U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                  Form 10-KSB

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended                 May 29, 2003
                         ----------------------------------------------
                                      OR
[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
              ACT OF 1934 (NO FEE REQUIRED)

For the transition period from                 to
                              ----------------    -------------------

Commission file number         0-1744
                      -------------------------

Ambassador Food Services Corporation
---------------------------------------------------------------
(Name of small business issuer in its charter)

Delaware                                     44-0656199
---------------------------------------------------------------
(State or other jurisdiction of         (IRS Employer Identification No.)
 incorporation or organization)

5-30 54th Avenue Long Island City, New York          11101
---------------------------------------------------------------
(Address of principal executive offices)          (Zip Code)

Issuer's telephone number:   718-361-2512
                          ----------------
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:  None

                          Common Stock (Par Value $1)
                          ---------------------------
                               (Title of Class)

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Exchange Act during the past 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_____

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will 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-KSB or any
amendment to this Form 10-KSB. [X]

Issuer's revenues for its most recent fiscal year are $ 5,862,844

At May 29, 2003,  there were  734,656  shares of the  Registrant's  common stock
outstanding.  Based on the average of the highest  bid and lowest  asked  prices
reported on the national  over-the-counter  market  (NASDAQ  Symbol  AMBF),  the
aggregate  market value of the shares held by  non-affiliates  of the Registrant
was $ 198,357.12.

Exhibit Index is on page 11.

Transitional Small Business Disclosure Format: YES__   NO_X_

                                       1
<PAGE>

                               Table of Contents


Part I

Item 1.  Description of Business
Item 2.  Description of Properties
Item 3.  Legal Proceedings
Item 4.  Submission of Matters to a Vote of Security Holders

Part II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters
Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations
Item 7.  Financial Statements
Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure
Item 8A. Controls and Procedures

Part III

Item 9.  Directors and Executive Officers of the Registrant; Compliance with
         16(a) of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K


                                       2

<PAGE>

                                     PART I


Item 1.    Description of Business

  (a) Business Development

  The Registrant   (hereinafter  "Company"  or  "Ambassador")  is  a    Delaware
      corporation, incorporated  in 1963.  It is engaged  through  divisions  in
      providing contract  food service and  janitorial  services in New York. On
      August 1, 1989, the name of the  Company  was  changed  from  Automatique,
      Incorporated to Ambassador Food Services Corporation.

      The principal  business  activity of the Company is the  servicing  of its
      customer accounts,   which  are  primarily   governmental  social  service
      agencies, and not-for profit organizations,  through the use of cafeterias
      and prepared meals delivered from the Company commissary. The Company also
      operates a janitorial business in New York and provides routine janitorial
      services for its current  food  service  customers.  The Company  does not
      solicit janitorial services outside its food service customer base.


  (b) Business of Issuer

      (1)   Description of Business Done by the Registrant in its Food Segment

      (i and ii) The  Company's  food service  operation is confined to the  New
                 York City area and consists of providing contract food services
                 for local government social service agencies and not-for-profit
                 agencies. Business is obtained through competitive  bidding and
                 is  serviced  by  producing  meals  in a central commissary and
                 delivering them to various designated points for consumption.

      (iii)      This segment has  developed  no new  products.  The Company, in
                 general, markets products developed by its suppliers.

      (iv)       The  practice  in  the  industry  is  to  operate under written
                 agreements with   the  locations  served.  In  the market  area
                 where the  Company is located, it has national, (iv)  regional,
                 and local competition, some of which have substantially greater
                 total  sales  and  assets.  Competition  in  the  food  service
                 industry  normally comes in the form of pricing and in  quality
                 of service and product.

      (v)        Raw materials, consisting of packaged products and commodities,
                 are   purchased  from  manufacturers  and  purveyors  and   are
                 warehoused or processed  by  the Company in  the local  market.
                 There  is  an  adequate  supply  of  raw  materials from normal
                 sources.

      (vi)       During  the  year  ended  May  29,  2003,  the  Company had one
                 customer  whose sales  were  equal  to  10 percent or  more  of
                 the  Company's  consolidated  revenues.  This  segment  is  not
                 subject to material fluctuations in sales volume resulting from
                 seasonality.

      (vii)      The  distinctive  logo  associated  with  the  Company has been
                 registered under the laws of the (vii) United  States  relating
                 to  trade names and trademarks.  The Company  regards such logo
                 as valuable and will maintain  the  registration  in effect for
                 continuing use in connection with the  Company's  business.  In
                 addition, the segment is a party to a

                                       3


<PAGE>

                 labor  agreement with the United Service  Employees  Union #377
                 in New York that  expires   December  31,  2003.  As of May 29,
                 2003, eight employees were members of the union.

      (viii)     The Company does not  have a material  portion of  its business
                 subject to renegotiation or termination at the election of  the
                 Government.

      (ix)       The  Company  does  not   believe  that  existing  or  probable
                 government regulations have a material effect on its operation.


  (b) (2)   Description  of Business Done by the  Registrant in its Janitorial
            Segment

      (i and ii) The  janitorial  and  maintenance   service   division  of  the
                 Company's business is confined  to the New York  City  area and
                 consists  primarily  of  providing  various  types  of  routine
                 cleaning services as an added service for existing food service
                 customers.

      (iii)      This segment has introduced no new products.

      (iv)       The janitorial segment  is  limited  to New  York  metropolitan
                 areas. Competition for janitorial  contracts comes  in the form
                 of pricing and quality of service.  Competition  in  general is
                 from regional and local companies.

      (v)        The  sources  and  availability  of  raw  materials  for   this
                 segment are adequate

      (vi)       During fiscal year 2003,  this segment had  no single  customer
                 whose sales were equal  to 10 percent or more of the  Company's
                 consolidated revenues. This segment is not subject to  material
                 fluctuations  in sales  volume  resulting from seasonality.

      (vii)      This  segment  is operating  without  registered  trademarks or
                 patents.  The segment is a party to a labor agreement with  the
                 United Service Employees  Union  #377  in New York that expires
                 December 31, 2003.  As of May 29,  2003,  four  employees  were
                 members of the union.

      (viii)     The Company does not have a  material portion  of its  business
                 subject to  renegotiation  or  termination  at the  election of
                 the Government.

      (xi)       The  Company  does  not  believe  that  existing  or   probable
                 government   regulations   have   a   material   effect  on its
                 operations.


  (b) (1 and 2)

      (x) Through (xii) with Respect to the Registrant's Business in General

      (iv)       The  Company  has  not  incurred  any  expense for research and
                 development  activities  during  any of its last two (2) fiscal
                 years.

      (v)        Compliance  with federal, state, and local laws and regulations
                 involving  the  protection  of  the environment will not have a
                 material effect.

      (vi)       As  of  May  29, 2003,  the  Company  employed approximately 74
                 persons.

                                       4
<PAGE>

Item 2.   Description of Properties

          The  Company  leases  all  real  estate  for  office,  warehouse,  and
          commissary facilities.  Annual rentals are approximately $234,000. The
          suitability of the leased properties is adequate;  such properties are
          described below:

                                   Type of             Size      Expiration
     Location                      Property         (Sq. Ft.)        Date

     5-30 54th Ave., Long
     Island City, NY               Office/Whse        8,000          3/06
     41-43 24th St., Long
     Island City, NY               Commissary/Whse    2,500          6/05
     24-1 Bridge Plaza, Long
     Island City, NY               Whse               2,000         11/06
     730 Kelly St., Bronx, NY      Shelter            2,300          6/05
     175-15 Rockaway Blvd.,
     Jamaica, NY                   Shelter            4,000          6/05


          The above physical  properties are used for office,  food  preparation
          and warehousing of food product items and equipment.  The Company owns
          all of the  equipment  used.  The Company  operates  approximately  12
          vehicles in the conduct of its business.

Item 3.   Legal Proceedings

          None.

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

          No matters  were  submitted to a vote of security  holders  during the
          fourth quarter of the fiscal year of the Company.


                                    PART II

Item 5.   Market for Registrants Common Equity and Related Stockholder Matters

  (a)     Price Range of Common Stock

          The  principal  market in which the  common  stock of the  Company  is
          traded is the national over- the- counter market (NASDAQ symbol AMBF).
          The bid  quotations  for the  Company's  common stock for each quarter
          during fiscal year ended May 29, 2003, is shown below:




                                       2003             2002
                                  Bid Quotation    Bid Quotation
                                   High    Low      High    Low
          First Quarter            $.25   $.25      $.27   $.27
          Second Quarter           $.27   $.27      $.27   $.25
          Third Quarter            $.30   $.30      $.27   $.27
          Fourth Quarter           $.27   $.27      $.27   $.27



                                       5
<PAGE>

          The  quotations  above  reflect   interdealer  prices  without  retail
          mark-up,  mark-down,  or  commission  and  may  not  represent  actual
          transactions.


