sharing purposes, of the
individual corporation employing such employees. All of UniMark's Mexican
employees are employed by its subsidiaries, each of which pays profit sharing in
accordance with its respective net income for profit sharing purposes. Tax
losses do not affect employee profit sharing. Statutory employee profit sharing
expense is reflected in the Company's cost of goods sold and selling, general
and administrative expenses, depending upon the function of the employees to
whom profit sharing payments are made. The Company's net income on a
consolidated basis as shown in the Consolidated Financial Statements is not a
meaningful indication of net income of the Company's subsidiaries for profit
sharing purposes or of the amount of employee profit sharing. Provisions for
Mexican employee profit sharing expense were $338,000, $436,000 and $544,000 in
1995, 1996 and 1997, respectively.

EXCHANGE RATE FLUCTUATIONS

    The Company procures and processes substantially all of its products in
Mexico, through its wholly owned subsidiaries ICMOSA and GISE, for export to the
United States, Canada, Europe and Japan. Generally, the cost of citrus procured
in Mexico reflects the spot market price for citrus in the United States. All of
UniMark's sales are denominated in U.S. dollars. As such, UniMark does not
anticipate sales revenues and raw material expenses to be materially affected by
changes in the valuation of the peso. Labor and certain other production costs
are peso denominated. Consequently, these costs are impacted by fluctuations in
the value of the peso relative to the U.S.
dollar.

    The Company's consolidated results of operations are affected by changes in
the valuation of the Mexican peso to the extent that ICMOSA or GISE has peso
denominated net monetary assets or net monetary liabilities. In periods where
the peso has been devalued in relation to the U.S. dollar, a gain will be
recognized to the extent there are peso denominated net monetary liabilities
while a loss will be recognized to the extent there are peso denominated net
monetary assets. In periods where the peso has gained value, the converse would
be recognized.

    The Company's consolidated results of operations are also subject to
fluctuations in the value of the peso as they affect the translation to U.S.
dollars of ICMOSA's net deferred tax assets or net deferred tax liabilities.
Since these assets and liabilities are peso denominated, a falling peso results
in a transaction loss



                                       18
<PAGE>   19

to the extent there are net deferred tax assets or a transaction gain to the
extent there are net deferred tax liabilities.

SEASONALITY

    Demand for UniMark's citrus and tropical fruit products is strongest during
the fall, winter and spring when seasonal fresh products such as mangos,
peaches, plums, and nectarines are not readily available for sales in
supermarkets in North America. In addition, a substantial portion of UniMark's
exports to Japan is processed and shipped during the first and fourth quarter
each year. Management believes UniMark's quarterly net sales will continue to be
impacted by this pattern of seasonality.

YEAR 2000 ISSUES

    The Company has completed an initial review of the impact of the year 2000
on its operations and data processing and does not anticipate that the year 2000
issue will have a significant adverse impact. The Company is currently
implementing new software and computer systems that are year 2000 compliant at
an estimated project cost of $625,000. This implementation is expected to be
completed by January, 1999.

LIQUIDITY AND CAPITAL RESOURCES

    At December 31, 1997, cash and cash equivalents totaled $1.2 million, a
decrease of $3.0 million from year end 1996. During 1997, operating activities
utilized cash of $14.3 million primarily to finance a $6.3 million increase in
inventories, a $2.3 million increase in trade receivables and other operating
activities of $5.7 million.

    During the second half of 1997, the Company initiated several changes in its
US and Mexico operations to improve production efficiencies and return the
Company to profitability. These measures are expected to positively impact the
Company's operating results in 1998. Finished goods inventories increased $3.2
million as a result of the increased sales volume while maintaining a turnover
rate of 3.8 times in both 1996 and 1997. Inventory costs associated with the
Company's orchards increased $1.6 million in 1997 as the Company continues to
expand its agricultural operations in Mexico. Trade accounts receivable also
increased as the result of the increased sales volume while maintaining a
turnover rate of 7.0 in 1997 as compared to 7.1 in 1996.

    During 1997, UniMark utilized cash of $12.8 million in investing activities.
Of this amount, $11.6 million was expended on property, plant and equipment and
$1.0 million was advanced on behalf of related parties. In March, 1997, the
Company purchased a warehouse and distribution facility located in McAllen,
Texas for a total cash consideration of approximately $1.2 million. In
connection therewith, the Company entered into a construction loan agreement
with Texas State Bank for approximately $2.1 million collateralized by the
property and improvements and guaranteed by the Company. The Company expended
approximately $1.6 million on capital improvements to the property and commenced
operations from the property in August, 1997. Also during 1997, the Company
expended $7.9 million on plant facilities and improvements, equipment and land
in Mexico. During 1997, the Company completed the acquisition of a juice
processing facility located in Poza Rica, Veracruz for approximately $3.1
million.

    Effective January 1, 1995, the Company entered into a five year operating
agreement with Industrias Horticolas de Montemorelos, S.A. de C.V. ("IHMSA") to
operate a freezing plant located in Montemorelos, Nuevo Leon, Mexico. Pursuant
to the terms of the operating agreement, the Company is obligated to pay IHMSA
an operating fee sufficient to cover the interest payments on IHMSA's existing
outstanding debt. Since, under the terms of the operating agreement, the Company
would benefit from the reduction of IHMSA's debt, the Company elected to advance
funds to IHMSA to retire certain of its outstanding debt. In May, 1997 the
Company advanced funds to IHMSA to retire its outstanding debt with Union de
Credito Allende in the amount of $1.2 million at a discount of 50% through
programs available in Mexico for debt reduction. During the five year term of
the operating agreement, the Company has the



                                       19
<PAGE>   20

right of first refusal to buy the IHMSA facility at its then fair market value.
At December 31, 1997 amounts due from IHMSA of $1,465,000 represent cash
advances applied to reduce IHMSA's outstanding debt. This amount is expected to
be applied to the purchase price when, and if, the Company elects to exercise
its purchase option.

    The Company's financing activities provided net cash of $23.0 million from
additional short-term borrowings and $2.6 million from additional long-term
borrowings, primarily the McAllen warehouse mortgage loan of $2.1 million. Cash
was utilized to reduce long-term debt by $1.7 million in 1997.

    The Company received cash proceeds of $1.0 million from additional unsecured
short-term borrowings from Bancrecer in Mexico. In connection therewith, the
Company renegotiated the renewal term of its outstanding $4.0 million of
unsecured debt with Bancrecer from three months to eighteen months.

    During 1997, the Company entered into loan agreements with Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A. ("Rabobank Nederland") to provide
short-term dollar denominated debt of up to $34.5 million. In February, the
Company entered into a revolving credit agreement to provide up to $9.5 million
(as amended) in the United States collateralized by US finished goods
inventories and US accounts receivable. In April, the Company entered into
additional revolving credit agreements to provide up to $15.0 million (as
amended) in Mexico collateralized by Mexico finished goods inventories and
Mexico accounts receivable from export sales. In May, the Company entered into a
loan agreement for short-term dollar denominated debt in Mexico of up to $10.0
million to partially finance investments in plants, expansion and upgrading of
facilities and agricultural operations. This bridge loan is collateralized by
land and improvements and equipment in Mexico.

    These agreements are cross-collateralized and guaranteed by the Company and
its subsidiaries and require the Company to maintain certain consolidated
financial performance levels relative to tangible net worth, working capital,
total debt and debt service. In addition, the agreements contain restrictions on
the issuance of additional shares of stock and the payment of dividends, among
other things, without the prior written consent of the bank. At December 31,
1997 the Company was in violation of certain financial covenants and
restrictions under these agreements, which Rabobank Nederland has waived as of
that date and has established new financial covenant levels and restrictions for
1998. Among the new restrictions, the Company will be charged a $25,000 monthly
fee in the event the $10.0 million bridge loan facility is not paid in full by
July 31, 1998. At December 31, 1997, the Company had outstanding loan balances
under the revolving credit agreements and bridge loan agreement of $19.2 and
$10.0 million, respectively, which were fully utilized. These agreements are
now scheduled to mature on January 1, 1999.

    During 1997, the Company has relied upon bank financing, principally short
term, to finance its working capital and certain of its capital expenditure
needs. Although these loan facilities with Rabobank Nederland have been extended
until January 1, 1999, no assurances can be given that Rabobank Nederland will
continue to renew such loan facilities. Presently, the Company is in discussions
with Rabobank Nederland and other financial institutions to extend or replace
existing working capital facilities and to establish a permanent long-term debt
facility to replace the bridge loan. Although no assurances can be given, the
Company believes it will be able to obtain such working capital and long-term
debt facilities on terms acceptable to the Company. The failure to obtain such
facilities would have a material adverse affect on the Company and its ability
to continue as a going concern.

    In May, 1997, ICMOSA retired approximately $500,000 of outstanding long-term
debt with Union de Credito Allende, a Mexican credit union, at a discount of
50%. The discount was granted pursuant to a Mexican government program, Acuerdo
de Apoyo Financiero y Fomento a la Micro, Pequena y Mediana Empresa ("FOPIME")
and through the participation of Nacional Financiera ("NAFINSA"), a Mexican
development bank, to help provide liquidity to the Mexican credit unions.

    In October, 1996, GISE and The Coca-Cola Export Corporation ("Coca-Cola"),
an affiliate of The Coca-Cola Company, entered into a ten year Supply Contract,
with a ten year renewal option, for the



                                       20
<PAGE>   21

production of Italian lemons. Pursuant to the terms of this Supply Contract,
GISE will plant and grow approximately 12,000 acres of Italian lemons for sale
to Coca-Cola at pre-determined prices. The Supply Contract requires Coca-Cola to
provide, free of charge, 750,000 lemon trees, enough to plant approximately
7,200 acres. In addition, the Supply Contract requires Coca-Cola to purchase all
the production from the project. The planting program began in November, 1996
and is scheduled to be completed in February, 2000 with harvesting of the first
crops to begin in late 1998. The Company estimates that this project will
require capital expenditures of $4.5 million in 1998. The total capital
requirements for the project is estimated to be approximately $27.0 million over
the next four years. Presently, the Company is exploring various financing
alternatives for this project. There can be no assurances that financing for
this project can be obtained on acceptable terms, or at all. The inability to
obtain third party financing for the project could have a material adverse
effect on the Company.

    The Company's cash requirements for 1998 and beyond will depend primarily
upon the level of sales, expenditures for capital equipment and improvements,
investments in agricultural projects, the timing of inventory purchases, the
success of newly introduced products and necessary reductions of debt.
Presently, the Company is in discussions with Rabobank Nederland and other
financial institutions regarding extending or replacing its existing debt
facilities. Although no assurances can be given, the Company believes it will be
able to obtain such debt facilities on terms acceptable to the Company. The
failure to obtain such debt facilities would have a material adverse affect on
the Company. UniMark believes that anticipated revenue from operations and
existing and future debt facilities will be adequate for its working capital
requirements for at least the next twelve months.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       ----
<S>                                                                     <C>
Report of Independent Auditors ....................................     22

Consolidated Balance Sheets as of December 31, 1996 and
    1997 ..........................................................     23

Consolidated Statements of Operations for the Years Ended
    December 31, 1995, 1996 and 1997 ..............................     24

Consolidated Statements of Shareholders' Equity for the Years Ended
    December 31, 1995, 1996 and 1997 ..............................     25

Consolidated Statements of Cash Flows for the Years Ended
    December 31, 1995, 1996 and 1997 ..............................     26

Notes to Consolidated Financial Statements ........................     27

</TABLE>



                                       21
<PAGE>   22
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
The UniMark Group, Inc.

