SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K/A
                                  ------------

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

For the fiscal year ended December 31, 1995     Commission file number:  0-22614


                        ATLANTIC BEVERAGE COMPANY, INC.
             (Exact name of registrant as specified in its charter)
                                  ------------

                    Delaware                       36-3761400
         (State or other jurisdiction of        (I.R.S. Employer
         incorporation or organization)      Identification Number)

               1587 Sulphur Spring Road, Baltimore Maryland 21227
                    (Address of principal executive offices)

       Registrant's telephone number including area code: (410) 247-5857
                                  ------------

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

          None                                 None
    (Title of class)       (Name of each exchange on which registered:)

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

                          Common Stock, $.01 par value
                                (Title of Class)

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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be  contained,  to the best of  Registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |_|

     The  aggregate  market  value of Common  Stock  held by  non-affiliates  of
Registrant is $6,028,435.50  (based upon the last sale price of the Common Stock
as reported on the NASDAQ National Market System on March 28, 1996).  The number
of shares of Common Stock outstanding as of March 29, 1996 was 5,740,984.

                      DOCUMENTS INCORPORATED BY REFERENCE

Certain  exhibits to the  Registrant's  Registration  Statement  on Form S-1, as
amended (File No. 33-69438) are incorporated by reference as Exhibits in Part IV
of this Report.


<PAGE>

                                     PART I

ITEM 1.  BUSINESS.

                                    OVERVIEW

         Atlantic  Beverage  Company,  Inc.  (the  "Company")  together  with
its  subsidiaries  is  engaged in the distribution  of  specialty  beverages  in
the  Baltimore  and  Washington  D.C.  metropolitan  areas  and  in the
manufacturing,  marketing and  distribution of meat products in several Texas
markets  including  Houston,  Dallas, Austin and San Antonio.

         The Company is a leading independent wholesale distributor of specialty
non-alcoholic  beverages  to the  retail  trade  in the  greater  Baltimore  and
Washington,  D.C.  metropolitan  area  and  surrounding  counties.  The  Company
currently has exclusive  distribution rights in its territory for ready-to-drink
teas, natural sodas, sparkling waters with juice, fruit juices, juice drinks and
still and sparkling waters. Brand name products distributed by the Company under
these exclusive  distribution rights include Royal Mistic(R),  Elliott's Amazing
Juices(TM), Crystal Geyser(R), Sunlike Juices and 16-ounce size bottled Boku(R).
The  Company's  product  line  generally  consists of  beverages  that appeal to
consumers  seeking an alternative to traditional  soft drinks.  These  beverages
typically have no artificial ingredients or artificial flavors, and are marketed
as  premium  products,  primarily  in a  single-serve  format.  Sales  of  Royal
Mistic(R)  products  accounted for approximately 60% of the Company's total case
sales in 1995.

         The Company  distributes its specialty  beverage products to over 6,000
customers,  including  independent  retail outlets such as  independent  grocery
stores,  delicatessens and restaurants, as well as large grocery and convenience
store chains and their independent  franchisees.  All of the Company's  beverage
customers  are located  within 75 miles of the Company's  warehouse  facility in
Baltimore,  Maryland.  The Company's current beverage distribution  territory of
the greater Baltimore and Washington, D.C. metropolitan area has a population of
over six million people,  making it the fifth largest  metropolitan  area in the
United States.

         Through its Prefco subsidiary,  the Company is engaged in the wholesale
distribution  of branded and unbranded  meats to the retail grocery  trade.  The
Company markets and  distributes its own branded,  processed meat products under
the brand name Bum's  Favorite Blue  Ribbon(R).  These  products,  which include
smoked  sausages,  bacon  and  packaged,  sliced  luncheon  meats,  account  for
approximately  15% of the sales of the Prefco subsidiary and are manufactured by
the  Company's   Carlton   subsidiary  as  well  as  by  third  party   contract
manufacturing  companies.  Blue Ribbon is currently  the best  selling  brand of
bacon and smoked sausage in the Houston market. In addition to marketing its own
branded  products,  the  company  is  also a  leading  regional  distributor  of
unbranded products including boxed beef, pork, chicken and related items.

         Through its Carlton subsidiary,  the Company  manufactures a variety of
smoked sausage products. Approximately 50% of total volume manufactured reflects
product sold through the Prefco  subsidiary under the Blue Ribbon brand name. Of
the  balance,   approximately   20%  of  total  volume  reflects  private  label
manufacturing  for other regional sausage brands and selected chain  supermarket
house  brands,  and  approximately  30% of total  volume is sold by the  Carlton
subsidiary under the brand names Carlton and Country Boy. These branded products
are marketed on a regional  basis,  principally  in the Austin,  San Antonio and
Dallas markets.

                               CORPORATE HISTORY

         In April 1991, MB Acquisition Corp. ("MB  Acquisition"),  a corporation
formed by a group of individuals  including the Company's  Chairman of the Board
and certain of the Company's  directors and stockholders,  acquired the business
of  the  Company  from  a  company  now  known  as  S&B   Ventures,   Inc.  (the
"Predecessor")  for a  purchase  price of  $1,158,000  (the  "Acquisition").  In
connection with the Acquisition, MB Acquisition also assumed certain obligations
to pay the  owners  of the  Predecessor  $2,000,000  pursuant  to a  non-compete
agreement  and  $829,000  pursuant  to  consulting  agreements.  MB  Acquisition
financed the  Acquisition  through a bridge loan provided by nine of its current
stockholders,  including an officer and certain  directors.  In September  1991,
Maryland  Beverage,  L.P.  (the  "Partnership")  was formed with the Company and
Strategic Investment Corporation ("Strategic"),  a wholly owned subsidiary of T.
Rowe  Price  Strategic  Partners  Fund,  L.P.,  as  its  sole  partners,  and MB
Acquisition was merged with and into the Company, and its assets and liabilities
were  contributed  to  the  Partnership.  In  September


<PAGE>

1993  the  Company  was reincorporated  in Delaware  and adopted the name
"Atlantic  Beverage  Company, Inc." In  November  1993,  in  connection  with
the  Company's  initial  public offering,  Strategic  (whose  only  asset was
its  partnership  interest  in the Partnership) merged with and into the
Company. Subsequently, the Partnership was dissolved and the Company succeeded
to the Partnership's assets and liabilities.

         On  April  27,  1994,  the  Company  entered  into and  consummated  an
agreement  to acquire  certain  assets and  marketing  rights from Flying  Fruit
Fantasy,  USA,  Inc.  ("FFF")  for total  consideration  of  approximately  $1.2
million.  Under the terms of this  agreement,  the  Company  obtained  worldwide
marketing and distribution  rights to a frozen beverage served through automated
dispensing machines. In December 1995, the Company adopted a plan to discontinue
this division of business. As a result, the Company recognized a one-time charge
of approximately  $2.4 million in the fourth quarter of 1995 which reflected the
write-off of $1.1 million in equipment  and $0.9 million in  intangible  assets,
and costs of  approximately  $0.4  million  associated  with  discontinuing  the
operation.

         In the first quarter of 1996, a newly formed,  wholly-owned  subsidiary
of the Company acquired the outstanding common stock of Prefco, Inc. ("Prefco").
Prefco,  based in Houston,  Texas,  markets and distributes its own branded meat
products  as well as  unbranded  meat  products to the retail  grocery  trade in
Texas.  Also in the first quarter of 1996,  Carlton Foods,  Inc.("Carlton")  was
merged into  another  newly  formed,  wholly-owned  subsidiary  of the  Company.
Carlton, based in New Braunfels, Texas, is a manufacturer of branded and private
label  meat  products.  The  combined  purchase  price  for these  entities  was
approximately $11 million,  which included approximately $3.0 million in Carlton
refinanced and assumed debt.

                                    INDUSTRY

Beverage Industry

         The  beverage  distribution  industry  is  divided  generally  into two
different   types  of   distributors:   bottler/distributors   and   independent
distributors.  The largest soft drink manufacturers  generally have a network of
companies  (which include both  independent and  company-owned  businesses) that
serve as  bottler/distributors  for their products.  Smaller beverage companies,
however,  typically engage contract bottlers to produce their products, and rely
on independent  companies  that function  solely as  distributors  to distribute
their products to consumers.

         The Company offers  suppliers the ability to distribute  their products
to  over  6,000  actively  serviced  customers.  Both  bottler/distributors  and
distributors  maintain  inventory in their own  warehouses,  sell products using
their own sales force and  deliver  products  using  their own trucks.  However,
subject  to  restrictions  contained  in  distribution  contracts,   independent
distributors  like the Company have the  flexibility to select a mix of products
to carry without being primarily dedicated to the large,  traditional soft drink
brands that bottler/distributors must support.

         Specialty  beverage  products and branded  bottled water  products have
been well  received not only by the consumer  but also by the retail  trade.  In
general, these products sell at a premium to traditional soft drinks, generating
higher  gross  profits  per  transaction  for the  retail  trade.  By  contrast,
traditional  soft drinks  compete  largely on the basis of pricing and promotion
and generate relatively lower unit profits.

         Although the domestic beverage  distribution  industry is characterized
by the relative  absence of  technological  risk and  relatively  minor  initial
capital  investment  requirements,  there  exist  significant  barriers to entry
primarily  due  to  geographic   exclusivity   agreements   with  suppliers  and
established relationships with customers. In addition, because of the relatively
substantial weight of bottled beverages and resulting expense of transportation,
competition at the distribution level occurs primarily on a regional basis.

Food Industry

         Through its Carlton and Prefco  subsidiaries,  the Company participates
in three general segments of the food industry:  processing,  distribution,  and
branded product marketing.

         The meat processing  segment which includes cooking,  slicing,  mixing,
grinding and similar  functions is generally  capital  intensive.  Unbranded raw
material typically comes from packing companies. In some instances,  packing and
processing are vertically  integrated.  In other instances,  as is the case with
the Company,  processing and

                                      -2-

<PAGE>

marketing are vertically integrated.  The Company's Carlton  subsidiary
manufactures  the Company's own branded products as well as those of other
branded meat companies and supermarkets on a private label basis. Because  of
the cost of  transportation  and shelf life of  product,  processing facilities
tend to serve a regional clientele.  Large,  integrated national meat companies
therefore  tend  to  establish   strategically   located  processing facilities
in different geographic regions.

         The meat distribution segment which serves several different classes of
trade including retail,  restaurant and institutional customers is generally not
capital  intensive but features very low gross margins and is subject to intense
price  competition.   Product  is  invoiced  and  priced  according  to  weight.
Successful   distributors  typically  distinguish  themselves  through  customer
service and low cost position. Price, product selection,  reliability,  in-stock
rate, promptness of delivery and weekend delivery options are among the benefits
which are most highly valued.  It is not uncommon for a grocery retailer to have
one  primary  supplier  in addition  to one or more  secondary  suppliers.  Meat
distribution companies typically serve a local or regional clientele.

         The branded meat product  business is generally not capital  intensive.
Strong  retail  brands can exist as local,  regional or national  phenomena  and
include bacon, hot dogs, cooked and uncooked sausage,  cooked hams,  chicken and
turkey  products.  Advertising  and  promotion  is  generally  critical  to  the
maintenance  of brand equity.  Companies  which market branded meat products can
exist on a stand-alone  basis as well as vertically  integrated  with processing
and / or distribution.  The Company reflects, to a limited extent, both forms of
vertical integration.

                                    STRATEGY

Beverage Strategy

         The Company's  success in the beverage  distribution  business has been
based  in  large  part on its  ability  to  serve  independent  grocery  stores,
delicatessens and restaurants,  as well as institutional  buyers, such as hotels
and universities, which traditionally sell cold, single-serve, bottled beverages
to  consumers.  The  Company  believes  that  these  customers  are drawn to the
specialty  products  carried by the Company  because of the larger unit  profits
they provide  relative to traditional soft drinks.  These customers  represented
approximately 60% of the Company's total beverage sales in 1995. The significant
exposure that results from so many smaller customers carrying the Company's line
of beverages  helps to create a broad-based  demand for the  products,  and, the
Company  believes,  will  demonstrate the strong  consumer demand  necessary for
larger retail outlets to consider stocking those beverages.

         Operating  Strategy.  The Company's  operating  strategy in its current
territory  is  to  continue  to  focus  on  the  distribution  of  non-alcoholic
beverages,  with primary emphasis on specialty beverages, and to maximize market
penetration for the products it carries. Key elements of the Company's operating
strategy include the following:

         (i) increasing  distribution to existing customers, in both the variety
of brands carried and the number of cases sold, by co-sponsoring  sales contests
and providing  incentive pricing to encourage  retailers to increase their sales
volume and broaden the variety of products they carry to include other beverages
distributed  by the  Company;  (ii)  adding new  customers  each year within the
Company's  geographic  territory;  and (iii) identifying and acquiring exclusive
distribution rights to products not currently distributed by the Company.

         Proprietary Brands. The Company is evaluating  opportunities to develop
or acquire  proprietary  beverage brands which it would then seek to market both
through its distribution system as well as on a multi-regional or national basis
through other distributors.  By utilizing its distribution system and by selling
through  other  distributors,  the  Company  believes  that  it  would  be  well
positioned to introduce  proprietary  brands into the specialty  beverage market
that do not directly compete with beverages the Company  currently  distributes.
There can be no assurance, however, that the Company will be able to acquire any
proprietary brands, or that any such acquisition will be successful.

                                      -3-

<PAGE>

Food Strategy

         Operating  Strategy.  The Company's  operating strategy with respect to
its newly acquired food businesses,  will be to grow both the Prefco and Carlton
subsidiaries  profitably,  while identifying and exploiting  synergy between the
two.  Key  elements  of this  operating  strategy  include  increasing  sales to
existing customers,  adding new customers, and identifying  opportunities to add
new products.

         Corporate  Growth  Strategy.   The  Company  has  identified  potential
strategies that will use the combination of its Carlton and Prefco  subsidiaries
as a platform for additional  corporate growth.  These potential  strategies may
include the review of  acquisition  opportunities  that appear to compliment the
subsidiaries' businesses.

                                    PRODUCTS

         The  Company  distributes  a  wide  variety  of  beverages,   including
ready-to-drink  teas, natural sodas,  sparkling waters with juice, fruit juices,
juice drinks,  still and sparkling waters and sports drinks. Brand name products
distributed by the Company include Royal Mistic(R), Elliott's Amazing Juices and
Drinks(TM),  Crystal Geyser(R),  bottled,  single-serve Boku(R),  Stewart's Root
Beer(R), Soho Natural Sodas(R), Jolt Cola(R), Vernor's Ginger Ale(R) and Sunlike
Juices.  The Company  reviews  hundreds of products each year, and  continuously
evaluates  the mix of products it  distributes.  The Company  actively  seeks to
acquire  distribution  rights  for  products  it  believes  show  strong  growth
potential.  For 1994 and 1995,  approximately 62% and 60%, respectively,  of the
Company's total beverage case sales  represented Royal Mistic(R)  products,  and
13% and  11%,  respectively,  represented  Elliott's(TM)  products.  None of the
Company's  other  suppliers  accounted for more than 10% of the Company's  total
beverage case sales during such periods.

         Through its Prefco subsidiary,  the Company  distributes a wide variety
of unbranded,  boxed meat products.  The Company  maintains an inventory of over
200  different  stock keeping  units of unbranded  product,  which include beef,
turkey,  pork and chicken.  Product is stored in the Company's two  refrigerated
warehouses in Houston and delivered on refrigerated  vehicles to several hundred
customers  including chain and independent  supermarkets and discount clubs. The
Company purchases product from  approximately one dozen meat packing  companies.
Purchases  of the same product may be spread among  several  suppliers  over the
course of a year,  and purchasing  decisions are frequently  driven by price and
availability,  both of which are likely to vary.  Three suppliers  accounted for
approximately 18%, 17% and 13% of the Company's boxed meat purchases during 1995
and 12%, 15% and 10% of such purchases during 1994. No other supplier  accounted
for more than 10% of such purchases during either year.

         Also through its Prefco subsidiary, the Company markets and distributes
its own branded  sausage,  bacon and  packaged,  sliced  luncheon  meats.  These
products are stored in the Company's  two  refrigerated  warehouses.  Product is
delivered on the Company's  refrigerated trucks, and customers typically include
the same retail  establishments  that  purchase  the  Company's  unbranded  meat
products.  The majority of Blue Ribbon sausage  product is  manufactured  by the
Company's Carlton subsidiary.  The balance of the sausage product as well as the
bacon and luncheon meats are purchased from four other contract food  processing
companies.

         In addition to  manufacturing  product for the Prefco  subsidiary,  the
Company's  Carlton  subsidiary  manufactures  and markets its own branded smoked
sausage products for the retail grocery trade. The Company  manufactures similar
products on a private label for other branded food companies.

                               SUPPLIER CONTRACTS

         The Company  does not  currently  have  contracts  with any of its food
suppliers. Many of the Company's major beverage brands, however, are distributed
on  an  exclusive  basis  under  distribution  contracts  within  the  Company's
territory.  The  terms  of the  contracts,  including  their  lengths,  vary  by
supplier. As of December 31, 1995, the Company had 14 beverage suppliers.

         The Company's  contract with Mistic Brands,  Inc. ("MBI"),  supplier of
Royal  Mistic(R),  expires  on  December  31,  2000.  The  Company  has been the
exclusive   distributor  of  Royal  Mistic(R)  in  the  greater   Baltimore  and
Washington,  D.C.  metropolitan  area since the product was first  introduced in
this territory in 1990.  Under the terms of the Royal  Mistic(R)  contract,  the
Company is obligated to distribute Royal Mistic(R) products to 80% of the retail
accounts  that  would  carry on a  regular  basis  cold,  single-serve,  bottled
specialty beverage products, excluding the

                                      -4-

<PAGE>

restaurant and bar trade. Unless such percentage is obtained by the Company to
MBI's  satisfaction,  MBI has the right to suspend shipments or cancel the
contract.  MBI also retains the right to sell to certain national buying chains
that require servicing by one national vendor. The contract also provides  that,
unless MBI agrees in writing to the sale of a product that MBI considers, in its
sole discretion, to be a direct competitor of its products, the Company cannot
sell to anyone within its territory any product that would,  in the sole
discretion of MBI,  compete with Royal Mistic(R) or be likely to cause
confusion in the minds of the public as to the Royal  Mistic(R) products. The
Company specifically cannot sell Snapple(R) or Clearly Canadian(R) products.
However, the Company is not prohibited or restricted from selling any beverages
which were carried by the Company as of September 14, 1993,  the date the last
amendment  to the  contract  was  signed,  and the  contract  does not prohibit
or restrict the Company from selling any non-Royal  Mistic(R)  products outside
its current territory. The Royal Mistic(R) contract is not assignable in the
event of a sale of a majority of the stock of the  Company  other than sales in
the public  markets.  The Company  believes  that it is in  compliance in all
material respects with the terms of the Royal Mistic(R) contract.

