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

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

                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 1999

                         Commission File Number 1-13747

                          ATLANTIC PREMIUM BRANDS, LTD.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           Delaware                                        36-3761400

   (STATE OF INCORPORATION)                         (I.R.S. EMPLOYER ID NO.)

             650 Dundee Road, Suite 370, Northbrook, Illinois 60062
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (847) 412-6200
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

       Title of Each Class           Name of Each Exchange on Which Registered
       -------------------           -----------------------------------------
 Common Stock, $.01 par value                  American Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                   YES [X] NO

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

     The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant, based upon the last reported closing price of
the registrant's Common Stock on March 14, 2000: $20,637,036.

     The number of shares outstanding of the registrant's Common Stock, par
value $.01, as of March 24, 2000: 6,879,012.

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain sections of the registrant's Proxy Statement for its Annual Meeting of
Stockholders to be held on May 19, 2000 are incorporated by reference into Part
III of this report.
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<PAGE>   2


                                     PART I

ITEM 1.  BUSINESS


GENERAL

     The Company, through its subsidiaries' operations in Texas, Louisiana,
Kentucky and Oklahoma, manufactures, markets and distributes branded and
unbranded food products for customers in a twelve state region. The Company's
subsidiaries are: Carlton Foods Corp. ("Carlton"), Grogan's Farm, Inc.
("Grogan's"), Prefco Corp. ("Prefco"), Potter Sausage Co. ("Potter") and
Richard's Cajun Foods Corp. ("Richard's").

     Through Carlton, the Company manufactures a variety of smoked sausage
products. Approximately 46% of the total volume manufactured is sold through
Prefco under the Blue Ribbon brand name. Approximately 46% of total volume
manufactured reflects private label products manufactured for other regional
sausage brands and selected chain supermarket house brands, and approximately 8%
of total volume manufactured is sold by Carlton under the brand names Carlton
and Country Boy(TM). These branded products are marketed on a regional basis,
principally in south and west Texas.

     Through Grogan's, the Company markets and distributes fresh pork sausage
products and refrigerated entrees for customers in a six state region. These
products are sold under the brand names Grogan's Farm(TM) and Partin's Country
Sausage(TM).

     Through Prefco, the Company is engaged in the marketing and distribution of
branded and unbranded meats to the retail grocery trade. The Company markets and
distributes its branded meat products under the brand name Blue Ribbon(R) and
Blue Ribbon Texas Traditions. These products, which include ready to eat
entrees, smoked sausages, bacon and packaged, sliced luncheon meats, account for
approximately 14% of the sales of Prefco and are manufactured by Carlton as well
as by third party contract manufacturing companies. Blue Ribbon is currently the
best selling brand of bacon 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 Potter, the Company manufactures, markets and distributes premium,
branded breakfast sausage, primarily in Oklahoma, Arkansas and Texas. These
products are sold under the J.C. Potter brand name and are generally delivered
to the retail grocery trade through its own distribution system. In addition,
Potter manufactures products for other branded food companies on a private-label
basis. Potter is a supplier to Prefco and a customer of Carlton.

     Through Richard's, the Company manufactures, markets and distributes
Cajun-style, cooked, pork sausage products and specialty foods for customers in
Louisiana under the brand name Richard's(TM) and Richard's Cajun Favorites(TM).




                                       2
<PAGE>   3



                                CORPORATE HISTORY

     In April 1991, MB Acquisition Corp. ("MB Acquisition"), a corporation owned
by a group of individuals including the Company's Chairman of the Board and
certain of the Company's directors and stockholders, acquired the Company from
an entity now known as S&B Ventures, Inc. (the "Predecessor") for a purchase
price of approximately $1.2 million (the "Acquisition"). In connection with the
Acquisition, MB Acquisition also assumed certain obligations to pay the owners
of the Predecessor $2.0 million pursuant to a non-compete agreement and $0.829
million 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 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.
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 business.

     In the first quarter of 1996, a newly formed, wholly-owned subsidiary of
the Company, Prefco, acquired the outstanding common stock of Prefco, Inc. Also
in the first quarter of 1996, Carlton Foods, Inc. was merged into another newly
formed, wholly-owned subsidiary of the Company, Carlton. The combined purchase
price for these entities was approximately $11.0 million, which included
approximately $3.0 million in Carlton refinanced and assumed debt.

     In August 1996, a newly formed, wholly-owned subsidiary of the Company,
Richard's, acquired certain of the assets of Richard's Cajun Country Food
Processors. The consideration for these assets was $2.5 million cash and a
subordinated promissory note in the amount of $0.875 million (the "Richards
Note").

     In October 1996, Grogan's Merger Corp. ("GMC"), a newly formed,
wholly-owned subsidiary of the Company, acquired and merged with the
distribution and manufacturing business of Grogan's Sausage, Inc. and Grogan's
Farm, Inc., respectively, based in Arlington, Kentucky for total consideration
of approximately $3.8 million, consisting of $1.9 million cash, $0.2 million in
a note (the "Grogan's Note") and 573,810 shares (approximate fair market value
of $1.7 million) of common stock of the Company. In May 1999, the 573,810 shares
were reacquired by the Company for approximately $1.4 million.

     In November 1996, GMC acquired the assets of Partin's Sausage ("Partin's")
in consideration for $0.4 million cash, $0.225 million in a note and 78,310
shares of common stock of the Company. In March 2000, the Company reacquired
70,000 of these shares of common stock. Partin's, based in Cunningham,
Kentucky, is engaged in the manufacturing, marketing and distribution of pork
sausage products.



                                       3
<PAGE>   4
     In March 1998, the Company and Potter, a newly-formed subsidiary, acquired
substantially all of the assets of J.C. Potter Sausage Company, a branded food
processing company based in Durant, Oklahoma, in consideration for $13.0 million
cash plus related transaction costs.

     At the end of 1998 through the beginning of 1999, the Company completed the
sale of substantially all the assets of its beverage division. The operations of
the beverage division consisted of the wholesale purchasing, marketing and
distribution of nonalcoholic beverages to retail trade accounts in the greater
Baltimore and Washington D.C. metropolitan areas.

     The disposition of the beverage division was recorded in three separate
transactions. On December 1, 1998 and January 11, 1999, Canada Dry Potomac
Corporation purchased the distribution rights and inventories for the Mistic(R),
Stewart's(R) and AriZona(TM) brands, along with certain other related assets.
The remaining accounts receivable and inventory, as well as substantially all
the furniture and equipment of the beverage division, were sold to Master
Distributors, Inc. on February 2, 1999. The consideration received by the
Company from these transactions totaled approximately $3.5 million and consisted
of approximately $3.1 million in cash, a promissory note payable to the Company
for $0.26 million and the assumption by the purchasers of approximately $0.14
million in liabilities and obligations of the beverage division. The Company
classified the beverage division's historic results of operations and the loss
incurred upon the disposal of assets as a discontinued operation.

     As a result of the disposition of the Company's Beverage Division, the
Company's operations consist solely of its food businesses.


                                    INDUSTRY

     Following the disposition of its beverage division, the Company's
operations consist of two business segments: food manufacturing and food
distribution. Note 17 to the Company's Consolidated Financial Statements
provides summarized financial information by business segment for continuing
operations for the last three fiscal years. The Company participates in these
two segments of the food industry through its Carlton, Prefco, Richards,
Grogan's and Potter subsidiaries.