    We have audited the accompanying consolidated balance sheets of The UniMark
Group, Inc. (the Company) as of December 31, 1996 and 1997, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The UniMark Group, Inc. at December 31, 1996 and 1997, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.


                                                  ERNST & YOUNG LLP

Dallas, Texas
March  27, 1998



                                       22
<PAGE>   23

                             THE UNIMARK GROUP, INC.

                           CONSOLIDATED BALANCE SHEETS
             (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                           -----------------------
                                                                             1996            1997
                                                                           -------         -------
     <S>                                                                   <C>             <C>
                                   ASSETS
      Current assets:
        Cash and cash equivalents....................................       $4,268          $1,237
        Accounts receivable -- trade, net of allowance of $142 in
           1996 and $685 in 1997.....................................        9,244          11,599
        Accounts receivable -- other.................................          758             716
        Inventories..................................................       19,411          25,726
        Income and value added taxes receivable......................        1,418           2,312
        Deferred income taxes........................................          196              --
        Prepaid expenses.............................................          771           1,605
                                                                           -------         -------
                Total current assets.................................       36,066          43,195
      Property, plant and equipment, net of accumulated
        depreciation of $2,712 in 1996 and $5,227 in 1997............       29,177          38,130
      Deferred income taxes..........................................          373           1,847
      Goodwill.......................................................        6,787           6,606
      Identifiable intangible assets.................................        2,320           1,823
      Due from related parties.......................................          632           1,678
      Other assets...................................................        1,328           1,337
                                                                           -------         -------
                Total assets.........................................      $76,683         $94,616
                                                                           =======         =======

                    LIABILITIES AND SHAREHOLDERS' EQUITY
      Current liabilities:
        Short-term borrowings........................................      $12,604         $31,452
        Current portion of long-term debt............................        1,114           1,655
        Accounts payable -- trade....................................        4,466           3,983
        Payable to related parties...................................          106             104
        Accrued expenses.............................................        2,108           4,439
        Income taxes payable.........................................           --              40
        Deferred income taxes........................................        3,915           6,050
                                                                           -------         -------
                Total current liabilities............................       24,313          47,723
      Long-term debt, less current portion...........................        4,332           8,626
      Deferred income taxes..........................................          238              15
      Commitments
      Shareholders' equity:
        Common stock, $0.01 par value:
           Authorized shares -- 20,000,000
           Issued and outstanding shares -- 8,561,333 in 1996 and
             8,598,833 in 1997.......................................           86              86
        Additional paid-in capital...................................       45,287          45,419
        Retained earnings (deficit)..................................        2,427          (7,253)
                                                                           -------         -------
                Total shareholders' equity...........................       47,800          38,252
                                                                           -------         -------
                Total liabilities and shareholders' equity...........      $76,683         $94,616
                                                                           =======         =======
</TABLE>

                             See accompanying notes.

                                       23
<PAGE>   24
                             THE UNIMARK GROUP, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                            ------------------------------------
                                                              1995          1996          1997
                                                            --------      --------      --------
<S>                                                         <C>           <C>           <C>
Net sales .............................................     $ 36,866      $ 65,238      $ 81,284
Cost of products sold .................................       24,192        46,612        59,280
                                                            --------      --------      --------
                                                              12,674        18,626        22,004
Selling, general and administrative expenses ..........        8,423        17,599        27,954
                                                            --------      --------      --------
Income (loss) from operations .........................        4,251         1,027        (5,950)
Other income (expense):
  Interest expense ....................................         (318)       (1,407)       (3,294)
  Interest income .....................................          470           548           436
  Foreign currency transaction gain (loss) ............          124          (248)         (945)
  Other income ........................................           98            21            11
                                                            --------      --------      --------
                                                                 374        (1,086)       (3,792)
                                                            --------      --------      --------
Income (loss) before income taxes and
   extraordinary gain .................................        4,625           (59)       (9,742)
Income tax expense (benefit) ..........................        1,678          (272)           77
                                                            --------      --------      --------
Income (loss) before extraordinary gain ...............        2,947           213        (9,819)
Extraordinary gain on forgiveness of debt, net of
  applicable income taxes of $259 in 1996 and
   $109 in 1997 .......................................           --           330           139
                                                            --------      --------      --------
Net income (loss) .....................................     $  2,947      $    543      $ (9,680)
                                                            ========      ========      ========

Basic earnings (loss) per share:
  Income (loss) before extraordinary item .............     $   0.57      $   0.03      $  (1.15)
  Extraordinary item ..................................          .--          0.04          0.02
                                                            --------      --------      --------
  Net income (loss) ...................................     $   0.57      $   0.07      $  (1.13)
                                                            ========      ========      ========

Diluted earnings (loss) per share:
  Income (loss) before extraordinary item .............     $   0.53      $   0.03      $  (1.15)
  Extraordinary item ..................................          .--          0.04          0.02
                                                            --------      --------      --------
  Net income (loss) ...................................     $   0.53      $   0.07      $  (1.13)
                                                            ========      ========      ========
</TABLE>

                             See accompanying notes.

                                       24
<PAGE>   25
                             THE UNIMARK GROUP, INC.

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

<TABLE>
<CAPTION>
                                                                            ADDITIONAL    RETAINED
                                                                   COMMON    PAID-IN      EARNINGS
                                                         SHARES    STOCK     CAPITAL     (DEFICIT)     TOTAL
                                                       ---------   ------    -------     ---------    --------
<S>                                                    <C>           <C>     <C>         <C>          <C>
Balance at January 1, 1995 .......................     4,650,000     $47     $ 7,408     $(1,063)     $  6,392
  Exercise of warrants and options, net
     of offering expenses ........................     1,268,050      12       5,627          --         5,639
  Net income .....................................            --      --          --       2,947         2,947
                                                       ---------     ---     -------     -------      --------

Balance at December 31, 1995 .....................     5,918,050      59      13,035       1,884        14,978
  Exercise of warrants and options ...............        64,250       1         305          --           306
  Shares issued for cash in secondary
    public offering, net of offering
    expenses .....................................     1,677,000      17      22,175          --        22,192
  Shares issued in acquisitions of GISE,
    Simply Fresh and Deli-Bon ....................       902,033       9       9,772          --         9,781
  Net income .....................................            --      --          --         543           543
                                                       ---------     ---     -------     -------      --------

Balance at December 31, 1996 .....................     8,561,333      86      45,287       2,427        47,800
  Exercise of options ............................        37,500      --         132          --           132
  Net loss .......................................            --      --          --      (9,680)       (9,680)
                                                       ---------     ---     -------     -------      --------
Balance at December 31, 1997 .....................     8,598,833     $86     $45,419     $(7,253)     $ 38,252
                                                       =========     ===     =======     =======      ========
</TABLE>


                             See accompanying notes.


                                       25
<PAGE>   26
                            THE UNIMARK GROUP, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                                 -----------------------------------
                                                                  1995          1996         1997
                                                                 -------      --------      --------
<S>                                                              <C>          <C>           <C>
OPERATING ACTIVITIES
Net income (loss) ..........................................     $ 2,947      $    543      $ (9,680)
Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Depreciation and amortization ..........................         495         1,751         3,465
    Deferred income taxes ..................................       1,406           408           634
    Extraordinary gain .....................................          --          (589)         (248)
    Changes in operating assets and liabilities:
       Receivables .........................................      (1,793)       (3,348)       (2,313)
       Inventories .........................................      (3,280)       (8,927)       (6,315)
       Prepaid expenses ....................................        (192)         (351)         (834)
       Accounts payable and accrued expenses ...............       3,615        (2,263)        1,846
       Income taxes payable ................................        (112)          (16)         (854)
                                                                 -------      --------      --------
Net cash provided by (used in) operating activities ........       3,086       (12,792)      (14,299)

INVESTING ACTIVITIES
Acquisition of Deli-Bon, GISE and Simply Fresh shares,
   net of cash acquired ....................................          --        (2,590)           --
Purchases of property, plant and equipment .................      (5,209)      (13,158)      (11,578)
(Increase) decrease in identifiable intangible assets ......          --          (919)           89
Decrease (increase) in amounts due from related parties ....         199          (542)       (1,046)
Increase in other assets ...................................         (14)       (1,194)         (260)
                                                                 -------      --------      --------
Net cash used in investing activities ......................      (5,024)      (18,403)      (12,795)

FINANCING ACTIVITIES
Net proceeds from the issuance of common shares ............       5,639        22,498           132
Net increase in short-term borrowings ......................       2,305         6,303        22,982
Proceeds from long-term debt ...............................          --         1,204         2,613
Payments of long-term debt .................................        (523)         (828)       (1,664)
                                                                 -------      --------      --------
Net cash provided by financing activities ..................       7,421        29,177        24,063
                                                                 -------      --------      --------

Net increase (decrease) in cash and cash equivalents .......       5,483        (2,018)       (3,031)
Cash and cash equivalents at beginning of year .............         803         6,286         4,268
                                                                 -------      --------      --------
Cash and cash equivalents at end of year ...................     $ 6,286      $  4,268      $  1,237
                                                                 =======      ========      ========

SUPPLEMENTAL CASH FLOW INFORMATION
  Interest paid ............................................     $   289      $  1,049      $  3,170
                                                                 =======      ========      ========
  Income taxes paid (received) .............................     $   521      $    (98)     $   (470)
                                                                 =======      ========      ========
</TABLE>


                             See accompanying notes.


                                       26
<PAGE>   27
                             THE UNIMARK GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997


NOTE 1  SIGNIFICANT ACCOUNTING POLICIES

    Description of Business: The Company is in the business of growing,
processing, marketing and distributing niche citrus and tropical fruit products,
including chilled and canned cut fruits, citrus juices and oils and other
specialty food ingredients.

    During 1996, the Company acquired Les Produits Deli-Bon Inc. (Deli-Bon), a
Quebec, Canada fruit processor; Grupo Industrial Santa Engracia, S.A. de C.V.
(GISE), a Mexican citrus juice and oil processor; and Simply Fresh Fruit, Inc.
(Simply Fresh), a Los Angeles, California fruit processor and distributor. See
Note 3 - Acquisitions.