         The Company's contract with Ginger Group, Ltd. ("Ginger"),  supplier of
Elliott's Amazing Fruit Juices and Drinks(TM) and Elliott's Teas(TM), expires on
December 31, 1996, and may be extended for one additional  three-year period and
successive  two-year periods  thereafter by written agreement between Ginger and
the  Company.  The  contract was modified in March 1994 to permit the Company to
carry  single-serve  juice  products,  tea or juice drink lines other than those
carried by the Company as of September 17, 1993,  which was not permitted  prior
thereto  without  the  consent of Ginger.  The  Company  believes  that it is in
compliance in all material respects with the terms of the Ginger contract.

         Other   distribution   contracts   place   similar   restrictions   and
requirements  on the  Company.  The  Company  believes  that  the  terms  of its
distribution contracts are similar to those employed throughout the industry. In
addition,  the  Company  has oral  distribution  agreements  for other  beverage
products.

                       SALES, MARKETING AND DISTRIBUTION

         The Company has a beverage  distribution  sales force of 30 persons who
service existing  customers and pursue new customers.  The Company  periodically
sets sales quotas for its salespersons, and promotes fulfillment of these quotas
through  sales  contests  and  specific  monetary  incentives.  Demand  for  the
Company's   beverage   products  tends  to  be  greater  during  warmer  months.
Accordingly,  sales are  generally  highest  in the  second  and third  calendar
quarters.

         Most  beverage  distribution  customers  are  visited  on a  weekly  or
biweekly  basis by a  salesperson  from the  Company.  When a customer  orders a
product,  the  salesperson  enters all  information  into a  hand-held  computer
terminal.  At the end of the day the salesperson is responsible for transmitting
this  information  by telephone to the  Company's  computer  system.  Invoicing,
loading  and  routing  are then  handled by the  warehouse  in  preparation  for
delivery the following day. The Company's computer system generates invoices and
assists in managing  the loading and routing  functions.  The majority of orders
are filled from the Company's  warehouse within 24 hours. The Company  generally
delivers products directly to the retail outlets,  where Company drivers usually
stock displays and collect payments.  Deliveries are made by the Company's fleet
of leased vehicles, which includes 30 beverage delivery trucks and vans.

         A variety of methods are used by the  Company's  beverage  suppliers to
promote their products directly to the consumer,  including advertising based on
product features such as ingredients,  quality and taste as well as a variety of
themes including health,  lifestyle,  convenience,  and physical fitness.  Price
promotions,  taste  tests  and  event  sponsorship  are  also  common.  In  some
instances,  under promotional arrangements with suppliers, the Company may place
refrigerated  coolers  with retail  customers to display the  Company's  product
lines.  The Company  must bear some or all of the  expense of these  promotional
activities within its territory.

         Two beverage  customers  accounted for  approximately  9.5% and 6.7% of
total beverage case sales during 1994 and  approximately  6.6% and 5.7% of total
beverage case sales during 1995. No other customer accounted for more than 5% of
the Company's beverage sales during either year.

         The Company's Prefco subsidiary distributes unbranded boxed beef, pork,
and poultry to chain and independent retail grocery customers,  most of whom are
located in the Houston  metropolitan area, and all of whom are within a 400-mile
radius of the Company's  distribution  facilities.  The Company  serves  several
hundred such

                                      -5-

<PAGE>

customers as either their primary or secondary fresh meat supplier. Prefco's
direct sales force contacts its customers on a daily basis. The Company delivers
product using 16 refrigerated  trucks,  generally  within one to three days of
receiving an order.

         The Company's  Prefco  subsidiary  also markets and distributes its own
Blue Ribbon  bacon,  sausage  and sliced  luncheon  meats to the retail  grocery
trade.  Orders are  received  on a  pre-sell  basis by the  direct  sales  force
mentioned  above as well as on a route-sales  basis by a separate group of sales
people, each of whom is responsible for a route sales vehicle.  The business has
historically  engaged in  significant  radio and  television  advertising in the
Houston market.

         The Company's Carlton subsidiary  solicits and receives customer orders
for  branded  product  through  two  direct  sales  people  as well  as  through
third-party  food  brokers and by  telephone  and  facsimile  transmission.  The
Company engages in a limited amount of advertising for such products,  primarily
through  weekly chain  supermarket  flyers.  Relationships  with  private  label
customers are generally  established at the senior  management  level,  although
recurring orders from such customers are normally received over the telephone or
facsimile  machine by  clerical  staff.  Branded and  private  label  orders are
generally filled within one to seven days and are either delivered on one of the
Carlton  Subsidiary's three refrigerated  vehicles or by common carrier,  or are
picked up by customers.

         Four food customers  accounted for approximately  42%, 8%, 8% and 8% of
the Company's  total food sales during 1995 and for 10%, 10%, 31% and 6% of such
sales during 1994.  No other  customer  accounted for more than 5% of total food
sales during either year.

                                ASSET MANAGEMENT

         Accounts Receivable.  Approximately 40% of the Company's beverage sales
are  made  on a cash  basis.  Beverage  accounts  receivable  typically  average
approximately  20 to 25 days of total  sales  or 30 to 40 days of sales  made on
account.

         Food sales are made almost exclusively on account,  and food accounts
receivable  typically average 15 to 20 days.

         Inventory.  The Company maintains all of its beverage  inventory at the
Company's warehouse in Baltimore.  The Company generally maintains an average of
approximately  20 days of beverage  inventory  on hand.  The Company  performs a
physical  count of its beverage  inventory  twice a month.  On an annual  basis,
cumulative  adjustments  to such  inventory  have  been  less  than 1% of  total
purchases  during each of the last three years.  The Company  turns its beverage
inventory approximately 18 times per year. The Company typically places purchase
orders to its  suppliers  by telephone  and by facsimile on a daily basis.  Once
placed,  these  orders  are  usually  filled  within  three to five days and the
products are transported to the Company's warehouse by common carrier.

         The Company maintains its food inventory at the manufacturing  facility
operated  by  its  Carlton  subsidiary  in  New  Braunfels,  Texas  and  at  two
distribution facilities operated by its Prefco subsidiary in Houston, Texas. The
Company  generally  maintains an average of eight days of food inventory on hand
which  reflects  approximately  six to seven  days of  inventory  at its  Prefco
subsidiary and approximately 30 days of inventory at its Carlton subsidiary. The
Company  typically  places  purchase orders to its suppliers by telephone and by
facsimile on a daily basis.  Orders are placed both on an as-needed basis and on
a scheduled basis in  anticipation  of future demand.  Orders are usually filled
within one to ten days, and products are transported to the Company's  warehouse
by common carrier.

                                  COMPETITION

Competition in the Beverage Industry

         In the  greater  Baltimore  and  Washington,  D.C.  metropolitan  area,
beverage  suppliers  have  limited  choices in  securing  distribution  of their
products  in the  entire  territory  by a single  distributor.  The two  largest
bottler/distributors,  Mid Atlantic  Coca-Cola Bottling Co., Inc. and Pepsi-Cola
Company,   are  affiliated   with  The  Coca-Cola   Company  and  PepsiCo  Inc.,
respectively,  and the Company  believes  that they do not carry  products  from
other  sources.  The  other  major  bottler/distributor,  Canada  Dry -  Potomac
Corporation,  distributes  a variety of specialty  beverage  brands and competes
directly with the Company. Mid Atlantic Coca-Cola, Pepsi-Cola and Canada Dry are
larger and have greater financial  resources than the Company.  The Company also
competes with specialty

                                      -6-

<PAGE>

grocery  distributors,  beer and wine  distributors and other independent
beverage  distributors.  In general, the major bottlers in the Company's
territory are focused on distributing their own brands, while beer and wine
distributors are fragmented and service fewer non-alcoholic customers.

         The  Company  believes  that it is the  largest  distributor  to  focus
primarily on specialty  beverage  products and branded  bottled water within its
territory.  A principal component of the Company's success is its willingness to
service smaller retailers as well as large customers, which the Company believes
helps develop a broad-based  consumer  interest in the products it carries.  The
Company  competes  primarily on the basis of its product  line and service.  The
product line includes highly visible,  exclusive,  niche products. The principal
methods of competition in the premium beverage  industry include product quality
and taste, packaging, brand advertising, trade and consumer promotions, pricing,
and the  development  of new products,  while  traditional  soft-drink  products
compete on the basis of all of the foregoing factors but with a greater emphasis
on pricing and advertising.

         Competitors  may  have a  significant  competitive  advantage  over the
Company if consumer choice favors  products not distributed by the Company,  and
the Company is unable to secure distribution  rights to the favored products.  A
significant  shift in consumer  demand  away from  specialty  beverage  products
generally would have a material adverse effect on the Company's business.  There
can be no assurance that the Company will be able to compete  successfully  with
other  distributors  to obtain new product  distribution  agreements or that the
Company's current distribution agreements will be renewed on terms acceptable to
the Company.

Competition in the Food Business

         Boxed Meat  Distribution.  Through its Prefco  subsidiary,  the Company
believes that it is the second largest of four major boxed meat  distributors in
the Houston  market.  Although  this  segment of the food  industry is extremely
competitive,  the Company  has  generally  succeeded  in  distinguishing  itself
through a high level of customer service.

         Branded Meat Products. Through its Prefco and Carlton subsidiaries, the
Company  competes with dozens of branded meat companies,  and its brands compete
with a wide  variety  of  both  regional  and  national  trademarks.  Among  the
competitive brands are Decker, J. Bar B., Hilshire Farms,  Hormel and Bryan. The
Company's  Carlton and Country Boy brands of smoked sausage are sold principally
in the Dallas,  San Antonio and Austin markets and currently have limited market
share.  The Company's  Blue Ribbon brand  currently  represents the best selling
brand of bacon and  sausage in the  Houston  market and a top ten brand for both
categories  in the San Antonio / Austin  market.  These  products have also been
recently  introduced to the Dallas market,  where their market share is limited.
The Company's  packaged,  sliced luncheon meats, also sold under the Blue Ribbon
trademark, were introduced to the Houston market in 1995 and have limited market
share.

         Private  Label  Manufacturing.  Through  its  Carlton  subsidiary,  the
Company  manufactures  smoked sausage and meat products on a private label basis
for other branded food companies and, on a limited basis,  for  supermarkets and
restaurants.  The  Company  believes  that it  enjoys  a strong  reputation  for
innovation and  responsiveness  in creating original recipes for such customers.
The Company  competes  with a wide  variety of  manufacturers,  many of whom are
significantly larger and may have greater manufacturing capacity and capital.

                             GOVERNMENT REGULATION

         The Company is subject to various  federal,  state and local  statutes,
including  federal,  Maryland,  and Texas  occupational  safety and health laws.
Furthermore,  the Company and its  suppliers may be subject to various rules and
regulations including those of the United States Department of Agriculture,  the
United  States Food and Drug  Administration  and similar  state  agencies  that
relate to  manufacturing,  nutritional  disclosure,  labeling  requirements  and
product names.

         While the Company  presently  does not sell  products in any state that
requires  deposits on  containers,  federal and state  proposals  for  container
deposit laws could  significantly  affect the Company's  operating  costs if any
such proposal were to be implemented. Although the Company would seek to pass on
any  additional  costs to its  customers,  there  can be no  assurance  that the
Company would be able to do so.

                                      -7-


<PAGE>

                        PRODUCT LIABILITY AND INSURANCE

         The Company has purchased product liability  insurance in the amount of
$1,000,000 per occurrence and $2,000,000 in the aggregate.  The Company also has
a $10,000,000  umbrella policy.  The Company believes that its present insurance
coverage is sufficient  for its current level of business  operations,  although
there is no assurance  that the present  level of coverage  will be available in
the future or at a reasonable cost. Further, there can be no assurance that such
insurance will be available in the future as the Company expands its operations,
that  insurance,  if  available,  will be  sufficient to cover one or more large
claims,  or that  the  applicable  insurer  will be  solvent  at the time of any
covered loss.

                                   EMPLOYEES

         The Company  currently has  approximately 90 full time employees in its
beverage  distribution  business,  approximately  63 full time  employees in its
Prefco  subsidiary  and  approximately  60 full time  employees  in its  Carlton
subsidiary. The Company uses temporary employees from time to time.

         The Company  believes that its relations  with  employees are good. The
Company has never suffered a material work stoppage or slow down.

                               EXECUTIVE OFFICERS

         The executive  officers and certain other significant  employees of the
Company are as follows:



      Name           Age                  Position
      ----           ---                  --------
Eric D. Becker        33  Chairman of the Board; Director
Merrick M. Elfman     37  Vice Chairman; Director
Alan F. Sussna        39  Chief Executive Officer
William E. O'Leary    48  President -- Beverage Division; Director
Franklin Roth         55  President -- Prefco Subsidiary
Bill Campbell         60  President -- Carlton Subsidiary
John F. Izzo          45  Vice President -- Finance, Controller and Treasurer
Anthony J. Brocato    47  Vice President -- Sales and General Manager, Beverage
                          Division

         Eric D.  Becker is  Chairman  of the Board and a director  of the
Company.  He has held  these  positions since April 1991 when the Company's
business was  purchased  from a  predecessor.  Mr. Becker is also a co-founder
and Managing  Principal  of Sterling  Capital,  Ltd.  ("Sterling  Capital"),  a
private  investment  firm which was founded in 1984.  Since 1984,  Mr.  Becker
has been  Chairman  and Vice  President  of  Sterling  Group,  Inc.,  an
affiliate of Sterling Capital ("Sterling  Group").  Mr. Becker is also a
director of Omega Acquisition  Corporation ("Omega"),  a privately  held
photographic  products  company.  From March 1988 until  December  1992,  Mr.
Becker served as the  Chairman  and  director of Castle Food  Products  Corp.
("Castle"),  a Maryland  food  distribution company  which  commenced  Chapter 7
liquidation  proceedings  in March 1993.  Mr. Becker is a member of the Audit
Committee.

         Merrick M. Elfman is Vice  Chairman of the  Company,  a position he has
held since  February 1996, and has been a director of the Company since 1991. He
is also the founder of Elfman Venture  Partners,  Inc. and serves as Chairman of
Gray  Supply  Company,  Inc.  Prior to joining  Sterling  in 1987,  he worked in
institutional  sales at  Goldman  Sachs.  Prior to Goldman  Sachs,  he owned and
operated a chain of pharmacies in Boston.

         Alan F. Sussna is Chief Executive Officer, a position he has held since
March 15, 1996. As a partner in the  consulting  firms of McKinsey & Company and
Bain & Company, he has opened offices as well as led those firms' Consumer Goods
practices.  Mr.  Sussna  has also held  industry  positions  as  Executive  Vice
President - Sales and Marketing for Jim Beam Brands and in product management at
Frito-Lay, Inc.

         William E. O'Leary is  President of the Beverage  Division and prior to
the  Acquisitions,  served as President  of the Company,  a position he has held
since July 1993.  He has served as a director  of the  Company  since  September

                                      -8-

<PAGE>

1993.  Mr.  O'Leary served as the Company's Vice President - Sales from February
1992 until May 1992,  and as the Company's  Vice  President and General  Manager
from May 1992 until July 1993.  Prior to joining the Company,  Mr. O'Leary spent
11 years with Convergent  Dealership  Systems,  a division of Unisys, in various
capacities, most recently as Vice President - Sales.

         Franklin Roth is President of the Prefco subsidiary of the Company.  He
founded  Prefco in July 1986 and served as its  President  from its inception to
its acquisition by the Company.  Prior to that, he held various positions in the
senior management of Blue Ribbon, the predecessor to Prefco.

         Bill Campbell is the President of the Carlton subsidiary.  He served as
President  of  Carlton  from 1992 to its  acquisition  by the  Company.  In this
capacity, he has supervised all sales, purchasing and manufacturing  operations.
From 1983 to 1992,  he was  General  Manager  of the  company.  Prior to joining
Carlton,  he held  several  other  positions  in the  processed  meat  industry,
including five years with  Braunfels,  Inc. and seven years with Jimmy Dean Meat
Company.

         John F. Izzo is Vice President -- Finance and Treasurer of the Company,
positions  he has held since  September  1993.  Mr.  Izzo has also served as the
Controller  of the Company since April 1991.  Prior to joining the Company,  Mr.
Izzo served as the Controller of the Predecessor since 1987.

         Anthony J. Brocato is Vice  President  -- Sales and General  Manager of
the Beverage Division.  He has held these positions since October 1994, prior to
which he was Director of Sales and  Marketing for  Pepsi-Cola  of  Salisbury,  a
position he had held for 12 years.


ITEM 2.  PROPERTIES.

         Beverage  Operations.  The Company  operates  from a 44,000 square foot
leased facility in Baltimore,  Maryland. The Company's lease expires in March 1,
1997,  subject to a one-year  automatic  renewal  unless the tenant or  landlord
gives required prior notice of its intention not to renew the lease. The Company
believes that alternative facilities are available on economically  advantageous
terms.  The Company  believes that these current  facilities will be adequate to
meet its needs for the next two years; however, the Company may lease additional
space  on a  short-term  basis,  as it has in the  past,  to take  advantage  of
favorable buying  opportunities and to help ensure a constant supply of product.
In addition,  if required for growth, the Company might need to lease or acquire
additional warehouse space.

         Prefco  Subsidiary.  The Company leases two refrigerated  warehouses in
Houston.  One  warehouse  facility,  which  includes  offices  and serves as the
subsidiary's headquarters, has a total of 20,000 square feet. The lease for this
facility  expires in 2003. The second facility has a total of 5,300 square feet.
The lease for this facility  expires in May 1996. In addition to the  foregoing,
the  subsidiary  also leases two small  offices,  with a total of  approximately
2,500 square feet of space.

         Carlton   Subsidiary.   The  Company   leases  a  20,000   square  foot
manufacturing facility and a 2,000 square foot office facility in New Braunfels,
Texas.  The lease on the  manufacturing  facility  expires in September 1, 2000,
with two five-year renewal options, and the lease on the office facility expires
in October 1, 1997 with a two-year renewal option.

                                      -9-

<PAGE>


ITEM 3.  LEGAL PROCEEDINGS.