  (b)     Number of Equity Security Holders

          As of May 29,  2003,  there were 532 record  holders of the  Company's
          common stock.

  (c)     Dividends

          The Company has never paid cash dividends on its common stock. Payment
          of dividends will be within the  discretion of the Company's  Board of
          Directors  and will depend,  among other  factors,  on earnings,  debt
          agreements,  capital  requirements,  and the  operating  and financial
          condition of the Company.

    Item 6. Management's Discussion and Analysis of Financial Condition and
                             Results of Operations

The  reader  should  read  the  following  discussion  in  conjunction  with the
Company's  historical  consolidated  financial  statements and the  accompanying
notes included elsewhere in this Form 10-KSB.

Disclosure Regarding Forward-Looking Statements
-----------------------------------------------

This Form 10-KSB, including, but not limited to the "Management's Discussion and
Analysis of  Financial  Condition  and  Results of  Operations"  and  "Business"
sections,  contains  "forward-looking  statements"  within  the  meaning  of the
Private Securities Litigation Reform Act of 1995, which can be identified by the
use of forward-looking  terminology,  such as "may," "intend," "will," "expect,"
"anticipate,"  "should,"  "plans to,"  "estimate"  or "continue" or the negative
thereof or other variations  thereon or comparable  terminology.  In particular,
any statement,  express or implied,  concerning  future operating results or the
ability to generate revenues,  income or cash flow to service the Company's debt
are  forward-looking   statements.   Although  the  Company  believes  that  the
expectations will prove to have been correct, all forward-looking statements are
expressly qualified by such cautionary statements, and the Company undertakes no
obligation to update such forward-looking statements.

Critical Accounting Policies
----------------------------

The Company's  consolidated  financial  statements and related public  financial
information  are  based on the  application  of  generally  accepted  accounting
principles ("GAAP"). GAAP requires the use of estimates; assumptions,  judgments
and subjective  interpretations of accounting  principles that have an impact on
the assets,  liabilities,  revenue and expense amounts reported. These estimates
can also affect supplemental  information  contained in the external disclosures
of the Company including information regarding contingencies, risk and financial
condition.  The Company believes its use of estimates and underlying  accounting
assumptions  adhere  to  generally  accepted   accounting   principles  and  are
consistently  and  conservatively  applied.  Valuations  based on estimates  are
reviewed for  reasonableness  and  conservatism on a consistent basis throughout
the Company. Primary areas where financial information of the Company is subject
to the use of estimates,  assumptions  and the  application of judgment  include
receivables,  inventories,  accruals and valuation of long-lived assets. We base
our estimates on historical  experience and on various other assumptions that we
believe to be  reasonable  under the  circumstances.  Actual  results may differ
materially from these estimates under different assumptions or conditions.

The Company's critical accounting policies are as follows:

                                       6
<PAGE>

Revenue Recognition
-------------------
Revenue from customer  contracts is recognized at the time services are provided
to the customer in accordance with those contracts.

Inventories
-----------
Inventories, which consist of food and supplies, are stated at the lower of cost
(first-in, first-out) or market. The Company reviews its inventory valuation and
writes down the inventory for unusable inventory.

Accounts Receivable
-------------------
All of the Company's accounts receivable are with customers located in New York.
The Company  grants  credit to customers  such as  governmental  social  service
agencies and other  nonprofit  organizations.  Credit terms are generally  30-60
days.  Collateral  is not  required.  Doubtful  receivables  continue to be very
insignificant.

As of May 29, 2003,  four customers  represented  approximately  50.9 percent of
total accounts  receivable.  As of May 30, 2002, two customers  represented 32.7
percent of total accounts  receivable.  One of these customers also  represented
33.8  percent  and 29.6  percent of total  consolidated  net sales for the years
ended May 29, 2003, and May 30, 2002, respectively.

Payment of  accounts  receivable  are  allocated  to the  specific  invoices  as
identified on the customer's remittance advice.

The carrying amount of accounts  receivable is reduced by a valuation  allowance
that  reflects  management's  best  estimate  of the  amounts  that  will not be
collected.

Effects of Recent Accounting Pronouncements
In November 2002, the FASB issued FASB Interpretation (FIN) No. 45, "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of  Indebtedness  of Others." FIN No. 45 addresses the disclosures to
be made by a guarantor in its interim and annual financial  statements about its
obligations  under  certain  guarantees  that it has  issued.  Under  FIN No. 45
recognition and initial  measurement  provisions are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002,  irrespective of
the guarantor's  fiscal year end. The disclosure  requirements in FIN No. 45 are
effective for financial  statements  of interim or annual  periods  ending after
December 15, 2002. The adoption of FIN No. 45 did not have a significant  impact
on the Company's consolidation financial position or results of operations.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation-Transition  and Disclosure," which amends SFAS No. 123, "Accounting
for  Stock-Based  Compensation."  SFAS No. 148 provides  alternative  methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee  compensation.  SFAS No. 148 also amends the disclosure
provisions of SFAS No. 123 to require prominent  disclosure about the effects on
reported net income of an entity's  accounting  policy decisions with respect to
stock-based employee  compensation,  and requires disclosure about those effects
in both annual and interim  financial  statements.  The adoption of SFAS No. 148
did not  have a  significant  impact  on the  Company's  consolidated  financial
position or results of operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN No. 46 clarifies the application of Accounting  Research Bulletin
No.  51  for  certain  entities  in  which  equity  investors  do not  have  the
characteristics  of a controlling  financial  interest or do not have sufficient
equity at risk for the  entity to  finance  its  activities  without  additional
subordinated  financial  support  from  other  parties.  FIN No. 46  applies  to
variable  interest  entities  created  after  January 31, 2003,  and to variable
interest entities in which an enterprise obtains an interest after that date. It
applies in the

                                       7
<PAGE>

fourth quarter of fiscal 2003 to variable interest entities in which the Company
may hold a variable  interest  that it acquired  before  February  1, 2003.  The
provisions of FIN No. 46 require that the Company  immediately  disclose certain
information  if it is  reasonably  possible that the Company will be required to
consolidate  or  disclose  variable  interest  entities  when FIN No. 46 becomes
effective.  The  Company  has  determined  that it does not  have a  significant
interest  in  such  entities  requiring  the  related  disclosure  based  on its
preliminary analysis and assessment.

In April  2003,  the FASB  issued  SFAS  149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging  Activities."  SFAS 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging  activities
under SFAS 133, "Accounting for Derivative  Instruments and Hedging Activities."
The changes are  intended  to improve  financial  reporting  by  requiring  that
contracts   with   comparable   characteristics   be  accounted  for  similarly.
Additionally,  those changes are expected to result in more consistent reporting
of contracts as either  derivatives or hybrid  instruments.  The requirements of
SFAS 149 will become effective for the Company  beginning in the last quarter of
fiscal  2003  for  contracts  entered  into or  modified  by it and for  hedging
relationships  designated  after June 30, 2003. The adoption of SFAS No. 149 did
not have a significant impact on the Company's  consolidated  financial position
or results of operations.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments  with  Characteristics  of both  Liability and Equity." SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial instruments with characteristics of both liability and equity. It also
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  Many of those  instruments
were  previously  classified as equity.  SFAS No. 150 is effective for financial
instruments  entered  into or modified  after May 31,  2003,  and  otherwise  is
effective at the beginning of the first interim period  beginning after June 15,
2003,  except for  mandatorily  redeemable  financial  instruments  of nonpublic
entities.  It is to be implemented by reporting a cumulative  effect of a change
in an accounting principal for financial instruments created before the issuance
date of the Statement and still  existing at the beginning of the interim period
of  adoption.  Restatement  is not  permitted.  Management  does not  expect the
adoption  of  SFAS  No.  150  to  have a  significant  impact  on the  Company's
consolidated financial position or results from operations.

Overview
--------

Ambassador  Food  Services  Corporation  provides  contract  food  services  for
government  social-service agencies and not-for-profit  organizations in the New
York City  area.  This  service  is  provided  in the form of  managing  on-site
cafeterias and delivery of meals prepared in the Company's  central  commissary.
The Company  also  provides  basic  janitorial  services for several of its food
service customers.  The Company does not provide janitorial services outside its
food service  customer  base.  Although the majority of the business is obtained
through  public  bids,  the Company  has  provided  food  service to most of its
clients in excess of five years.

Results of Operation
--------------------

Total sales for fiscal year 2003 of $5,862,844  were  $512,843  (8.0%) less than
fiscal year 2002.