     The food 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, in the
packaged meat industry, packing and processing are vertically integrated. In
other instances, as is the case with the Company, processing and marketing are
vertically integrated. Because of the cost of transportation and shelf-life for
the products, processing facilities tend to serve a regional clientele. Large
national meat companies therefore tend to establish strategically located
processing facilities in different geographic regions.

     The food distribution segment which serves several different classes of
customers including retail, restaurant and institutional customers, is generally
not capital intensive but provides lower gross margins and is subject to intense
price competition. Product is generally 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. Food
distribution companies typically serve a local or regional clientele.




                                       4
<PAGE>   5


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


                                    STRATEGY

     Operating Strategy. The Company's operating strategy is to grow its food
businesses profitably, while identifying and exploiting synergies among them.
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 food subsidiaries as a platform for
additional corporate growth. These potential strategies may include acquisition
opportunities that complement the subsidiaries' businesses.


                                    PRODUCTS

     Through Prefco, 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 refrigerated warehouses in Houston
and is 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 20.9%,
8% and 7.9% of the Company's boxed meat purchases during 1999 and 21.6%, 15.6%
and 10.8% of such purchases during 1998. No other supplier accounted for more
than 10% of such purchases during either year.

     Also through Prefco, the Company markets and distributes its own branded
dinner entrees, sausage, bacon and packaged, sliced luncheon meats. These
products are stored in the Company's refrigerated warehouses in Houston. 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(R) sausage product is manufactured by
Carlton and Grogan's. The balance of the sausage product as well as the dinner
entrees, bacon and luncheon meats are purchased from a number of other contract
food processing companies.

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

     Through Richard's, the Company manufactures, markets and distributes
Cajun-style, cooked pork sausage products and specialty foods for customers in
the state of Louisiana under the brand name Richards(TM) and Richard's Cajun
Favorites(TM).



                                       5
<PAGE>   6



     Through Grogan's, the Company markets and distributes fresh pork sausage
products for customers in a six state region. These products are sold under the
brand names Grogan's(TM) and Partin's(TM).

     Through its Potter subsidiary, the Company manufactures, markets and
distributes premium, branded breakfast sausage, primarily in Oklahoma, Arkansas
and Texas. These products are sold under the J.C. Potter brand name and are
generally delivered to the retail grocery trade through its own distribution
system. In addition, Potter manufactures products for other branded food
companies on a private-label basis. Potter is a supplier to Prefco and a
customer of Carlton.


                        SALES, MARKETING AND DISTRIBUTION

     Prefco 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 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 refrigerated trucks, generally within one to three days of receiving an
order.

     Prefco also markets and distributes its own Blue Ribbon(R) and Blue Ribbon
Texas Traditions dinner entrees, bacon, sausage and sliced luncheon meats to the
retail grocery trade. Orders are received by the direct sales force and from the
sales force managing the route sales vehicles. The business has historically
engaged in significant radio and television advertising in the Houston market.

     Carlton solicits and receives customer orders for branded product through
direct salespeople as well as through third-party food brokers and by telephone
and facsimile transmission. 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 Carlton's
refrigerated vehicles, by common carrier, or are picked up by customers.

     Richard's employs a route delivery sales force. Orders are taken by the
route salespeople and filled immediately from stock on board the route sales
trucks. The subsidiary engages in promotions, including in-store sampling, as
well as in print advertising. All customers are located within the state of
Louisiana.

     Grogan's employs a route delivery sales force. Orders are taken by the
route salespeople and filled immediately from stock onboard the route sales
trucks. In addition, Grogan's sells approximately 7% of its product to third
party distributors. The Company engages in promotions, including in-store
sampling, as well as in print, radio and television advertising. Customers are
located in Kentucky, Illinois, Indiana, Mississippi, Tennessee, and Arkansas.

     Potter employs a route delivery sales force. Orders are taken by the route
salespeople and filled immediately from stock on board the route sales trucks.
In addition, Potter sells approximately 50% of its product to third party
distributors. The Company engages in promotions, including in-store sampling, as
well as in print, radio and television advertising. Customers are located in
Arkansas, Oklahoma and Texas.



                                       6
<PAGE>   7



     One food distribution customer, Sam's Club Inc., accounted for
approximately 43% of the Company's total net sales during 1999 and 1998. No
other customer accounted for more than 10% of total net sales during either
year.


                                ASSET MANAGEMENT

     Accounts Receivable. Sales are made almost exclusively on account, and
accounts receivable typically average 15 to 20 days.

     Inventory. The Company maintains its inventory at the manufacturing
facilities operated by Carlton in New Braunfels, Texas, by Richard's in Church
Point, Louisiana, by Grogan's in Arlington, Kentucky, by Potter in Durant,
Oklahoma and Malvern, Arkansas and at two distribution facilities operated by
Prefco in Houston, Texas. The Company generally maintains an average of eight to
ten days of inventory on hand which reflects approximately six days of inventory
at Prefco, approximately 25 days of inventory at Carlton, approximately ten to
15 days of inventory at Richard's and Grogan's and approximately 15 days of
inventory at Potter. 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 warehouses by common carrier.


                                   COMPETITION

     Food Distribution. Through Prefco, 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
believes it has generally succeeded in distinguishing itself through a high
level of customer service.

     Food Processing. Through Potter, Prefco, Carlton, Richard's and Grogan's,
the Company competes with several branded meat companies, and its brands compete
with a wide variety of both regional and national brands. Among the competitive
brands are Decker, J. Bar B., Hilshire Farms, Hormel, Bryan, Bob Evans and Jimmy
Dean. The Company's Carlton(TM) and Country Boy(TM) 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(R) brand currently
represents the best selling brand of bacon in the Houston market. The Company's
packaged, sliced luncheon meats and entrees were introduced to the Houston
market in 1995 and 1998, respectively, and currently have limited market share.
The Company's Richard's(TM), Richard's Cajun Favorites, Grogan's(TM) and
Partin's(TM) brands enjoy a strong regional share within their respective
markets. Through Carlton and Potter, 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.




                                       7
<PAGE>   8


                              GOVERNMENT REGULATION

     The Company is subject to various federal, state and local statutes,
including federal occupational safety and health laws. Furthermore, the Company
and its suppliers are 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.


                         PRODUCT LIABILITY AND INSURANCE

     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 65 employees at Prefco,
approximately 75 employees at Carlton, approximately 65 employees at Richard's,
approximately 30 employees at Grogan's and approximately 275 employees at
Potter. 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.




                                       8
<PAGE>   9


ITEM 2.  PROPERTIES

     Prefco. The Company leases a 30,000 square foot refrigerated warehouse in
Houston. The lease for this facility expires in November 2000. In addition,
Prefco also leases a 5,000 square foot office facility, the lease for which
expires September 30, 2000, with a three-year renewal option.

     Carlton. 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 2000, with two five-year renewal
options, and the lease on the office facility is on a month to month basis.

     Richard's. The Company owns a 12,500 square foot manufacturing facility in
Church Point, Louisiana.