         The Company is a defendant in two lawsuits filed by former suppliers to
its  discontinued  frozen beverage  division.  The Company  believes that it has
substantial  defenses and intends to vigorously defend such claims. In addition,
the Company believes that the ultimate resolution of such claims will not have a
material  adverse  impact on the financial  position or results of operations of
the Company.


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

None to report.


                                    PART II

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

         Atlantic Beverage Company, Inc.'s Common Stock is principally traded on
the NASDAQ  Small Cap Market  under the symbol ABEV.  The  following  table sets
forth, for the periods indicated,  the high and low sale prices of the Company's
Common Stock as reported by NASDAQ.


                 STOCK PRICES                               STOCK PRICES
               High         Low                           High        Low
1994                                       1995
1st Quarter    7            4              1st Quarter    3 5/8       2 3/4
2nd  Quarter   5 1/2        3 3/4          2nd  Quarter   3 1/4       2 3/8
3rd Quarter    5            3 1/2          3rd Quarter    2 3/4       1 1/16
4th Quarter    4            2 5/8          4th Quarter    1 7/8       1 1/4


         As of March 29,  1996,  there were  approximately  90  shareholders  of
record  of the  Company's  Common  Stock.  The  Company  has not  paid  any cash
dividends  since its  initial  public  offering.  The Company  anticipates  that
earnings,  if  any,  will  be  retained  for use in the  business  or for  other
corporate  purposes,  and it is not  anticipated  that any cash dividends on the
common stock will be paid in the foreseeable future.


ITEM 6.  SELECTED FINANCIAL DATA.

         The following  selected financial data for the Company are based on the
consolidated  financial  statements  of the  Company.  The  amounts  provided as
statement of  operations  data and balance  sheet data for the periods  prior to
reorganization have not been adjusted to give effect to the Reorganization.  The
Company's financial  statements as of December 31, 1994 and 1995 and for each of
the three years in the period  ended  December  31,  1995,  including  the notes
thereto  and the  related  report of Arthur  Andersen  LLP,  independent  public
accounts, are included on pages F-1 through F-18 herein.

         The  acquisition of the business of the  Predecessor  was accounted for
under  the  purchase  method  of  accounting  and a  new  accounting  basis  was
established for the Company  beginning April 24, 1991.  Accordingly,  results of
operations  for the period prior to April 24, 1991 are not comparable to results
for subsequent periods.

                                      -10-

<PAGE>

         The  information  set forth below  should be read in  conjunction  with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and the  financial  statements of the Company  contained  elsewhere
herein.


<TABLE>
<CAPTION>
                                               (In thousands, except per share information)
                                 Predecessor                                  Company
                                 -----------   ----------------------------------------------------------------------
                                  January 1,     April 24,
                                   1991 to        1991 to      Year Ended    Year Ended    Year Ended    Year Ended
                                   April 23    December 31,   December 31,  December 31,  December 31,    December
                                                                                                             31,
                                 ------------- -------------- ------------- ------------- -------------- ------------
                                     1991          1991           1992          1993          1994          1995
================================ ============= ============== ============= ============= ============== ============
<S> <C>
Statement of Operations
Net Sales                              $5,858        $16,934       $22,807       $26,296        $24,152      $20,596
Gross profit, exclusive of
depreciation                            1,609          4,324         6,027         6,782          6,365        5,853

Income (Loss) from operations             406              5           384         1,216            278         (138)
Interest expense                           10            359           721           765              8           25
Interest income                            11              4             -             6             32           12
Other expenses                              -            119           533         1,311             52            -
Income (Loss) before minority
interest, income tax
(provision) benefit                       407           (469)         (870)         (853)           249         (152)
Minority interest in income
(loss) before income tax
(provision) benefit                         -           (117)         (217)          108              -            -
Income (Loss) before income
tax (provision) benefit                   407           (352)         (653)         (961)           249         (152)
Income tax (provision) benefit           (163)             -             -           350             15            -
Net income (loss) from
continuing operations                     244           (352)         (653)         (611)           264         (152)
Loss from discontinued
operations                                  -              -             -             -           (302)        (528)
Loss on disposal of
discontinued operations                     -              -             -             -              -       (2,410)
Net income (loss)                     $   244        $  (352)      $  (653)      $  (611)       $   (38)     $(3,091)
Net income (loss) per share                 -              -         (1.18)         (.48)          (.02)       (1.22)
================================ ============= ============== ============= ============= ============== ============
Balance Sheet Data
Cash                                   $1,835        $     7       $    38       $ 1,065        $   142      $     -
Working capital (deficit)                 854           (913)         (576)        2,590            963         (758)
Total assets                            3,163          4,878         4,410         4,940          5,175        2,921
Long-term debt                            695          2,239         2,630            15              -            -
Deferred compensation                       -            547           553             -              -            -
Other liabilities                           -            851           932             -              -            -
Minority interest                           -            333           115             -              -            -
Accumulated earnings (deficit)            289           (352)       (1,017)         (934)          (979)      (4,079)
Total stockholders' equity             $  301        $(1,262)      $(1,927)      $ 3,886        $ 4,073      $   562
(deficit)
================================ ============= ============== ============= ============= ============== ============
</TABLE>

                                      -11-

<PAGE>

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

General

         In November 1993, the Company  completed an initial public  offering of
1,173,150 shares of common stock at $6.50 per share (the "Offering").  Following
the Offering, the Company repaid approximately $4.2 million in debt and recorded
a net  non-cash  charge of  approximately  $1.3 million in  connection  with the
repayment of debt and the write-off of certain intangible assets.

         On  April  27,  1994,  the  Company  entered  into and  consummated  an
agreement  to acquire  certain  assets and  marketing  rights from Flying  Fruit
Fantasy,  USA,  Inc.  ("FFF")  for total  consideration  of  approximately  $1.2
million.  Under the terms of this  agreement,  the  Company  obtained  worldwide
marketing and distribution  rights to a frozen beverage served through automated
dispensing machines. In December 1995, the Company adopted a plan to discontinue
this  division.  As a  result,  in the  fourth  quarter  of  1995,  the  Company
recognized a one-time charge of  approximately  $2.4 million which reflected the
write-off of $1.1 million in equipment  and $0.9 million in  intangible  assets,
and costs of  approximately  $0.4  million  associated  with  discontinuing  the
operation.

         In the first quarter of 1996, a newly formed,  wholly-owned  subsidiary
of the Company acquired the outstanding common stock of Prefco, Inc. ("Prefco").
Prefco,  based in Houston,  Texas,  markets and distributes its own branded meat
products  as well as  unbranded  meat  products to the retail  grocery  trade in
Texas.  Also in the first quarter of 1996,  Carlton Foods,  Inc.("Carlton")  was
merged into  another  newly  formed,  wholly-owned  subsidiary  of the  Company.
Carlton, based in New Braunfels, Texas, is a manufacturer of branded and private
label  meat  products.  The  combined  purchase  price  for these  entities  was
approximately $11 million,  which included approximately $3.0 million in Carlton
refinanced  and assumed  debt.  In connection  with these  transactions  and the
financing thereof,  the Company incurred transaction costs of approximately $1.0
million, which will be reflected as an asset on the Company's balance sheet.

         In connection with such transactions,  the Company issued approximately
650,000 shares of common stock to the former  stockholders of Carlton and Prefco
and issued at a price of $1.05 per share  approximately  2.7  million  shares of
common  stock in a private  placement  to a limited  number of  purchasers.  The
Company also  entered into a loan  agreement  with  LaSalle  National  Bank (the
"LaSalle  Facility")  which provided a $4.5 million term loan and a $6.5 million
revolving line of credit. The Company also issued a subordinated promissory note
to the former  shareholders  of Prefco in the amount of $1.4  million.  The note
bears  interest  at 9% per annum and is payable  in  quarterly  installments  of
interest,  with a final  payment of all  outstanding  interest and  principal on
March 15, 2001.


Results of Operations

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

         Net Sales. Net sales decreased by  approximately  $3.6 million or 14.7%
from  approximately  $24.2  million  for the year  ended  December  31,  1994 to
approximately  $20.6 million for the year ended December 31, 1995. This decrease
reflects a decrease in case sales  resulting from increased  competition  during
the year.

         Gross Profit.  Gross profit decreased by approximately  $0.5 million or
8.0% from  approximately  $6.4  million for the year ended  December 31, 1994 to
approximately  $5.9 million for the year ended  December  31,  1995,  reflecting
lower net sales.  Gross profit as a percentage of net sales increased from 26.4%
to 28.4%. This increase was primarily the result of a shift toward higher margin
products and selected price increases.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses  decreased  approximately  $0.1  million  or 1.6%  from
approximately $6.1 million for the year ended December 31, 1994 to approximately
$6.0 million for the year ended December 31, 1995. As a percentage of net sales,
selling, general and

                                      -12-

<PAGE>

administrative expenses increased from 25.2% to 29.1%. This increase was
primarily the result of the decline in net sales.

         Income (Loss) from Operations.  Income (loss) from operations decreased
approximately  $0.4  million from income of  approximately  $0.3 million for the
year ended  December  31, 1994 to a loss of  approximately  $0.1 million for the
year ended December 31, 1995.  This decrease was primarily due to the decline in
net sales.

         Net Income (Loss) from  Continuing  Operations.  Net income (loss) from
continuing  operations  decreased  approximately  $0.4  million  from  income of
approximately  $0.3  million for the year ended  December  31, 1994 to a loss of
approximately  $0.1 million for the year ended December 31, 1995.  This decrease
was primarily due to the decline in net sales.

         Loss from Discontinued  Operations.  Loss from discontinued  operations
increased  approximately  $0.2 million from  approximately  $0.3 million for the
year ended  December 31, 1994 to  approximately  $0.5 million for the year ended
December  31,  1995.  These  losses  represent  the  results  of  the  Company's
discontinued  frozen beverage  division.  The Company  operated the division for
approximately eight months in 1994 and for 12 months in 1995.

         Loss on Disposal of Discontinued  Operations.  On December 31, 1995 the
Company recognized a charge of approximately $2.4 million in connection with its
decision to discontinue its frozen beverage division as described above.

         Net  Loss.   Net  loss  increased   approximately   $3.1  million  from
approximately $38,000 for the year ended December 31, 1994 to approximately $3.1
million for the year ended December 31, 1995. This increase  reflects the impact
of the decline in Net Sales as well as the  increase  in loss from  discontinued
operations and the loss on disposal of discontinued operations.


Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

         Net Sales.  Net sales decreased by  approximately  $2.1 million or 8.2%
from  approximately  $26.3  million  for the year  ended  December  31,  1993 to
approximately  $24.2 million for the year ended December 31, 1994. This decrease
resulted from decreased case sales in the Company's  distribution business which
reflected the combined  impact of weather and increased  competition  during the
year.

         Gross Profit.  Gross profit decreased by approximately  $0.4 million or
6.2% from  approximately  $6.8  million for the year ended  December 31, 1993 to
approximately  $6.4 million for the year ended December 31, 1994.  This decrease
resulted primarily from a decrease in net sales. Gross profit as a percentage of
net sales increased from 25.8% to 26.4%.  This increase was primarily the result
of a shift toward higher margin products in the Company's  distribution business
and an increase in purchase discounts.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses  increased  approximately  $0.5  million  or 9.4%  from
approximately $5.6 million for the year ended December 31, 1993 to approximately
$6.1 million for the year ended December 31, 1994. As a percentage of net sales,
selling,  general and administrative expenses increased from 21.1% to 25.2%. The
increase in selling,  general and administrative expenses reflected increases in
sales and  marketing  expenses and an increase in  administrative  expenses as a
result of the company's being publicly traded.

         Income from Operations.  Income from operations decreased approximately
$0.9  million  or 77.2%  from  approximately  $1.2  million  for the year  ended
December 31, 1993 to approximately  $0.3 million for the year ended December 31,
1994.  This decrease is primarily due to the factors  discussed in net sales and
selling,  general and  administrative  expenses.  As a percentage  of net sales,
income from operations decreased from 4.6% to 1.2%.

         Interest Expense. Interest expense decreased approximately $0.8 million
or 98.9% from approximately $0.8 million to approximately  $8,000. This decrease
resulted  primarily  from the  application  of proceeds from the Offering to the
repayment of indebtedness.

                                      -13-

<PAGE>

         Other Expenses.  Other expenses decreased  approximately $1.3 from $1.3
million for the year ended  December 31, 1993 to  approximately  $52,000 for the
year ended December 31, 1994. During 1993, the Company  incurred,  in connection
with the repayment of indebtedness following its initial public offering,  other
expenses  of  approximately  $1.3  million  resulting  from:  (i)  a  charge  of
approximately $0.3 million representing the write-off of capitalized transaction
costs  related  to such  debt;  (ii) a gain of  approximately  $0.1  million  in
connection with the prepayment of obligations due the owners of the Predecessor;
and (iii) a charge of  approximately  $1.1 million related to the release of the
owners of the  Predecessor  from a non-compete  agreement upon such  prepayment.
During 1994,  other expenses  totaled  approximately  $52,000 which  reflected a
charge of  approximately  $40,000  resulting  form the write-off of a consulting
agreement with Hamilton Investments,  Inc. and a charge of approximately $12,000
resulting  from the  settlement  of a lawsuit with one of the  Company's  former
vendors.

         Minority  Interest  in Income  Before  Income Tax  Provision.  Minority
interest in income before income tax provision decreased from approximately $0.1
million for the year ended December 31, 1993 to zero for the year ended December
31, 1994. Prior to the merger of Strategic Investment Corporation  ("Strategic")
into the Company  (the  "Reorganization"),  minority  interest in income  before
income  tax  provision  reflected  Strategic's  25%  interest  in the  income of
Maryland Beverage L.P.

         Income Tax Benefit.  Income tax benefit  decreased  from $350,000 for
the year ended  December 31, 1993 to $15,000 for the year ended December 31,
1994.

         Net Income (Loss) from  Continuing  Operations.  Net income (loss) from
continuing  operations  increased  approximately  $1.2  million  from a loss  of
approximately  $1.0  million for the year ended  December  31, 1993 to income of
approximately  $0.2 million for the year ended December 31, 1994.  This increase
primarily  reflects  factors  discussed in interest  expense and other  expenses
offset by those  discussed in net sales and selling  general and  administrative
expenses.

         Loss from Discontinued  Operations.  Loss from discontinued  operations
increased  approximately  $0.3 million from zero for the year ended December 31,
1993 to  approximately  $0.3 million for the year ended December 31, 1994.  This
loss  reflects  the  results  of  the  Company's  discontinued  frozen  beverage
division.  The Company operated the division for  approximately  eight months in
1994.

         Net  Loss.   Net  loss  decreased   approximately   $0.6  million  from
approximately $0.6 million for the year ended December 31, 1993 to approximately
$40,000 for the year ended December 31, 1994. This decrease  primarily  reflects
factors  discussed  in  interest  expense  and  other  expenses  offset by those
discussed in net sales,  selling general and administrative  expenses,  and loss
from discontinued operations.


Liquidity and Capital Resources

         Cash flow from  operating  activities  for the year ended  December 31,
1995 was approximately $0.1 million.  This amount was principally  affected by a
net loss, the add-back of depreciation and amortization,  loss from discontinued
operations and the loss on disposal of discontinued  operations,  an increase in
accounts payable and a decrease in accounts  receivable.  Cash used in investing
activities for the year ended December 31, 1995 was  approximately  $0.6 million
and  primarily  reflected  capital  expenditures.  Cash  provided  by  financing
activities was  approximately  $0.3 million and was principally  affected by the
repurchase of  approximately  $0.4 million of common stock, by net borrowings on
the Company's  revolving line of credit of approximately  $0.4 million and by an
increase in bank overdrafts of approximately $0.3 million.  Net cash used during
the period was approximately $0.1 million.

         Under an open-market  stock repurchase plan authorized by the Company's
board of directors,  the Company  repurchased 2,500 shares in the fourth quarter
of 1994,  20,500 shares during the third quarter of 1995 and 9,606 shares during
the fourth quarter of 1995. Under the terms of the LaSalle Facility, the Company
is  prohibited  from  repurchasing  its stock and has therefore  terminated  its
open-market  stock  repurchase  plan. In addition to repurchasing  shares in the
open market,  the Company  repurchased  375,432 shares in a private  transaction
from a single holder during the third quarter of 1995.

         The Company  believes  that cash  generated  from  operations  and bank
borrowings  will be  sufficient  to fund its working  capital  requirements  and
capital expenditures as currently contemplated for the next year. This belief is

                                      -14-

<PAGE>

based on projections of operating results which necessarily involve uncertainty.
Actual results may differ  materially  from  projections.  The LaSalle  Facility
contains  certain  covenants,  compliance  with  which  is a  condition  to  all
borrowings. No assurance can be given that the Company will remain in compliance
with such covenants throughout the term of the LaSalle Facility.

         The Company has recorded a tax asset of $365,000. A valuation allowance
exists as of December  31, 1995  because,  based on the weight of all  available
evidence,  management  believes it is more  likely  than not that the  remaining
deferred  tax asset will not be fully  realized.  To the extent that the Company
reports  taxable income in future  periods,  or events occur which indicate that
the  remaining  deferred  tax asset will more than likely not be  realized,  the
valuation  allowance may be further adjusted  resulting in a lower effective tax
rate in those periods.

         The Company,  from time to time,  reviews the possible  acquisition  of
other businesses.

Seasonality

         Consumer demand for beverage products  distributed by the Company tends
to be greater during warmer months.  Accordingly,  the Company's  beverage sales
and profits are  generally  highest in the second and third  calendar  quarters.
Management believes that this phenomenon will be mitigated by the results of its
food operations.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The Company's 1995  Financial  Statements and the Report of Independent
Auditors thereon are set forth on pages F-1 through F-18 of this Form 10-K/A.

         Supplementary data regarding  quarterly results of operations have been
omitted since it is not applicable.


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

None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Class III - Directors elected at the 1996 Annual Meeting:

         Alan F. Sussna.  Mr. Sussna is Chief Executive Officer, a position he
has held since March 15, 1996. As a partner in the consulting firms of McKinsey
& Company and Bain & Company, he has opened offices as well as led those firms'
Consumer Goods practices.  Mr. Sussna  has also held industry positions as
Executive Vice President - Sales and Marketing for Jim Beam Brands and in
product management at Frito-Lay, Inc.

         Rick  Inatome.  Mr.  Inatome has served as a director  of the
Corporation  since  September  1993.  Since 1976, Mr. Inatome, age 42, has
served as the Chairman of Inacom, a computer services firm.

         John A.  Miller.  Mr.  Miller  has served as a director  of the
Corporation  since  September  1993.  Mr. Miller,  age 42, has served as
President and a director of North  American  Paper Company since 1987. Mr.
Miller is a member of the Audit Committee and the Compensation Committee.