For discussion and comparison purposes, the operating results for 2003 and 2002,
by line of business and in total, are presented in the table below:

<TABLE>
<CAPTION>


            2003                   Food                Janitorial               Total
<S>                             <C>          <C>        <C>        <C>       <C>          <C>
Sales                           $5,319,260   100.0%     $543,584   100.0%    $5,862,844   100.0%

                                       8
<PAGE>

<CAPTION>
<S>                              <C>          <C>                    <C>     <C>           <C>
Cost of Product Sold             2,292,769    43.1%            -     0.0%    $2,292,769    39.1%
Operating Expense                1,838,272    34.6%      525,146    96.6%    $2,363,418    40.3%
Depreciation Expense                80,414     1.5%            -     0.0%      $ 80,414     1.4%
Administrative Expense           1,253,625    23.6%            -     0.0%    $1,253,625    21.4%

Operating Income (Loss)          (145,820)    -2.7%       18,438     3.4%   $ (127,382)    -2.2%


            2002                   Food                Janitorial              Total
Sales                           $5,732,687   100.0%     $643,000   100.0%    $6,375,687   100.0%
Cost of Product Sold             2,593,982    45.2%            -     0.0%    $2,593,982    40.7%
Operating Expense                1,968,361    34.3%      589,136    91.6%    $2,557,497    40.1%
Depreciation Expense                82,101     1.4%            -     0.0%      $ 82,101     1.3%
Administrative Expense           1,220,167    21.3%       20,420     3.2%    $1,240,587    19.4%

Operating Income (Loss)          (131,924)    -2.3%       33,444     5.2%    $ (98,480)    -1.5%

</TABLE>

Sales for the food service  segment of $5,319,260 were $413,427 less than fiscal
year 2002 (7.2%). Sales for the janitorial segment of $543,584 were $99,416 less
than fiscal year 2002  (15.5%).  The  decrease in sales for both  segments was a
result of a decrease in customer base and a decrease in business with  customers
whose programs are funded by the city of New York.

Cost of food products  sold for fiscal year 2003 was 43.1% of sales  compared to
45.2% for fiscal year 2002.  This slight  increase in gross profit resulted from
competitive pricing on purchases and changes in the menu mix sold to customers.

Operating  expenses for the food service segment for fiscal year 2003 were 34.6%
of sales compared to 34.3% of sales for fiscal year 2002. Operating expenses for
the janitorial  segment increased to 96.6% of sales compared to 91.6% for fiscal
year 2002.  Janitorial sales for fiscal years 2003 and 2002 consist primarily of
auxiliary  janitorial  services for current food service  customers  and carry a
smaller margin.

Administrative expense for fiscal year 2003 increased $13,038 compared to fiscal
year  2002.  This  slight  increase  resulted  from  costs  incurred  in  moving
accounting and administrative functions from Kansas City to the Long Island City
corporate office.

Gain on Sale of Assets:  In  connection  with the sale of the Iowa and  Oklahoma
vending  machine and cafeteria  operations  in 2001,  $200,000 was held from the
purchase  price  by the  buyer  contingent  upon  the  buyer  retaining  certain
customers.  This  $200,000  was not  recorded  by the  Company  in the  year the
transaction  occurred as it was deemed a gain  contingency.  The Asset  Purchase
Agreement  called for the Company to receive the  $200,000 in various  intervals
through 2004.  $100,000 was collected and recorded  during 2002. On February 15,
2003,  the Company  reached an agreement to receive the final  $100,000  payment
relating to the sale.  This $100,000 was not due until January 2004.  The entire
amount of $100,000 was collected on April 1, 2003.

On April 1, 2003, the holder of an 8% note agreed to accept $125,000 as full and
complete  settlement and  satisfaction  of all debts and amounts due on the note
payable.  This  transaction  resulted  in a gain  on  extinguishment  of debt of
$790,992.

                                       9
<PAGE>

Liquidity and Capital Resources
-------------------------------

The Company's working capital on May 29, 2003, decreased to a surplus of $30,765
compared to a surplus of $107,811 on May 30, 2002.  Cash decreased from $251,023
on May 30,  2002,  to $85,051 on May 29, 2003.  The Company used  $100,000 for a
collateral deposit required by the credit line lender.

Net cash used in  operating  activities  for the year  ended May 29,  2003,  was
$90,879 compared to $227,107 for the prior year.  Receivables  decreased $69,729
because of  decreased  sales in both the food service and  janitorial  services.
Accounts payable decreased $149,688,  inventories decreased $20,553, and prepaid
expenses increased $19,481.

Net cash used in  investing  activities  for the year  ended May 29,  2003,  was
$114,784 compared to net cash provided by investment  activities of $335,403 for
the prior year.  The fiscal year ended May 30, 2002,  included the proceeds from
the sale of the assets of the vending machine and cafeteria  operations in Iowa,
Missouri and Oklahoma of $507,899.

Net cash provided by financing  activities  for the year ended May 29, 2003, was
$39,691  compared to  $122,487  for the prior  year.  Proceeds  from the line of
credit  payable  decreased  $183,636,  and payments on long term debt  decreased
$100,843 net from fiscal year 2002.

                                                Less than     1 - 3     4 - 5
     Contractual Obligations            Total    1 year       years     years
     Long Term Debt (Including
     Related Parties)                $ 189,482 $  82,251   $ 104,963  $  2,268
     Net Operating Leases            $ 643,865 $ 239,263   $ 404,602  $
                                    -------------------------------------------
                         Total       $ 833,347 $ 321,514   $ 509,565  $  2,268

The Company continues to have a good relationship with its vendors.

Management believes that the available cash, cash flows from operations and cash
available under the line of credit will marginally fund the Company's operating,
capital expenditure and debt requirements through May 28, 2004.

2002 Results
------------

Sales for the continuing food service segment of $5,732,687 exceeded fiscal year
2001 by $764,397  (15.4%).  Sales for the  janitorial  segment of $643,000  were
$349,886  (35.2%) less than fiscal year 2001.  Due to the loss of its janitorial
customer  base in New  Jersey,  operations  in New Jersey were  discontinued  in
August 2001. The Company continues to provide basic janitorial services to a few
of its existing  food service  customers in New York City.  The Company does not
pursue janitorial sales outside of its food service customer base.

Cost of food products  sold for fiscal year 2002 was 45.2% of sales  compared to
44.7% for fiscal year 2001. This slight decrease in gross profit resulted from a
reduction of selling  prices to remain  competitive  in the bidding  process for
governmental food service contracts.

Operating  expenses for the food service segment for fiscal year 2002 were 34.3%
of sales  compared 34.9% of sales for fiscal year 2001.  Operating  expenses for
the janitorial  segment increased to 91.6% of sales compared to 83.9% for fiscal
year 2001.  Janitorial  sales for fiscal 2002  consist  primarily  of  auxiliary
janitorial  services  for current  food  service  customers  and carry a smaller
margin.


Administrative  expenses  for the food  segment  decreased to 21.3% of sales for
fiscal year 2002  compared to 23.5% of sales for fiscal year 2001 due  primarily
to the increase in customer base and resulting sales increase.

Depreciation increased $7,395 for the food service segment because of an upgrade
of several delivery vehicles.

Interest expense  decreased  $146,394 (70.4%) because a majority of the proceeds
from the sale of the assets of vending  machine and food service  operations  in
Missouri,  Iowa and Oklahoma were used to reduce debt.  Declining interest rates
also  contributed  to the decrease.  In addition,  in January 2001,  the Company
restructured a note payable with a primary lender by reducing the interest rate.

The  Company  received  and  recorded  $100,000  of a $200,000  contingent  gain
provided in the Asset Purchase Agreement for the Midwest vending operations.

Liquidity and Capital Resources
-------------------------------

The Company's working capital on May 30, 2002 increased to a surplus of $107,811
compared  to a surplus  of $73,737 on May 31,  2001.  Cash and cash  equivalents
increased  from  $20,240  on May 31,  2001 to  $251,023  on May 30,  2002.  This
increase is the result of the  collection  of the deferred  receivable  from the
sale of assets in fiscal year 2001.  The Company used  $100,000 for a collateral
deposit required by the credit line lender.

Net cash provided by operating  activities for the year ended May 30, 2002 was a
deficiency of $227,107, compared to a deficiency of $309,877 for the prior year.
Receivables  increased a gross of $ 113,832  because of  increased  sales in the
food service  segment.  Account  Payable  increased  $58,402,  however,  accrued
expenses  decreased  $236,647,  prepaid  expenses  decreased  $16,939  and other
liabilities decreased $17,401.

Net Cash provided by investing  activities  decreased  $1,092,504 from the prior
year because the prior year included the proceeds from the sale of the assets of
the vending machine and cafeteria operations in Iowa, Missouri and Oklahoma.

Net cash  provided by  financing  activities  for fiscal year 2002 was  $122,487
compared to a deficiency of  $1,330,565  for fiscal year 2001,  which  contained
payment of debt with the proceeds of the sale of assets.  The net cash  provided
by financing  activities for fiscal year 2002 contained a reduction of long-term
debt of $132,067 and additional credit line borrowing of $254,644.