     Grogan's. The Company owns an 11,000 square foot manufacturing facility in
Arlington, Kentucky.

     Potter. The Company owns a 120,000 square foot rendering, processing,
distribution, warehouse and administrative facility in Durant, Oklahoma. In
addition, the Company owns a 6,800 square foot distribution facility in Malvern,
Arkansas.


ITEM 3.  LEGAL PROCEEDINGS

     None.




                                       9
<PAGE>   10



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

         No matters were submitted to a vote of security holders during the
fourth quarter of 1999.


                      EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
                            AGE OF
     NAME OF OFFICER        OFFICER  OFFICES HELD AND BUSINESS EXPERIENCE FOR LAST FIVE YEARS
--------------------------  -------  --------------------------------------------------------
<S>                        <C>       <C>
Merrick M. Elfman             41     Chairman since July 1996 and a Director
                                     since 1993. Mr. Elfman is Chairman of Gray
                                     Supply Company, Inc., a privately-held
                                     distributor of specialty lighting products,
                                     and Carlton Foods, which is now a
                                     subsidiary of the Company, Vice-Chairman of
                                     International Collectors Society LP, a
                                     privately-held collectibles company, and a
                                     director of Becker Group, Ltd., a
                                     privately-held company in the mall
                                     decorations business. Mr. Elfman is the
                                     founder of Elfman Venture Partners, Inc., a
                                     private investment firm of which he has
                                     been President since 1987.


Alan F. Sussna                43     Director, President and Chief Executive
                                     Officer since March 1996. Mr. Sussna is
                                     also a director of International Collectors
                                     Society LP, a privately-held collectibles
                                     company, and Becker Group, Ltd., a
                                     privately-held company in the mall
                                     decorations business, positions he has held
                                     since June 1998 and December 1998,
                                     respectively. From October 1991 through
                                     October 1995, Mr. Sussna was a director of
                                     Bain & Company, a consulting firm. Through
                                     his association with Bain & Company and as
                                     a partner in the consulting firm of
                                     McKinsey & 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.

Thomas M. Dalton              51     Senior Vice President and Chief Financial
                                     Officer since April 1998. Mr. Dalton served
                                     as a director, Executive Vice President and
                                     Chief Financial Officer of the Richelieu
                                     Group, a privately-held company with nine
                                     operating subsidiaries in food processing
                                     and distribution from 1985 to 1993. From
                                     1994 through 1998, Mr. Dalton served as a
                                     director, Chief Executive Officer and Chief
                                     Financial Officer of SNA Inc., a food
                                     processing and distribution company, and
                                     has been a director of Duo-Fast
                                     Corporation, a privately-held manufacturer
                                     and distributor of tools and fasteners
                                     since 1997.

Steve Englander               44     Chief Marketing Officer since August 1998.
                                     Prior to his employment with the Company,
                                     Mr. Englander was Vice President of
                                     Marketing with Morningstar Foods, a
                                     position he held from September 1995
                                     through March 1998. From September 1991
                                     through June 1995, he was Vice President of
                                     Marketing and Sales at Eagle Snacks, a
                                     division of Anheuser Busch.

</TABLE>




                                       10
<PAGE>   11

                                     PART II

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

     The Company's Common Stock is principally traded on the American Stock
Exchange ("AMEX") under the symbol "ABR." The following table sets forth, for
the periods indicated, the high and low sales prices of the Company's Common
Stock as reported by AMEX.

==========================================================================
           STOCK PRICES                          STOCK PRICES
--------------------------------------------------------------------------
                 High       Low                       High        Low
--------------------------------------------------------------------------
1998                                 1999
--------------------------------------------------------------------------
1st Quarter     3 7/8     2 15/16    1st Quarter        3       1 15/16
--------------------------------------------------------------------------
2nd Quarter     3 1/2       2        2nd Quarter      2 3/4      2 1/16
--------------------------------------------------------------------------
3rd Quarter     3 1/8      2 1/4     3rd Quarter      2 1/2     1 7/8
--------------------------------------------------------------------------
4th Quarter     2 7/8      1 7/8     4th Quarter      2 1/8      1 3/8
==========================================================================

     As of March 24, 2000, there were approximately 167 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.




                                       11
<PAGE>   12
ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The following selected financial data for the Company are based on the
consolidated financial statements of the Company. The Company's financial
statements as of December 31, 1998 and 1999 and for each of the years in the
three-year period ended December 31, 1999, including the notes thereto and the
related report of KPMG LLP and Arthur Andersen LLP, independent certified public
accountants, are included elsewhere in this Form 10-K.

     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 consolidated financial statements of the Company contained
elsewhere in this Form 10-K.

<TABLE>
<CAPTION>

                                                            (IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
                                                                      YEARS ENDED DECEMBER 31,
                                                       1995         1999        1996         1997            1998
                                                       ----         ----        ----         ----            ----
<S>                                                  <C>        <C>          <C>          <C>            <C>
INCOME STATEMENT DATA
Net sales                                             $    --    $133,878     $151,049     $180,818       $196,699
Income from continuing operations                     $    --         440          434        1,820          1,261
Income (loss) from discontinued operations,
     including loss on disposal                        (3,091)        455          (77)      (1,301)           (72)
Net income (loss)                                      (3,091)        896          357          324          1,189
Basic income per common share from continuing
     operations                                            --        0.08         0.06         0.25           0.18
Diluted income per common share from continuing
     operations                                            --        0.08         0.06         0.24           0.18
Basic and diluted net income (loss) per common share    (1.23)       0.17         0.05         0.04           0.17
------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
Total assets                                          $ 1,320      32,823       33,245       45,665         44,551
Long-term obligations                                      --          --        6,270       18,514         17,426
</TABLE>




In 1995, the Company consisted solely of the beverage division. During the
fourth quarter of 1998, the Company decided to dispose of its beverage division.
The beverage division has been treated as a discontinued operation and prior
years' financial statements have been restated.



                                       12
<PAGE>   13
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


GENERAL

     In 1996 the Company implemented a new corporate strategy that resulted in
the acquisition of five food businesses. Each of these businesses represented a
preeminent local or regional branded processed meat company. In addition to
significantly increasing the Company's size, the newly acquired businesses
created a broader platform for future growth.

     In order to acquire and operate its food businesses, the Company formed
four new subsidiaries during 1996: Prefco Corp., Carlton Foods Corp., Richard's
Cajun Foods Corp., and Grogan's Farm, Inc. In 1998, the Company formed a fifth
new subsidiary, Potter Sausage Company, to acquire the business of J.C. Potter
Sausage Company and affiliates.

     In conjunction with the new corporate strategy, during 1998 the Company
completed the sale of substantially all the assets of its beverage division,
which operated as a distributor of non-alcoholic beverages in the Baltimore and
Washington D.C. metropolitan areas. The disposition occurred in three
transactions on December 1, 1998, January 11, 1999 and February 2, 1999.

     RESULTS OF OPERATIONS

     All of the acquisitions in 1996 and 1998 were recorded utilizing the
purchase method of accounting. Therefore, results of the acquired businesses
prior to the effective date of such acquisitions are not included in the
Company's results of operations. The beverage division has been accounted for as
a discontinued operation and prior year's financial statements have been
restated. The discussion of results of operations below excludes the results of
the beverage division.

     YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

     Net Sales. Net sales increased by $15.9 million or 8.8% from $180.8 million
for the year ended December 31, 1998 to $196.7 million for the year ended
December 31, 1999. The increase in net sales was primarily due to the impact of
the acquisition of Potter, which the Company acquired on March 20, 1998, and the
introduction of new branded product lines in key markets.

     Gross Profit. Gross profit increased by approximately $2.0 million or 8.4%
from $23.9 million for the year ended December 31, 1998 to $25.9 million for the
year ended December 31, 1999. Gross profit as a percentage of net sales was
13.2% for both the year ended December 31, 1998 and 1999. The dollar increase
primarily reflects the impact of the Potter acquisition. Pork prices have a
significant impact on the Company's cost of goods sold and lower pork prices
during 1998 favorably impacted gross profit as compared to 1999.



                                       13
<PAGE>   14
     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $1.7 million or 8.4% from $19.8 million for
the year ended December 31, 1998 to $21.4 million for the year ended December
31, 1999. As a percentage of net sales, selling, general and administrative
expenses were 10.9% for both the year ended December 31, 1998 and 1999. This
dollar increase is attributable primarily to the increase in net sales.

     Income from Operations. Income from operations increased $0.3 million from
$4.2 million for the year ended December 31, 1998 to approximately $4.5 million
for the year ended December 31, 1999. This increase is attributable to factors
discussed above.

     Interest Expense. Interest expense increased $0.3 million from $2.2 million
for the year ended December 31, 1998 to $2.5 million for the year ended December
31, 1999. This increase was primarily attributable to increased levels of debt
(and the related amortization of deferred financing costs and note discounts)
that were necessary to finance the acquisition of Potter.

     Warrants with a put option were issued by the Company in conjunction with
the debt incurred at the time of the Potter acquisition. The Company is required
to accrete the value of the warrants and mark-to-market the estimated fair value
of the put option. Any increases to such value are charged to earnings as
additional interest expense. To the extent of any charges to earnings, any
subsequent decreases to the value of the warrants are added to earnings as
additional interest income. Furthermore, any such additional interest expense
would not be deductible in the Company's federal or state income tax returns
and, therefore, would increase the effective income tax rate of the Company. For
purposes of these calculations, the fair value of the warrants was estimated
using a Black-Scholes option-pricing model. During the years ended December 31,
1998 and 1999, the Company recorded no additional interest expense as the
estimated fair value of the warrants did not exceed the carrying value of the
warrants.

     Income from Continuing Operations Before Income Taxes. Income from
continuing operations before income taxes was $2.3 million for the years ended
December 31, 1998 and 1999.

     Income Taxes. The effective tax rate differs from the statutory rate
primarily because of state income taxes, the non-deductibility of goodwill
amortization and, in 1998, the reduction of the deferred tax asset valuation
allowance of $462,500.

     YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

     Net Sales. Net sales increased by $29.8 million or 19.7% from $151.0
million for the year ended December 31, 1997 to approximately $180.8 million for
the year ended December 31, 1998. The increase in net sales was primarily due to
the impact of the acquisition of Potter, which increased net sales for 1998 by
$26.4 million. The remainder of the increase relates primarily to introduction
of new branded product lines.

     Gross Profit. Gross profit increased by approximately $10.5 million or
78.3% from $13.4 million for the year ended December 31, 1997 to approximately
$23.9 million for the year ended December 31, 1998. Gross profit as a percentage
of net sales increased from 8.9% for the year ended December 31, 1997 to 13.2%
for the year ended December 31, 1998. These increases primarily reflect the
impact of acquisitions and the availability of certain of the Company's raw
materials at prices below those paid in 1997. Pork prices have a significant
impact on the Company's cost of goods sold and lower pork prices during 1998
favorably impacted gross profit as compared to 1997.



                                       14
<PAGE>   15


     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $8.0 million or 67.9% from $11.8 million for
the year ended December 31, 1997 to approximately $19.8 million for the year
ended December 31, 1998. As a percentage of net sales, selling, general and
administrative expenses increased from 7.8% to 10.9%. This increase was
primarily attributable to the larger percentage of branded product sales in
1998, which generally require higher selling, general and administrative
expenses per dollar of sales, primarily related to increased advertising
support.

     Income from Operations. Income from operations increased $2.6 million from
$1.6 million for the year ended December 31, 1997 to approximately $4.2 million
for the year ended December 31, 1998. This increase is attributable to the
factors discussed above.

     Interest Expense. Interest expense increased $0.7 million from $1.5 million
for the year ended December 31, 1997 to $2.2 million for the year ended December
31, 1998. This increase was primarily attributable to increased levels of debt
(and the related amortization of deferred financing costs and note discounts)
that were necessary to finance the acquisition of Potter.

     Warrants with a put option were issued by the Company in conjunction with
the debt incurred at the time of the Potter acquisition. The Company is required
to accrete the value of the warrants and mark-to-market the estimated fair value
of the put option. Any increases to such value are charged to earnings as
additional interest expense. To the extent of any charges to earnings, any
subsequent decreases to the value of the warrants are added to earnings as
additional interest income. Furthermore, any such additional interest expense
would not be deductible in the Company's federal or state income tax returns
and, therefore, would increase the effective income tax rate of the Company. For
purposes of these calculations, the fair value of the warrants was estimated
using a Black-Scholes option-pricing model. During the year ended December 31,
1998, the Company recorded no additional interest expense as the estimated fair
value of the warrants did not exceed the carrying value of the warrants.

     Income from Continuing Operations Before Income Taxes. Income from
continuing operations before income taxes increased $1.8 million from $0.5
million for the year ended December 31, 1998 to $2.3 million for the year ended
December 31, 1998. This increase reflects the factors discussed above.

     Income Taxes. The effective tax rate differs from the statutory rate
primarily because of state income taxes, the non-deductibility of goodwill
amortization and the reduction of the valuation allowance of $226,000 and
$462,500 in 1997 and 1998, respectively.

     Extraordinary Item. During the year ended December 31, 1998 the Company
recorded a one-time extraordinary loss of $0.3 million resulting from the early
extinguishment of debt and the write-off of the related unamortized deferred
financing costs that occurred at the time the Company's debt facilities were
refinanced. This extraordinary expense was recorded net of the related tax
benefit of $0.1 million.



                                       15
<PAGE>   16
LIQUIDITY AND CAPITAL RESOURCES

     Cash provided by operating activities for the year ended December 31, 1997
was $5.2 million. The cash generated from operating activities was primarily the
result of income from continuing operations, depreciation and amortization, a
decrease in accounts receivable and an increase in accounts payable, partially
offset by an increase in inventory. Net cash provided by operating activities
for the year ended December 31, 1998 was $3.9 million. This amount was
principally the result of income from continuing operations, depreciation and
amortization, and an increase in accrued expenses, partially offset by an
increase in accounts receivable and a decrease in accounts payable. Net cash
provided by operating activities for the year ended December 31, 1999 was $5.1
million. This amount was principally the result of income from continuing
operations, depreciation and amortization, a decrease in accounts receivable and
an increase in accounts payable, partially offset by a decrease in accrued
expenses.