Members of Board of Directors Continuing in Office Following 1996 Annual Meeting

Class I - Directors Serving Until 1997 Annual Meeting:

         Eric D.  Becker.  Mr.  Becker is Chairman of the Board and a director
of the  Company.  He has held these positions  since April 1991 when the
Company's  business was  purchased  from a  predecessor.  Mr. Becker is also a

                                      -15-

<PAGE>

co-founder and Managing Principal of Sterling Capital, Ltd. ("Sterling
Capital"),  a private investment firm which was founded in 1984.  Since 1984,
Mr.  Becker has been  Chairman and Vice  President of Sterling  Group,  Inc., an
affiliate of Sterling  Capital  ("Sterling  Group") and the general  partner of
Sterling  Advisors,  LP  ("Sterling Advisors").  From March 1988 until  December
1992,  Mr.  Becker served as the Chairman and director of Castle Food Products
Corp., a Maryland food  distribution  company which commenced  Chapter 7
liquidation  proceedings in March 1993.  Mr. Becker is a member of the Audit
Committee.

         William E.  O'Leary.  Mr.  O'Leary is President of the  Corporation,  a
position  he has held  since July  1993,  and has  served as a  director  of the
Corporation   since  September  1993.  Mr.  O'Leary,   age  49,  served  as  the
Corporation's  Vice  President - Sales from February 1992 until May 1992, and as
the  Corporation's  Vice President and General  Manager from May 1992 until July
1993.  Prior to  joining  the  Corporation,  Mr.  O'Leary  spent  11 years  with
Convergent Dealership Systems, a division of Unisys, in various capacities, most
recently as Vice President - Sales.

         G. Cook Jordan,  Jr. Mr. Jordan has served as a director of the
Corporation  since  September 1993.  Since 1988, Mr. Jordan has served as a
Manager of Allstate Venture Capital,  which is affiliated with Allstate
Insurance Company.  Mr. Jordan,  age 44, is a director of Sylvan Learning
Systems,  Inc., a leading  provider of educational services in North America
through  franchised and  company-owned  learning  centers.  Mr. Jordan is a
member of the Audit Committee and the Compensation Committee.

Class II - Directors Serving Until 1998 Annual Meeting:

         Steven  M.  Taslitz.  Mr. Taslitz  has  served as a  director  of the
Corporation  since  November  1991. Mr. Taslitz is a co-founder and Managing
Principal of Sterling  Capital and Sterling Group. Mr. Taslitz has served as the
President of Sterling  Group since 1984.  Mr.  Taslitz,  age 36, is a director
of Resource  Media,  Inc., a privately-held radio broadcast company,  and is
president and a director of Arizona City Broadcasting  Corporation, a Delaware
corporation which filed a petition under the Federal bankruptcy laws in January
1995.

         Merrick M.  Elfman.  Mr.  Elfman is Vice  Chairman of the Company,  a
position he has held since  February 1996,  and has been a director of the
Company since 1991. He is also the founder of Elfman Venture  Partners,  Inc.
and serves as Chairman of Gray Supply Company, Inc.

                                      -16-

<PAGE>

Board Committees

         The  Board  of  Directors  has  established  an Audit  Committee  and a
Compensation  Committee and has no nominating  committee.  Selection of nominees
for the Board is made by the entire Board of Directors.

         The Audit  Committee  is composed  of Mr.  Becker,  Mr.  Jordan and Mr.
Miller. The Audit Committee is responsible for reviewing the internal accounting
procedures of the  Corporation  and the results and scope of the audit and other
services provided by the Corporation's independent auditors, consulting with the
Corporation's   independent   auditors  and   recommending  the  appointment  of
independent  auditors to the Board of Directors.  The Audit  Committee met three
times  during  the year  ended  December  31,  1995;  each  member  of the Audit
Committee attended each meeting.

         The  Compensation  Committee is composed of Mr. Jordan and Mr.  Miller.
The  Compensation  Committee  has the  authority  and performs all of the duties
related  to  the  compensation  of  management  of  the  Corporation,  including
determining  policies and practices,  changes in  compensation  and benefits for
management, determination of employee benefits and all other matters relating to
employee  compensation,  including matters relating to the administration of the
Corporation's Stock Option Plan (the "Plan"). The Compensation Committee met one
time during the year ended  December 31, 1995;  each member of the  Compensation
Committee attended that meeting.

Attendance at Meetings

         During the year ended  December 31, 1995,  the Board of Directors  held
six meetings.  All directors attended more than 75% of the meetings of the Board
of Directors.

Directors' Fees

         The  Corporation  has adopted a policy of paying  fees to  non-employee
directors  (other than Mr.  Becker) in the amount of $7,500 per year,  plus $500
for each  meeting  of the  Board  attended  and $250  for each  meeting  of each
committee thereof attended. Non-employee directors have also received options to
purchase an aggregate of 15,000 shares of Common Stock under the Company's Stock
Option Plan (the "Plan").  Assuming the adoption by  shareholders at this annual
meeting of the  Directors'  Stock Option Plan  described  in Proposal  Three and
attached hereto as Appendix A, non-employee  directors will receive,  in lieu of
cash directors'  fees,  options to purchase 10,000 shares  following each annual
meeting beginning with the 1996 annual meeting.  See Proposal Three,  Directors'
Stock Option Plan.

                                      -17-

<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION.


Executive Compensation

         The following  table sets forth annual and long-term  compensation  for
the fiscal  years ended  December  31,  1993,  1994 and 1995 for services in all
capacities to the  Corporation of (i) the Chief  Executive  Officer and (ii) the
Corporation's  other  executive  officers  whose total  annual  salary and bonus
exceeded $100,000 during such periods (the "Named Officers").

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                          Long-Term
                                          Annual Compensation                        Compensation Awards
                                   ---------------------------------        -------------------------------------
                                                                             Securities
                                                                             Underlying             All Other
Name and Position(1)               Year      Salary($)      Bonus($)        Options/SAR's      Compensation($)(5)
---------------------------        ----     ----------      --------        -------------      ------------------
<S> <C>
Eric D. Becker,                    1995          --              --                --                    --
Chairman of the Board(2)           1994          --              --                --                    --
                                   1993          --              --                --                    --

William E. O'Leary,                1995     166,126              --            25,000                 3,000
President(3)                       1994     160,680              --                --                    --
                                   1993     156,000          78,966           125,086                 2,937

Anthony J. Brocato, Jr.(4),        1995     100,000          22,433                --                 2,000
Vice President, Sales and          1994     100,000              --                --                    --
General Manager-Beverage           1993          --              --                --                    --
Division
</TABLE>

------------
(1)    This table presents information  concerning the Company's Chief Executive
       Officer and its three other most highly  compensated  executive  officers
       (determined  by reference to total  annual  salary and bonuses  earned by
       such officers) for the fiscal year ended December 31, 1995. Mr.  Franklin
       Roth and Mr. Alan Pauly joined the Company as executive officers in March
       1996.  Mr. Roth  receives an annual  salary of  $125,000,  and Mr.  Pauly
       currently  receives an annual salary of $100,000.  These executives would
       have been  included in this table had they been with the  Company  during
       the fiscal year ended December 31, 1995.
(2)    Although  Mr.  Becker  received  no  compensation  from the  Corporation
       during  1993,  1994 and 1995,  the Corporation  paid Sterling Group
       $101,041,  $144,200 and 148,526 in 1993, 1994 and 1995,  respectively,
       for certain  consulting  services,  including  the  services  of Mr.
       Becker.  See  "Certain  Transactions  with Management."  The Corporation
       entered into a five-year  Consulting  Agreement with Sterling Group
       (assigned by Sterling  Group to Sterling  Advisors),  effective  November
       29, 1993,  pursuant to which  Sterling Group agreed to provide
       consulting  services to the Corporation,  including the services of Mr.
       Becker,  and will receive  fees of  $144,200  per  annum,  increasing  by
       3% on  January  1 of each year the  agreement  is in effect.  Effective
       March 15,  1996,  the  Consulting  Agreement  was  terminated  and
       replaced  with a new Consulting  Agreement  pursuant to which  Sterling
       Group and Elfman  Venture  Partners,  Inc.  will provide consulting
       services to the  Corporation  for fees in the aggregate of $300,000 per
       annum,  increasing 5% on January 1 of each year the agreement is in
       effect. See "Consulting and Employment Agreements."
(3)    On March 15, 1996 and Mr. Sussna was named Chief  Executive  Officer of
       the Company.  Mr. O'Leary  continues his duties as President.
(4)    Mr.  Brocato  assumed his position in October  1994 and his salary for
       1994 is  presented  on an  annualized basis.
(5)    Includes contributions by the Corporation in the amount of $1,371, $1,391
       and $1,400 to its 401(k) Plan on behalf of Mr. O'Leary in 1993,  1994 and
       1995,  respectively.  Includes  contributions  by the  Corporation in the
       amount of $1,000 to its  401(k)  Plan on behalf of Mr.  Brocato  in 1995.
       Also includes life  insurance  premiums  paid by the  Corporation  in the
       amount of $1,566  on behalf of Mr.  O'Leary  in each of 1993 and 1994 and

                                      -18-

<PAGE>

       $1,600 in 1995 and life insurance premiums paid by the Corporation in the
       amount of $1,000 on behalf of Mr. Brocato in 1995.

Option Grants

         There were options to purchase  25,000  shares at an exercise  price of
$2.75 per share granted to Mr.  O'Leary during the year ended December 31, 1995.
There were no options granted to the Named Officers during the fiscal year ended
December 31, 1995. In March 1996, the  Corporation  granted  options to purchase
10,000  shares of Common  Stock to Mr. E. Becker at an exercise  price of $1.05,
determined  by the Board of Directors to be the fair market value of the options
on the date of the grant.  These options are subject to stockholder  approval of
Proposal Two herein  relating to an increase in the number of shares that may be
issued under the Corporation's Stock Option Plan.

Option Fiscal Year-End Values

         Shown below is information  with respect to the unexercised  options to
purchase the Corporation's  Common Stock granted in 1995 under the Plan. Neither
the Corporation's  Chief Executive Officer nor the Named Officers  exercised any
stock options during the year ended December 31, 1995.

<TABLE>
<CAPTION>
                                     Number of
                               Securities Underlying                        Value of Unexercised
                                Unexercised Options                         In-the-Money Options
                           Held at December 31, 1995(#)                    at December 31, 1995($)
                        -----------------------------------           ---------------------------------
Name                    Exercisable           Unexercisable           Exercisable         Unexercisable
----                    -----------           -------------           -----------         -------------
<S> <C>
Eric D. Becker(1)              --                      --                   --                   --
William E. O'Leary        100,052                  50,034                $0.00                $0.00
Anthony Brocato                --                      --                   --                   --
</TABLE>

(1) Options to purchase 10,000 shares of Common Stock were granted to Mr. Becker
    in March 1996 at an exercise price of $1.05 per share. These options are
    subject to stockholder approval.


                                      -19-

<PAGE>


Compensation Committee Report on Executive Compensation

         The Compensation  Committee of the Board of Directors has furnished the
following  report on its policies with respect to the  compensation of executive
officers.  The report is not deemed to be "soliciting material" or to be "filed"
with the SEC or  subject  to the  SEC's  proxy  rules or to the  liabilities  of
Section  18 of  the  1934  Act,  and  the  report  shall  not  be  deemed  to be
incorporated by reference into any prior or subsequent filing by the Corporation
under the Securities Act of 1933 or the 1934 Act.

         The  Corporation's  Board of  Directors  established  the  Compensation
Committee at the end of 1993,  and the  Committee  will  determine  and act upon
compensation decisions as described below in 1996 and future years. Decisions on
compensation of the Corporation's  executives officers generally will be made by
the  Compensation  Committee  of  the  Board  of  Directors.  No  member  of the
Compensation  Committee  is an employee of the  Corporation.  During  1995,  the
Committee  consisted  of  Mr.  Miller  and  Mr.  Jordan.  All  decisions  by the
Compensation  Committee  relating  to  the  compensation  of  the  Corporation's
executive  officers  will be reviewed by its full  Board,  except for  decisions
concerning grants under the Plan, if approved,  which will be made solely by the
Committee in order for the grants to satisfy certain requirements under the 1934
Act.

Compensation Policies Toward Executive Officers

         The  Corporation's  executive  compensation  policies  are  intended to
provide competitive levels of compensation that reflect the Corporation's annual
and long-term  performance  goals,  reward superior corporate  performance,  and
assist the Corporation in attracting and retaining qualified  executives.  Total
compensation  for the Named  Officers as well as the other senior  executives is
comprised  of  three  principal   components:   base  salary,  annual  incentive
compensation and grants of options to purchase the  Corporation's  Common Stock.
The base salaries are fixed at levels which the Compensation  Committee believes
are  comparable  to  those of  executives  of  similar  status  in the  beverage
distribution  industry.  In addition to base salary,  each executive  officer is
eligible  to  receive  an annual  bonus  tied to the  Corporation's  success  in
achieving   certain  annual   performance   measures,   as  well  as  individual
performance.  The Board of Directors and the Compensation Committee also believe
that longer-term incentives are appropriate to motivate and retain key personnel
and that stock  ownership by management  is beneficial in aligning  management's
and   stockholders'   interests  in  the   enhancement  of  stockholder   value.
Accordingly,  the  Compensation  Committee  intends to consider annual grants of
stock options to executive officers and other employees under the Plan.

                                      -20-

<PAGE>

         The following  describes in more specific  terms the three  elements of
compensation that implement the Committee's compensation reported for 1995:

         Base Salary.  Each year the Chief Executive  Officer  recommends to the
Committee a base salary level for senior executives whose salaries are not fixed
by contract. In this regard, Messrs.  O'Leary,  Brocato and Izzo's base salaries
are  fixed by  contract,  and Mr.  Becker  is not  directly  compensated  by the
Corporation.  In formulating such  recommendations,  the Chief Executive Officer
considers  local salary levels for comparable  positions,  informal  information
regarding  industry  standards  and  performance  judgments  as to the  past and
expected future contributions of the individual senior executives. The Committee
will  review  the  recommendations  and fix the base  salaries  of each of these
executive  officers  based on available  competitive  compensation  data and the
Committee's assessment of each officer's past performance and its expectation as
to future contributions.

         Annual  Incentive Bonus.  Annual incentive  bonuses are primarily based
upon  the  achievement  of  measurable   pre-tax  earnings   performance   goals
established at the beginning of the fiscal year. In the case of Mr.  O'Leary,  a
bonus  opportunity of up to 50% of base salary is based on achieving 100% of the
pre-tax  earnings goal. For John Izzo,  Vice President  Finance,  Controller and
Treasurer,  a bonus  opportunity  of up to 22.5% of base salary is based on this
pre-tax  earnings goal, and for Mr. Brocato,  a bonus  opportunity of $7,500 per
quarter based on the achievement of certain case sales.

         In addition to the executive  officers,  some level of annual incentive
bonus may currently be earned by the Corporation's  salaried  employees based on
the recommendation of the President.

         Long-Term Stock Option  Incentives.  Stock options  provide  executives
with the  opportunity to buy an equity  interest in the Corporation and to share
in the  appreciation  of the  value of the  Corporation's  Common  Stock.  Stock
options are granted at the fair  market  value price of the Common  Stock on the
date of grant,  are subject to vesting  over time and only have future value for
the executives if the stock price  appreciates  from the date of grant.  Factors
influencing stock option grants to executive officers include performance of the
Corporation, relative levels of responsibility, contributions to the business of
the Corporation and competitiveness with other growth oriented companies.  Stock
options  granted  to  executive  officers  and other  management  employees  are
approved by the Compensation Committee. In 1993, Mr. O'Leary was granted options
to purchase 125,086 shares of stock at an exercise price of $6.50 per share, 20%
of which options vested upon  stockholder  approval of the Plan and 20% of which
vested  or are to vest on the first  through  fourth  anniversary  dates of such
grant. In April 1995, the Board of Directors  determined to reprice the unvested
options.  The new  exercise  price for the  unvested  options is the fair market
value of the Common  Stock on the date on which the options  vest.  In addition,
there were  options to purchase  25,000 at an exercise  price of $2.75 per share
granted to the Chief Executive  Officer during the year ended December 31, 1995.
There were no options granted to the Named Officers during the fiscal year ended
December 31, 1995.

         Other   Compensation   Plans.  The  Corporation   maintains  a  defined
contribution  plan (the  "401(k)  Plan")  which is  intended  to satisfy the tax
qualification requirements of Sections 401(a), 401(k) and 401(m) of the Internal
Revenue  Code of  1986,  as  amended  (the  "Code").  The  Corporation's  senior
executives  are eligible to  participate in the 401(k) Plan and are permitted to
contribute  up to the maximum  percentage  allowable not to exceed the limits of
Code Sections 401(k),  404 and 415 (i.e.,  $9,240 in 1995). All amounts deferred
under  the  401(k)  Plan's  salary  reduction  feature  by  a  participant  vest
immediately  in  the  participant's  account  while  contributions  made  by the
Corporation  vest over a seven year  period in the  participant's  account.  The
Corporation will make a matching contribution to the 401(k) Plan equal to 25% of
each  participant's  contribution,  up to a maximum  of 6% of the  participant's
salary. The Corporation may make additional discretionary contributions.

         Benefits.  Benefits  offered to key executives are largely those that
are offered to the general  employee population,  such as group health and life
insurance  coverage and  participation  in the Company's 401(k) Plan. In
addition,  Mr.  O'Leary  is  provided  a  Corporation  automobile.  Benefits
are not tied  directly  to  corporate performance.

                                      -21-

<PAGE>

Mr. Becker's Compensation.

         Although Mr. Becker  received no  compensation  from the  Corporation
during 1995, the  Corporation  paid Sterling  Group  $148,526 in 1995 for
certain  consulting  services,  including  the  services of  Mr. Becker.  See
"Certain Transactions with Management" and "Consulting and Employment
Agreements."

         The Compensation  Committee  believes that the Corporation's  executive
compensation  policies and programs serve the interests of the  Corporation  and
its stockholders.  Total compensation to the executives is linked to Corporation
performance.

         Submitted by the Members of the Compensation Committee:



                                                     John A. Miller
                                                     G. Cook Jordan, Jr.