     The UniMark Group, Inc. ("the Company") was incorporated in the state of
Texas on January 3, 1992. During the period from January 3, 1992 (inception)
through December 31, 1992, 3,000,000 shares of the Company's common stock were
exchanged for the issued and outstanding common shares of UniMark Foods, Inc.,
which was owned by the same shareholders as the Company. Since the companies
were under common control, the transaction was accounted for using historical
costs. Additionally, 800 shares of common stock of UniMark International, Inc.
were acquired for $800 during that same period, giving the Company an 80%
interest which was increased to a 100% interest with the acquisition of the
remaining 200 shares during 1994. On August 11, 1994, 1,300,950 shares of the
Company's common stock were exchanged for all of the issued and outstanding
common shares of Industrias Citricolas de Montemorelos, S.A. de C.V. ("ICMOSA"),
a Mexican corporation. The transaction was accounted for in a manner similar to
a pooling-of-interests using historical costs and, accordingly, the accompanying
financial statements include the accounts and operations of ICMOSA for all
periods presented.

    As discussed in Notes 9 and 17, the Company has several projects and
commitments requiring substantial capital. Although the Company is exploring
various financing options and believes sufficient capital will ultimately be
available, there can be no assurances that adequate financing or capital can be
obtained on acceptable terms or at all. The inability to obtain sufficient debt
or equity capital for these projects and commitments could have a material
adverse effect on the Company and its projects including the realization of the
amounts capitalized and costs deferred related to these projects and
commitments.

    Additionally, the Company has recently relied upon bank financing to finance
its working capital and certain of its capital expenditure needs (see Notes 7
and 8). Although the principal loan facilities have been extended until January
1, 1999, no assurances can be given that the lender will continue to renew such
loan facilities. The Company's cash requirements for 1998 and beyond will depend
primarily upon the level of sales, expenditures for capital equipment and
improvements, investments in agricultural projects, the timing of inventory
purchases, the success of newly introduced products and necessary reductions of
debt. Presently, the Company is in discussions with is primary lender and other
financial institutions regarding extending or replacing its existing debt
facilities. Although no assurances can be given, the Company believes it will be
able to obtain such debt facilities on terms acceptable to the Company. The
failure to obtain such debt facilities would have a material adverse affect on
the Company.

    Principles of Consolidation: The consolidated financial statements include
the accounts of The UniMark Group, Inc. and its subsidiaries, all of which are
wholly owned. All significant intercompany accounts and transactions have been
eliminated.

    Foreign Operations: A significant portion of the Company's operations are
located in Mexico and a significant portion of the Company's fruit is procured
in Mexico. In addition, substantially all of the


                                       27
<PAGE>   28

Company's Mexican employees are affiliated with labor unions. As is typical in
Mexico, wages are renegotiated every year while other terms are negotiated every
two years. Recently, Mexico has faced turbulent political and economic times.
Should political unrest spread or political leadership or other causes vastly
change economic conditions in Mexico, the Company's operations could be
adversely affected.

    Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

    Cash Equivalents: The Company considers all highly liquid investments with
original maturities of three months or less when purchased to be cash
equivalents.

    Concentration of Credit Risk: The Company manufactures and sells niche
citrus and tropical fruit products, citrus juices and oils and other specialty
food ingredients to customers in the foodservice and retail industries in the
United States, Europe, Canada and Japan. The Company performs periodic credit
evaluations of its customers' financial condition and generally does not require
collateral. Trade receivables generally are due within 30 days. Credit losses
have been within management's expectations. A significant portion of sales has
historically been made to two customers. One customer accounted for 27.5%, 8.9%
and 3.9% and another customer accounted for 17.6%, 8.3% and 6.63% of the
Company's net sales for the years ended December 31, 1995, 1996 and 1997,
respectively.

    Advertising Costs: The Company expenses advertising costs as incurred.
Advertising expense was $137,000, $528,000 and $262,000 for the years ended
December 31, 1995, 1996 and 1997, respectively.

    Inventories: Inventories held in the United States and Canada are carried at
the lower of cost or market using the first-in, first-out method. Mexican
inventories are valued at the lower of cost or market using average cost.

    Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Depreciation is computed by the straight-line method over the following
lives:

<TABLE>
<S>                                                                     <C>
             Building...............................................           20 years
             Machinery and equipment................................       5-12.5 years
             Transportation equipment...............................          5-7 years
             Computer equipment.....................................          4-7 years
             Office equipment.......................................         5-10 years
             Automobiles............................................          3-5 years
</TABLE>
    The Company reviews its property, plant and equipment and other non-current
assets for impairment when changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Impairment is measured as the amount
by which the carrying amount of the asset exceeds the estimated fair value of
the asset less disposal costs.

    Foreign Currency Transactions: The functional currency of the Company and
its subsidiaries is the United States dollar. Transactions in foreign currency
are recorded at the prevailing exchange rate on the day of the related
transaction. Assets and liabilities denominated in foreign currency are
remeasured to dollars at the prevailing exchange rate as of the balance sheet
date. Exchange rate differences are reflected in the current year's operations.

    Income Taxes: Deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.


                                       28
<PAGE>   29

    Segment Reporting: In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (Statement 131), which is
effective for years beginning after December 15, 1997. Statement 131 establishes
standards for the way that public enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports. It also establishes standards for related disclosures about products
and services, geographic areas and major customers. Statement 131 is effective
for financial statements for years beginning after December 15, 1997, and
therefore the Company will adopt the new requirements retroactively in 1998.
Management has not completed its review of Statement 131, but does not
anticipate that the adoption of this statement will have a significant effect on
the Company's reported segments.

    Reclassifications: Certain prior year items have been reclassified to
conform to the current year presentation in the accompanying financial
statements.

NOTE 2  EARNINGS PER SHARE

    In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which was required to be adopted on December 31,
1997. In accordance therewith, the Company changed the method previously used to
compute earnings per share and restated all prior period amounts. Under the new
requirements for calculating basic earnings per share, the dilutive effect of
stock options and warrants are excluded. Under the new requirements for
calculating diluted earnings per share, the dilutive effect of stock options and
warrants are calculated based on the average market price of the Company's
common stock during each period utilizing the treasury stock method.

    The following table sets forth the computation of basic and diluted earnings
per share for income from continuing operations:

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                       -----------------------------
                                                        1995       1996       1997
                                                       ------     ------     -------
                                                (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)

<S>                                                    <C>        <C>        <C>
NUMERATOR
Income (loss) before extraordinary gain ..........     $2,947     $  213     $(9,819)

DENOMINATOR
Denominator for basic earnings per share -
  weighted average shares ........................      5,213      7,450       8,590
Effect of dilutive securities:
  Employee and director stock options ............        189        294          --
  Warrants .......................................        169         52          --
                                                       ------     ------     -------
Dilutive potential common shares .................        358        346          --
                                                       ------     ------     -------
Denominator for diluted earnings per share -
  weighted average shares adjusted for assumed
  conversions ....................................      5,571      7,796       8,590
                                                       ======     ======     =======

Basic earnings (loss) per share ..................     $ 0.57     $ 0.03     $ (1.15)
                                                       ======     ======     =======
Diluted earnings (loss) per share ................     $ 0.53     $ 0.03     $ (1.15)
                                                       ======     ======     =======
</TABLE>

NOTE 3  ACQUISITIONS

    On January 3, 1996, the Company acquired, in a purchase transaction, all of
the outstanding shares of capital stock of Les Produits Deli-Bon, Inc.
(Deli-Bon), a Quebec corporation that principally processes



                                       29
<PAGE>   30

and sells fruit salads to the food service industry in Canada. The total
consideration given for the purchase of the shares included approximately (i)
$787,000 in cash, (ii) a $49,000 six month promissory note and (iii) 28,510
shares of common stock for an aggregate purchase price of $1.5 million. The
Company's consolidated statement of operations for the year ended December 31,
1996 includes the results of operations of Deli-Bon since the date of the
acquisition. The excess purchase price over the estimated fair value of the net
assets acquired was $303,000 and is being amortized using the straight-line
method over twenty years. Accumulated amortization was $14,000 and $30,000 at
December 31, 1996 and 1997, respectively.

    On May 9, 1996, the Company acquired all of the outstanding shares of
capital stock of Simply Fresh Fruit, Inc. (Simply Fresh), in exchange for (i)
$2,500,000 cash, (ii) 90,909 shares of Unimark common stock and (iii) five-year
covenants not to compete totaling $1,000,000 in a purchase transaction for an
aggregate purchase price of $5.0 million. Simply Fresh is a fruit processing and
distribution company located in Los Angeles, California. The Company's
consolidated statement of operations for the year ended December 31, 1996
includes the results of operations of Simply Fresh since April 1, 1996, the
effective date of the acquisition. The excess purchase price over the estimated
fair value of the net assets acquired was $3,359,000 and is being amortized
using the straight-line method over forty years. Accumulated amortization was
$63,000 and $147,000 at December 31, 1996 and 1997, respectively.

    In addition, price protection exists on the shares issued in the Deli-Bon
and Simply Fresh acquisitions whereby the Company is required to issue
additional shares (or cash at its discretion) to the sellers in the event of a
decline in the public market value of the UniMark shares below an established
level during the period in which the sellers' shares are restricted from
trading. See Note 17.

    Also on May 9, 1996, the Company acquired all of the outstanding shares of
capital stock of Grupo Industrial Santa Engracia, S.A. de C.V. (GISE), in
exchange for 782,614 shares of common stock in a purchase transaction
representing a purchase price of $12 million. In addition, Unimark agreed to pay
up to an additional $8.0 million during the next four years if GISE achieves
certain financial operating targets. GISE operates three juice plants in the
heart of major citrus growing regions in Mexico. The Company's consolidated
statement of operations for the year ended December 31, 1996 includes the
results of operations of GISE since April 1, 1996, the effective date of the
acquisition. The excess purchase price over the estimated fair value of the net
assets acquired was $3,264,000 and is being amortized using the straight-line
method over forty years. Accumulated amortization was $61,000 and $143,000 at
December 31, 1996 and 1997, respectively.

    The following unaudited pro forma summary presents the consolidated results
of operations of the Company as if the GISE and Simply Fresh acquisitions had
occurred at the beginning of each year (in thousands, except for per share
amounts).

<TABLE>
<CAPTION>
                                                      (UNAUDITED)
                                                 YEAR ENDED DECEMBER 31,
                                               ---------------------------
                                                  1995              1996
                                               ---------         ---------
<S>                                            <C>               <C>
Revenue....................................    $  62,374         $  70,743
Income before extraordinary gain...........        4,502               649
Net income.................................        4,502               979
Net income per share (fully diluted).......    $     .67         $     .12
</TABLE>

    The above amounts are based upon certain assumptions and estimates which the
Company believes are reasonable. The pro forma results do not necessarily
represent results which would have occurred if acquisitions had actually taken
place at the date and on the basis assumed above.

    In August, 1996, the Company commenced plant operations in Lawrence,
Massachusetts after purchasing certain assets in a secured party sale from Fleet
National Bank and entering into a lease



                                       30
<PAGE>   31

agreement with Gato Realty Trust for a fruit processing facility. The Company
purchased certain inventory, equipment, vehicles and intangible assets for a
total cash consideration of approximately $2.4 million. In addition, the Company
entered into a lease agreement for a plant facility with an initial lease term
of six years and monthly rental payments of $18,000. The Company also paid
initial lease costs of approximately $337,000 in cash.