Item 7. Financial Statements

     The response to this item is included as a separate  section of this report
     commencing on page F-1

Item 8. Changes  in  and   disagreements   with   accountants on  accounting and
        financial disclosure.

     None

Item 8A.  Controls  and Procedures

     The Company's  management,  including the Chief Executive  Officer and Vice
     President   for   Administration,   has  conducted  an  evaluation  of  the
     effectiveness of Ambassador Food Services Corporation's disclosure controls
     and procedures pursuant to Exchange Act Rule 13a-15. Based on the Company's
     evaluation,  which  was filed  with the  Commission,  the  Chief  Executive
     Officer and Vice President for Administration concluded that the disclosure
     controls  and  procedures  are  effective  in  ensuring  that all  material
     information  required to be filed in this Annual Report has been made known
     to them in a timely  fashion.  There  have been no  significant  changes in
     internal controls,  or in factors that could significantly  affect internal
     controls,  subsequent to the date the Chief Executive  Officer and the Vice
     President for Administration completed their evaluation.


                                    PART III

Item 9. Directors  and  Executive  Officers  of the  Registrant;
        Compliance with 16 (a) of the Exchange Act.


                                       11

<PAGE>

   (a),(b) The Executive Officers and Directors of the Company are as follows:

                                                                  Director
               Name           Age      Principal Occupation         Since

       Robert A. Laudicina(1)  62    President, Treasurer(2)         1986
       Arthur D. Stevens(1)    78    Chairman of the Board (3)       1963
       Ann W. Stevens          61    Real Estate Broker              1996
       John A. Makula          54    Vice President/ Secretary(4)    2000

      (1)  Member of Executive Committee of Board of Directors

      (2)  Mr.  Laudicina  was  elected President in March 1998 and Treasurer in
           May  1998.  He  served  as  Executive  Vice  President  beginning  in
           February  1989  and  Vice  President  prior to that time beginning in
           January 1982.

      (3)  Mr. Stevens has been Chairman of the Board of Directors of Ambassador
           since  February 15,   1963. He  was  also  the  first  President  and
           Treasurer of Ambassador  beginning  on April 19, 1963,  relinquishing
           those positions  in April  1978 and  October 1969,  respectively.  He
           again assumed the position of  President on January 1, 1987,  serving
           in that capacity through March 1998. He was Chief  Executive  Officer
           from April 11, 1963 through May 1998 and  Treasurer  from January 26,
           1972 through May 1998.

      (4)  Mr. Makula was elected Assistant Secretary  on  April 12,  2000,  and
           elected Vice President, Secretary, Director in May 2000.

   (c) Arthur D. Stevens,  Chairman,  and Ann W. Stevens,  Director, are husband
       and  wife.  No  other family  relationship  exists  between  any  of  the
       executive  officers and directors listed above.

       Each  Officer  holds his office at the pleasure of the Board of Directors
       until the next annual  meeting of the  Directors  and until his successor
       is duly elected and qualified.

       The  Executive  Officers and Directors  listed above were not involved in
       or part of any legal proceedings, as is described in Item 401(d).

Item 10.  Executive Compensation

  (a), (b) The  following  table sets forth  information as to the  remuneration
           accrued by Ambassador Food Services  Corporation  and its  subsidiary
           during the fiscal year  ended May 29,  2003,  for each  Director  and
           Officer whose aggregate remuneration for the year exceeded $100,000.

             Names of Individuals,
           Number of Persons in Group
         and Capacities in which Served
              Robert A. Laudicina,         Fiscal     Base
          President, CEO and Treasurer      Year     Salary
                                            2003    $127,302
                                            2002    $148,936
                                            2001    $176,706
                                            2000    $174,769


 d)    Stock Options

       Robert  Laudicina,   President  and  Treasurer  and  John  Makula,   Vice
       President  and Secretary  each held options to purchase  25,000 shares of
       Ambassador  common  stock at $1.37  exercisable  anytime  before  June 1,
       2003, effective June 1, 1999.

                                       12

<PAGE>

       On April 8, 2002,  the Board of  Directors  terminated  the Stock  Option
       Agreement.  Mr.  Laudicina and Mr. Makula consented to the termination of
       the agreement.

 g)    Related Party Transactions

       The  Company  entered into a consulting  agreement with a stockholder and
       former  officer.   The  agreement,   originally  requiring   payments  of
       $100,482  per  annum,  was  informally  amended  to  a  total  per  annum
       consulting fee of $91,000.  The consulting  agreement  terminates in  May
       2009.  The expense  relating to that  agreement at May 29, 2003, and  May
       30, 2002, was $91,000 and $102,000, respectively.

Item 11. Security Ownership of Certain Beneficial Owners and Management

  (a)  Security Ownership of Certain Beneficial Owners

       The following table sets forth, as of May 29, 2003, the information  with
       respect to common stock  ownership of each person known by the Company to
       own  beneficially  more  than 5% of the  shares of the  Company's  common
       stock, and of all Officers and Directors as a group.


                                                  Amount        Percent of
                                               Beneficially     Outstanding
      Name and Address of Beneficial Owner(s)      Owned           Shares

      Arthur D. Stevens
      1901 W. 69th Street
      Mission Hills, KS  66205                   191,444 (1)        26.1%

      Thomas G. Berlin
      800 Superior Avenue, Suite 2100
      Cleveland, Ohio 44114                      235,409 (3)        32.0%

      George T. Terris
      104 S. Warbler
      Sarasota, FL 34236                          54,000 (2)         7.3%

      George F. Crawford
      10110 Fontana Lane
      Overland Park, KS  66207                    51,761             7.0%


      (1)  Does not include 91,400  shares  beneficially  owned by Mr.  Stevens'
           adult  children,   in   which  shares  he  disclaims  any  beneficial
           interest.

      (2)  Does  not  include  4,000  shares  owned  by  Mr.  Terris'  immediate
           family, in which shares he disclaims any  beneficial interest.

      (3)  Includes 12,800 shares owned by Mr. Berlin's wife.



                                       13

<PAGE>

  (b)  Security Ownership of Management

                                                  Shares of Stock
                                                Beneficially Owned
                                                   May 29, 2003
                                                   ------------
                                              Number          Percent
      Name                                 of Shares         of Stock
      Arthur D. Stevens
      1901 W. 69th Street
      Mission Hills, KS  66205               191,444  (1)       26.1%

      Robert A. Laudicina
      310 Prospect Avenue
      Hackensack, NJ 07061                    26,265             3.6%

      John Makula
      5 Pittsford Way
      Nanuet, NY 10954                         9,750             1.3%

      Ann W. Stevens
      1901 W. 69th Street
      Mission Hills, KS 66205                  1,000             0.1%

      All Directors and Officers             228,459            31.0%
         as a Group (4 persons)

      (1) Does  not include  91,400  shares  beneficially  owned by Mr. Stevens'
          adult children, in which shares he disclaims any beneficial interest.

  (c)  Changes in Control

       The  Company  knows  of no  contractual  arrangements,  which  may,  at a
       subsequent date, result in a change in control of the Company.


Item 12. Certain Relationships and Related Transactions

The Company  entered into a consulting  agreement with a stockholder  and former
officer. The agreement, originally requiring payments of $100,482 per annum, was
informally  amended  to a  total  per  annum  consulting  fee  of  $91,000.  The
consulting  agreement  terminates  in May 2009.  The  expense  relating  to that
agreement  at May  29,  2003,  and May  30,  2002,  was  $91,000  and  $102,000,
respectively.

In  connection  with  the  settlement  of debt the  Company  signed  notes  with
stockholders  and management of the Company in the aggregate  amount of $95,000.
These  notes are payable  $30,000 on demand  after  October  2003 and $65,000 on
demand  after  April  2007.  Interest  at 10 percent  is  payable in  semiannual
installments.


                                       14
<PAGE>



Item 13.  Exhibits and Reports on Form 8-K

  (a)  Exhibit No.:

         21     Subsidiary of the Registrant.

         31.1   Certification of Chief Executive Officer of Ambassador Food
                Services Corporation pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.

         31.2   Certification of Chief Financial Officer of Ambassador Food
                Services Corporation pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.

         32.1   Certification of Chief Executive Officer of Ambassador Food
                Services Corporation pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.

         32.2   Certification of Chief Financial Officer of Ambassador Food
                Services Corporation pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.



Note: The Company will provide,  on the written request of  any  stockholder,  a
      copy of any exhibit to this Form  10-KSB at a rate of  $.15 per page.  The
      minimum  fee  is   $5.00.   Requests  should  be  directed  to  Robert  A.
      Laudicina,  President,  Ambassador Food  Services  Corporation,  5-30 54th
      Avenue, Long Island City, New York 11101.