Consulting and Employment Agreements

         The Corporation  entered into a Consulting  Agreement (the  "Consulting
Agreement")  with Mr. Becker and Sterling  Group  (assigned by Sterling Group to
Sterling  Advisors),  effective November 29, 1993,  pursuant to which Mr. Becker
acted  as  a  part-time   consultant  to  the  Corporation  and  served  as  the
Corporation's  Chairman  of the Board and a director.  The initial  term of this
Consulting  Agreement  was from November 29, 1993 until  December 31, 1998.  The
term of the agreement was to extend for additional  one year periods  commencing
on January 1, 1999, and each January 1 thereafter,  unless and until  terminated
by written  notice  given by either  party to the other 12 months  prior to each
applicable   termination  date.  The  Consulting  Agreement  provided  that  the
Corporation  shall pay Sterling  Advisors a base fee of $140,000 per year, which
base fee shall  increase by 3% on January 1 for each year the agreement  remains
in effect.

         The Corporation,  Sterling Group and Messrs. Becker, Taslitz, D. Becker
and C.  Hoehn-Saric  entered into a  Non-Compete  and  Non-Disclosure  Agreement
containing certain  non-competition and  confidentiality  provisions pursuant to
which Sterling Group and Messrs.  Becker,  Taslitz, D. Becker and C. Hoehn-Saric
have agreed not to compete  with the  Corporation  for a period  ending one year
after  Sterling  Group's   consulting   relationship  with  the  Corporation  is
terminated,  nor will they solicit for employment  any director,  stockholder or
certain  employees of the  Corporation  during such period.  Such agreement also
provides  that  neither  Sterling  Group  nor such  persons  will  disclose  any
confidential  information  concerning  the  Corporation  and its business to any
other person or entity except as may be required by law.

         Effective  March 15, 1996, the Consulting  Agreement was terminated and
replaced  with a new  Consulting  Agreement  (the  "New  Consulting  Agreement")
pursuant to which  Sterling  Advisors and Elfman  Venture  Partners,  Inc.  will
provide  consulting  services to the Corporation for base consulting fees in the
aggregate  of  $300,000  per year,  increasing  5% on January 1 of each year the
agreement  is in effect.  The New  Consulting  Agreement  also  provides for the
reimbursement  of certain  expenses  incurred  by Sterling  Advisors  and Elfman
Venture  Partners,  Inc.  on behalf of the  Corporation.  Mr.  Becker  acts as a
consultant to the  Corporation and serves as the  Corporation's  Chairman of the
Board pursuant to the New  Consulting  Agreement.  The New Consulting  Agreement
provides  that the  Chairman is entitled to  participate  in any profit  sharing
plan,  retirement  plan,  group life insurance  plan or other  insurance plan or
medical  insurance  plan  maintained  by the  Corporation  for its  non-employee
directors, and reimbursement for certain fees of professional organizations. The
term of the New  Consulting  Agreement is from March 15, 1996 until December 31,
2001.  The  term of the  agreement  extends  for  additional  one  year  periods
commencing  January 1, 2002,  and each  January 1  thereafter,  unless and until
terminated by written  notice given by either party to the other 12 months prior
to each applicable  termination date. In addition to the base consulting fees, a
financing  fee equal to the greater of 2.5% of the total  consideration  paid by
the  Company in an  acquisition  shall be paid to Sterling  Advisors  and Elfman
Venture  Partners,  Inc. The New  Consulting  Agreement  provides  that Sterling
Advisors and Elfman Venture Partners, Inc. (or their respective principals) will
receive in the  aggregate  options to  purchase  25,000  shares of Common  Stock
during  each year in which  the New  Consulting  Agreement  is in  effect.  Such
options vest on each  December 31 at an exercise  price equal to 70% of the fair
market value of the Common

                                      -22-

<PAGE>

Stock on the  preceding  January 1. All  compensation payable by the Corporation
under the New Consulting  Agreement is payable 80% to Sterling Advisors and 20%
to Elfman Venture Partners, Inc.

         The Corporation  entered into an Employment  Agreement with Mr. O'Leary
in September 1993,  pursuant to which Mr. O'Leary will serve as the President of
the Corporation. The initial term of the agreement is from November 29, 1993 and
continues  until  December 31, 1996.  The term of the agreement is to extend for
additional  one year periods  commencing on January 1, 1997,  and each January 1
thereafter,  unless and until terminated by written notice given by either party
to the  other  three  months  prior to each  applicable  termination  date.  The
agreement  provides that the Corporation shall pay Mr. O'Leary base compensation
of $156,000 per year,  which base  compensation  shall increase by 3% on March 1
for each year the agreement  remains in effect.  Commencing in 1994, Mr. O'Leary
is also  eligible  to receive a bonus each year  equal to  one-half  of his base
salary for such year  provided (i) Mr.  O'Leary was a full-time  employee of the
Corporation  during such year and (ii) the Corporation  achieved 100% of pre-tax
earnings as set forth in the annual budget submitted by Mr. O'Leary and approved
by the  Board of  Directors  of the  Corporation.  Pursuant  to the terms of the
agreement,  Mr. O'Leary received options on November 29, 1993 to acquire 125,086
shares of the Common Stock of the Corporation,  20% of which options vested upon
stockholder  approval of the Plan and 20% of which  vested or are to vest on the
first through fourth anniversary dates of such grant. The exercise price of such
options is equal to $6.50 per share for options  that vested  before 1995 and is
equal to the fair  market  value of the Common  Stock on the date of vesting for
the  remainder  of  the  options.  The  Corporation  has  registered  under  the
Securities Act on Form S-8 the shares issuable under such options.  In addition,
during 1995,  Mr.  O'Leary  received  options to purchase an  additional  25,000
shares at an exercise  price of $2.75 per share which  options were  immediately
vested.

         The Corporation also entered into an Employment Agreement with Mr. Izzo
in   September   1993,   pursuant  to  which  Mr.  Izzo  is  to  serve  as  Vice
President-Finance,  Controller and Treasurer of the Company. The initial term of
the agreement is from November 29, 1993 until December 31, 1996. The term of the
agreement is to extend for additional one year periods  commencing on January 1,
1997,  and each January 1  thereafter,  unless and until  terminated  by written
notice given by either  party to the other six months  prior to each  applicable
termination date. The agreement provides that the Corporation shall pay Mr. Izzo
a base salary of $47,000 per year. On March 15, 1996, Mr. Izzo's base salary was
increased to $60,000 per year.

         Mr. O'Leary's and Mr. Izzo's employment agreements also contain certain
non-competition and confidentiality provisions pursuant to which Mr. O'Leary and
Mr. Izzo have each agreed not to compete  with the  Corporation  for a period of
eighteen months following  termination of their employment with the Corporation,
nor will they  solicit  for  employment  any  director,  stockholder  or certain
employees of the  Corporation  during such period.  The agreement  also provides
that Mr.  O'Leary and Mr. Izzo will not  disclose any  confidential  information
concerning the Corporation and its business to any other person or entity except
as may be required by law.

         Mr. Robert E. Groth, who was a party to a Consulting Agreement with the
Corporation  dated April 27, 1994 pursuant to which Mr. Groth acted as President
of  the  Corporation's   Flying  Fruit  Fantasy  Division,   resigned  from  the
Corporation's   Board  of  Directors  in  March  1996  in  connection  with  the
Corporation's  sale to Mr. Groth and related parties of certain  equipment for a
purchase price of $80,000  following the  Corporation's  decision to discontinue
the Flying Fruit Fantasy Division.

         The Corporation entered into an Employment  Agreement with Mr. Brocato,
in April 1995,  pursuant to which Mr. Brocato agreed to serve as Vice President,
Sales and General  Manager/Beverage  Division. The term of the agreement is from
April 24, 1995 and continues  until December 31, 1996. The term of the agreement
is to extend for additional one year periods  commencing on January 1, 1997, and
each January 1 thereafter,  unless and until  terminated by written notice given
by either party to the other three months prior to each  applicable  termination
date.  The  agreement  provides  that the  Company  shall pay Mr.  Brocato  base
compensation  of $100,000 per year.  Mr.  Brocato is eligible to receive a bonus
each quarter of $7,500 provided (i) Mr. Brocato was a full-time  employee of the
Company  during the preceding  quarter and (ii) the Company  achieve 100% of the
case sales'  budget as determined by the Company's CEO and approved by the Board
of  Directors in  conjunction  with the annual  budget.  The bonus for the first
three quarters of Mr. Brocato's employment was paid regardless of achievement of
case sales budget. Pursuant to the terms of the agreement,  Mr. Brocato received
options to purchase 7,000 shares on January 1, 1996 and will receive  options to
purchase an  additional  7,000  shares on January 1, 1997 and 1998.  The options
become  vested  three  years from the date of grant and have an  exercise  price
equal to the closing price on NASDAQ on the day before the options are granted.

                                      -23-

<PAGE>

Compliance with Section 16 of the Securities Exchange Act of 1934

         Section 16(a) of the  Securities  Exchange Act of 1934, as amended (the
"1934  Act"),  requires  the  Corporation's  officers,   directors  and  certain
beneficial  holders  of common  stock to file  reports  about  their  beneficial
ownership of the Corporation's  common stock.  Based solely on its review of the
copies  of such  reports  furnished  to the  Corporation  by its  directors  and
officers during and with respect to the year 1995, the Corporation believes that
none of its directors and officers  failed to file on a timely basis any reports
required by Section 16(a) of the 1934 Act.


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

         The  following  table  sets forth  certain  information  regarding  the
ownership  of Common  Stock as of April 15,  1996,  by each person  known by the
Corporation  to be the  beneficial  owner of more than five  percent (5%) of the
outstanding shares of Common Stock, each director of the Corporation, each Named
Officer (as defined below), and all executive officers and directors as a group.
The  information  presented  in the table is based upon the most recent  filings
with the Securities and Exchange  Commission by such persons or upon information
otherwise provided by such persons to the Corporation.


                                      Shared Beneficially
  Names of Beneficial Owners                Owned(1)         Percentage Owned
  --------------------------------    -------------------    ----------------

Douglas Becker....................        352,293(4)              6.13%
Eric D. Becker....................        402,293(4)(6)           7.00%
Merrick M. Elfman.................        417,394(3)(4)           7.25%
Philip L. Glass...................        370,265(8)              6.45%
Bruce Goldman.....................        613,411(2)             10.68%
Rudolf Christopher Hoehn-Saric....        383,035(4)(7)           6.66%
Rick Inatome......................         98,240(4)              1.71%
G. Cook Jordan, Jr................         18,000(4)               *
William E. O'Leary................        150,052(9)              2.57%
John A. Miller....................        100,240(4)              1.75%
Alan F. Sussna....................        152,900                 2.66%
Steven M. Taslitz.................        408,269(4)(5)           7.10%
Anthony Brocato...................          5,000                  *
All directors and executive officers
as a group (12 persons)...........      1,886,779                31.89%


*Less than one percent

(1)    Beneficial  ownership is determined in accordance  with the rules of the
       Securities and Exchange  Commission and  generally  includes  voting or
       investment  power with  respect to  securities.  Shares of Common Stock
       subject to options or warrants  currently  exercisable or exercisable
       within 60 days are deemed outstanding for  purposes of computing  the
       percentage  ownership of the person  holding such option or warrant but
       are not deemed  outstanding  for purposes of computing  the  percentage
       ownership of any other  person.  Except where indicated  otherwise,  and
       subject to community  property laws where applicable,  the persons named
       in the table above have sole voting and  investment  power with  respect
       to all shares of Common Stock shown as beneficially owned by them.
(2)    Includes  250,346 shares of Common Stock of the Corporation  held by KJT
       Gift Trust dated 1/11/94,  of which Mr.  Goldman is a  co-trustee.  Mr.
       Goldman  disclaims  beneficial  ownership of the shares held by the KJT
       Gift Trust.
(3)    Mr. Elfman shares beneficial ownership of such shares with his wife,
       Therese L. Wareham.

                                      -24-

<PAGE>

(4)    Includes  shares that may be acquired upon the exercise of options
       granted under the Plan.  With respect to Messrs.  D. Becker,  E. Becker,
       Hoehn-Saric,  Inatome and Taslitz,  also includes  options to purchase
       10,000  shares  granted to each of them in March 1996 at an exercise
       price of $1.05 per share, the fair market value of the Common Stock on
       the date of the option  grants.  These options are subject to
       shareholder  approval  of an increase in the number of shares that may be
       issued under the Corporation's Stock Option Plan.
(5)    Mr. Taslitz shares beneficial ownership of the shares with his wife,
       Kathy J. Taslitz.
(6)    Mr. Becker shares beneficial  ownership of such shares with his wife,
       Jill E. Becker,  the registered holder of such shares.
(7)    Mr. Hoehn-Saric beneficially owns these shares directly and indirectly as
       custodian for Gabriella  Hoehn-Saric and Rudolf Christopher  Hoehn-Saric,
       Jr.
(8)    Philip L. Glass shares  beneficial  ownership of such shares with his
       wife,  Ellen V. Glass.  Of the 370,265 shares of Common Stock
       attributable to the beneficial  ownership of Mr. and Mrs.  Glass,  84,770
       shares are held by the Glass  International  Ltd.  Profit  Sharing Plan
       and Trust dated 7/1/83 (the  "Trust").  Mr. and Mrs. Glass are
       co-trustees and also  beneficiaries  of the Trust. The balance of such
       shares of Common Stock of the  Corporation  are held by the Mr.  and Mrs.
       Glass  jointly,  either as joint  tenants  or tenants in common.
(9)    Includes 100,052 shares that may be acquired upon the exercise of options
       granted under the Plan.

                                      -25-

<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The Corporation and Sterling Group entered into a Management  Agreement
in September 1991  ("Management  Agreement")  pursuant to which the  Corporation
agreed  to pay  Sterling  Group a  management  fee (the  "Management  Fee")  for
providing  certain  management  services.  The  Corporation  also  agreed to pay
Sterling  Group a one-time  financing  fee,  payable over  eighteen  months (the
"Financing  Fee")  in  connection  with the  acquisition  of the  assets  of the
Corporation  from its  predecessor's  owners and the financing  thereof.  During
1995, the Corporation paid $148,526 in Management Fees. The Management Agreement
was terminated in connection with the initial public  offering.  The Corporation
also entered into a Consulting  Agreement with Sterling  Group.  See "Consulting
and Employment Agreements."

         In December 1995, the Corporation discontinued its Flying Fruit Fantasy
Division and sold assets in March 1996 related  thereto to Mr. Groth and related
parties for a purchase price of $80,000. The Corporation  established its Flying
Fruit  Fantasy  Division  in May 1994  through  the  acquisition  of assets  for
$500,000  in cash and  23,077  shares  of the  Corporation's  Common  Stock.  In
addition, pursuant to the terms of the asset purchase agreement, the Corporation
was required to pay $5,000 per month for 24 consecutive months from the May 1994
closing. In addition, the Sellers received one share of the Corporation's Series
A Non-Voting  Convertible  Preferred  Stock which  converted on October 27, 1996
into  $150,000  worth of the  Corporation's  common  stock (based on the average
closing  price on the five days  preceding  October  27,  1996  valued at $5 per
share).

         In March 1996, a Financing  Fee of $300,000 was paid to Sterling
Advisors  and Elfman  Venture  Partners, Inc. in connection with the acquisition
of Carlton Foods Corp. and Prefco Inc., described below.

         On January 25, 1996,  the  Company,  Carlton  Foods Corp.,  and Carlton
Foods,  Inc.  executed an Agreement  and Plan of Merger under which  Carlton was
merged into Carlton Foods Corp., a wholly owned subsidiary of the Company. Prior
to the March 15, 1996 closing date of the transaction,  certain of the Company's
shareholders  collectively  owned  approximately  40.7% of Carlton  Foods,  Inc.
Carlton was merged  with and into a  wholly-owned  subsidiary  of the Company in
consideration  of the issuance of 400,001 shares of the Company's  common stock.
The Company also refinanced and assumed  certain  indebtedness of Carlton in the
amount of approximately  $3,000,000,  which included  approximately  $300,000 in
principal and accrued interest owed by Carlton to certain of its stockholders.

         On March 15, 1996, the Atlantic Beverage Company,  Inc. (the "Company")
finalized  a  transaction  by  which  ABEV  Acquisition  Corp.,  a  wholly-owned
subsidiary  of the Company,  acquired all of the capital  stock of Prefco,  Inc.
("Prefco").  Prefco,  based in Houston,  Texas,  markets and distributes its own
branded meat products as well as unbranded  meat products to the retail  grocery
trade in Texas.  Simultaneously  with the  acquisition  of Prefco's  stock,  the
Company merged  Carlton Foods,  Inc.  ("Carlton")  into a separate  wholly-owned
subsidiary  of the  Company.  Carlton,  based  in  New  Braunfels,  Texas,  is a
manufacturer  of branded and private  label meat  products.  The newly  acquired
business operate as separate, wholly-owned subsidiaries of the Company under the
names Prefco Corp. and Carlton Foods Corp. Under the terms of the Stock Purchase
Agreement  executed on January 23, 1996,  among the Company,  ABEV, and Franklin
Roth and Allen Pauly (collectively,  the "Selling Shareholders"),  ABEV acquired
all  of  the  outstanding  capital  stock  of  Prefco.   Immediately  after  the
acquisition of Prefco,  it was merged into ABEV which  subsequently  changed its
name to Prefco Corp. The purchase  price under the Stock Purchase  Agreement was
$7,400,000,  of which  $6,000,000 was paid in cash at the March 15, 1996 closing
and  $1,400,000  will be paid  under a  subordinated  note.  The note  will bear
interest  at 9% per annum  and will be  payable  in  quarterly  installments  of
interest,  with the final  payment of all  outstanding  interest  and  principal
payable  on March 15,  2001,  the fifth  anniversary  of the  closing  date.  In
addition  to  the  amounts  paid  in  cash  and  under  the  note,  the  Selling
Shareholders  each received  25,000 shares of the  Company's  Common Stock.  The
Company will also,  under certain  conditions based primarily upon the growth in
annual  income,   deliver  to  the  Selling  Shareholders  options  to  purchase
additional  shares of the Company  during  each of the four  fiscal  years after
closing.  In  addition  to the assumed  debt and the  issuance  of a  $1,400,000
subordinated  note to the Selling  Shareholders of Prefco,  the Company financed
the  acquisitions  and merger through (i) a loan agreement with LaSalle National
Bank which  provided a $4,500,000  term loan and a $6,500,000  revolving line of
credit and (ii) a $2,800,000 private placement of approximately 2,700,000 shares
of the Company's unregistered common stock.