NOTE 4  INVENTORIES

    Inventories consist of the following :

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                       -------------------
                                                         1996        1997
                                                       -------     -------
                                                           (IN THOUSANDS)
         <S>                                           <C>         <C>
          Finished goods:
             Cut fruits ..........................     $10,536     $12,983
             Juice and oils ......................       1,796       2,592
                                                       -------     -------
                                                        12,332      15,575
          Orchards and advances to suppliers .....       4,134       5,718
          Raw materials and supplies .............       2,945       4,433
                                                       -------     -------
                    Total ........................     $19,411     $25,726
                                                       =======     =======
</TABLE>

NOTE 5  PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>
                                                      DECEMBER 31,
                                                  -------------------
                                                   1996        1997
                                                  -------     -------
                                                     (IN THOUSANDS)
          <S>                                     <C>         <C>
          Land ..............................     $ 1,084     $ 1,928
          Construction in progress ..........       2,775       2,201
          Buildings and improvements ........       9,364      13,084
          Machinery and equipment ...........      18,666      26,144
                                                  -------     -------
                                                   31,889      43,357
          Accumulated depreciation ..........       2,712       5,227
                                                  -------     -------
                    Total ...................     $29,177     $38,130
                                                  =======     =======
</TABLE>

    Depreciation expense was $431,000, $1,263,000 and $2,625,000 for the years
ended December 31, 1995, 1996 and 1997, respectively.

NOTE 6  IDENTIFIABLE INTANGIBLE ASSETS

    Identifiable intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                                  -----------------
                                                   1996       1997
                                                  ------     ------
                                                   (IN THOUSANDS)
         <S>                                     <C>        <C>
          Covenants not to compete ..........     $1,508     $1,508
          Tradename .........................        704        704
          Other .............................        486        351
                                                  ------     ------
                                                   2,698      2,563
          Less accumulated amortization .....        378        740
                                                  ------     ------
                                                  $2,320     $1,823
                                                  ======     ======
</TABLE>


                                       31
<PAGE>   32

    The covenants not to compete relate to the agreements with the former owners
of acquired businesses and are being amortized on a straight-line basis over the
five-year terms of the agreements. The tradename relates to the Flavor Fresh
brand name and is being amortized on a straight-line basis over twenty years.

NOTE 7  SHORT-TERM BORROWINGS

    During 1997, the Company entered into loan agreements with a bank to provide
short-term dollar denominated debt of up to $34.5 million. In February 1997, the
Company entered into a revolving credit agreement to provide up to $9.5 million
(as amended) in the United States collateralized by US finished goods
inventories and US accounts receivable. In April 1997, the Company entered into
additional revolving credit agreements to provide up to $15.0 million (as
amended) in Mexico collateralized by Mexico finished goods inventories and
Mexico accounts receivable from export sales. In May 1997, the Company entered
into a bridge loan agreement for short-term dollar denominated debt in Mexico of
up to $10.0 million to partially finance investments in plants, expansion and
upgrading of facilities and agricultural operations. This bridge loan is
collateralized by land and improvements and equipment in Mexico.

    These agreements are cross-collateralized and guaranteed by the Company and
its subsidiaries and require the Company to maintain certain consolidated
financial performance levels relative to tangible net worth, working capital,
total debt and debt service. In addition, the agreements contain restrictions on
the issuance of additional shares of stock and the payment of dividends, among
other things, without the prior written consent of the bank. At December 31,
1997 the Company was in violation of certain financial covenants and
restrictions under these agreements, which the lender has waived as of that date
and has established new financial covenant levels and restrictions for 1998.
Among the new restrictions, the Company will be charged a $25,000 monthly fee in
the event the $10.0 million bridge loan facility is not paid in full by July 31,
1998. At December 31, 1997, the Company had outstanding loan balances under the
revolving credit agreements and bridge loan agreement of $19.2 and $10.0
million, respectively, which were fully utilized. These agreements are now
scheduled to mature on January 1, 1999.

    In November, 1997, ICMOSA entered into a three year unsecured loan agreement
with a Mexican bank for short-term dollar denominated debt of up to $6.0
million. At December 31, 1997 the outstanding loan balance was $2.0 million
which is scheduled to mature on June 9, 1998.

    The weighted average interest rate on short-term borrowings as of December
31, 1997 was 8.6%.

NOTE 8  LONG-TERM DEBT

    Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                                -------------------
                                                                                 1996       1997
                                                                                -------     -------
                                                                                   (IN THOUSANDS)
<S>                                                                              <C>         <C>
     Note payable to bank, unsecured; interest at Libor + 5%
       payable quarterly, unpaid principal due February 1, 1999 ...........     $    --     $ 2,400
     Note payable to bank, unsecured; interest at Libor + 5%
       payable quarterly, unpaid principal due March 1, 1999 ..............          --       1,600
     Note payable to bank, collateralized by McAllen, Texas
       warehouse property and improvements; principal and interest
       at Prime + .5% payable monthly, unpaid principal and
       interest due September 6, 2012 .....................................          --       2,053
     Non-compete covenant obligations totaling $1.5 million,
      discounted at 9%, payable monthly through May 1, 2001 ...............       1,327         986
     Note payable to bank, collateralized by plant and equipment
       in Mexico; principal and interest at 18.5% payable monthly;
       unpaid principal and interest due November 25, 2004 ................       1,243       1,168
     Note payable to bank, collateralized by machinery and
       equipment in the United States; principal and interest at
       8.66% payable in monthly installments of $16,475; unpaid
       principal and interest due January 1, 2002 .........................         800         666
     Note payable to bank; collateralized by plant and equipment
       in Mexico; principal and interest at Libor + 8% payable
       monthly; unpaid principal and interest due December 30, 2001 .......         759         759
     Other notes payable ..................................................       1,317         649
                                                                                -------     -------
                                                                                  5,446      10,281
     Less current portion .................................................       1,114       1,655
                                                                                -------     -------
                                                                                $ 4,332     $ 8,626
                                                                                =======     =======
</TABLE>


                                       32
<PAGE>   33

    Certain of the loan contracts establish restrictions and obligations with
respect to the application of funds and require maintenance of insurance of the
assets and timely presentation of financial information.

    All long-term debt at December 31, 1997 is U.S. dollar denominated except
for $1,168,000 which is Mexican peso denominated and $42,000 which is Canadian
dollar denominated.

    Based on interest rates provided by the Company's long-term debt and the
floating rates provided on its short-term borrowings, the Company believes the
carrying amounts of its short and long-term debt approximate their fair value.

    Maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
                                                                  (IN THOUSANDS)
<S>                                                                <C>
                1998...........................................         $  1,655
                1999...........................................            4,792
                2000...........................................              826
                2001...........................................              582
                2002...........................................              283
                Thereafter.....................................            2,143
                                                                        --------
                                                                        $ 10,281
                                                                        ========
</TABLE>

NOTE 9  RELATED PARTY TRANSACTIONS

    Effective January 1, 1995, the Company entered into a five year operating
agreement with Industrias Horticolas de Montemorelos, S.A. de C.V. ("IHMSA") to
operate a freezing plant located in Montemorelos, Nuevo Leon, Mexico. Pursuant
to the terms of the operating agreement, the Company is obligated to pay IHMSA
an operating fee sufficient to cover the interest payments on IHMSA's existing
outstanding debt (approximately $4.6 million). The Company is responsible for
all raw material and operating costs and the sale of the finished goods produced
at the IHMSA plant. Payments made pursuant to the operating agreement were
$347,000, $116,000 and $42,000 during the years ended December 31, 1995, 1996
and 1997, respectively. The Vaquero family owns collectively an approximate 8%
interest in IHMSA. Certain members of the Vaquero family are officers,
shareholders and directors of the Company. During the five year term of the
operating agreement, the Company has the right of first refusal to buy the IHMSA
facility at its then fair market value.

    The Company has subsequently elected to advance funds to IHMSA to retire
certain of its outstanding debt since, under the terms of the operating
agreement, the Company would benefit from the IHMSA debt reduction. At December
31, 1997 amounts due from IHMSA of $1,465,000 represent cash advances applied to
reduce IHMSA's outstanding debt. This amount is expected to be applied to the
purchase price when, and if, the Company elects to exercise its purchase option.


                                       33
<PAGE>   34
    Effective July 1, 1995, the Company entered into a ten year operating
agreement with Empacadora de Naranjas Azteca, S.A. de C.V. ("Azteca"), to
operate a processing plant in Montemorelos, Nuevo Leon, Mexico. The operating
agreement provides for payments in the amount of (i) interest on existing debt
of approximately $220,000 with credit institutions, (ii) asset tax and (iii)
annual property tax. Prior to this time, Azteca "co-packed" chilled grapefruit
sections and mango slices for the Company. During the six-month period ended
June 30, 1995, Azteca co-packed approximately $1.4 million of fruit for the
Company. The Vaquero family owns collectively an approximate 14.3% interest in
Azteca. Payments made pursuant to the operating agreement were $143,000, $1,000
and $61,000 during the years ended December 31, 1995, 1996 and 1997,
respectively. During the term of the operating agreement, the Company has the
right of first refusal to buy the Azteca facility at its then fair market value.

    Transactions with related parties are as follows:

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,
                                        -------------------------------
                                        1995          1996         1997
                                        ----          ----         ----
                                               (IN THOUSANDS)
<S>                                     <C>        <C>             <C>
     Sales ........................     $  379     $        --     $ --
                                        ======     ===========     ====
     Purchases ....................     $2,016     $       121     $190
                                        ======     ===========     ====
</TABLE>

    In November, 1995, the Company entered into a lease agreement with Loma
Bonita Partners, a Texas general partnership, for approximately 200 hectares
(494 acres) of land located in Loma Bonita, Veracruz, Mexico for the development
of citrus groves. The lease commenced in December, 1995 and expires in ten
years. Loma Bonita Partners is 50% owned by an officer, who is also a director
and shareholder of the Company. The Company believes that said lease agreement
is on terms no less favorable to the Company than would be available from
unrelated third parties. Rent expense on this lease was $5,670, $68,870 and
$78,000 for the years ended December 31, 1995, 1996 and 1997, respectively.

    P&C Services, Inc. (P&C) is a California corporation owned by officers and
management of Simply Fresh that leased the hourly plant employees to Simply
Fresh. This employee leasing arrangement was terminated in 1997. Payments made
to P&C during 1996 and 1997 amounted to approximately $1.0 million and $741,000,
respectively. The balance payable to P&C at December 31, 1997 represents
non-interest bearing cash advances from P&C to Simply Fresh.