                                       15
<PAGE>

Signatures

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                             AMBASSADOR FOOD SERVICES CORPORATION
                             ------------------------------------
                                  (Registrant)


                             By  /s/  Robert A. Laudicina         Date
                                ---------------------------------     ---------
                                  Robert A. Laudicina
                                  President and CEO


                             By  /s/  John Makula                  Date
                                ----------------------------------     --------
                                  John A. Makula
                                  Vice President and Secretary







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



   /s/  Arthur D. Stevens      Chairman of the Board               Date
------------------------------------------------------------------     ---------
Arthur D. Stevens              Title


                               President and Chief
   /s/  Robert A. Laudicina    Executive Officer/Director          Date
------------------------------------------------------------------     ---------
Robert A. Laudicina            Title


   /s/   Ann W.  Stevens       Director                            Date
------------------------------------------------------------------     ---------
Ann W. Stevens                 Title


   /s/  John A. Makula         Vice President/Secretary, Director  Date
------------------------------------------------------------------     ---------
John A. Makula                 Title


                                       16


<PAGE>


              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                 CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MAY 29, 2003


                                                                      Page


Independent Auditors' Report                                          F-1


Consolidated Balance Sheets
May 29, 2003 and May 30, 2002                                         F-2


Consolidated Statements of Income
For the Years Ended May 29, 2003 and May 30, 2002                     F-3


Consolidated Statements of Changes in Stockholders' Equity (Deficit)
For the Years Ended May 29, 2003 and May 30, 2002                     F-4


Consolidated Statements of Cash Flows
For the Years Ended May 29, 2003 and May 30, 2002                     F-5


Notes to Consolidated Financial Statements                         F-6 -F-14


<PAGE>

               INDEPENDENT AUDITORS' REPORT


               To the  Board of  Directors  and  Stockholders,  Ambassador  Food
               Services Corporation and Subsidiary:

               We have audited the accompanying  consolidated  balance sheets of
               Ambassador Food Services Corporation and Subsidiary as of May 29,
               2003 and May 30, 2002, and the related consolidated statements of
               income,  changes in stockholders' equity (deficit) and cash flows
               for the years then  ended.  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  auditing  standards
               generally  accepted  in  the  United  States  of  America.  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  financial  statements  referred  to  above
               present  fairly,  in  all  material  respects,  the  consolidated
               financial  position of Ambassador  Food Services  Corporation and
               Subsidiary  as of  May  29,  2003  and  May  30,  2002,  and  the
               consolidated results of its operations and its cash flows for the
               years  then  ended  in  conformity  with  accounting   principles
               generally accepted in the United States of America.





               WithumSmith+Brown
               New Brunswick, New Jersey
               July 8, 2003, except for Note 4, as to which the date is
                 August 27, 2003

                                      F-1

<PAGE>
               AMBASSADOR FOOD SERVICE CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                          MAY 29, 2003 AND MAY 30, 2002

          ASSETS                                       2003             2002
                                                       ----             ----

Current Assets:
    Cash                                         $    85,051      $   251,023
    Accounts receivable, net of allowance for
      doubtful accounts of $7,189 in 2003 and
      in 2002                                        764,688          834,417
    Inventories                                       94,475          115,028
    Prepaid expenses                                  48,248           28,767
    Restricted cash                                  210,913          103,531
                                                 -----------      -----------
          Total Current Assets                     1,203,375        1,332,766

Property and Equipment, Net                          167,148          166,183

    Deposits                                          20,860           29,830
                                                 -----------      -----------

          TOTAL ASSETS                           $ 1,391,383      $ 1,528,779
                                                 ===========      ===========

          LIABILITIES AND STOCKHOLDERS' EQUITY
            (DEFICIT)

Current Liabilities:
    Line of credit payable                         $ 562,181        $ 491,173
    Current maturities of long-term debt              52,251           68,562
    Notes payable to related parties                  30,000               --
    Accounts payable                                 371,353          521,041
    Accrued expenses                                 156,825          144,179
                                                 -----------      -----------
          Total Current Liabilities                1,172,610        1,224,955

Long-Term Debt, Less Current Maturities               42,231          878,129
Other Liabilities                                      1,700           18,850
Notes Payable to Related Parties, Net of Current
  Portion                                             65,000               --

Stockholders' Equity (Deficit):
    Common stock, $1.00 par value                  1,009,230        1,009,230
    Additional paid-in capital                       718,291          718,291
    Accumulated deficit                           (1,287,985)      (1,991,075)
                                                 -----------      -----------
                                                     439,536         (263,554)
    Less treasury stock at cost                     (329,694)        (329,601)
                                                 -----------      -----------
          Total Stockholders' Equity (Deficit)       109,842         (593,155)
                                                 -----------      -----------

          TOTAL LIABILITIES AND STOCKHOLDERS'
            EQUITY (DEFICIT)                     $ 1,391,383      $ 1,528,779
                                                 ===========      ===========



The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.

                                      F-2

<PAGE>

               AMBASSADOR FOOD SERVICE CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                FOR THE YEARS ENDED MAY 29, 2003 AND MAY 30, 2002

                                                     2003             2002
                                                     ----             ----

Sales                                            $ 5,862,844      $ 6,375,687

Costs and Expenses:
    Cost of food products sold                     2,292,769        2,593,982
    Operating                                      2,363,418        2,557,497
    Administrative                                 1,253,625        1,240,587
    Depreciation and amortization                     80,414           82,101
                                                 -----------      -----------
          Total Costs and Expenses                 5,990,226        6,474,167
                                                 -----------      -----------
Operating Loss                                      (127,382)         (98,480)

Other Income (Expense):
    Interest income                                    8,539           16,664
    Interest expense                                 (64,340)         (61,648)
    Gain on sale of assets                           100,000          100,000
    Gain on sale of property and equipment               --             1,100
    Gain on settlement of debt                       790,992             --
    Other (expense) income                            (3,434)         52,727
                                                 -----------      -----------
          Total Other Income (Expense), Net          831,757          108,843
                                                 -----------      -----------
Income Before Income Tax Expense                     704,375           10,363

Income Tax Expense                                     1,285            1,932
                                                 -----------      -----------
Net Income                                       $   703,090      $     8,431
                                                 ===========      ===========
Basic and Diluted Income Per Common Share:       $      0.96           $ 0.01
                                                 ===========      ===========
Weighted Average of Common Shares Outstanding        734,684          734,991
                                                 ===========      ===========







The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.

                                      F-3

<PAGE>
               AMBASSADOR FOOD SERVICE CORPORATION AND SUBSIDIARY
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                FOR THE YEARS ENDED MAY 29, 2003 AND MAY 30, 2002


<TABLE>
<CAPTION>

                                                   Common Stock
                           ------------------------------------------------------------
                           Authorized         Issued                  Treasury          Additional                       Total
                           ----------- ---------------------- -------------------------   Paid-in      Accumulated    Stockholders'
                             Shares     Shares       Amount      Shares      Amount       Capital        Deficit    Equity (Deficit)
                             ------     ------       ------      ------      ------     ----------     -----------  ----------------

<S>                         <C>        <C>        <C>          <C>         <C>          <C>          <C>               <C>
Balance, May 31, 2001       2,000,000  1,009,230  $ 1,009,230  (273,974)   $(329,511)   $ 718,291    $ (1,999,506)     $(601,496)

Net Income                      --         --           --        --           --           --              8,431          8,431

Purchase of Treasury Stock      --         --           --         (300)         (90)       --              --               (90)
                            ---------  ---------  -----------  ---------   ----------   ---------    -------------     ----------

Balance, May 30, 2002       2,000,000  1,009,230    1,009,230  (274,274)    (329,601)     718,291      (1,991,075)      (593,155)

Net Income                      --         --           --        --           --           --            703,090        703,090

Purchase of Treasury Stock      --         --           --         (300)         (93)       --              --               (93)
                            ---------  ---------  -----------  ---------   ----------   ---------    -------------     ----------
Balance, May 29, 2003       2,000,000  1,009,230  $ 1,009,230  (274,574)   $(329,694)   $ 718,291    $ (1,287,985)       $109,842
                            =========  =========  ===========  =========   ==========   =========    =============     ----------
</TABLE>


The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.