                                      -26-

<PAGE>

                                    PART IV

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

(a)(1)  Financial Statements

         Atlantic Beverage Company, Inc. has set forth on pages F-1 through F-18
of this Form 10-K the following financial statements of the Company:

                  ATLANTIC BEVERAGE
                  COMPANY, INC.:                             Page(s)

                  Report of Independent Public
                  Accountants                                  F-2

                  Consolidated Balance Sheets as of
                  December 31, 1994 and 1995                   F-3

                  Consolidated Statements of
                  Operations For the Years Ended
                  December 31, 1993, 1994 and 1995             F-4

                  Consolidated Statements of Stockholders'
                  (Deficit) Equity For the Years Ended
                  December 31, 1993, 1994 and 1995             F-5

                  Consolidated Statements of Cash Flows For
                  The Years Ended December 31, 1993,
                  1994 and 1995                                F-6

                  Notes to Consolidated Financial
                  Statements                                   F-8

(a)(2)  Financial Statement Schedules

         Financial  statement  schedules have been omitted since they are either
not required, not applicable, or the information is otherwise included.

(a)(3)  Exhibits

         The  following  exhibits are filed with this Form 10-K or  incorporated
herein by reference to the document set forth next to the exhibits listed below:

 Exhibit
  Number                              Description
 -------                              -----------
    2.01    Agreement and Plan of Merger dated as of September 15, 1993 ("Merger
            Agreement") among the Company, Strategic Investment Corporation and
            T. Rowe Price Strategic Partners Fund, L.P. ("Strategic Fund").

    2.02    Form of Amendment to Merger Agreement.

 Exhibit
  Number                              Description
 -------                              -----------
    3.01    Certificate of Incorporation of the Company, including all
            amendments thereto.

    3.02    By-Laws of the Company.

    3.03    Certificate of Designation of the Series A Non-Voting Convertible
            Preferred Stock of the Company (filed as an exhibit to the Company's
            Quarterly Report on Form 10-Q for the  Quarter  ended  June 30,
            1994 and  incorporated  herein by reference)

                                      -27-

<PAGE>

    4.01    Specimen Stock Certificate.

    4.02    Registration Rights Agreement between Strategic Fund and the
            Company.

    4.03    Stock Option Plan.

   10.01    Distribution Agreement dated as of November 25, 1992 between Joseph
            Victori Wines, Inc. and Maryland Beverage, L.P., as amended.(**)

   10.02    Letter dated March 21, 1994 from the Company to Ginger  Group,  Ltd.
            (filed as an exhibit  to the  Company's  Annual  Report on Form 10-K
            filed with the Securities and Exchange Commission for the year ended
            December 31, 1993.)

   10.03    Distribution Agreement dated April 12, 1991 between Ginger Group,
            Ltd. and Castle Food Products Corporation, as amended.(**)

   10.04    Non-Compete and Non-Disclosure Agreement dated September 24, 1993
            among the Company, Sterling Group, Inc., Eric D. Becker, Steven M.
            Taslitz, Douglas L. Becker and R. Christopher Hoehn-Saric.

   10.05    Employment Agreement dated September 24, 1993 between the Company
            and William E. O'Leary.

   10.06    Employment Agreement dated September 24, 1993 between the Company
            and John F. Izzo.

   10.07    Warehouse Lease dated August 5, 1988 between Hill Management
            Services, Inc. and Maryland Beverage Company, Inc., as amended.

   10.08    Consulting Agreement dated September 24, 1993 among the Company,
            Eric D. Becker and Sterling Group, Inc.

   10.09    Assignment of Consulting Agreement dated December 31, 1993 among the
            Company, Sterling Group, Inc. and Sterling Advisors, L.P. (filed as
            an exhibit to the Company's Annual Report on Form 10-K filed with
            the Securities and Exchange Commission for the year ended December
            31, 1993.)

   10.10    Form of Tax Indemnification Agreement.

   10.11    Amendment to Employment Agreement dated September 24, 1993 between
            the Company and William E. O'Leary.

   10.12    Asset Purchase Agreement, dated April 7, 1994, among the Company,
            Flying Fruit Fantasy, U.S.A., Inc., Groth Industries, Inc. and
            Robert E. Groth and Georgia B. Groth (filed as an exhibit to the
            Company's Form 8-K filed with the Securities and Exchange Commission
            on July 11, 1994 and incorporated herein by reference)

   10.13    Agreement  for License,  dated as of April 27, 1994,  between  Groth
            Industries, Inc. as the Beverage Company (filed as an exhibit to the
            Company's Form 8-K filed with the Securities and Exchange Commission
            on July 11, 1994 and incorporated herein by reference)

   10.14    Consulting Agreement,  dated April 27, 1994, between the Company and
            Robert E. Groth (filed as an exhibit to the Company's Form 8-K filed
            with the  Securities  and Exchange  Commission  on July 11, 1994 and
            incorporated herein by reference)

   10.15+   Stock Purchase  Agreement dated as of January 23, 1996,  between the
            among the Company,  ABEV Acquisition Corp.,  Franklin Roth and Allen
            Pauly (filed as an exhibit to the Company's  Form 8-K filed with the
            Securities and Exchange Commission on April 1, 1996 and incorporated
            herein by reference)

   10.16+   Employment  Agreement dated March 15, 1996 between ABEV  Acquisition
            Corp.  and Franklin Roth (filed as an exhibit to the Company's  Form
            8-K filed with the  Securities  and Exchange  Commission on April 1,
            1996 and incorporated herein by reference)

   10.17+   Agreement  and Plan of Merger Dated as of January 25, 1996 among the
            Company,  Carlton Foods Corp., and Carlton Foods,  Inc. (filed as an
            exhibit  to the  Company's  Form 8-K filed with the  Securities  and
            Exchange  Commission  on April 1,  1996 and  incorporated  herein by
            reference)

   10.18+   $1.4 Million  Subordinated  Note made by ABEV  Acquisition  Corp. in
            favor of Franklin  Roth and Allen Pauley (filed as an exhibit to the
            Company's Form 8-K filed with the Securities and Exchange Commission
            on April 1, 1996 and incorporated herein by reference)

 Exhibit
  Number                               Description
 -------                               -----------
   10.19+   Loan  and  Security  Agreement  dated  as of March  15,  1996  among
            Atlantic  Beverage  Company,  Inc.,  Carlton  Foods  Corp.  and ABEV
            Acquisition  Corp., as borrowers,  and LaSalle National Bank, as the
            Lender (filed as an exhibit to the Company's Form 8-K filed with the
            Securities and Exchange Commission on April 1, 1996 and incorporated
            herein by reference)

   10.20+   Stock  Purchase  Agreement  dated as of March  15,  1996  among  the
            Company and  Purchasers  under the $2.8  million  Private  Placement
            (filed  as an  exhibit  to the  Company's  Form 8-K  filed  with the
            Securities and Exchange Commission on April 1, 1996 and incorporated
            herein by reference)

   11.01    Statement Regarding Computation of Pro Forma Per Share Earnings.(*)

                                      -28-

<PAGE>

   11.02    Statement Regarding Computation of Historical Weighted Average
            Common Shares.(*)

   23.01    Consent of Independent Public Accountants(*)

   99.01    Limited Partnership Agreement of Maryland Beverage L.P.

--------------
         ** Confidential treatment was afforded for certain portions of these
agreements.

         *  Filed with the  Company's  Annual  Report on Form 10-K for the
fiscal year ended December 31, 1995.  Unless  otherwise  noted, all other
Exhibits have either been  previously  filed or incorporated by reference as an
exhibit to the Registrant's Registration Statement on Form S-1 (No. 33-68522).

         +  Filed  as an  exhibit  to  the  Company's  Form  8-K  filed  with
the Securities and Exchange  Commission on April 1, 1996 and incorporated
herein by reference.


(b)  Report on Form 8-K

         Atlantic Beverage Company, Inc.  Form 8-K filed April 1, 1996

                                      -29-


<PAGE>

                                   SIGNATURES

                  Pursuant  to the  requirements  of  Section 13 or 15(d) of the
Securities  Exchange Act of 1934,  the Company has duly caused this Report to be
signed on its behalf by the  undersigned,  thereunto duly  authorized on January
10, 1997.


                                      ATLANTIC BEVERAGE COMPANY, INC.



                                      By: /S/ Merrick M. Elfman
                                          ----------------------------------
                                          Chairman of the Board and Director

                                      -30-


<PAGE>


                         ATLANTIC BEVERAGE COMPANY, INC.

                         FINANCIAL STATEMENTS
                         AS OF DECEMBER 31, 1994 AND 1995
                         TOGETHER WITH REPORT OF
                         INDEPENDENT PUBLIC ACCOUNTANTS


<PAGE>

                        ATLANTIC BEVERAGE COMPANY, INC.


                         INDEX TO FINANCIAL STATEMENTS



                                                                        Page

Report of Independent Public Accountants                                 F-2

Consolidated Balance Sheets - as of December 31, 1994
    and 1995                                                             F-3

Consolidated Statements of Operations -
    for the years ended December 31, 1993, 1994 and 1995                 F-4

Consolidated Statements of Stockholders' (Deficit) Equity -
    for the years ended December 31, 1993, 1994 and 1995                 F-5

Consolidated Statements of Cash Flows -
    for the years ended December 31, 1993, 1994 and 1995                 F-6

Notes to Consolidated Financial Statements                               F-8

                                      F-1

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholders of
Atlantic Beverage Company, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheets  of  Atlantic
Beverage Company, Inc. (a Delaware  corporation,  successor to Maryland Beverage
Company,  Inc., a Maryland  corporation)  and its  wholly-owned  (majority-owned
through November 29, 1993) limited partnership as of December 31, 1994 and 1995,
and the related consolidated  statements of operations,  stockholders' (deficit)
equity and cash flows for each of the three years in the period  ended  December
31, 1995.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Atlantic Beverage Company, Inc.
as of December 31, 1994 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995.



Baltimore, Maryland,
    March 15, 1996

                                      F-2

<PAGE>

                        ATLANTIC BEVERAGE COMPANY, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                  --------------------------------
                                                                                        1994              1995
                                                                                  ---------------   --------------
<S> <C>
                         ASSETS

CURRENT ASSETS:
    Cash                                                                          $      142,395    $           -
    Accounts receivable, net of allowance for doubtful accounts
       of $71,000 and $35,000, respectively                                            1,000,329           798,385
    Inventory                                                                            692,969           630,968
    Prepaid expenses and other                                                           229,251           171,467
                                                                                  --------------    --------------

          Total current assets                                                         2,064,944         1,600,820

EQUIPMENT, net (Note 2)                                                                  521,491           706,518

NONCOMPETE AGREEMENTS, net (Note 3)                                                      156,000           116,000
DEFERRED TAX ASSET, net (Note 6)                                                         365,000           365,000

GOODWILL, net (Note 1)                                                                   146,365            30,666
OTHER ASSETS, net (Note 4)                                                                32,748           102,143
NET NON-CURRENT ASSETS OF DISCONTINUED
    OPERATIONS (Note 14)                                                               1,888,291                -
                                                                                  --------------    -------------

          Total Assets                                                            $    5,174,839    $    2,921,147
                                                                                  ==============    ==============
              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Bank overdraft                                                                $           -     $      297,458
    Line of credit (Note 7)                                                                   -            440,000
    Current portion of notes payable                                                       6,932               788
    Accounts payable                                                                     658,139           855,846
    Accrued expenses                                                                      83,712            42,528
    Net current liabilities of discontinued operations (Note 14)                         353,546           722,173
                                                                                  --------------    --------------

          Total current liabilities                                                    1,102,329         2,358,793
                                                                                  --------------    --------------

COMMITMENTS AND CONTINGENCIES (Notes 9 and 15)

STOCKHOLDERS' EQUITY:
    Preferred stock, $.01 par value, 5,000,000 shares authorized;
       none issued                                                                            -                 -
    Series A nonvoting convertible preferred stock, $.01 par value;
       1 share authorized, issued and outstanding in 1994                                140,357                -
    Common stock, $.01 par value; 30,000,000 shares authorized;
       2,697,955 and 2,727,955 shares issued in 1994 and 1995,
       respectively                                                                       26,980            27,280
    Additional paid-in capital                                                         4,891,552         5,041,252
    Accumulated deficit                                                                 (978,879)       (4,079,108)
    Less: Treasury stock, at cost, 2,500 and 408,038 shares,
          respectively                                                                    (7,500)         (427,070)
                                                                                  --------------    --------------

          Total Stockholders' Equity                                                   4,072,510           562,354
                                                                                  --------------    --------------

          Total Liabilities and Stockholders' Equity                              $    5,174,839    $    2,921,147
                                                                                  ==============    ==============
</TABLE>

      The accompanying notes are an integral part of these balance sheets.

                                      F-3

<PAGE>

                        ATLANTIC BEVERAGE COMPANY, INC.


                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                --------------------------------------------------
                                                                      1993             1994               1995
                                                                ---------------   ---------------   --------------
<S> <C>
NET SALES                                                       $   26,295,942    $   24,151,796    $   20,596,436
COST OF GOODS SOLD, exclusive of depreciation
    shown below                                                     19,513,667        17,787,253        14,743,435
                                                                --------------    --------------    --------------

          Gross profit                                               6,782,275         6,364,543         5,853,001
                                                                --------------    --------------    --------------
SELLING, GENERAL AND ADMINISTRATIVE
    EXPENSES:
    Salaries and benefits                                            2,930,301         3,234,935         3,087,421
    Other operating expenses                                         1,798,196         2,313,401         2,367,239
    Depreciation and amortization (Notes 2, 3 and 4)                   736,309           394,261           388,321
    Management and consulting fees to related
       parties (Note 11)                                               101,041           144,200           148,200
                                                                --------------    --------------    --------------
          Total selling, general and administrative
              expenses                                               5,565,847         6,086,797         5,991,181
                                                                --------------    --------------    --------------

    Income (loss) from operations                                    1,216,428           277,746          (138,180)

INTEREST INCOME                                                          5,800            31,836            11,654

INTEREST EXPENSE:
    Related parties                                                    654,421                -                 -
    Other (Notes 4 and 7)                                              110,337             8,350            25,394

OTHER EXPENSES, net (Note 12)                                        1,310,824            51,764                -
                                                                --------------    --------------    --------------
          Loss before minority interest and
              income tax benefit                                      (853,354)          249,468          (151,920)
MINORITY INTEREST IN LOSS BEFORE
    INCOME TAX BENEFIT                                                 107,631                -                 -
                                                                --------------    --------------    --------------

          (Loss) income before income tax benefit                     (960,985)          249,468          (151,920)

INCOME TAX BENEFIT (Note 6)                                            350,000            15,000                -
                                                                --------------    --------------    --------------

          Net (loss) income from continuing operations                (610,985)          264,468          (151,920)
LOSS FROM DISCONTINUED OPERATIONS
    (Note 14)                                                               -           (302,203)         (528,466)
LOSS ON DISPOSAL OF DISCONTINUED
    OPERATIONS (Note 14)                                                    -                 -         (2,410,200)
                                                                --------------    --------------    --------------

NET LOSS                                                        $     (610,985)   $      (37,735)   $   (3,090,586)
                                                                ==============    ==============    ==============
    NET (LOSS) INCOME FROM CONTINUING
       OPERATIONS AFTER ACCRETION OF
       PREFERRED STOCK                                          $     (610,985)   $      257,202    $     (161,563)
                                                                ==============    ==============    ==============

(LOSS) INCOME PER COMMON SHARE DATA:
    NET (LOSS) INCOME FROM CONTINUING
       OPERATIONS                                               $         (.48)   $          .09    $         (.06)
    LOSS FROM DISCONTINUED OPERATIONS,
       INCLUDING LOSS ON DISPOSAL                                         -                 (.11)            (1.16)
                                                                --------------    --------------    --------------
    NET LOSS                                                    $         (.48)   $         (.02)   $        (1.22)
                                                                ==============    ==============    ==============
    WEIGHTED AVERAGE SHARES OUTSTANDING                              1,261,495         2,710,950         2,528,532
                                                                ==============    ==============    ==============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-4

<PAGE>

                        ATLANTIC BEVERAGE COMPANY, INC.


           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)



<TABLE>
<CAPTION>
                                                     Series A Nonvoting
                                                         Convertible
                                                      Preferred Stock                     Common Stock
                                             --------------------------------------------------------------------
                                                  Shares            Amount           Shares            Amount
                                             ---------------   ---------------  ---------------   ---------------
<S> <C>
BALANCE, December 31, 1992                               -     $           -         1,126,296    $       11,263
    Final distributions to
       shareholders resulting from
       "S" Corporation termination                       -                 -                -                 -
    Termination of "S" Corporation
       status                                            -                 -                -                 -
    Issuance of common stock for
       minority interest in
       partnership                                       -                 -           375,432             3,754
    Issuance of common stock in
       connection with initial public
       offering, net of expenses                         -                 -         1,173,150            11,732
    Net loss                                             -                 -                -                 -
                                             --------------    --------------   --------------    --------------

BALANCE, December 31, 1993                               -                 -         2,674,878            26,749
    Issuance of common stock                             -                 -            23,077               231
    Issuance of preferred stock                           1           133,091               -                 -
    Accretion of preferred stock                         -              7,266               -                 -
    Purchase of treasury stock                           -                 -                -                 -
    Other                                                -                 -                -                 -
    Net loss                                             -                 -                -                 -
                                             --------------    --------------   --------------    --------------

BALANCE, December 31, 1994                                1           140,357        2,697,955            26,980
    Purchase of treasury stock                           -                 -                -                 -
    Accretion of preferred stock                         -              9,643               -                 -
    Conversion of preferred stock
       to common stock                                   (1)         (150,000)          30,000               300
    Net loss                                             -                 -                -                 -
                                             --------------    --------------   --------------    --------------

BALANCE, December 31, 1995                               -     $           -         2,727,955    $       27,280
                                             ==============    ==============   ==============    ==============
</TABLE>


<TABLE>
<CAPTION>
                                          Additional                                  Treasury Stock                    Total
                                            Paid-in          Accumulated     ---------------------------------       Stockholders'
                                            Capital            Deficit          Shares            Amount           Equity (Deficit)
                                      ------------------   ----------------  ---------------   ---------------     ----------------
<S> <C>
BALANCE, December 31, 1992              $    (921,197)       $  (1,016,927)              -     $           -       $  (1,926,861)
    Final distributions to
       shareholders resulting from
       "S" Corporation termination                 -              (160,000)              -                 -            (160,000)
    Termination of "S" Corporation
       status                                (854,034)             854,034               -                 -                  -
    Issuance of common stock for
       minority interest in
       partnership                            218,937                   -                -                 -             222,691
    Issuance of common stock in
       connection with initial public
       offering, net of expenses            6,349,895                   -                -                 -           6,361,627
    Net loss                                       -              (610,985)              -                 -            (610,985)
                                      ---------------      ---------------   --------------    --------------    ---------------

BALANCE, December 31, 1993                  4,793,601             (933,878)              -                 -           3,886,472
    Issuance of common stock                  103,623                  -                 -                 -             103,854
    Issuance of preferred stock                    -                   -                 -                 -             133,091
    Accretion of preferred stock                   -                (7,266)              -                 -                  -
    Purchase of treasury stock                     -                    -             2,500            (7,500)            (7,500)
    Other                                      (5,672)                  -                -                 -              (5,672)
    Net loss                                       -               (37,735)              -                 -             (37,735)
                                      ---------------      ---------------   --------------    --------------    ---------------

BALANCE, December 31, 1994                  4,891,552             (978,879)           2,500            (7,500)         4,072,510
    Purchase of treasury stock                     -                    -           405,538          (419,570)          (419,570)
    Accretion of preferred stock                   -                (9,643)              -                 -                  -
    Conversion of preferred stock
       to common stock                        149,700                    -                -                 -                  -
    Net loss                                       -            (3,090,586)              -                 -          (3,090,586)
                                      ---------------      ---------------   --------------    --------------    ---------------

BALANCE, December 31, 1995              $   5,041,252        $  (4,079,108)         408,038    $     (427,070)     $     562,354
                                        =============        =============   ==============    ==============      =============
</TABLE>

        The accompanying notes are an integral part of these statements.