    Receivable and payable balances with related parties are as follows:

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                           -----------------
                                                                            1996        1997
                                                                           ------     ------
                                                                            (IN THOUSANDS)
<S>                                                                        <C>        <C>
     Accounts receivable:
       Empacadora de Naranjas Azteca, S.A. de C.V. (Azteca) ..........     $  221     $  213
       Industrias Horticolas de Montemorelos, S.A. de C.V. (IHMSA) ...        320      1,465
       Other .........................................................         91         --
                                                                           ------     ------
                                                                           $  632     $1,678
                                                                           ======     ======
     Accounts payable:
        P&C Services, Inc. ...........................................     $  103     $  104
       Industrias Horticolas de Montemorelos, S.A. de C.V. (IHMSA) ...          3         --
                                                                           ------     ------
                                                                           $  106     $  104
                                                                           ======     ======
</TABLE>

    The Company operates a 144 acre grapefruit grove located close to the ICMOSA
plant in Montemorelos pursuant to a ten year operating agreement that expires in
2000. Per the agreement, the Company operates the grove and purchases all the
grapefruit produced at a formula price tied to purchases from unrelated third
parties. The grove is owned by a partnership that consists primarily of
shareholders of Azteca. The Vaquero family owns a 14.3% interest in this
partnership. The Company believes that said arrangement is on terms no less
favorable to the Company than would be available from unrelated third


                                       34
<PAGE>   35

parties. Fruit purchases from the grove were $8,000, $121,000 and $190,000 for
the years ended December 31, 1995, 1996 and 1997, respectively.

    The Company leases its corporate office facility from a company owned by an
individual who served as the Company's president and was a shareholder of the
Company through February, 1998. Rent expense on this lease was $36,000, $98,250
and $110,700 for the years ended December 31, 1995, 1996 and 1997, respectively.

    During 1995, 1996 and 1997, the Company paid Jordaan, Howard and Pennington,
PLLC amounts of $106,145, $299,723 and $179,962, respectively, for legal
services rendered. Mr. Jordaan, a director and, commencing in February, 1998,
chairman of the Company, is a member of Jordaan, Howard & Pennington, PLLC.

NOTE 10  LEASES

    The Company leases buildings, various plant facilities, certain equipment
and citrus groves under operating leases. The Isla plant lease is for a period
of ten years, expiring in 2005, and contains a purchase option through July 1,
1998 for $850,000. The San Rafael plant lease is for a period of nine years,
expiring in 2003, and contains the right of first refusal to purchase the
facility at its then fair market value. The Simply Fresh plant lease is for a
period of ten years, expiring in 2004, and contains a purchase option
exercisable from August 15, 1996 through August 14, 1998 for $4.5 to $4.75
million. The plant lease for the Lawrence, MA facility is for an initial period
of six years, expiring in 2002, and contains a purchase option exercisable
during the term of the lease for the then fair market value of the property. The
Company has under lease approximately 926 acres of citrus groves in Mexico for
periods of ten to fifteen years expiring in 2005 and 2010.

    As described in Note 9, the Company leases its corporate office facility and
a 494 acre citrus grove from related parties. The related party building lease
expires in 2000, but its term may be renewed for a five-year period. The related
party citrus grove lease expires in 2005.

    Future minimum payments under non-cancelable operating leases with initial
terms of one year or more at December 31, 1997, consist of the following:

<TABLE>
<CAPTION>
                            RELATED
                            PARTIES         OTHER           TOTAL
                            -------         -----           -----
                                       (IN THOUSANDS)
<S>                          <C>              <C>          <C>
 1998.............           $  78            $916         $   994
 1999.............              78             865             943
 2000.............              78             874             952
 2001.............              78             625             703
 2002.............              78             513             591
 Thereafter.......             234             943           1,177
</TABLE>

    Rent expense was $670,000, $1,159,000 and $1,234,000 for the years ended
December 31, 1995, 1996 and 1997, respectively.


                                       35
<PAGE>   36
NOTE 11  INCOME TAXES

    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of December 31, 1996 and
1997 are as follows:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                            -------------------
                                                             1996          1997
                                                            -------      ------
                                                              (IN THOUSANDS)
<S>                                                         <C>          <C>
     Deferred tax assets:
       Net operating loss carryforwards ...............     $ 1,132      $4,332
       Inventories ....................................         200         582
       Asset tax credit ...............................         975       1,057
       Credit available to offset Mexican tax .........         192         249
       Accrued expenses ...............................         156         318
       Bad debt reserve ...............................          --         260
       Intangible assets ..............................          --         232
       Other ..........................................         171         114
                                                            -------      ------
     Total deferred tax assets ........................       2,826       7,144
     Less valuation allowance .........................          --      (2,990)
                                                            -------      ------
     Net deferred tax assets ..........................     $ 2,826      $4,154
                                                            =======      ======

     Deferred tax liabilities:
       Depreciation ...................................     $ 2,251      $2,091
       Inventories ....................................       4,003       5,862
       Other ..........................................         156         419
                                                            -------      ------
     Deferred tax liabilities .........................     $ 6,410      $8,372
                                                            =======      ======
</TABLE>

    Income (loss) before income taxes and extraordinary gain relating to
operations in the United States and Mexico is as follows:

<TABLE>
<CAPTION>
                                                   YEAR ENDED DECEMBER 31,
                                             ---------------------------------
                                              1995         1996          1997
                                             -------      -------      -------
                                                      (IN THOUSANDS)
<S>                                          <C>          <C>          <C>
     United States ......................    $   364      $(2,749)     $(7,102)
     Mexico .............................      4,261        2,690       (2,640)
                                             -------      -------      -------
                                             $ 4,625      $   (59)     $(9,742)
                                             =======      =======      =======
</TABLE>

    The components of the provision for income taxes include the following:

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                                  -----------------------------
                                                   1995         1996      1997
                                                  -------      -----      -----
                                                          (IN THOUSANDS)
    <S>                                          <C>          <C>        <C>
     U.S. federal -- current ................     $   198      $(386)     $ (76)
     U.S. state -- current ..................          31        (48)        14
     U.S. deferred ..........................         (32)      (488)       565
                                                  -------      -----      -----
                                                      197       (922)       503
                                                  -------      -----      -----
     Foreign -- current .....................          43        127         40
     Foreign -- deferred ....................       1,438        523       (466)
                                                  -------      -----      -----
                                                    1,481        650       (426)
                                                  -------      -----      -----
                                                  $ 1,678      $(272)     $  77
                                                  =======      =====      =====
</TABLE>


                                       36
<PAGE>   37

Principal reconciling items from income tax computed at the U.S. statutory rate
of 34% are as follows:

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                       -------------------------------
                                                        1995        1996        1997
                                                       -------      -----      -------
                                                                (IN THOUSANDS)
    <S>                                               <C>          <C>        <C>
     Provision at 34% statutory rate .............     $ 1,573      $ (20)     $(3,312)
     State income tax (net of federal benefit) ...          21       (103)        (228)
     Permanent differences .......................          --       (438)         852
     Effect of foreign rates .....................         273          3           (2)
     Other .......................................          22        286         (223)
     Change in valuation allowance ...............        (211)        --        2,990
                                                       -------      -----      -------
                                                       $ 1,678      $(272)     $    77
                                                       =======      =====      =======
</TABLE>

    The Company has a net operating loss carryforward in the United States of
$4,633,000 which begins to expire in 2011 and in Mexico of $7,628,000 which
begins to expire in 2006. The Mexican subsidiaries have asset tax credits
totaling $1,057,000 available to offset Mexican income tax which begin to expire
in 1999. One Mexican subsidiary also has a job creation credit of $249,000
available to offset income tax in Mexico, which will begin to expire in 2006.

NOTE 12  STOCK OPTIONS

    In 1994, the Company adopted an employee stock option plan and an outside
director stock option plan ("the Plans"). In 1997, the Company amended the
employee stock option plan to reserve an additional 340,000 shares of common
stock for issuance thereunder. The Plans authorize the Board of Directors to
grant options to employees and consultants of the Company and to outside
directors of the Company to purchase up to 820,000 shares of common stock under
the employee stock option plan, as amended, and 100,000 shares for the outside
directors stock option plan. The terms and the vesting period of any option
granted under the Plans is fixed by the Board of Directors at the time the
option is granted, provided that the exercise period may not be greater than 10
years from the date of grant. The exercise price of any option granted under the
employee stock option plan shall not be less than 100% and 85% of the fair
market value of the stock on the date of the grant for Incentive Stock Options
and Nonstatutory Stock Options, as defined, respectively. The exercise price of
any option granted under the outside directors stock option plan shall not be
less than 100% of the fair market value of the stock on the date of the grant.
The Company has reserved 820,000 and 100,000 shares for issuance pursuant to the
employee stock option plan and the outside directors stock option plan,
respectively.

<TABLE>
<CAPTION>
                                                           EMPLOYEE STOCK       OUTSIDE DIRECTORS STOCK
                                                            OPTION PLAN              OPTION PLAN
                                                        ----------------------  -----------------------
                                                                      WEIGHTED-                WEIGHTED-
                                                                       AVERAGE                 AVERAGE
                                                                      EXERCISE                 EXERCISE
                                                        OPTIONS        PRICE    OPTIONS         PRICE
                                                        -------      ---------  -------      ---------
<S>                                                 <C>            <C>         <C>         <C>
     Options outstanding, January 1, 1995 ........      220,000      $    3.50   60,000      $    3.50
         Granted .................................      163,000           4.61    7,500           7.13
         Exercised ...............................       (5,000)          3.50       --            .--
                                                        -------                  ------
     Options outstanding, December 31, 1995 ......      378,000           3.98   67,500           3.90
         Granted .................................       12,500          11.30    7,500          17.00
         Exercised ...............................      (23,500)          3.50   (7,000)          3.50
         Forfeited ...............................       (5,000)          3.50       --            .--
                                                        -------                  ------
     Options outstanding, December 31, 1996 ......      362,000           4.27   68,000           5.39
         Granted .................................      195,000           7.25    7,500           6.88
         Exercised ...............................      (37,500)          3.50       --            .--
         Forfeited ...............................       (5,000)          3.50       --            .--
                                                        -------                  ------
     Options outstanding, December 31, 1997 ......      514,500           5.46   75,500           5.54
                                                        =======                  ======

     Exercisable at December 31,
         1995 ....................................       50,000      $    3.50   67,500      $    3.90
         1996 ....................................      117,250           3.89   68,000           5.39
         1997 ....................................      181,125           4.13   75,500           5.54

     Weighted-average fair value of options
     granted during the years ended:
         December 31, 1995 .......................      $  1.87                              $    2.60
         December 31, 1996 .......................         4.51                                   6.27
         December 31, 1997 .......................         3.10                                   2.53
</TABLE>


                                       37
<PAGE>   38

    Exercise prices for employee options outstanding as of December 31, 1997
ranged from $3.50 to $12.25. The weighted-average remaining contractual life of
those options is 2.5 years. Exercise prices for outside directors options
outstanding as of December 31, 1997 ranged from $3.50 to $17.00. The
weighted-average remaining contractual life of those options is 1.6 years. All
options granted under the outside directors stock option plan are immediately
exercisable. Options issued to employees during 1995, 1996 and 1997 vest ratably
over four years.