                                      F-4
<PAGE>

               AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED MAY 29, 2003 AND MAY 30, 2002

                                                       2003             2002
                                                       ----             ----

Cash Flows from Operating Activities:
    Net income                                       $ 703,090        $   8,431
    Gain on settlement of debt                        (790,992)            --
    Adjustments to reconcile net income to
      net cash used in operating activities:
      Depreciation and amortization                     80,414           82,101
      Gain on sale of property and equipment              --             (1,100)
      Bad debt recovery                                   --            (16,148)
      Changes in:
        Accounts receivable                             69,729          (97,684)
        Inventories                                     20,553            9,878
        Prepaid expenses                               (19,481)         (16,939)
        Accounts payable                              (149,688)          58,402
        Accrued expenses                                12,646         (236,647)
        Other liabilities                              (17,150)         (17,401)
                                                     ----------       ----------
          Net Cash (Used in) Operating Activities      (90,879)        (227,107)

Cash Flows from Investing Activities:
    Purchase of property and equipment                 (16,372)         (73,251)
    Proceeds from sale of property and equipment            --            1,100
    Change in restricted cash                         (107,382)        (103,531)
    Collection of deferred receivable                       --          507,899
    Change in deposits                                   8,970            3,186
                                                     ----------       ----------
          Net Cash (Used in) Provided by Investing
          Activities                                  (114,784)         335,403

Cash Flows from Financing Activities:
    Principal payments on long-term debt               (41,224)        (132,067)
    Increase in borrowings of long-term debt           135,000             --
    Payment to settle debt                            (125,000)            --
    Purchase of treasury stock                             (93)             (90)
    Net proceeds under line of credit payable           71,008          254,644
                                                     ----------       ----------
          Net Cash Provided by Financing Activities     39,691          122,487
                                                     ----------       ----------

Net Change in Cash                                    (165,972)         230,783

Cash at Beginning of Year                              251,023           20,240
                                                     ----------       ----------

Cash at End of Year                                  $  85,051        $ 251,023
                                                     ==========       ==========

Supplemental Disclosure of Cash Flow Information:
    Cash paid during the year for:
      Income taxes                                   $   1,258        $   5,242
      Interest                                       $  62,089        $  57,677

    Supplemental disclosure of noncash inventory
      and financing activities:
        Purchase of equipment through the
          issuance on long-term debt                 $  65,007        $    --





The  Notes  to  Consolidated  Financial Statements are an integral part of these
statements.


                                      F-5
<PAGE>
              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies:
----------------------------------------------------
       Significant  accounting  policies  followed by Ambassador  Food Services
       Corporation  (AFSC) and its  wholly-owned  subsidiary,  Ambassador  Fast
       Services, Inc. (AFS) (hereinafter  collectively known as the Company) in
       the preparation of the accompanying  consolidated  financial  statements
       are summarized below:

       Nature of Business
       The Company conducts  operations in New York in two operating  segments:
       food  (meal  preparation  and  delivery,  cafeteria  and  catering)  and
       janitorial   services.   These  segments  primarily  service  government
       agencies and nonprofit organizations.

       Principles of Consolidation
       The   consolidated   financial   statements   include  the  accounts  of
       Ambassador Food Services  Corporation and its  wholly-owned  subsidiary,
       Ambassador   Fast   Services,   Inc.  All   intercompany   balances  and
       transactions have been eliminated in consolidation.

       Reporting Periods
       The Company has a fiscal  year (52 or 53 weeks)  ending on the  Thursday
       nearest May 31.  Fiscal years 2003 and 2002 contained 52 weeks.

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

       Inventories
       Inventories,  which  consist  of food and  supplies,  are  stated at the
       lower of cost (first-in, first-out) or market.

       Income Taxes
       Deferred  income tax  assets  and  liabilities  are  recognized  for the
       differences  between  financial and income tax reporting basis of assets
       and  liabilities  based on  enacted  tax rates and  laws.  The  deferred
       income tax  provision  or benefit  generally  reflects the net change in
       deferred  income  tax  assets  and   liabilities   during  the  year.  A
       valuation  allowance  is recorded  when the  expected  recognition  of a
       deferred tax asset is considered to be unlikely.

       Financial Instruments

       Short-Term Financial Instruments
       --------------------------------
       The  carrying  amount of  short-term  financial  instruments,  including
       cash,  trade  accounts  receivables  and  payables  and certain  accrued
       liabilities,  approximates their fair value in the financial  statements
       because of the short maturity of such instruments.

       Notes Payable and Long-Term Debt
       --------------------------------
       The carrying  amount of the line of credit  approximates  its fair value
       because  the  currently   effective  rates  reflect  market  rates.  The
       carrying amount of fixed rate notes payable  approximates its fair value
       based on the Company's estimated current incremental  borrowing rate for
       similar obligations with similar terms.

       Reclassifications
       Restricted  cash reported in  the 2002  financial  statements  have been
       reclassified  to conform to the 2003 presentations.

                                      F-6

<PAGE>

              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies (Continued):
----------------------------------------------------------------

       Concentration of Credit Risk
       Financial   instruments   which   potentially   expose  the  Company  to
       concentrations  of credit  risk,  as  defined  by  Financial  Accounting
       Standards Board (FASB) Statement No. 105, consist  primarily of cash and
       accounts receivable.

       Cash
       ----
       The  Company  places   operating   cash  with  high  quality   financial
       institutions.   At  times  these  amounts  exceed  the  Federal  Deposit
       Insurance Corporation limits of $100,000,  however,  management monitors
       the soundness of these  institutions  and  considers the Company's  risk
       negligible.

       Receivables and Credit Policies
       Accounts  receivable  are  customer  obligations  due under normal trade
       terms  requiring  payment  within 30 to 60 days from the  invoice  date,
       depending  on  the  terms  the  Company  has  with  the  customer.  If a
       customer  fails to remit  payment  within 90 days of the  invoice  date,
       management  calls the  customer  to  determine  when  collection  can be
       expected.  Customer  account  balances with invoices  dated over 90 days
       are considered delinquent.

       All of the Company's  accounts  receivable are with customers located in
       New York. The Company  grants credit to customers  such as  governmental
       social service  agencies and other nonprofit  organizations.  Collateral
       is not required.

       As of May  29,  2003,  four  customers  represented  approximately  50.9
       percent  of  total  accounts  receivable.   As  of  May  30,  2002,  two
       customers  represented  32.7 percent of total accounts  receivable.  One
       of these  customers  also  represented  33.8 percent and 29.6 percent of
       total  consolidated  net sales for the years  ended May 29, 2003 and May
       30, 2002, respectively.

       Payment of accounts  receivable  are allocated to the specific  invoices
       as identified on the customer's remittance advice.

       The  carrying  amount of accounts  receivable  is reduced by a valuation
       allowance that reflects  management's  best estimate of the amounts that
       will not be collected.

       Effects of Recent Accounting Pronouncements
       In November  2002,  the FASB issued  FASB  Interpretation  (FIN) No. 45,
       "Guarantor's  Accounting and  Disclosure  Requirements  for  Guarantees,
       Including  Indirect  Guarantees of  Indebtedness  of Others." FIN No. 45
       addresses the  disclosures  to be made by a guarantor in its interim and
       annual  financial   statements  about  its  obligations   under  certain
       guarantees  that  it has  issued.  Under  FIN  No.  45  recognition  and
       initial measurement  provisions are applicable on a prospective basis to
       guarantees  issued or modified after December 31, 2002,  irrespective of
       the  guarantor's  fiscal year end. The  disclosure  requirements  in FIN
       No. 45 are  effective  for  financial  statements  of  interim or annual
       periods  ending after  December 15, 2002. The adoption of FIN No. 45 did
       not have a significant impact on the Company's  consolidation  financial
       position or results of operations.


                                      F-7

<PAGE>

              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies (Continued):
----------------------------------------------------------------

       Effects of Recent Accounting Pronouncements (Continued)
       In  December  2002,  the  FASB  issued  SFAS  No.  148,  "Accounting  for
       Stock-Based  Compensation-Transition  and  Disclosure"  which amends SFAS
       No.  123,  "Accounting  for  Stock-Based  Compensation".  SFAS   No.  148
       provides  alternative  methods of transition  for a voluntary  change  to
       the fair value  based  method  of  accounting  for  stock-based  employee
       compensation.  SFAS  No. 148 also  amends the  disclosure  provisions  of
       SFAS  No.  123 to  require  prominent  disclosure  about the  effects  on
       reported  net income  of an entity's  accounting  policy  decisions  with
       respect to  stock-based  employee  compensation,  and requires disclosure
       about those  effects in  both annual and  interim  financial  statements.
       The  adoption of SFAS  No. 148 did not have a  significant  impact on the
       Company's consolidated financial position or results of operations.

       In January 2003, the FASB issued FIN No.  46,  "Consolidation of Variable
       Interest  Entities".  FIN No. 46 clarifies  the application of Accounting
       Research  Bulletin No. 51 for certain entities  in which equity investors
       do not have the  characteristics of a  controlling  financial interest or
       do not have  sufficient  equity at  risk for the  entity to  finance  its
       activities without additional  subordinated  financial support from other
       parties.  FIN  No. 46  applies  to  variable  interest  entities  created
       after January  31, 2003,  and to variable  interest  entities in which an
       enterprise  obtains  an  interest  after  that  date.  It  applies in the
       fourth  quarter of fiscal  2003 to variable  interest  entities  in which
       the  Company  may  hold a  variable  interest  that  it  acquired  before
       February  1,  2003.  The  provisions  of  FIN No.  46  require  that  the
       Company  immediately  disclose  certain  information  if it is reasonably
       possible  that the Company will be required to  consolidate  or  disclose
       variable  interest  entities  when  FIN No.  46  becomes  effective.  The
       Company has determined  that it does  not have a significant  interest in
       such entities  requiring the related  disclosure based on its preliminary
       analysis and assessment.