F-5                                                                          F-6

<PAGE>

                                                                     Page 1 of 2

                        ATLANTIC BEVERAGE COMPANY, INC.


                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                  --------------------------------------------------
                                                                        1993              1994             1995
                                                                  ---------------   ---------------  ---------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                      $     (610,985)   $      (37,735)  $   (3,090,586)
    Adjustments to reconcile net loss to cash flows
       provided by operating activities-
          Loss on disposal of discontinued operations                         -                 -         2,410,200
          Loss from discontinued operations                                   -            302,203          528,466
          Depreciation and amortization                                  852,157           397,823          398,441
          Deferred income tax benefit                                   (350,000)          (15,000)              -
          Minority interest in net loss                                  107,631                -                -
          Write-off of deferred financing costs                          311,364                -                -
          Write-off of non-compete agreement                           1,138,888                -                -
          Write-off of consulting agreement                                   -             39,800               -
          Gain from repayment of debt                                   (139,428)               -                -
          Gain on disposal of assets                                      (6,547)               -                -
          (Increase) decrease in accounts receivable, net               (315,539)          325,906          201,944
          (Increase) decrease in inventory                              (693,116)          440,226           62,001
          (Increase) decrease in prepaid expenses and
              other assets                                               (61,990)         (124,252)          57,784
          (Decrease) increase in accounts payable                        537,974          (260,579)         197,707
          Increase (decrease) in accrued expenses                       (226,600)          (18,598)         (41,184)
          Payment of deferred compensation                              (432,404)               -                -
                                                                  --------------    --------------   -------------
    Net cash flows provided by (used in)
       operating activities of-
          Continuing operations                                          111,405         1,049,794          724,773
          Discontinued operations                                             -           (178,157)        (597,626)
                                                                  --------------    --------------   --------------

              Net cash flows provided by operating
                 activities                                              111,405           871,637          127,147
                                                                  --------------    --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of equipment                                            (107,736)         (853,131)        (493,805)
    Proceeds from sale of equipment                                       14,399                -               533
    Cash paid for Flying Fruit Fantasy acquisition                            -           (578,939)              -
    Payment of transaction costs related to
       Flying Fruit Fantasy acquisition                                       -           (217,030)              -
    Purchase of distribution rights                                      (25,000)          (50,000)              -
    Payment in consideration of noncompete
       agreement                                                        (200,000)               -                -
    Payment in consideration of consulting agreement                     (60,000)               -                -
    Deferred acquisition costs (Note 16)                                      -                 -           (88,014)
                                                                  --------------    --------------   --------------

              Net cash flows used in investing
                 activities                                             (378,337)       (1,699,100)        (581,286)
                                                                  --------------    --------------   --------------
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-7

<PAGE>

                                                                     Page 2 of 2

                        ATLANTIC BEVERAGE COMPANY, INC.


                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                  ----------------------------------------------------
                                                                        1993              1994             1995
                                                                  ---------------   ---------------  -----------------
<S> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
    Increase (decrease) in bank overdraft                         $     (338,375)   $           -    $      297,458
    Net borrowings (repayments) under line of credit                    (889,253)               -           440,000
    Repayments of notes payable to related parties                    (2,600,000)               -                -
    Repayments of notes payable                                          (42,852)          (60,671)          (6,144)
    Payment of exclusivity fees                                         (300,000)               -                -
    Payments of deferred financing costs                                 (84,971)          (21,374)              -
    Issuance of common stock, net                                      6,361,627                -                -
    Purchase of treasury stock                                                -             (7,500)        (419,570)
    Dividends and other distributions to shareholders                   (812,211)               -                -
    Other                                                                     -             (5,665)              -
                                                                  --------------    --------------   --------------

              Net cash flows provided by (used in)
                 financing activities                                  1,293,965           (95,210)         311,744
                                                                  --------------    --------------   --------------

NET INCREASE (DECREASE) IN CASH                                        1,027,033          (922,673)        (142,395)

CASH, beginning of period                                                 38,035         1,065,068          142,395
                                                                  --------------    --------------   --------------

CASH, end of period                                               $    1,065,068    $      142,395   $            -
                                                                  ==============    ==============   ==============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-8

<PAGE>

                        ATLANTIC BEVERAGE COMPANY, INC.


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation - Company

The  accompanying  consolidated  financial  statements  present the  accounts of
Atlantic Beverage Company,  Inc. (previously known as Maryland Beverage Company,
Inc.) and its  wholly-owned  (majority-owned  through November 29, 1993) limited
partnership,  Maryland  Beverage  L.P.  (the  "Partnership").  The  entities are
collectively referred to herein as the "Company".  All significant  intercompany
transactions have been eliminated in consolidation. The preparation of financial
statements in conformity with generally accepted accounting  principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
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.

Through  November  29,  1993,  Atlantic  Beverage  Company,  Inc.  owned  a  75%
partnership interest in the Partnership, was the sole general partner, exercised
significant control and the Partnership  represented the only operating activity
for Atlantic Beverage Company, Inc. As a result, the accounts of the Partnership
were fully  consolidated with Atlantic  Beverage  Company,  Inc. with a minority
interest  recorded for the 25% interest  owned by a separate  entity.  Effective
November 29, 1993,  Strategic (whose only asset was its partnership  interest in
the Partnership)  was merged with and into the Company.  The sole stockholder of
Strategic received 375,432 shares of common stock  (representing a 25% interest)
of the Company in exchange for Strategic's interest in the Partnership.  In July
1995,  the Company  purchased 100% of  Strategic's  interest for $375,432.  This
repurchase is accounted for as treasury stock in the  accompanying  consolidated
balance sheet.

Company Background

On April 23, 1991,  MB  Acquisition  Corp.  (an Illinois  corporation)  acquired
substantially  all of the assets and assumed  certain  liabilities of a Maryland
corporation now known as S&B Ventures,  Inc. (the "Predecessor") for $1,000,000,
subject to certain  adjustments as defined  within the Asset Purchase  Agreement
(which resulted in an adjusted purchase price of approximately $1,158,000).  The
Asset  Purchase   Agreement  also  provided  for  additional   payments  to  the
shareholders of the Predecessor for the following: (i) noncompete agreement (see
Note 3); (ii) "Exclusivity  Fee" in consideration  for dealing  exclusively with
the  acquirer for a certain  period of time;  and (iii)  performance  of certain
consulting duties and a deferred compensation agreement.

The acquisition  made by MB Acquisition  Corp. was accounted for by the purchase
method. Accordingly, the purchase price was allocated to the assets acquired and
liabilities  assumed  based  on  their  estimated  fair  values  at the  date of
acquisition. The excess of purchase price over the fair value of assets acquired
is accounted for as goodwill.

                                      F-9

<PAGE>

In addition,  the Company paid  $2,000,000 for a noncompete  agreement (see Note
3).

Substantially  all  financing for the  acquisition  was  originally  provided by
certain  stockholders of MB Acquisition  Corp. as a $3,000,000 bridge loan to MB
Acquisition  Corp.  The bridge loan was retired during 1991 through the issuance
of  subordinated  promissory  notes  payable to  stockholders  and the  minority
interest shareholder and with cash generated by operations.

Effective  September 19, 1991, MB Acquisition  Corp.  merged its net assets into
Atlantic  Beverage  Company,  Inc. which then  contributed its net assets (which
consisted solely of those acquired from MB Acquisition Corp.) to the Partnership
in exchange for a 75% ownership  interest.  The remaining 25% ownership interest
was purchased by Strategic (a wholly-owned subsidiary of T. Rowe Price Strategic
Partners Fund, L.P.), previously an unrelated investor, for $450,000.

The contribution of the net assets of Atlantic Beverage Company, Inc. to the
Partnership was recorded at the net book value of the assets.

The Company is an independent  wholesale  distributor of specialty  nonalcoholic
beverages  to the retail trade in the greater  Baltimore  and  Washington,  D.C.
metropolitan area and surrounding counties.

Reincorporation/Change in Name

In September 1993,  Maryland  Beverage  Company,  Inc., a Maryland  corporation,
reincorporated  as a Delaware  corporation  under the name of Atlantic  Beverage
Company,  Inc.  All  references  within the  accompanying  financial  statements
reflect the change in name for all periods presented.

In  connection  with the  reincorporation,  a 24-for-one  exchange of the common
stock was affected,  increasing the number of shares issued and outstanding from
46,929 to 1,126,296. All references in the accompanying financial statements and
related  notes with  respect  to common  stock and per share  amounts  have been
retroactively adjusted for the exchange.

Acquisition of Flying Fruit Fantasy

On April 27,  1994,  the Company  acquired  substantially  all of the assets and
assumed certain liabilities of Flying Fruit Fantasy, USA, Inc. for approximately
$580,000 in cash and 23,077  shares of common stock of the Company with a market
value of  approximately  $104,000  at  closing,  one share of Series A nonvoting
preferred stock  convertible  into $150,000 worth of common stock on October 18,
1995,  valued at no less than $5.00 per share,  and $5,000 in cash per month for
24 months after closing. The convertible  preferred stock on April 27, 1994, was
valued at  $133,091  and was  accreted  through  the  conversion  date up to the
estimated fair value at conversion. On October 18, 1995, the preferred stock was
converted into 30,000 shares of common stock.

                                      F-10

<PAGE>


The acquisition was accounted for using the purchase method of accounting,
whereby the purchase price is allocated to the assets acquired and liabilities
assumed based on fair value.  The resulting goodwill was determined as follows:

      Cash consideration provided at closing                        $  578,939
      Consideration paid through the issuance of note to the Seller    110,553
      Consideration paid through the issuance of the Company's
          Common Stock                                                 103,923
      Consideration paid through the issuance of the Company's
          Preferred Stock                                              133,091

      Acquisition costs                                                252,250
                                                                     ---------
                                                                     1,178,756

      Fair value of net assets acquired                               (122,051)
                                                                     ---------

      Goodwill                                                      $1,056,705
                                                                     =========

During  1995,  the  Company  decided to  discontinue  the Flying  Fruit  Fantasy
Division (see Note 14).

Revenue Recognition

The Company records sales when product is delivered to the customers.  Discounts
provided, principally volume, are accrued at the time of the sale.

Inventory

Inventory is stated at the lower of cost or market and is comprised solely of
finished goods.  Cost is determined using the first-in, first-out (FIFO) method.

Equipment

Equipment consists of office and warehouse equipment and delivery vehicles and
is stated at cost.  Depreciation is provided for on the straight-line method
over the five year and ten year estimated useful lives of the assets.

Reclassifications

Certain amounts in the prior years' consolidated  financial statements have been
reclassified to conform to the current year's presentation.

Other Assets

Other  assets  consist  of  costs  associated  with the  acquisitions  described
(distribution and license agreements), deferred financing costs and a consulting
agreement.  These assets are being amortized using the straight-line method over
the following useful lives:

           Distribution and license agreements            2-3 years
           Deferred financing costs                         2 years

                                      F-11

<PAGE>

Goodwill

Goodwill was recorded with the acquisition of the Predecessor and is being
amortized using the straight-line method over 5 years .  Amortization expense
for each of the years ended December 31, 1993, 1994 and 1995 was $115,699.
Accumulated amortization as of December 31, 1994 and 1995 was $432,130 and
$547,829, respectively.

Income Taxes

Prior to the Company's  initial  public  offering (see Note 13), the Company and
its stockholders elected to be treated as an S corporation under Subchapter S of
the Internal Revenue Code. As such, the Company's taxable income or loss for the
periods was included in the  individual  income tax returns of its  stockholders
for federal and state income tax purposes.  As a result, no provision for income
taxes has been included in the  accompanying  statements  of operations  for the
period from January 1, 1993 to November 23, 1993.

In February 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income
Taxes."  SFAS 109 requires deferred income taxes to be recorded under the
liability method and restricts the conditions under which a deferred asset may
be recorded.

Supplemental Cash Flow Information

                                            Cash Paid         Cash Paid
                                            for Taxes        for Interest
                                         ---------------   --------------
        Year ended December 31, 1993
            Related parties              $           -     $      662,350
            Other                                    -            114,602
        Year ended December 31, 1994
            Related parties                          -              5,090
            Other                                29,500             4,788
        Year ended December 31, 1995
            Related parties                          -              4,026
            Other                                    -             15,274

2.     EQUIPMENT:

Equipment as of December 31, 1994 and 1995 are summarized as follows:

                                              1994              1995
                                         --------------    ---------


        Equipment and vehicles           $      959,053    $    1,369,010

        Less - Accumulated depreciation        (437,562)         (662,492)
                                         --------------    --------------

        Property and equipment, net      $      521,491    $      706,518
                                         ==============    ==============

                                      F-12

<PAGE>

Depreciation  expense for the years ended  December 31, 1993,  1994 and 1995 was
$116,663, $170,869 and $224,930, respectively.

3.     NONCOMPETE AGREEMENTS:

In  connection  with the  execution  of the  Asset  Purchase  Agreement  for the
Predecessor,  described in Note 1, a noncompete  agreement was entered into with
the shareholders of the Predecessor. Concurrent with the payment, at a discount,
of the amounts due to the  Predecessor  shareholders,  the Company  released the
Predecessor  shareholders from their noncompete agreements.  The net unamortized
balance of $1,138,888  was written off and included  within "other  expenses" in
the  accompanying  consolidated  statement  of  operations  for the  year  ended
December 31, 1993 (see Note 12).

The  Company,  Sterling  Group,  Inc.  (Sterling  Group)  and  Sterling  Group's
principals have entered into a noncompete and nondisclosure agreement, effective
November 29, 1993 (the closing date of the Company's  initial public  offering),
containing certain noncompetition and confidentiality  provisions. The agreement
provides that Sterling  Group and its  principals  agree not to compete with the
Company for a period of five years from the closing date,  nor will they solicit
for  employment any director,  stockholder or certain  employees of the Company.
Such agreement  also provides that Sterling  Group and its  principals  will not
disclose any confidential information concerning the Company and its business to
any other  person or entity  except as may be required by law.  The Company paid
Sterling Group a fee of $200,000 at closing in consideration of such agreement.

Amortization expense for the years ended December 31, 1993, 1994 and 1995, was
$309,557, $40,000 and $40,000, respectively.  Accumulated amortization as of
December 31, 1994 and 1995 was $44,000 and $84,000, respectively.

4.     OTHER ASSETS:

Other assets are comprised of the following as of December 31, 1994 and 1995:

                                                    1994              1995
                                               --------------    --------------

   Distribution agreements                     $      634,000    $       25,000

   Deferred financing costs                            21,374            21,374

   Deferred acquisition costs (see Note 16)                -             88,014
                                               --------------    --------------

                                                      655,374           134,388

   Less - Accumulated amortization                   (622,626)          (32,245)
                                               --------------    --------------

   Other assets, net                           $       32,748    $      102,143
                                               ==============    ==============

Amortization   expense  applicable  to  distribution,   license  and  consulting
agreements  for years ended  December 31,  1993,  1994 and 1995,  was  $194,389,
$36,025  and  $7,692,  respectively,  and is included  within  depreciation  and
amortization expenses in the accompanying consolidated statements of operations.
Amortization  of  deferred  financing  costs of  $115,848,  $3,562 and  $10,120,
respectively,  has been included  within  interest  expense in the  accompanying
consolidated  statements  of operations  for the years ended  December 31, 1993,
1994 and 1995, respectively.

                                      F-13

<PAGE>


5.     SIGNIFICANT SUPPLIERS:

For the years ended December 31, 1993, 1994 and 1995, approximately 62%, 62% and
60%,  respectively,  of the  Company's  sales,  based on cases  sold or  amounts
purchased,  represented  Royal  Mistic  products.  Further,  14%,  13% and  11%,
respectively,  represented Elliott's Amazing Juices products. No other suppliers
accounted for more than 5% of the Company's sales during such periods. The Royal
Mistic  exclusive   distribution  agreement  expires  in  December  2000,  while
Elliott's Amazing Juices distribution  agreement expires in December 1996. There
can be no assurance that these distribution agreements will be renewed.

6.     INCOME TAXES AND "S" CORPORATION SHAREHOLDER DISTRIBUTIONS:

"S" Corporation Shareholder Distributions

The Company made distributions to its shareholders during 1993 to enable them to
pay estimated taxes on their respective share of the Company's taxable income.

Income Taxes

Effective  November 23, 1993, the Company  terminated its "S" Corporation status
and became a "C" Corporation for income tax purposes.

The  Company  has  incurred  significant  tax  losses and has  generated  timing
differences  which  would give rise to  deferred  taxes.  Based  upon  available
evidence,  management  believes that, it is more likely than not, that a portion
of these losses and future deductions will be realized in future periods and has
recorded a tax benefit and deferred tax asset,  net of an  applicable  valuation
allowance as required by Statement of  Financial  Accounting  Standards  No. 109
"Accounting  for  Income  Taxes." In  connection  with the loss on  disposal  of
discontinued operations, no benefit for income taxes was recorded.