    The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee and outside director stock
options because, as discussed below, the alternative fair value accounting
provided for under Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock-Based Compensation" (FASB 123), requires use of option
valuation models that were not developed for use in valuing stock options. Under
APB 25, because the exercise price of the Company's stock options equals or
exceeds the market price of the underlying stock on the date of grant, no
compensation expense is recognized.

    Pro forma information regarding net income and earnings per share is
required by FASB 123 and has been determined as if the Company had accounted for
its stock options under the fair value method of that statement. The fair value
for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 1995,
1996 and 1997, respectively: risk-free interest rates of 7.0%, 5.7% and 6.2%;
dividend yields of 0%, 0% and 0%; volatility factors of the expected market
price of the Company's common stock of .45, .45 and .45; and a weighted-average
expected life of the option of 3.9, 3.5 and 4.0 years.

    The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options.

    For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands, except for per share amounts):

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                  --------------------------------------
                                                      1995         1996         1997
                                                  ------------  ----------  ------------
     <S>                                         <C>           <C>         <C>
     Pro forma net income (loss) ............     $      2,872  $      419  $     (9,859)
     Pro forma earnings (loss) per share:
         Basic ..............................     $       0.55  $     0.06  $      (1.15)
         Diluted ............................     $       0.52  $     0.05  $      (1.15)
</TABLE>


                                       38
<PAGE>   39

    Because FASB 123 is applicable only to options and stock-based awards
granted subsequent to December 31, 1994, its proforma effect will not be fully
reflected until 1998.

NOTE 13  CAPITAL STOCK

    On August 11, 1994, the Company completed an initial public offering of
550,000 units consisting of a total of 1,650,000 shares of its common stock and
1,100,000 Redeemable Common Stock Purchase Warrants ("the Warrants"). The
Warrants were transferable separately from the common stock and entitled the
holder to purchase one share of the Company's common stock at an exercise price
of $4.50 per share. On June 8, 1995 the Company notified all registered holders
of the Warrants of its intention to redeem all of the outstanding Warrants by
July 21, 1995 at a call price of $0.05 per warrant. During 1995, the Company
issued 1,099,990 shares of common stock on the exercise of a like amount of the
Warrants with gross proceeds to the Company of $4,949,955.

    In conjunction with the initial public offering on August 11, 1994, the
Company issued warrants to its underwriting representatives ("the
Representatives' Warrants") to purchase up to 55,000 units consisting of a total
of 165,000 shares of its common stock and 110,000 Redeemable Common Stock
Purchase Warrants. The Representatives' Warrants are exercisable for a period of
five years from the offering date at a price per unit of $15.00. The Company
reserved 275,000 shares for issuance upon the exercise of the Representatives'
Warrants and the underlying Redeemable Common Stock Purchase Warrants. During
1995, the Company issued 163,060 shares of common stock on the exercise of
32,612 Representatives' Warrants and the 65,224 underlying Redeemable Common
Stock Purchase Warrants with gross proceeds to the Company of $782,688. During
1996, the Company issued 33,750 shares of common stock on the exercise of 6,750
Representatives' Warrants and the 13,500 underlying Redeemable Common Stock
Purchase Warrants with gross proceeds to the Company of $162,000. At December
31, 1997 there were 15,638 Representatives' Warrants outstanding.

    On June 14, 1996, the Company completed its secondary public offering
whereby it sold 1,677,000 shares of its common stock at $14.50 per share with
net proceeds to the company of $22.2 million.

NOTE 14  RESTRICTIONS ON RETAINED EARNINGS

    Under the terms of its loan agreements with a bank, the Company may not
declare or pay any dividends on its shares without the bank's prior written
consent.

NOTE 15  SEGMENT AND GEOGRAPHIC INFORMATION

    The Company's operations involve a single industry segment; growing,
processing, marketing and distributing citrus and tropical fruit products,
including chilled and canned cut fruits, citrus juices and oils, and other
specialty food ingredients. Financial information, summarized by geographic
location, is as follows:

<TABLE>
<CAPTION>
                                                     UNITED STATES
                                                      AND CANADA      MEXICO    ELIMINATIONS    CONSOLIDATED
                                                      ----------      ------    ------------    ------------
                                                                         (IN THOUSANDS)
    <S>                                               <C>           <C>           <C>           <C>
     Year ended December 31, 1995:
        Sales to unaffiliated customers ..........     $ 23,898      $ 12,968      $     --      $ 36,866
        Transfers between geographic areas .......           --        12,937       (12,937)           --
                                                       --------      --------      --------      --------
        Total revenue ............................     $ 23,898      $ 25,905      $(12,937)     $ 36,866
                                                       ========      ========      ========      ========
        Operating profit .........................     $    364      $  4,410      $   (149)     $  4,625
                                                       ========      ========      ========      ========
        Identifiable assets ......................     $  9,679      $ 17,165      $   (226)     $ 26,618
                                                       ========      ========      ========      ========
     Year ended December 31, 1996:
        Sales to unaffiliated customers ..........     $ 44,118      $ 21,120      $     --      $ 65,238
        Transfers between geographic areas .......        2,733        24,161       (26,894)           --
                                                       --------      --------      --------      --------
        Total revenue ............................     $ 46,851      $ 45,281      $(26,894)     $ 65,238
                                                       ========      ========      ========      ========
        Operating profit (loss) ..................     $ (2,594)     $  2,939      $   (404)     $    (59)
                                                       ========      ========      ========      ========
        Identifiable assets ......................     $ 29,132      $ 39,215      $  8,336      $ 76,683
                                                       ========      ========      ========      ========
     Year ended December 31, 1997:
        Sales to unaffiliated customers ..........     $ 65,763      $ 15,521      $     --      $ 81,284
        Transfers between geographic areas .......        4,599        36,173       (40,772)           --
                                                       --------      --------      --------      --------
        Total revenue ............................     $ 70,362      $ 51,694      $(40,772)     $ 81,284
                                                       ========      ========      ========      ========
        Operating profit (loss) ..................     $ (6,497)     $ (2,266)     $   (979)     $ (9,742)
                                                       ========      ========      ========      ========
        Identifiable assets ......................     $ 30,608      $ 60,862      $  3,146      $ 94,616
                                                       ========      ========      ========      ========
</TABLE>


                                       39
<PAGE>   40

NOTE 16  EXTRAORDINARY GAIN

    In July, 1996, the Mexican government enacted a new program, Acuerdo Para El
Financiamiento del Sector Attropecuario y Pesquero ("FINAPE"), whereby certain
agricultural and commercial enterprises were eligible for a one time reduction
in their existing debt obligations with Mexican banks as a means of stimulating
the economy and supporting the Mexican banking system. Pursuant to the
provisions of FINAPE, GISE obtained a reduction in its debt principal with
Banamex of $4,000,000 pesos or approximately US $532,000.

    In August, 1996, the Mexican government enacted a second program, Acuerdo de
Apoyo Financiero y Fomento a la Micro, Pequena y Mediana Empresa ("FOPIME"), of
debt reduction for other commercial enterprises. Pursuant to the provisions of
FOPIME, ICMOSA obtained a reduction in its debt principal with Union de Credito
Allende of approximately US $57,000.

    In May, 1997, ICMOSA retired certain outstanding long-term debt with Union
de Credito Allende, a Mexican credit union, at a discount of 50% granted
pursuant to FOPIME and through the participation of Nacional Financiera, a
Mexican development bank, to help provide liquidity to the Mexican credit
unions. The debt reduction amounted to $2.0 million pesos or approximately US
$248,000.

    Provisions for Mexican income taxes and statutory employee profit sharing of
34% and 10%, respectively, have been provided on these gains from debt
forgiveness.

NOTE 17  COMMITMENTS AND CONTINGENCIES

    In May, 1996, the Company entered into a non-assignable, exclusive license
and technical assistance agreement with a Japanese company for the right to
manufacture and sell certain fruit products in the US, Canada and Mexico.
Pursuant to the agreement, the Company pays a 3% royalty based on the net sales
of these products, subject to an annual minimum royalty amount, which is
reported and paid quarterly. The agreement is for an initial term of five years
with automatic one year renewals unless terminated by either party. At December
31, 1997 minimum annual royalties of $200,000 are payable through April, 2001.

    In October, 1996, GISE and The Coca-Cola Export Corporation ("Coca-Cola"),
an affiliate of The Coca-Cola Company, entered into a ten year Supply Contract,
with a ten year renewal option, for the production of Italian lemons. Pursuant
to the terms of this Supply Contract, GISE will plant and grow approximately
12,000 acres of Italian lemons for sale to Coca-Cola at pre-determined prices.
The Supply Contract requires Coca-Cola to provide, free of charge, 750,000 lemon
trees, enough to plant approximately 7,200 acres. In addition, the Supply
Contract requires Coca-Cola to purchase all the production from the project. The
Company estimates that this project will require capital expenditures of $4.5
million in 1998. The total capital requirements for the project are estimated to
be approximately $27.0 million over the next four years. Presently, the Company
is exploring various financing alternatives for this project. There can be no
assurances that financing can be obtained on acceptable terms, or at all. The
inability to obtain third party financing for this project could have a material
adverse effect on the Company.



                                       40
<PAGE>   41

    In December, 1996, the Company entered into a deposit, operation and stock
purchase agreement with the owners of Frutalamo, S.A. de C.V. for the operation
of the Frutalamo juice processing plant. Pursuant to the terms of the agreement,
the Company is to pay a non-refundable guaranty deposit of $1.9 million for the
right to purchase all the issued and outstanding shares of stock of Frutalamo
from its existing shareholders. An initial deposit of $650,000 was paid upon
execution of the agreement with the balance payable in annual installments of
$420,000 each through October 30, 1999. As of December 31, 1997,the deposit
amounted to $950,000. The stock purchase option is exercisable on October 30,
1999 for an additional sum of $6.0 million, with $1.8 million payable at that
time and the balance payable over a five year period with interest at an annual
rate of 7%. Additionally, the agreement requires the Company to pay a
contractual penalty of $1.0 million to the owners of Frutalamo in the event the
agreement is rescinded.

    Effective January 1, 1995, the Company entered into a five year operating
agreement with Industrias Horticolas de Montemorelos, S.A. de C.V. ("IHMSA") to
operate a freezing plant located in Montemorelos, Nuevo Leon, Mexico. Pursuant
to the terms of the operating agreement, the Company is obligated to pay IHMSA
an operating fee sufficient to cover the interest payments on IHMSA's existing
outstanding debt. During the five year term of the operating agreement, the
Company has the right of first refusal to buy the IHMSA facility at its then
fair market value. Since, under the terms of the operating agreement, the
Company would benefit from the reduction of IHMSA's debt, the Company elected to
advance funds to IHMSA to retire certain of its outstanding debt. At December
31, 1997 amounts due from IHMSA of $1,465,000 represent cash advances applied to
reduce IHMSA's outstanding debt. This amount is expected to be applied to the
purchase price when, and if, the Company elects to exercise its purchase option.
Presently, the fair market value of the IHMSA plant is approximately $6.5
million and IHMSA has outstanding debt of approximately $3.4 million.