     Cash used in investing activities for the years ended December 31, 1997,
1998 and 1999 was $0.8 million, $13.6 million and $1.9 million, respectively,
which was primarily related to capital expenditures and in 1998 the cash paid
for the acquisition of Potter.

     Cash used in financing activities in the year ended December 31, 1997 was
$1.8 million, primarily related to the decrease in the Company's bank overdraft
and payments under term debt and notes payable, offset by cash received from the
issuance of common stock. Cash provided by financing activities in the year
ended December 31, 1998 was $8.9 million, principally affected by the borrowings
under the term debt and notes payable to finance the acquisition of Potter and
an increase in the bank overdraft. These amounts were partially offset by
payments of term debt and notes payable under the line of credit. Cash used in
financing activities in the year ended December 31, 1999 was $4.1 million,
principally affected by the payments of term debt and notes payable under the
line of credit, the repurchase of the Company's common stock and a decrease in
the bank overdraft.

     In the first quarter of 1998, the Company acquired substantially all of the
assets of Potter, a branded food processing company located in Durant, Oklahoma
in consideration for approximately $13.0 million cash, assumed liabilities and
related transaction costs. In connection with this acquisition, the Company
borrowed approximately $6.5 million in senior subordinated debt from Banc One
Capital Corporation ("Senior Subordinated Note"). This Senior Subordinated Note
included detachable common stock warrants with a put option. The Company also
refinanced its line of credit and term debt through Fleet Capital ("Fleet
Facility"). The Fleet Facility provided a line of credit balance as of March 31,
1998, of approximately $7 million, which was $0.4 million greater than the
balance previously outstanding under the existing line of credit facility.

     As of December 31, 1998 and 1999, the Company had outstanding under the
Fleet Facility approximately $10.3 million and $8.9 million, respectively, in
term debt and approximately $1.6 million and $0.8 million, respectively, in
line-of-credit borrowings. The Company owed $6.5 million to Banc One under the
Senior Subordinated Note, and approximately $2.7 million of subordinated debt to
former owners of Prefco, Richard's, Grogan's and Partin's. The Senior
Subordinated Note bears interest at 10% per annum. The subordinated debt owed to
former owners bears interest at an average rate of approximately 7.7% per annum.
The term debt and line of credit agreement under the Fleet Facility bear annual
interest at either the bank's prime rate plus 1% (9.00% and 9.50% at December
31, 1998 and 1999, respectively) or adjusted LIBOR plus 2.5%, at the Company's
option.



                                       16
<PAGE>   17



     Warrants issued in conjunction with the Senior Subordinated Note provide
that on the occurrence of a Put Trigger Event (defined below), if the average
trading volume of the Company's stock for four consecutive weeks is less than
15% of the number of shares issuable to the holder of the put warrants, such
holders would have a thirty day right to require the Company to redeem the
warrants for a cash amount equal to the greater of a cash flow formula (defined
in the Warrant Agreement) or the fair market value of the underlying shares
based upon an appraisal, in each case, net of an exercise price of $3.38 per
share. For these purposes, a "Put Trigger Event" would occur upon the earlier of
certain events, including the fifth anniversary of the warrants, a sale of all
or substantially all of the assets of the Company, or a business combination in
which the Company is not the surviving corporation.

     If the holder of the warrants exercises the put option, the Company's
ability to satisfy such obligation will depend on its ability to raise
additional capital. The Company's ability to secure additional capital at such
time will depend upon the Company's overall operating performance, which will be
subject to general business, financial, competitive and other factors affecting
the Company and either the processed meat distribution industry, certain of
which factors are beyond the control of the Company. No assurance can be given
that the Company will be able to raise the necessary capital on terms acceptable
to the Company, if at all, to satisfy the put obligation in a timely manner. If
the Company is unable to satisfy such obligation, the Company's business,
financial condition and operations will be materially and adversely effected.

     As of December 31, 1999, the Company believes that cash generated from
operations and bank borrowings will be sufficient to fund its debt service,
working capital requirements and capital expenditures as currently contemplated
for 2000. However, the Company's ability to fund its working capital
requirements and capital expenditures will depend in large part on the Company's
ability to continue to comply with covenants in the Fleet Facility. The
Company's ability to continue to comply with the covenants in the Fleet Facility
will depend on a number of factors, certain of which are beyond the Company's
control, including but not limited to, successful integration of acquired
businesses and implementation of its business strategy, prevailing economic
conditions, uncertainty as to evolving consumer preferences, sensitivity to such
factors as weather and raw material costs, the impact of competition and the
effect of each of these factors on its future operating performance. No
assurance can be given that the Company will remain in compliance with such
covenants throughout the term of the Fleet Facility.

     The Company, from time to time, reviews the possible acquisition of other
products or businesses. The Company's ability to expand successfully through
acquisition depends on many factors, including the successful identification and
acquisition of products or businesses and the Company's ability to integrate and
operate the acquired products or businesses successfully. There can be no
assurance that the Company will be successful in acquiring or integrating any
such products or businesses.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is subject to certain market risks. These risks relate to
commodity price fluctuations, interest rate changes, fluctuations in the value
of the warrants with the put option and credit risk.

     The Company is a purchaser of pork and other meat products. The Company
buys pork and other meat products based upon market prices that are established
with the vendor as part of the purchase process. The operating results of the
Company are significantly impacted by pork prices. The Company does not use
commodity financial instruments to hedge pork and other meat product prices.

     The Company's exposure to interest rate risk relates primarily to its debt
obligations and temporary cash investments. Interest rate risk is managed
through variable rate borrowings with varying maturities. The



                                       17
<PAGE>   18
Company does not use, and has not in the past fiscal year used, any derivative
financial instruments relating to the risk associated with changes in interest
rates.

     The Company is required to accrete the value of the warrants and
mark-to-market the estimated fair value of the put option. Any increases to such
value are charged to earnings as additional interest expense. To the extent of
any charges to earnings, any subsequent decreases to the value of the warrants
are added to earnings as additional interest income. Furthermore, any such
additional interest expense would not be deductible in the Company's federal or
state income tax returns and, therefore, would increase the effective income tax
rate of the Company. For purposes of these calculations, the fair value of the
warrants was estimated using a Black-Scholes option-pricing model. During the
years ended December 31, 1998 and 1999, the Company recorded no additional
interest expense as the estimated fair value of the warrants did not exceed the
carrying value of the warrants.

     The Company is exposed to credit risk on certain assets, primarily accounts
receivable. The Company provides credit to customers in the ordinary course of
business and performs ongoing credit evaluations. The Company currently believes
its allowance for doubtful accounts is sufficient to cover customer credit
risks.


YEAR 2000

     The "Year 2000 Issue" is the result of computer programs using a two-digit
format, as opposed to four digits, to indicate the year. These two-digit
computer systems are unable to interpret dates beyond the year 1999, which could
cause a system failure or other computer errors, leading to disruptions in
operations.

     The transition to the year 2000 was uneventful to the Company. There were
no disruptions from external forces such as utility or transportation companies
or any other related service interruptions. Vendors and customers that are
critical to the Company's businesses experienced no interruptions in their
respective businesses, and consequently the Company's results of operations,
liquidity and financial condition were unaffected. The costs paid to third
parties in connection with the Company's review of its information technology
were approximately $225,000.


RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

     In June 1999 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133 - an amendment of FASB Statement No. 133." SFAS 133
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS 133 requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting. SFAS 133
is effective for fiscal years beginning after June 15, 1999 and now effective
under SFAS 137 beginning after June 15, 2000. The Company is required to comply
with SFAS in fiscal 2001. The Company generally does not use derivative
financial instruments and other than the warrants with a put option, there were
no such instruments outstanding as of December 31, 1999. The Company is
evaluating the effect of SFAS 133 on its accounting policy related to derivative
financial instruments.



                                       18
<PAGE>   19

FORWARD LOOKING STATEMENTS

     The Company wants to provide stockholders and investors with more
meaningful and useful information. Therefore, this Annual Report on Form 10-K
contains forward-looking information and describes the Company's belief
concerning future business conditions and the outlook for the Company based on
currently available information. Whenever possible, the Company has identified
these "forward looking" statements by words such as "believes," "estimates,"
"expects," "will depend" and similar expressions. These forward looking
statements are subject to risks and uncertainties which would cause the
Company's actual results or performance to differ materially from those
expressed in these statements. These risks and uncertainties include the
following: risks associated with acquisitions, including integration of acquired
businesses; new product development and other aspects of the Company's business
strategy; uncertainty as to evolving consumer preferences; customer and supplier
concentration; the impact of competition; the impact of change in the valuation
of the warrants with the put option on the Company's net income and effective
tax rate; the Company's ability to raise additional capital; sensitivity to such
factors as weather and raw material costs; and the factors discussed above under
the caption "Quantitative and Qualitative Disclosures About Market Risk."
Readers are encouraged to review the Company's Current Report on Form 8-K dated
June 4, 1997 filed with the Securities and Exchange Commission for a more
complete description of these factors. The Company assumes no obligation to
update the information contained in this Annual Report on Form 10-K.





                                       19
<PAGE>   20
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See discussion under the caption "Quantitative and Qualitative Disclosures
about Market Risk" in Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations."


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Company's 1999 Financial Statements and the related Report of
Independent Auditors are set forth on pages F-1 through F-21 of this Form 10-K.


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

     As previously reported on a Current Report on Form 8-K dated December 14,
1998 (filed with the Securities and Exchange Commission on December 21, 1998)
and a Current Report on Form 8-K dated January 25, 1999 (filed with the
Securities and Exchange Commission on February 1, 1999), the Company replaced
Arthur Andersen LLP with KPMG LLP as its independent certified public
accountants.



                                       20
<PAGE>   21



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Incorporated by reference to "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's Proxy Statement for
its Annual Meeting of Stockholders to be held on May 19, 2000 (the "2000 Proxy
Statement").


ITEM 11. EXECUTIVE COMPENSATION

     Incorporated by reference to "Compensation" in the 2000 Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Incorporated by reference to "Security Ownership of Certain Beneficial
Owners and Management" in the 2000 Proxy Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Incorporated by reference to "Certain Transactions with Management and
Others" in the 2000 Proxy Statement.





                                       21
<PAGE>   22




                                     PART IV

ITEM     14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
         (a) The following documents are filed as part of this Form 10-K:

                  1.       The consolidated financial statements of the Company
                  and its subsidiaries, together with the applicable reports of
                  independent public accountants:
                                                                            Page
                           Independent Auditors' Report                      F-2

                           Report of Independent Public Accountants          F-3

                           Consolidated Balance Sheets - as of December 31, 1998
                           and 1999                                          F-4

                           Consolidated Income Statements - for the years ended
                           December 31, 1997, 1998 and 1999                  F-5

                           Consolidated Statements of Stockholders' Equity -
                           for the years ended December 31, 1997, 1998
                           and 1999                                          F-6

                           Consolidated Statements of Cash Flows - for the years
                           ended December 31, 1997, 1998 and 1999            F-7

                           Notes to Consolidated Financial Statements        F-8

                  2.       The following exhibits are filed with this report or
                  incorporated by reference as set forth below:

                  Exhibit
                  Number      Description

                  3.1         Certificate of Incorporation of the Company,
                              including all amendments thereto (11)
                  3.2         By-Laws of the Company (1)
                  4.1         Specimen Stock Certificate (1)
                  4.2         Registration  Rights  Agreement  between T. Rowe
                              Price Strategic  Partners Fund, L.P. and the
                              Company (1)
                  4.3         Atlantic Premium Brands, Ltd. Employee Stock
                              Purchase Plan dated November 1, 1997 (2)
                  4.4         $1.4 million  Subordinated  Note made by ABEV
                              Acquisition Corp. in favor of Franklin Roth and
                              Allen Pauly (4)
                  4.5         6.35% Subordinated  Non-Negotiable Promissory
                              Note due July 31, 2001 made by Richard's Cajun
                              Foods Corp.  and the Company in favor of J.L.
                              Richard in the  original  principal amount of
                              $850,000 (6)
                  4.6         8% Subordinated Non-Negotiable Promissory Note due
                              September 30, 2001 made by Grogan's Merger Corp.
                              in favor of Bobby L. Grogan and Betty R. Grogan in
                              the original  principal amount of $219,593 (6)




                                       22
<PAGE>   23


                  4.7         8% Subordinated  Non-Negotiable  Promissory Note
                              due December 31, 2003 made by Grogan's Farm, Inc.
                              in favor of Jefferson Davis and Roger Davis in the
                              original  principal  amount of $219,593 (6)
                  4.8         Secured Promissory Note dated as of March 20, 1998
                              of the Company and certain of its subsidiaries
                              payable to Fleet Capital Corporation in the
                              original principal amount of $11,000,000 (6)
                  4.9         Loan and Security Agreement dated as of March 20,
                              1998 among Fleet Capital  Corporation, the Company
                              and certain of its subsidiaries (6)
                  4.10        Stock  Pledge Agreement dated as of March 20, 1998
                              between the Company and Fleet Capital
                              Corporation (6)
                  4.11        Atlantic Premium Brands, Ltd. and Subsidiaries
                              Senior Subordinated Note and Warrant Purchase
                              Agreement dated as of March 20, 1998 among the
                              Company,  certain of its subsidiaries and Banc
                              One Capital Partners, LLC ("Banc One") (6)
                  4.12        Senior Subordinated Note due March 31, 2005 of the
                              Company payable to Banc One dated as of March 20,
                              1998 in the original principal amount of
                              $6,500,000 (6)
                  4.13        Atlantic Premium Brands, Ltd. Warrant Certificate
                              Common Stock Purchase Warrant of Banc One dated as
                              of March 20, 1998 (6)
                  4.14        Atlantic Premium Brands, Ltd. Warrant Certificate
                              Contingent Common Stock Purchase Warrant of Banc
                              One dated as of March 20, 1998 (6)
                  4.15        Put Option Agreement dated as of March 20, 1998
                              between the Company and Banc One (6)
                  4.16        Registration Rights Agreement dated as of March
                              20, 1998 between the Company and Banc One (6)
                  4.17        Shareholders Agreement dated as of March 20, 1998
                              among the Company, certain of its shareholders and
                              Banc One (6)
                  4.18        Preemptive Rights Agreement dated as of March 20,
                              1998 between the Company and Banc One (6)
                  4.19        Debt Subordination Agreement dated as of March 20,
                              1998 among Banc One Capital Partners, LLC, the
                              Company, certain of its subsidiaries and Fleet
                              Capital Corporation (6)
                  4.20        Lien Subordination Agreement dated as of March 20,
                              1998 between Fleet Capital Corporation and Banc
                              One Capital Partners, LLC (6)
                  10.1        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
                              (1)
                  10.2        Consulting Agreement dated March 15, 1996 by and
                              between the Company, Sterling Advisors, L.P. and
                              Elfman Venture Partners, Inc. (3)
                  10.3        Amendment to Consulting Agreement dated as of
                              October 16, 1996 among the Company, Sterling
                              Advisors, L.P. and Elfman Venture Partners, Inc.
                              (6)
                  10.4        Second Amendment to Consulting Agreement dated as
                              of September 7, 1997 among the Company, Sterling
                              Advisors, L.P. and Elfman Venture Partners, Inc.
                              (6)
                  10.5        Third Amendment to Consulting Agreement dated as
                              of December 1, 1998 among the Company, Sterling
                              Advisors, L.P. and Elfman Ventures Partners, Inc.
                              (10)
                  10.6        Form of Tax Indemnification Agreement (1)
                  10.7        Stock Purchase Agreement dated as of January 23,
                              1996 among the Company, ABEV Acquisition Corp.,
                              Franklin Roth and Allen Pauly (4)