       In April 2003,  the FASB issued SFAS 149,  "Amendment of Statement 133 on
       Derivative  Instruments  and  Hedging  Activities."  SFAS 149  amends and
       clarifies financial accounting and reporting for derivative  instruments,
       including certain derivative  instruments embedded in other contracts and
       for  hedging  activities  under  SFAS  133,  "Accounting  for  Derivative
       Instruments  and  Hedging   Activities."  The  changes  are  intended  to
       improve  financial  reporting by requiring that contracts with comparable
       characteristics be accounted for similarly.  Additionally,  those changes
       are  expected to result in more  consistent  reporting  of  contracts  as
       either  derivatives or hybrid  instruments.  The requirements of SFAS 149
       will become  effective  for the Company  beginning in the last quarter of
       fiscal 2003 for contracts  entered into or modified by it and for hedging
       relationships  designated  after June 30, 2003.  The adoption of SFAS No.
       149 did not  have a  significant  impact  on the  Company's  consolidated
       financial position or results of operations.

       In May 2003,  the FASB  issued  SFAS No.  150,  "Accounting  for  Certain
       Financial   Instruments  with   Characteristics  of  both  Liability  and
       Equity."   SFAS  No.  150   establishes   standards  for  how  an  issuer
       classifies   and   measures    certain    financial    instruments   with
       characteristics  of both  liability and equity.  It also requires that an
       issuer  classify  a  financial  instrument  that is within its scope as a
       liability   (or  an   asset  in  some   circumstances).   Many  of  those
       instruments  were  previously  classified  as  equity.  SFAS  No.  150 is
       effective for financial  instruments  entered into or modified  after May
       31,  2003,  and  otherwise  is  effective  at the  beginning of the first
       interim  period  beginning  after June 15, 2003,  except for  mandatorily
       redeemable  financial  instruments  of  nonpublic  entities.  It is to be
       implemented  by  reporting  a  cumulative   effect  of  a  change  in  an
       accounting  principal  for  financial   instruments  created  before  the
       issuance  date of the  Statement  and still  existing at the beginning of
       the  interim   period  of  adoption.   Restatement   is  not   permitted.
       Management  does  not  expect  the  adoption  of SFAS  No.  150 to have a
       significant  impact on the Company's  consolidated  financial position or
       results from operations.

                                      F-8

<PAGE>

              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of Significant Accounting Policies (Continued):
----------------------------------------------------------------

       Revenue Recognition
       Revenue from  customer  contracts is recognized at the time services are
       provided to the customer in accordance with those contracts.

       Property and Equipment
       Property and equipment are stated at cost.  Depreciation  is provided in
       amounts   sufficient  to  relate  the  cost  of  depreciable  assets  to
       operations  over  their  estimated  useful  lives  on the  straight-line
       method.  The estimated  lives used in  determining  depreciation  are as
       follows:

               Description                                  Years
               -----------                                  -----

           Cafeteria and Commissary Equipment               3-7
           Leasehold Improvements                   Lesser of Estimated Life or
                                                          Term of Lease
           Vehicles                                         3-5
           Office Equipment                                 3-7
           Warehouse Equipment                              3-7

       Income Per Common Share
       Income  per  common  share is  computed  using the  weighted  average of
       common shares outstanding during the period.

Note 2 - Restricted Cash:
-------------------------
       In connection  with Company's  renewal of its line of credit in December
       2002, the Company was required to increase its  collateral  deposit from
       $100,000  to  $200,000.  The  deposit  earns  interest at the prime rate
       (4.25  percent  at May 29,  2003  and  4.75  percent  at May 30,  2002).
       Interest  earned for the year ended May 29,  2003 and 2002  amounted  to
       $7,382 and  $3,531,  respectively.  The  collateral  is  required  to be
       maintained during the term of the loan.

Note 3 - Property and Equipment:
--------------------------------
       Property and equipment consists of the following at May 29 and 30:

                                                      2003         2002
                                                      ----         ----

       Cafeteria and Commissary Equipment           $456,349    $444,545
       Leasehold Improvements                         22,657      19,832
       Vehicles                                      162,183     116,704
       Office Equipment                               60,213      60,213
       Warehouse Equipment                            22,189      22,189
                                                    --------    --------
                                                     723,591     663,483
       Less Accumulated Depreciation                 556,443     497,300
                                                    --------    --------
          Property and Equipment, Net               $167,148    $166,183
                                                    ========    ========

       Depreciation expense amounted to $80,414 and $82,101 for the years
       ended May 29, 2003 and May 30, 2002, respectively.


                                      F-9

<PAGE>

              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Line of Credit Payable:
--------------------------------
       The  Company  entered  into a line of  credit  agreement  with a lender,
       which  provides  for maximum  borrowings  of  $1,000,000,  limited to 85
       percent of  eligible  accounts  receivable  as  defined  by the  lender.
       Interest is payable  monthly at prime (4.25  percent and 4.75 percent at
       May 29, 2003 and May 30,  2002,  respectively)  plus 3.75  percent.  The
       loan is collateralized by a first priority  perfected  security interest
       in all the Company's  assets excluding  equipment,  for which the lender
       has a  second  priority  perfected  security  interest.  The  agreement,
       which expires in December 2003,  contains a tangible net worth covenant,
       as  defined  by  the  lender.  At  May  29,  2003,  the  Company  was in
       violation with that  covenant.  On August 25, 2003, the lender agreed to
       waive the violation  through  August 22, 2003, the date at which certain
       individuals  owed  monies,  agreed  to  subordinate  their  debt  to the
       lender.  The  subordinated  amount of $95,000  resulted  in the  Company
       being in compliance with its tangible net worth  covenant.  In addition,
       the  agreement  requires  that  the  Company  deposit  with  the  lender
       $200,000 in a  restricted  savings  account  (see Note 2). On August 27,
       2003, the lender extended the maturity date to August 2004.

       The balance of the credit line was  $562,181  and $491,173 as of May 29,
       2003 and May 30, 2002, respectively.

Note 5 - Long-Term Debt:
------------------------
       Long-term debt consists of the following
         at May 29 and 30:
                                                           2003       2002
                                                           ----       ----
       Notes  payable -  equipment,  payable in monthly
       installments of approximately $1,791,  including
       interest   at   8   percent,   paid   in   2003,
       collateralized by equipment                       $   --     $ 17,978

       Notes  payable -  vehicles,  payable  in monthly
       installments,  non-interest  bearing, due August
       2007                                               38,546       --

       Note  payable  -  vehicle,  payable  in  monthly
       installments, bearing interest at 8.99 percent,
       due May 2007                                       15,936       --

       Note  payable  to  an  individual  at 8  percent,
       extinguished in March 2003 (see Note 8)                --     928,713

       Notes  payable  to   individuals,   payable  upon
       demand  after  October   2003.   Interest  at  10
       percent   is    payable    is   in    semi-annual
       installments                                       40,000       --
                                                         -------    --------

       Total Long-Term Debt                               94,482     946,691

       Less Current Maturities                            52,251      68,562
                                                         -------    --------

       Long-Term Portion                                 $42,231    $878,129
                                                         =======    ========

       Aggregate  maturities  of  long-term  debt due  within  the  five  years
       subsequent to May 29, 2003 are as follows:

                     Year                        Amount
                     ----                        ------

                     2004                       $52,251
                     2005                        12,852
                     2006                        13,207
                     2007                        13,904
                     2008                         2,268
                                                -------
                       Total                    $94,482
                                                =======

                                      F-10

<PAGE>

              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Related Party Transactions:
------------------------------------
       The Company  entered into a consulting  agreement with a stockholder and
       former  officer.   The  agreement,   originally  requiring  payments  of
       $100,482  per  annum,  was  informally  amended  to a  total  per  annum
       consulting fee of $91,000.  The consulting  agreement  terminates in May
       2009.  The expense  relating to that  agreement  at May 29, 2003 and May
       30, 2002 was $91,000 and $102,000, respectively.