    During 1997, the previous owners of Simply Fresh Fruit, Inc. requested that
the common stock price protection provisions of the May 9, 1996 acquisition
agreement be satisfied by the Company. The Company had previously issued 90,909
shares of its common stock in consideration of $1.5 million of the acquisition
purchase price. This request as well as other issues related to the acquisition
agreement are presently the subject of binding arbitration proceedings. The
actual number of additional shares to be issued by the Company, if any, has yet
to be determined.

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

    Not applicable.


                                       41
<PAGE>   42
                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    The information required by this Item is incorporated by reference from the
section "Directors and Executive Officers" in the Company's 1998 Proxy
Statement.


ITEM 11. EXECUTIVE COMPENSATION.

    The information required by this Item is incorporated by reference from the
sections "Compensation of Executive Officers" and "Compensation of Directors" in
the Company's 1998 Proxy Statement. Information in the section and subsection
titled "Report of the UniMark Group, Inc. Board of Directors Compensation
Committee" and "Performance Graph" is not incorporated by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this Item is incorporated by reference from the
section "Security Ownership of Principal Shareholders, Directors and Management"
in the Company's 1998 Proxy Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    The information required by this Item is incorporated by reference from the
sections "Compensation of Executive Officers", "Compensation of Directors" and
"Certain Transactions" in the Company's 1998 Proxy Statement.


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

    (1) FINANCIAL STATEMENTS:

        See Index to Financial Statements (Item 8).

    (2) FINANCIAL STATEMENT SCHEDULES:

        All schedules have been omitted since they are either not applicable or
        the information is contained elsewhere in "Item 8. Financial Statements
        and Supplementary Data."

    (3) EXHIBITS


                                       42
<PAGE>   43

<TABLE>
<CAPTION>
    NUMBER
    EXHIBIT                        EXHIBIT
    -------                        -------
   <S>        <C>
     3.1      Articles of Incorporation of The UniMark Group, Inc., as amended(1)
     3.2      Amended and Restated Bylaws of The UniMark Group, Inc.(1)
     3.3      Articles of Exchange of The UniMark Group, Inc.(1)
     4.1      Specimen Stock Certificate(1)
     10.1     The UniMark Group, Inc. 1994 Employee Stock Option Plan(1)
     10.2     The UniMark Group, Inc. 1994 Stock Option Plan for Directors(1)
     10.3     Stock Exchange Agreement between The UniMark Group, Inc. and the
              stockholders of Industrias Citricolas de Montemorelos, S.A. de
              C.V.(1)
     10.4     Citrus Grove Lease Agreement(1)
     10.5     Asset Operating Agreement between the Registrant and Industrias
              Horticolas de Montemorelos, S.A. de C.V.(2)
     10.6     Lease agreement among Hector Gerardo Castagne Maitret, Carlos
              Courturier Arellano, Mauro Alberto Salazar Rangel, Miguel Angel
              Salazar Rangel, Alejandrina Trevino Garcia, Gerardo Trevino
              Garcia, Jorge Maitret and Industrias Citricolas de Montemorelos,
              S.A. de C.V.(2)
     10.7     Contract of Purchase and Sale between Empacadora Tropifrescos,
              Sociedad Anonima de Capital Variable and Industrias Citricolas de
              Montemorelos, S.A. de C.V.(2)
     10.8     Lease Agreement between Industrias Citricolas de Montemorelos,
              S.A. de C.V. and Valpak, S.A. de C.V. dated July 1, 1995(3)
     10.9     Asset Operating Agreement between Industrial Citricolas de
              Montemorelos, S.A. de C.V. and Empacadora de Naranjas Azteca, S.A.
              de C.V. dated July 1, 1995(3)
     10.10    Contract for Operation, Administration, and Purchase and Sale of
              Fruit between Industrial Citricolas de Montemorelos, S.A. de C.V.
              and Mr. Jorge Croda Manica ("Las Tunas") dated July 1, 1995(3)
     10.11    Lease Contract between Industrial Citricolas de Montemorelos, S.A.
              de C.V. and Mr. Mauro Alberto Salazar Rangel and Mr. Miguel Angel
              Salazar Rangel ("Huerta Loma Bonita") dated 1995(3)
     10.12    Unilateral Recognition of Indebtedness and Granting of Revolving
              Collateral between Industrial Citricolas de Montemorelos, S.A. de
              C.V. and Rabobank Curacao N.V. dated September 20, 1995(3)
     10.13    Amended and Restated Stock Purchase Agreement among The UniMark
              Group, Inc., 9029-4315 Quebec Inc., Michel Baribeau and Gestion
              Michel Baribeau Inc. dated January 3, 1996(4)
     10.14    Lease Agreement between Loma Bonita Partners and UniMark Foods,
              Inc. dated November 28, 1995(3)
     10.15    Lease Agreement between The UniMark Group, Inc. and Grosnez
              Partners dated January 1, 1996(3)
     10.16    Rural Property Sublease Agreement between Industrial Citricolas de
              Montemorelos, S.A. de C.V. and Lorenzo Uruiza Lopez dated October
              23, 1995(3)
     10.17    Purchase Agreement between Industrial Citricolas de Montemorelos,
              S.A. de C.V. and Jose Enrique Alfonso Perez Rodriquez dated
              October 23, 1995(3)
     10.18    Stock Purchase Agreement between The UniMark Group, Inc. and the
              stockholders of Grupo Industrial Santa Engracia dated April 30,
              1996(6)
     10.19    Stock Purchase Agreement between The UniMark Group,
              Inc., UniMark Foods, Inc., Sam Perricone Children's Trust 1972,
              Sam Perricone and Mark Strongin dated May 9, 1996(6)
     10.20    Employment Agreement by and between Grupo Industrial Santa
              Engracia, S.A. de C.V. and Ing Jose Ma. Martinez Brohez dated as
              of May 9, 1996(7)
     10.21    Lease Agreement by and among Ralphs Grocery Company, Simply Fresh
              Fruit, Inc. and Davalon Sales, Inc. dated as of March 1, 1994(7)
     10.22    Revolving Credit Agreement by and among UniMark Foods, Inc., The
              UniMark Group, Inc., UniMark International, Inc., Simply Fresh
              Fruit, Inc. and Cooperatieve Centrale Raiffeisen-Boerenleenbank
              B.A. dated February 12, 1997. (9)
     10.23    Supply Contract between The Coca-Cola Export Corporation
              and Grupo Industrial Santa Engracia, S.A. de C.V. dated October 7,
              1996. (9)
     10.24    Loan Agreement made between Industrias Citricolas de
              Montemorelos, S.A. de C.V., Grupo Industrial Santa Engracia, S.A.
              de C.V., Agromark, S.A. de C.V., as borrowers; The UniMark Group,
              Inc., as guarantor, and Cooperatieve Centrale
              Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland", as lender,
              dated May 29, 1997. (10)
</TABLE>


                                      43
<PAGE>   44
<TABLE>
   <S>        <C>
     10.25    Revolving Loan Agreement with Security Interest by and between
              Industrias Citricolas de Montemorelos, S.A. de C.V., as borrower,
              Grupo Industrial Santa Engracia, S.A. de C.V.
              "Gise", Agromark, S.A. de C.V. "Agromark", and Cooperatieve
              Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland" New
              York Branch dated April 10, 1997. (10)
     10.26    Revolving Loan Agreement with Security Interest by and between
              Grupo Industrial Santa Engracia, S.A. de C.V. "Gise", as borrower,
              Industrias Citricolas de Montemorelos, S.A. de C.V. "Icmosa",
              Agromark, S.A. de C.V. "Agromark", and Cooperatieve Centrale
              Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland" New York
              Branch dated April 10, 1997. (10)
     10.27    First Amendment to Revolving Credit Agreement by and among UniMark
              Foods, Inc., the borrower, and The UniMark Group, Inc., UniMark
              International, Inc., Simply Fresh Fruit, Inc., the guarantors, and
              Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
              Nederland", New York Branch dated October 7, 1997. (10)
     10.28    Second Amendment to Revolving Credit Agreement by and among
              UniMark Foods, Inc., the borrower, and The UniMark Group, Inc.,
              UniMark International, Inc., Simply Fresh Fruit, Inc., the
              guarantors, and Cooperatieve Centrale Raiffeisen-Boerenleenbank
              B.A., "Rabobank Nederland", New York Branch dated November 12,
              1997. (10)
     10.29    Articles of Association of Gisalamo, S.A. de C.V. (11)
     10.30    Deposit, Operation, Exploitation and Stock Purchase Option
              Agreement by and among The UniMark Group, Inc. and Mr. Francisco
              Domenech Tarrago and Mr. Francisco Domenech Perusquia dated
              December 17, 1996 (11)
     10.31    Gratuitous Loan Agreement by and among Gisalamo, S.A. de C.V. and
              Frutalamo, S.A. de C.V. dated December 17, 1996 (11)
     10.32    Non-Competition Agreement by and among The UniMark group, Inc. and
              Jorn Budde dated February 18, 1998 (12)
     21       Subsidiaries of the Registrant (11)
     23       Consent of Ernst & Young LLP (11)
     27       Financial Data Schedule, year ended December 31, 1997 (11)
     27.1     Financial Data Schedule, restated, year ended December 31, 1996
              (11)
</TABLE>

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

    (1) Previously filed as an Exhibit to the Registrant's Registration
        Statement on Form SB-2, as amended, SEC Registration No. 33-78352-D.

    (2) Previously filed as an Exhibit to the Registrant's Annual Report on Form
        10-KSB for the fiscal year ended December 31, 1994.

    (3) Previously filed as an Exhibit to the Registrant's Quarterly Report on
        Form 10-QSB for the fiscal quarter ended September 30, 1995.

    (4) Previously filed as an Exhibit to the Registrant's Current Report on
        Form 8-K dated January 16, 1995.

    (5) Previously filed as an Exhibit to the Registrant's Annual Report on Form
        10-KSB for the fiscal year ended December 31, 1995.

    (6) Previously filed as an Exhibit to the Registrant's Current Report on
        Form 8-K dated May 10, 1996.

    (7) Previously filed as an Exhibit to the Registrant's Registration
        Statement on Form S-1, as amended, SEC Registration No. 333-3539.

    (8) Previously filed as an Exhibit to the Registrant's Quarterly Report on
        Form 10-Q for the fiscal quarter ended March 31, 1996.

    (9) Previously filed as an Exhibit to the Registrant's Annual Report on Form
        10-K for the fiscal year ended December 31, 1996.

    (10) Previously filed as an Exhibit to the Registrant's Quarterly Report on
        Form 10-Q for the fiscal quarter ended September 30, 1997

    (11) Filed herewith.