A provision for current income taxes has not been provided in 1994 due to
utilization of loss carryforwards.  The benefit from deferred income taxes on
continuing operations for the years ended December 31, 1993, 1994 and 1995,
included amounts summarized as follows:

                                 1993              1994             1995
                           ---------------   ---------------  --------------
  Federal                  $      419,000    $       13,000   $      180,000
  State                            56,000             2,000           24,000
                           --------------    --------------   --------------

                                  475,000            15,000          204,000

  Valuation allowance            (125,000)               -          (204,000)
                           --------------    --------------   --------------

  Total tax benefit        $      350,000    $       15,000   $           -
                           ==============    ==============   ==============

                                      F-14

<PAGE>


Deferred tax assets are comprised of the following at December 31:

                                                 1994             1995
                                            ---------------  ----------

   Net operating loss carryforwards         $      465,000   $      609,000
   Assets and liabilities of discontinued
     operations                                         -           819,500
   Other                                            25,000           85,000
                                            --------------   --------------

                                                   490,000        1,513,500

   Valuation allowance                            (125,000)      (1,148,500)
                                            --------------   --------------

   Deferred tax asset                       $      365,000   $      365,000
                                            ==============   ==============

Temporary  differences  between the financial reporting carrying amounts and tax
basis of assets and liabilities and net losses give rise to deferred taxes.  The
principal   sources  of  temporary   differences   include  net  operating  loss
carryforwards from depreciation and amortization and bad debt reserves.

The statutory  federal income tax rate,  reconciled to the effective  income tax
rate benefit is as follows:

                                                     1994             1995
                                               ---------------  ----------------

   Statutory federal income tax rate                  34.0%            34.0%
   State income taxes, net of federal income
     tax effect                                        4.6              4.6
   Nondeductible amortization of goodwill            (84.7)           (75.6)
   Utilization of loss carryforwards                  84.9              -
   Valuation allowance                                 -               37.0
   Other                                             (10.4)             -
                                               -----------      -----------

       Total                                          28.4%             -  %
                                               ===========      ===========


Income Taxes - Company, Pro Forma (Unaudited)

For the period from  January 1, 1993 to November  23, 1993,  the  provision  for
federal and state income taxes, equal to approximately $160,000, would be offset
through the utilization of net operating loss carryforwards.

7.     BORROWINGS UNDER LINE OF CREDIT:

In August 1994, the Company  entered into a new line of credit  agreement with a
bank  through  August  1996.  Under the terms of the  agreement,  the Company is
permitted  to borrow up to  $2,500,000,  subject  to advance  formulas  based on
accounts  receivable and inventory.  Amounts borrowed are due on demand and bear
interest at the bank's  prime rate plus an  additional  rate  ranging from 0% to
 .50%, depending upon certain financial ratios. The Company is also subject to an
unused  credit line fee equal to 1/4% per annum of the average  daily unused and
undisbursed  portion of the revolving  credit amount,  but is not subject to any
prepayment  penalties.  Amounts  borrowed are payable monthly and are secured by
all assets of the  Company.  At  December  31,  1995,  the  Company  had amounts
outstanding of $440,000 (see Note 16 for refinancing).

                                      F-15

<PAGE>


Information related to the line of credit for the years ended December 31, 1993,
1994 and 1995 is as follows:

                              Weighted Average
                        -------------------------------      Maximum
                           Month-end         Interest         Amount
                            Balance            Rate        Outstanding
                        --------------       --------      -----------
       1993               $   689,644           8.3%       $   889,253
       1994                   323,544           7.8            750,922
       1995                    88,417           8.75           575,000

8.     STOCK OPTIONS:

The Company has a non-incentive stock option plan (the Plan) which authorizes
the Company to grant, to eligible individuals, options for the purchase of
shares of the Company's $.01 par value common stock.  The Company accounts for
this plan in accordance with APB Opinion No. 25 "Accounting for Stock Issued to
Employees."

Under the terms of the Plan, the Company may issue up to 250,000  options to its
full time or all employees.  The option exercise price equals the stock's market
price on the date of grant and options vest after three  years.  The issuance of
options  to  employees  during  1994 and 1995 had no impact on the  accompanying
consolidated financial statements.

In addition to options  issued under the Plan,  the Company  granted  options to
purchase  152,586 and 40,000  shares of the  Company's  common  stock to certain
executives,  officers  and  directors  during  1993 and 1995,  respectively,  at
exercise prices of $6.50 and $2.75.  These options were  exercisable on the date
of grant.

<TABLE>
<CAPTION>
                                               1993                        1994                        1995
                                    -------------------------------------------------------------------------------------------
                                                    Weighted                    Weighted                    Weighted
                                                    Average                     Average                     Average
                                                    Exercise                    Exercise                    Exercise
                                       Shares        Price         Shares         Price         Shares        Price
<S> <C>                             -------------------------------------------------------------------------------------------
Outstanding, beginning of year              -     $      -         152,586    $      6.50      170,036    $      6.31
Granted                                152,586           6.50       21,300           4.63       67,700           2.75
Exercised                                   -            -              -            -              -            -
Forfeited                                   -            -          (3,850)          4.63       (4,600)          3.49
Expired                                     -            -              -            -              -            -
Outstanding, end of year               152,586           6.50      170,036           6.31      233,136           5.47
Exercisable, end of year                37,517           6.50       70,034           6.50      142,552           5.45
</TABLE>

Options  granted were deemed to have no fair market value as of the December 31,
1993, 1994 and 1995.

                                      F-16

<PAGE>


9.     OPERATING LEASE COMMITMENTS:

The Company  leases its  warehouse,  office  building  and most of its  delivery
vehicles under operating  leases.  These leases have remaining terms from one to
five years.  Rental  expense under these leases for the years ended December 31,
1993,  1994 and 1995 was  $563,667,  $618,543 and  $594,010,  respectively.  The
delivery  vehicle leases include  options to cancel up to three of the leases in
the event of an economic slowdown. As of December 31, 1995, future minimum lease
payments under these operating leases are as follows:

          1996                            $      527,640
          1997                                   361,956
          1998                                   313,023
          1999                                   150,037
          2000                                   132,600
          2001 and thereafter                    213,186
                                          --------------
                                          $    1,698,442
                                          ==============
10.    REPURCHASE OF COMMON STOCK:

Throughout 1995, the Company repurchased 405,538 shares of its outstanding
common stock at an average per share cost of $1.03.  The Company accounted for
these transactions as treasury stock, utilizing the cost method.

11.    RELATED PARTY TRANSACTIONS:

The accompanying  consolidated statements of operations include interest related
to certain notes payable to related parties (including  amortization of deferred
financing costs) and other liabilities to stockholders of approximately $654,000
and $5,100 for the years ended December 31, 1993 and 1994, respectively.

Effective  November 29, 1993, the Company revised its Consulting  Agreement (the
Agreement) between the Company and Sterling Group, a company in which certain of
the stockholders have a controlling interest.  The initial term of the Agreement
is through December 31, 1998. The Agreement  provides that the Company shall pay
a base fee of $140,000  per year,  which shall  increase by 3% for each year the
Agreement remains in effect.  On December 31, 1993,  Sterling Group assigned the
Agreement to Sterling Advisors, L.P., a partnership owned by the stockholders of
Sterling Group.

The accompanying  consolidated  statements of operations  include  approximately
$101,000,  $144,000 and $148,000 for the years ended December 31, 1993, 1994 and
1995,  respectively,  for management  and consulting  services that were paid to
certain stockholders and to Sterling Group.

                                      F-17

<PAGE>


12.    OTHER EXPENSES, NET:

Other  expenses  (income) for the years ended December 31, 1993 and 1994 consist
of the following:


                                                   1993             1994
                                             ---------------   --------------

  Write-off of consulting agreement          $           -     $       39,800
  Write-off of deferred financing costs             311,364                -
  Write-off of noncompete agreement (Note 3)      1,138,888                -
  Net gain from repayment of liabilities to
      shareholders of the predecessor              (139,428)               -

  Other                                                  -             11,964
                                             --------------    --------------

  Total Other Expenses                       $    1,310,824    $       51,764
                                             ==============    ==============

13.    INITIAL PUBLIC OFFERING:

Effective  November 29, 1993, the Company  completed its initial public offering
of 1,100,000  shares of its common stock.  The offering  price to the public was
$6.50 per share.  Effective  December 22, 1993,  the Company sold an  additional
73,150  shares  at  $6.50  per  share  as  a  result  of  the  exercise  of  the
over-allotment option granted to the Company's underwriters.  Total net proceeds
from the offering were $6,361,627.

14.    DISCONTINUATION OF THE FLYING FRUIT FANTASY DIVISION:

In December 1995, the Company adopted a plan to dispose of its Flying Fruit
Fantasy division.  As a result, the Company recognized a one-time charge of
$2,410,200, which was determined as follows:

   Write-off of equipment                              $    1,085,112
   Write-off of goodwill                                      744,310
   Write-off of noncompete agreements
       and other assets                                       215,703
   Other costs to discontinue operations                      365,075
                                                       --------------
                                                       $    2,410,200
                                                       ==============

This net loss has been reflected in the accompanying  consolidated statements of
operations under Loss on Disposal of Discontinued Operations.

The results of the Flying Fruit Fantasy  division have been reported  separately
as discontinued  operations in the consolidated statements of operations for the
years ended  December 31, 1994 and 1995.  Revenues from the Flying Fruit Fantasy
division  were $549,500 for the year ended  December 31, 1995,  and $475,478 for
the year ended  December 31, 1994. No benefit for income taxes has been recorded
in connection with these losses due to the uncertainty  that the Company will be
able to offset the losses against future taxable income.

                                      F-18

<PAGE>


The assets and liabilities as of December 31, 1994 and 1995, have been presented
separately in the accompanying consolidated balance sheets.  A summary of the
net assets (liabilities) of the Flying Fruit Fantasy division as of December 31,
1994 and 1995 is as follows:

                                                   1994              1995
                                              --------------    --------------

  Current:
      Accounts receivable, net                $       57,588    $           -
      Inventory                                       79,444                -
      Prepaid expenses                                 2,500                -
      Accounts payable and accrued expenses         (417,435)         (702,504)
      Deferred purchase costs                        (75,643)          (19,669)
                                              --------------    --------------

            Net current liabilities                 (353,546)         (722,173)
                                              --------------    --------------

  Non-Current:
      Property and equipment, net                    837,086                -
      Intangible assets, net                       1,051,205                -
                                              --------------    --------------

         Net noncurrent assets                     1,888,291                -
                                              --------------    --------------

         Net assets and liabilities           $    1,534,745    $     (722,173)
                                              ==============    ==============

15.    CONTINGENCIES:

Lawsuits  and  claims are filed  against  the  Company  from time to time in the
ordinary course of business.  These actions are in various  preliminary  stages,
and no judgments or decisions  have been  rendered by hearing  boards or courts.
Management,  after reviewing  developments to date with legal counsel, is of the
opinion that the outcome of such matters will not have a material adverse effect
on the Company's financial position or results of operations.

16.    SUBSEQUENT EVENTS:

On March  15,  1996,  newly  formed  wholly-owned  subsidiaries  of the  Company
acquired the outstanding  common stock of Prefco,  Inc. (Prefco) and merged with
Carlton Foods, Inc. (Carlton).  Prefco is a distributor of its own meat products
to the retail  grocery trade in Texas and Carlton is a  manufacturer  of branded
and  private  label meat  products  located in Texas.  Certain of the  Company's
shareholders  collectively owned  approximately  40.7% of Carlton prior to March
15, 1996.  The Prefco  acquisition  was effective  January 1, 1996. The combined
purchase  price for these  acquisitions  was  approximately  $11 million,  which
included  approximately  $3  million in Carlton  debt which was  refinanced  and
assumed by the Company.  In addition to the assumed debt, the Company has funded
the  acquisitions  through  additional  borrowings  from a commercial  bank, the
issuance  of a $1.4  million  subordinated  note to the former  stockholders  of
Prefco,  the  issuance of  approximately  650,000  shares of common stock to the
former  stockholders of Prefco and Carlton and a $2.8 million private  placement
of approximately 2.7 million shares of the Company's  unregistered common stock.
In  connection  with these  acquisitions,  the Company had  incurred  $88,014 of
expenses  as  of  December  31,  1995,  which  has  been  recorded  as  deferred
acquisition costs within other assets on the consolidated balance sheet.

Also,  in  connection  with the  funding  of  these  acquisitions,  the  Company
refinanced its line of credit, which is described in Note 7.

                                      F-19

<PAGE>

                                 EXHIBIT INDEX


  Exhibit
  Number                              Description
  -------                             -----------
    2.01    Agreement and Plan of Merger dated as of September 15, 1993 ("Merger
            Agreement") among the Company, Strategic Investment Corporation and
            T. Rowe Price Strategic Partners Fund, L.P. ("Strategic Fund").

    2.02    Form of Amendment to Merger Agreement.

    2.03+   Stock Purchase  Agreement dated as of January 23, 1996,  between the
            among the Company,  ABEV Acquisition Corp.,  Franklin Roth and Allen
            Pauly (filed as an exhibit to the Company's  Form 8-K filed with the
            Securities and Exchange Commission on April 1, 1996 and incorporated
            herein by reference)

    2.04+   $1.4 Million  Subordinated  Note made by ABEV  Acquisition  Corp. in
            favor of Franklin  Roth and Allen Pauley (filed as an exhibit to the
            Company's Form 8-K filed with the Securities and Exchange Commission
            on April 1, 1996 and incorporated herein by reference)

    2.05+   Agreement  and Plan of Merger Dated as of January 25, 1996 among the
            Company,  Carlton Foods Corp., and Carlton Foods,  Inc. (filed as an
            exhibit  to the  Company's  Form 8-K filed with the  Securities  and
            Exchange  Commission  on April 1,  1996 and  incorporated  herein by
            reference)

    2.06+   Loan  and  Security  Agreement  dated  as of March  15,  1996  among
            Atlantic  Beverage  Company,  Inc.,  Carlton  Foods  Corp.  and ABEV
            Acquisition  Corp., as borrowers,  and LaSalle National Bank, as the
            Lender (filed as an exhibit to the Company's Form 8-K filed with the
            Securities and Exchange Commission on April 1, 1996 and incorporated
            herein by reference)

    2.07+   Stock  Purchase  Agreement  dated as of March  15,  1996  among  the
            Company and  Purchasers  under the $2.8  million  Private  Placement
            (filed  as an  exhibit  to the  Company's  Form 8-K  filed  with the
            Securities and Exchange Commission on April 1, 1996 and incorporated
            herein by reference)

    3.01    Certificate of Incorporation of the Company, including all
            amendments thereto.

    3.02    By-Laws of the Company.
    3.03    Certificate of Designation of the Series A Non-Voting Convertible
            Preferred Stock of the Company  (filed as an exhibit to the
            Company's  Quarterly  Report on Form  10-Q for the  Quarter  ended
            June 30,  1994 and  incorporated herein by reference)

    4.01    Specimen Stock Certificate.
    4.02    Registration Rights Agreement between Strategic Fund and the
            Company.

    4.03    Stock Option Plan.

   10.01    Distribution Agreement dated as of November 25, 1992 between Joseph
            Victori Wines, Inc. and Maryland Beverage, L.P., as amended.(**)

   10.02    Letter dated March 21, 1994 from the Company to Ginger  Group,  Ltd.
            (filed as an exhibit  to the  Company's  Annual  Report on Form 10-K
            filed with the Securities and Exchange Commission for the year ended
            December 31, 1993.)

   10.03    Distribution Agreement dated April 12, 1991 between Ginger Group,
            Ltd. and Castle Food Products Corporation, as amended.(**)

   10.04    Non-Compete and Non-Disclosure Agreement dated September 24, 1993
            among the Company, Sterling Group, Inc., Eric D. Becker, Steven M.
            Taslitz, Douglas L. Becker and R. Christopher Hoehn-Saric.

   10.05    Employment Agreement dated September 24, 1993 between the Company
            and William E. O'Leary.

   10.06    Employment Agreement dated September 24, 1993 between the Company
            and John F. Izzo.

   10.07    Warehouse Lease dated August 5, 1988 between Hill Management
            Services, Inc. and Maryland Beverage Company, Inc., as amended.


<PAGE>

  Exhibit
  Number                               Description
  -------                              -----------
   10.08    Consulting Agreement dated September 24, 1993 among the Company,
            Eric D. Becker and Sterling Group, Inc.

   10.09    Assignment of Consulting Agreement dated December 31, 1993 among the
            Company, Sterling Group, Inc. and Sterling Advisors, L.P. (filed as
            an exhibit to the Company's Annual Report on Form 10-K filed with
            the Securities and Exchange Commission for the year ended December
            31, 1993.)

   10.10    Form of Tax Indemnification Agreement.

   10.11    Amendment to Employment Agreement dated September 24, 1993 between
            the Company and William E. O'Leary.

   10.12    Asset Purchase Agreement, dated April 7, 1994, among the Company,
            Flying Fruit Fantasy, U.S.A., Inc., Groth Industries, Inc. and
            Robert E. Groth and Georgia B. Groth (filed as an exhibit to the
            Company's Form 8-K filed with the Securities and Exchange Commission
            on July 11, 1994 and incorporated herein by reference)

   10.13    Agreement  for License,  dated as of April 27, 1994,  between  Groth
            Industries, Inc. as the Beverage Company (filed as an exhibit to the
            Company's Form 8-K filed with the Securities and Exchange Commission
            on July 11, 1994 and incorporated herein by reference)

   10.14    Consulting Agreement,  dated April 27, 1994, between the Company and
            Robert E. Groth (filed as an exhibit to the Company's Form 8-K filed
            with the  Securities  and Exchange  Commission  on July 11, 1994 and
            incorporated herein by reference)

   10.15+   Employment  Agreement dated March 15, 1996 between ABEV  Acquisition
            Corp.  and Franklin Roth (filed as an exhibit to the Company's  Form
            8-K filed with the  Securities  and Exchange  Commission on April 1,
            1996 and incorporated herein by reference)

   11.01    Statement Regarding Computation of Pro Forma Per Share Earnings

   11.02    Statement Regarding Computation of Historical Weighted Average
            Common Shares.(*)

   23.01    Consent of Independent Public Accountants*

   99.01    Limited Partnership Agreement of Maryland Beverage L.P.

         ** Confidential treatment was afforded for certain portions of these
agreements.

         * Filed with the  Company's  Annual  Report on Form 10-K for the fiscal
year ended December 31, 1995.  Unless  otherwise  noted, all other Exhibits have
either been  previously  filed or incorporated by reference as an exhibit to the
Company's Registration Statement on Form S-1 (No. 33-68522).

         + Filed  as an  exhibit  to  the  Company's  Form  8-K  filed  with
the Securities and Exchange  Commission on April 1, 1996 and incorporated
herein by reference.