       In  connection  with the  settlement  of debt (See  Note 8) the  Company
       signed  notes with  stockholders  and  management  of the Company in the
       aggregate amount of $95,000.  These notes are payable upon demand,  some
       after  October  2003 and some after April  2007.  Interest at 10 percent
       is payable in  semiannual  installments.  Aggregate  maturities of these
       notes due within the next four years are as follows:

                     Year                         Amount
                     ----                         ------

                     2004                        $30,000
                     2005                           --
                     2006                           --
                     2007                         65,000
                                                 -------
                       Total                     $95,000
                                                 =======

Note 7 - Gain on Sale of Assets:
--------------------------------
       In  connection  with the sale of the Iowa and Oklahoma  vending  machine
       and cafeteria  operations  in 2001,  $200,000 was held from the purchase
       price  by  the  buyer  contingent  upon  the  buyer  retaining   certain
       customers.  This  $200,000  was not  recorded by the Company in the year
       the  transaction  occurred  as it was  deemed  a gain  contingency.  The
       Asset Purchase  Agreement called for the Company to receive the $200,000
       in various intervals  through 2004.  $100,000 was collected and recorded
       during 2002. On February 15, 2003,  the Company  reached an agreement to
       receive the final $100,000  payment  relating to the sale. This $100,000
       was not due until  January  2004.  The  entire  amount of  $100,000  was
       collected on April 1, 2003.

Note 8 - Gain on Settlement of Debt:
------------------------------------
       On March 10, 2003, a note payable to an individual  with an  outstanding
       balance of $915,992  and due June 2008,  was settled for  $125,000.  The
       settlement  resulted  in a gain of  $790,992  for the year ended May 29,
       2003.

Note 9 - Commitments:
---------------------
       Future  minimum  lease  payments  under  all  non-cancelable   operating
       leases, as of May 30, 2003 are as follows:

           Fiscal Year                  Real
              Ending                   Estate      Equipment       Total
           -----------                 ------      ---------       -----

               2004                   $234,003       $5,260       $239,263
               2005                    239,421        1,360        240,781
               2006                    140,511          --         140,511
               2007                     23,310          --          23,310
                                      --------       ------       --------
               Total                  $637,245       $6,620       $643,865
                                      ========       ======       ========

       Certain  operating  leases  provide  for  renewal  options at their fair
       rental value at the time of renewal.  In the normal  course of business,
       operating leases are generally renewed or replaced by other leases.

       Rental  expense  charged to operations was $184,033 in 2003 and $180,832
       in 2002.

                                      F-11

<PAGE>

              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Income Taxes:
-----------------------
       Deferred income taxes consisted of the following at May 29 and May 30:

                                                        2003        2002
                                                        ----        ----

       Deferred Tax Asset                            $ 554,411    $ 845,477
       Less Valuation Allowance                       (512,618)    (776,798)
                                                     ----------   ----------
       Net Deferred Tax Asset                           41,793       68,679

       Deferred Tax Liability                          (41,793)     (68,679)
                                                     ----------   ----------

       Net Deferred Income Taxes                     $    --      $    --
                                                     ==========   ==========

       The approximate tax effect of each temporary  difference  giving rise to
       the deferred tax asset and liability was as follows:

                                                        2003        2002
                                                        ----        ----

       Pension Costs
                                                     $    --      $  12,202
       Vacation Accrual                                 11,398       15,452
       Allowance for Bad Debts                           2,876        2,876
       Contribution Carryforward                        14,772         --
       Net Operating Loss Carryforwards                525,365      814,947
                                                     ----------   ----------
       Deferred Tax Asset                            $ 554,411    $ 845,477
                                                     ==========   ==========

       Accelerated Depreciation                      $ (41,793)   $ (68,679)
                                                     ----------   ----------
       Deferred Tax Liability                        $ (41,793)   $ (68,679)
                                                     ==========   ==========

       The  valuation  allowance  was  established  to reduce the  deferred tax
       asset to zero.  The  reduction is necessary  because of prior  operating
       losses and  uncertainty  about the  Company's  ability  to  utilize  net
       operating  loss   carryforwards   before  they  expire.   The  valuation
       allowance  decreased  by  $264,180  and  increased  by $68,853 in fiscal
       years 2003 and 2002, respectively.

       The income tax  benefit  reflected  in the  consolidated  statements  of
       operations  differs  from the  amounts  computed  at  federal  statutory
       income tax rates.  The  principal  differences  are as follows at May 29
       and 30:
                                                        2003        2002
                                                        ----        ----
       Federal Income Tax Expense Computed
        at Statutory Rate                            $ 239,487    $   3,523
       State Income Tax Expense                          1,285          622
       Utilization of Net Operating Loss              (239,487)      (2,312)
                                                     ----------   ----------

       Income Tax Expense                            $   1,285    $   1,932
                                                     ==========   ==========

       The  Company  has  federal  net  operating   loss  (NOL)   carryforwards
       available  at May 29,  2003  amounted  to  $1,313,413  which  expire  at
       various intervals from 2008 through 2020.

       In addition,  for state purposes, AFS and AFSC has State of New York NOL
       carryforwards  available at May 29, 2003, which amounted to $905,124 and
       expire at various intervals from 2008 through 2016.


                                      F-12

<PAGE>

              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11 - Common Stock Options:
-------------------------------
       The  Company  previously  granted  100,000  options  to  certain  of its
       officers,  directors  and key  employees.  All options  vested as of May
       31, 2000.

       The Company  accounts for stock options in  accordance  with APB Opinion
       No.  25 and  related  interpretations.  Since no  options  were  granted
       during 2003 and 2002, no compensation expense has been recorded.

       The following summarizes the activity in the Company's stock option
       plan:

                                                                  Weighted
                                                                   Average
                                            Number of shares      Exercise
                                      -------------------------     Price
                                      Outstanding   Exercisable   Per Share
                                      -----------   -----------   ---------

       Outstanding May 31, 2001         50,000        50,000        $1.37
       Granted                            --            --            --
       Exercised                          --            --            --
       Canceled                        (50,000)      (50,000)        1.37
                                       --------      --------       -----
       Outstanding, May 30, 2002          --            --            --
                                       --------      --------       -----
       Outstanding, May 29, 2003          --            --          $ --
                                       ========      ========       =====

       As of April 8, 2002,  the Board of  Directors  in  conjunction  with the
       consent of the plan's members, canceled the above plan.

Note 12 - Segment Information:
------------------------------
       The Company has adopted  Financial  Accounting  Standards Board SFAS No.
       131  Disclosures  about  Segments of a Business  Enterprise  and Related
       Information.  SFAS No. 131 requires  companies to report  financial  and
       descriptive   information  about  its  reportable   operating  segments,
       including  segment profit or loss,  certain specific revenue and expense
       items and segment  assets,  as well as  information  about the  revenues
       derived from the  Company's  products  and  services,  the  countries in
       which  the  Company  earns   revenues  and  holds   assets,   and  major
       customers.  The  Company's  businesses  are organized and managed as two
       operating  segments  based on the  differences in products and services.
       These  segments  are  Food  and  Janitorial.   Selected  information  by
       operating  segment is presented  below for the years ending May 29, 2003
       and 30, 2002:
<TABLE>
<CAPTION>

                   2003                   Food      Janitorial    Eliminations      Total
                   ----                   ----      ----------    ------------      -----

       <S>                             <C>           <C>           <C>           <C>
       Sales                           $5,319,260    $ 543,584     $   --        $ 5,862,844
       Operating Income (Loss)         $ (145,820)   $  18,438     $   --        $  (127,382)
       Assets                          $1,386,974    $   4,409     $   --        $ 1,391,383
       Depreciation and Amortization   $   80,414    $   --        $   --        $    80,414
       Capital Expenditures            $   81,379    $   --        $   --        $    81,379

                   2002                   Food      Janitorial    Eliminations      Total
                   ----                   ----      ----------    ------------      -----

       Sales                           $5,732,687    $ 643,000     $   --        $  6,375,687
       Operating Income (Loss)         $ (131,924)   $  33,444     $   --        $    (98,480)
       Assets                          $1,454,150    $ 139,410     $(64,781)     $  1,528,779
       Depreciation and Amortization   $   82,101    $   --        $   --        $     82,101
       Capital Expenditures            $   73,251    $   --        $   --        $     73,251
</TABLE>

                                      F-13

<PAGE>

              AMBASSADOR FOOD SERVICES CORPORATION AND SUBSIDIARY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 - Segment Information (Continued):
------------------------------------------
       A  reconciliation  of the totals reported for the operating  segments to
       income before income taxes expense are as follows at May 29 and 30:

                                                        2003         2002
                                                        ----         ----

       Total Reportable Segment Operating Loss       $(127,382)    $(98,480)

       Other Income (Expense):
        Interest income                                  8,539       16,664
        Interest expense                               (64,340)     (61,648)
        Gain on sale of assets                         100,000      100,000
        Gain on sale of property and equipment           --           1,100
        Gain on settlement of debt                     790,992        --
        Other expense income                            (3,434)      52,727
                                                     ----------    ---------
           Total Other Income (Expense), Net           831,757      108,843
                                                     ----------    ---------

       Income Before Income Taxes                    $ 704,375     $ 10,363
                                                     ==========    =========


                                      F-14