    (12) Previously filed as an Exhibit to the Registrant's Current Report on
         Form 8-K dated February 18, 1998.
    ---------------------------------------------------------------------------
    (4)   REPORTS ON FORM 8-K

    The Company filed no current reports on Form 8-K during the fourth quarter
ended December 31, 1997.



                                       44
<PAGE>   45

                                   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.

                                            The UniMark Group, Inc.
                                                 (Registrant)

                                     By: /s/  Rafael Vaquero Bazan
                                        --------------------------------------
                                              Rafael Vaquero Bazan
                                          President and Chief Executive Officer
Dated:  March 27, 1998

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report was signed below by the following persons on behalf of the registrant and
in the capacities and on the dates stated:

<TABLE>
<CAPTION>
               SIGNATURE                         TITLE                                  DATE
               ---------                         -----                                  ----
<S>                                     <C>                                      <C>
    /s/  Jakes Jordaan                  Director, Chairman                          March 27, 1998
    ---------------------------------
    Jakes Jordaan



    /s/  Rafael Vaquero Bazan           President, Chief Executive Officer,         March 27, 1998
    ---------------------------------   Chief Operating Officer and Director
    Rafael Vaquero Bazan                (Principal Executive Officer)




    /s/  Keith Ford                     Vice-president -- Finance,                  March 27, 1998
    ---------------------------------   Secretary and Treasurer (Principal
    Keith Ford                          Financial and Accounting Officer)




    /s/  Eduardo Vaquero Bazan          Director                                    March 27, 1998
    ---------------------------------
    Eduardo Vaquero Bazan


    /s/  Jose Martinez Brohez           Director                                    March 27, 1998
    ---------------------------------
    Jose Martinez Brohez


    /s/  Pedro Vaquero Garcia           Director                                    March 27, 1998
    ---------------------------------
    Pedro Vaquero Garcia


    /s/  Fernando Camacho Casas         Director                                    March 27, 1998
    ---------------------------------
    Fernando Camacho Casas
</TABLE>


                                       45
<PAGE>   46

<TABLE>
<CAPTION>
    NUMBER
    EXHIBIT                        EXHIBIT INDEX
    -------
   <S>        <C>
     3.1      Articles of Incorporation of The UniMark Group, Inc., as
              amended(1)
     3.2      Amended and Restated Bylaws of The UniMark Group, Inc.(1)
     3.3      Articles of Exchange of The UniMark Group, Inc.(1)
     4.1      Specimen Stock Certificate(1)
     10.1     The UniMark Group, Inc. 1994 Employee Stock Option Plan(1)
     10.2     The UniMark Group, Inc. 1994 Stock Option Plan for Directors(1)
</TABLE>




<PAGE>   47

<TABLE>
   <S>        <C>
     10.3     Stock Exchange Agreement between The UniMark Group, Inc. and the
              stockholders of Industrias Citricolas de Montemorelos, S.A. de
              C.V.(1)
     10.4     Citrus Grove Lease Agreement(1)
     10.5     Asset Operating Agreement between the Registrant and Industrias
              Horticolas de Montemorelos, S.A. de C.V.(2)
     10.6     Lease agreement among Hector Gerardo Castagne Maitret, Carlos
              Courturier Arellano, Mauro Alberto Salazar Rangel, Miguel Angel
              Salazar Rangel, Alejandrina Trevino Garcia, Gerardo Trevino
              Garcia, Jorge Maitret and Industrias Citricolas de Montemorelos,
              S.A. de C.V.(2)
     10.7     Contract of Purchase and Sale between Empacadora Tropifrescos,
              Sociedad Anonima de Capital Variable and Industrias Citricolas de
              Montemorelos, S.A. de C.V.(2)
     10.8     Lease Agreement between Industrias Citricolas de Montemorelos,
              S.A. de C.V. and Valpak, S.A. de C.V. dated July 1, 1995(3)
     10.9     Asset Operating Agreement between Industrial Citricolas de
              Montemorelos, S.A. de C.V. and Empacadora de Naranjas Azteca, S.A.
              de C.V. dated July 1, 1995(3)
     10.10    Contract for Operation, Administration, and Purchase and Sale of
              Fruit between Industrial Citricolas de Montemorelos, S.A. de C.V.
              and Mr. Jorge Croda Manica ("Las Tunas") dated July 1, 1995(3)
     10.11    Lease Contract between Industrial Citricolas de Montemorelos, S.A.
              de C.V. and Mr. Mauro Alberto Salazar Rangel and Mr. Miguel Angel
              Salazar Rangel ("Huerta Loma Bonita") dated 1995(3)
     10.12    Unilateral Recognition of Indebtedness and Granting of Revolving
              Collateral between Industrial Citricolas de Montemorelos, S.A. de
              C.V. and Rabobank Curacao N.V. dated September 20, 1995(3)
     10.13    Amended and Restated Stock Purchase Agreement among The UniMark
              Group, Inc., 9029-4315 Quebec Inc., Michel Baribeau and Gestion
              Michel Baribeau Inc. dated January 3, 1996(4)
     10.14    Lease Agreement between Loma Bonita Partners and UniMark Foods,
              Inc. dated November 28, 1995(3)
     10.15    Lease Agreement between The UniMark Group, Inc. and Grosnez
              Partners dated January 1, 1996(3)
     10.16    Rural Property Sublease Agreement between Industrial Citricolas de
              Montemorelos, S.A. de C.V. and Lorenzo Uruiza Lopez dated October
              23, 1995(3)
     10.17    Purchase Agreement between Industrial Citricolas de Montemorelos,
              S.A. de C.V. and Jose Enrique Alfonso Perez Rodriquez dated
              October 23, 1995(3)
     10.18    Stock Purchase Agreement between The UniMark Group, Inc. and the
              stockholders of Grupo Industrial Santa Engracia dated April 30,
              1996(6)
     10.19    Stock Purchase Agreement between The UniMark Group,
              Inc., UniMark Foods, Inc., Sam Perricone Children's Trust 1972,
              Sam Perricone and Mark Strongin dated May 9, 1996(6)
     10.20    Employment Agreement by and between Grupo Industrial Santa
              Engracia, S.A. de C.V. and Ing Jose Ma. Martinez Brohez dated as
              of May 9, 1996(7)
     10.21    Lease Agreement by and among Ralphs Grocery Company, Simply Fresh
              Fruit, Inc. and Davalon Sales, Inc. dated as of March 1, 1994(7)
     10.22    Revolving Credit Agreement by and among UniMark Foods, Inc., The
              UniMark Group, Inc., UniMark International, Inc., Simply Fresh
              Fruit, Inc. and Cooperatieve Centrale Raiffeisen-Boerenleenbank
              B.A. dated February 12, 1997. (9)
     10.23    Supply Contract between The Coca-Cola Export Corporation
              and Grupo Industrial Santa Engracia, S.A. de C.V. dated October 7,
              1996. (9)
     10.24    Loan Agreement made between Industrias Citricolas de
              Montemorelos, S.A. de C.V., Grupo Industrial Santa Engracia, S.A.
              de C.V., Agromark, S.A. de C.V., as borrowers; The UniMark Group,
              Inc., as guarantor, and Cooperatieve Centrale
              Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland", as lender,
              dated May 29, 1997. (10)
     10.25    Revolving Loan Agreement with Security Interest by and between
              Industrias Citricolas de Montemorelos, S.A. de C.V., as borrower,
              Grupo Industrial Santa Engracia, S.A. de C.V.
</TABLE>


<PAGE>   48


<TABLE>
    <S>       <C>
              "Gise", Agromark, S.A. de C.V. "Agromark", and Cooperatieve
              Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland" New
              York Branch dated April 10, 1997. (10)
     10.26    Revolving Loan Agreement with Security Interest by and between
              Grupo Industrial Santa Engracia, S.A. de C.V. "Gise", as borrower,
              Industrias Citricolas de Montemorelos, S.A. de C.V. "Icmosa",
              Agromark, S.A. de C.V. "Agromark", and Cooperatieve Centrale
              Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland" New York
              Branch dated April 10, 1997. (10)
     10.27    First Amendment to Revolving Credit Agreement by and among UniMark
              Foods, Inc., the borrower, and The UniMark Group, Inc., UniMark
              International, Inc., Simply Fresh Fruit, Inc., the guarantors, and
              Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
              Nederland", New York Branch dated October 7, 1997. (10)
     10.28    Second Amendment to Revolving Credit Agreement by and among
              UniMark Foods, Inc., the borrower, and The UniMark Group, Inc.,
              UniMark International, Inc., Simply Fresh Fruit, Inc., the
              guarantors, and Cooperatieve Centrale Raiffeisen-Boerenleenbank
              B.A., "Rabobank Nederland", New York Branch dated November 12,
              1997. (10)
     10.29    Articles of Association of Gisalamo, S.A. de C.V. (11)
     10.30    Deposit, Operation, Exploitation and Stock Purchase Option
              Agreement by and among The UniMark Group, Inc. and Mr. Francisco
              Domenech Tarrago and Mr. Francisco Domenech Perusquia dated
              December 17, 1996 (11)
     10.31    Gratuitous Loan Agreement by and among Gisalamo, S.A. de C.V. and
              Frutalamo, S.A. de C.V. dated December 17, 1996 (11)
     10.32    Non-Competition Agreement by and among The UniMark group, Inc. and
              Jorn Budde dated February 18, 1998 (12)
     21       Subsidiaries of the Registrant (11)
     23       Consent of Ernst & Young LLP (11)
     27       Financial Data Schedule (11)
     27.1     Financial Data Schedule (11)

</TABLE>

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

    (1) Previously filed as an Exhibit to the Registrant's Registration
        Statement on Form SB-2, as amended, SEC Registration No. 33-78352-D.

    (2) Previously filed as an Exhibit to the Registrant's Annual Report on Form
        10-KSB for the fiscal year ended December 31, 1994.

    (3) Previously filed as an Exhibit to the Registrant's Quarterly Report on
        Form 10-QSB for the fiscal quarter ended September 30, 1995.

    (4) Previously filed as an Exhibit to the Registrant's Current Report on
        Form 8-K dated January 16, 1995.

    (5) Previously filed as an Exhibit to the Registrant's Annual Report on Form
        10-KSB for the fiscal year ended December 31, 1995.

    (6) Previously filed as an Exhibit to the Registrant's Current Report on
        Form 8-K dated May 10, 1996.

    (7) Previously filed as an Exhibit to the Registrant's Registration
        Statement on Form S-1, as amended, SEC Registration No. 333-3539.

    (8) Previously filed as an Exhibit to the Registrant's Quarterly Report on
        Form 10-Q for the fiscal quarter ended March 31, 1996.

    (9) Previously filed as an Exhibit to the Registrant's Annual Report on Form
        10-K for the fiscal year ended December 31, 1996.

    (10) Previously filed as an Exhibit to the Registrant's Quarterly Report on
        Form 10-Q for the fiscal quarter ended September 30, 1997

    (11) Filed herewith.

    (12) Previously filed as an Exhibit to the Registrant's Current Report on
         Form 8-K dated February 18, 1998.