                                       23
<PAGE>   24

                  10.8        Asset Purchase Agreement dated as of March 6, 1998
                              among Potter's Acquisition Corp., J.C. Potter
                              Sausage Company, Potter's Farm, Inc., Potter
                              Rendering Co. and Potter Leasing Company, Ltd. (6)
                  10.9        Asset Purchase Agreement dated as of November 24,
                              1998 between the Company and Canada Dry Potomac
                              Corporation (9)
                  10.10       Asset Purchase Agreement dated February 2, 1999
                              between the Company and Master Distributors, Inc.
                              (9)
                  10.11       Stock Purchase Agreement dated April 23, 1999
                              among the Company and Bobby L. Grogan and Betty
                              Ruth Grogan (12)
                  10.12       The Company's 1999 Amended and Restated Stock
                              Option Plan (11)
                  10.13       Employment Agreement dated October 29, 1996
                              between the Company and Alan F. Sussna (5)
                  10.14       Employment Agreement dated as of April 6, 1998
                              between the Company and Thomas M. Dalton (7)
                  10.15       Employment Agreement dated August 10, 1998 between
                              the Company and Steven Englander (8)
                  21          Subsidiaries of the Company (6)
                  23.1        Consent of KPMG LLP (*)
                  23.2        Consent of Arthur Andersen LLP (*)
                  27          Financial Data Schedule (*)

------------------
* Filed herewith
(1)  Filed as an exhibit to the Company's Registration Statement No. 33-69438 or
     the amendments thereto and incorporated herein by reference.
(2)  Filed as an exhibit to the Company's Form S-8 Registration Statement No.
     333-39561 and incorporated herein by reference.
(3)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
     quarter ended March 31, 1996 and incorporated herein by reference.
(4)  Filed as an exhibit to the Company's Current Report on Form 8-K dated March
     15, 1996, filed with the Securities and Exchange Commission on April 1,
     1996, and incorporated herein by reference.
(5)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
     quarter ended September 30, 1996 and incorporated herein by reference.
(6)  Filed as an exhibit to the Company's Annual Report on Form 10-K for the
     year ended December 31, 1997, and incorporated herein by reference.
(7)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
     quarter ended March 31, 1998, and incorporated herein by reference.
(8)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
     quarter ended September 30, 1998, and incorporated herein by reference.
(9)  Filed as an exhibit to the Company's Current Report on Form 8-K dated
     February 2, 1999, filed with the Securities and Exchange Commission on
     February 16, 1999, and incorporated herein by reference.
(10) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
     year ended December 31, 1998, and incorporated herein by reference.
(11) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
     quarter ended June 30, 1999, and incorporated herein by reference.
(12) Filed as an exhibit to the Company's Current Report on Form 8-K dated May
     21, 1999, filed with the Securities and Exchange Commission on May 24,
     1999, and incorporated herein by reference.

        (b) Reports on Form 8-K:

            On December 7, 1999, the Company filed a Current Report on Form 8-K
         dated November 30, 1999 disclosing Item 5, the Company's announcement
         that the Board of Directors authorized the purchase of up to $0.5
         million of the Company's common stock in the open market or in
         privately negotiated transactions.


                                       24
<PAGE>   25
                                   SIGNATURES

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

                                        ATLANTIC PREMIUM BRANDS, LTD.


                                        By:     /s/ Thomas M. Dalton
                                             ---------------------------
                                             Thomas M. Dalton
                                             Senior Vice President
                                             and Chief Financial Officer
Dated as of March 29, 2000.

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


<TABLE>
<CAPTION>
               SIGNATURE                                      TITLE                                  DATE
               ---------                                      -----                                  ----
<S>                                         <C>
                                             Director                                           March ___, 2000
-----------------------------------------
             Eric D. Becker


         /s/ Thomas M. Dalton                Senior Vice President and Chief Financial          March 29, 2000
-----------------------------------------    Officer (principal financial and
            Thomas M. Dalton                 accounting officer)


         /s/ Merrick M. Elfman               Director                                           March 29, 2000
-----------------------------------------
           Merrick M. Elfman


           /s/ Brian Fleming                 Director                                           March 29, 2000
-----------------------------------------
             Brian Fleming


           /s/ John T. Hanes                 Director                                           March 29, 2000
-----------------------------------------
             John T. Hanes


            /s/ Rick Inatome                 Director                                           March 29, 2000
-----------------------------------------
              Rick Inatome


         /s/ G. Cook Jordan, Jr.             Director                                           March 29, 2000
-----------------------------------------
          G. Cook Jordan, Jr.


           /s/ John A. Miller                Director                                           March 29, 2000
-----------------------------------------
             John A. Miller


           /s/ Alan F. Sussna                Chief Executive Officer and Director               March 29, 2000
-----------------------------------------    (principal executive officer)
             Alan F. Sussna

           /s/ Steven M. Taslitz             Director                                           March 29, 2000
-----------------------------------------
           Steven M. Taslitz

</TABLE>

<PAGE>   26

                          ATLANTIC PREMIUM BRANDS, LTD.

                          INDEX TO FINANCIAL STATEMENTS

                                                                           PAGE

Independent Auditors' Report                                                F-2

Report of Independent Public Accountants                                    F-3

Consolidated Balance Sheets - as of December 31, 1998 and 1999              F-4

Consolidated Income Statements - for the years ended
  December 31, 1997, 1998 and 1999                                          F-5

Consolidated Statements of Stockholders' Equity - for the years ended
  December 31, 1997, 1998 and 1999                                          F-6

Consolidated Statements of Cash Flows - for the years ended
  December 31, 1997, 1998 and 1999                                          F-7

Notes to Consolidated Financial Statements                                  F-8




                                      F-1

<PAGE>   27
                          INDEPENDENT AUDITORS' REPORT


To the Stockholders of
Atlantic Premium Brands, Ltd.:

We have audited the accompanying consolidated balance sheets of Atlantic Premium
Brands, Ltd. (a Delaware corporation) and subsidiaries as of December 31, 1998
and 1999, and the related consolidated statements of income, stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. The consolidated
balance sheet of Atlantic Premium Brands, Ltd. and subsidiaries as of December
31, 1997 and the related consolidated statements of income, stockholders' equity
and cash flows for the year ended December 31, 1997, were audited by other
auditors whose report thereon dated March 20, 1998 (except with respect to the
matter discussed in Note 3, as to which the date is March 25, 1999), expressed
an unqualified opinion on those statements.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Atlantic Premium
Brands, Ltd. and subsidiaries as of December 31, 1998 and 1999, and the results
of their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.


                                        /s/ KPMG LLP


Chicago, Illinois
March 16, 2000



                                      F-2


<PAGE>   28
                       [Letterhead of Arthur Andersen LLP]

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholders of
Atlantic Premium Brands, Ltd.:


We have audited the accompanying consolidated balance sheet of Atlantic Premium
Brands, Ltd. (a Delaware corporation), and subsidiaries as of December 31, 1997,
and the related consolidated statements of operations, stockholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 Premium Brands, Ltd.
and subsidiaries as of December 31, 1997, and the results of their operations
and their cash flows for the year then ended, in conformity with generally
accepted accounting principles.



                                          /s/ Arthur Andersen LLP

Baltimore, Maryland,
  March 20, 1998 (except with
  respect to the matter discussed
  in Note 3, as to which the date
  is March 25, 1999)


                                      F-3
<PAGE>   29
                          ATLANTIC PREMIUM BRANDS, Ltd.

                           Consolidated Balance Sheets
                        (in thousands, except share data)

<TABLE>
<CAPTION>

                                                                    December 31,
                                                                 1998          1999
                          ASSETS
<S>                                                            <C>            <C>
Current assets:
  Cash                                                         $  1,774       $ 1,841
  Accounts receivable, net of allowance for doubtful
    accounts of $247 and $348, respectively                      10,437         9,623
  Inventory                                                       4,457         5,610
  Prepaid expenses and other current assets                         235           475
  Deferred income taxes                                             544           587
  Net assets of discontinued operations                           1,240           276
                                                               --------       -------
      Total current assets                                       18,687        18,412

Property, plant and equipment, net                               12,288        12,549
Intangible assets, net                                           13,517        13,153
Other assets, net                                                   605           437
Deferred tax assets                                                 568             -
                                                               --------       -------
      Total assets                                             $ 45,665       $44,551
                                                               ========       =======
           LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Bank overdraft                                               $  4,073       $ 2,963
  Notes payable under line of credit                              1,579           751
  Current maturities of long-term debt                            1,378         1,964
  Accounts payable                                                5,608        10,572
  Income taxes payable                                               79             -
  Accrued expenses                                                4,602         1,222
                                                               --------       -------
      Total current liabilities                                  17,319        17,472

Long-term debt, net of current maturities                        17,079        15,986
Deferred income taxes                                                 -             5
Put warrants                                                      1,435         1,435
                                                               --------       -------
      Total liabilities                                          35,833        34,898

Stockholders' equity:
  Preferred stock, $.01 par value; 5,000,000 shares
    authorized; none issued or outstanding                            -             -
  Common stock, $.01 par value; 30,000,000 shares
    authorized; 7,412,583 and 6,845,069 shares
    issued and outstanding, respectively                             74            68
  Additional paid-in-capital                                     12,260        10,898
  Accumulated deficit                                            (2,502)       (1,313)
                                                               --------       -------
      Total stockholders' equity                                  9,832         9,653
                                                               --------       -------
      Total liabilities and stockholders' equity               $ 45,665       $44,551
                                                               ========       =======
</TABLE>


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


                                      F-4

<PAGE>   30
                          ATLANTIC PREMIUM BRANDS, Ltd.

                         Consolidated Income Statements
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                                    December 31,
                                                        1997            1998              1999
                                                        ----            ----              ----
<S>                                                  <C>            <C>             <C>
Net sales                                            $  151,049     $   180,818     $  196,699
Cost of goods sold                                      137,617         156,870        170,751
                                                     ------------------------------------------
   Gross profit                                          13,432          23,948         25,948
Selling, general and administrative
   expenses:
 Salaries and benefits                                    4,373           8,537          9,875
 Other operating expenses                                 6,377           9,593          9,449
 Depreciation and amortization                            1,041           1,663          2,123
                                                     ------------------------------------------
   Total selling, general and
    administrative expenses                              11,791          19,793         21,447
                                                     ------------------------------------------
   Income from operations                                 1,641           4,155          4,501
Interest expense                                          1,495           2,206          2,491
Other income, net                                           368             321            337
                                                     ------------------------------------------
   Income from continuing operations
    before income taxes                                     514           2,270          2,347
Income tax expense                                          (80)           (450)        (1,086)
                                                     ------------------------------------------
   Income from continuing
    operations                                              434           1,820          1,261
Discontinued operations:
   Loss from discontinued operations                        (77)           (742)           (72)
   Loss on disposal of discontinued operations                -            (559)             -
                                                     ------------------------------------------
Income before extraordinary loss                            357             519          1,189
Extraordinary loss                                            -             195              -
                                                     ------------------------------------------
Net income                                           $      357     $       324     $    1,189
                                                     ------------------------------------------


Weighted average common shares:
  Basic                                               6,846,013       7,384,372      7,054,284
                                                     ------------------------------------------
  Diluted                                             7,102,850       7,576,236      7,193,748
                                                     ------------------------------------------

Income per common share:
 Basic
  Income from continuing
   operations                                        $     0.06     $    0.25       $     0.18
  Loss from discontinued operations,
   including loss on disposal                             (0.01)        (0.18)           (0.01)
  Extraordinary loss                                          -         (0.03)               -
                                                     -----------------------------------------
 Net income                                          $     0.05     $    0.04       $     0.17
                                                     -----------------------------------------
 Diluted:
  Income from continuing
   operations                                        $     0.06     $    0.24       $     0.18
  Loss from discontinued operations,
   including loss on disposal                             (0.01)        (0.17)           (0.01)
  Extraordinary loss                                          -         (0.03)               -
                                                     -----------------------------------------
 Net income                                          $     0.05     $    0.04       $     0.17
                                                     -----------------------------------------
</TABLE>


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


                                      F-5

<PAGE>   31

                          ATLANTIC PREMIUM BRANDS, Ltd.

                 Consolidated Statements Of Stockholders' Equity
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                   Additional       Total
                                                     Common Stock      Paid-in     Accumulated   Stockholders'
                                                   Shares     Amount    Capital       Deficit       Equity
                                                   ------     ------    -------       -------       ------
<S>                                                <C>       <C>       <C>         <C>            <C>
Balance, December 31, 1996                          6,397     $ 64     $ 9,723     $ (3,183)      $ 6,604
  Issuance of common stock
    through private placement, net                    977       10       2,378            -         2,388
  Issuance of stock options to non-employee             -        -          40            -            40
  Net income                                            -        -           -          357           357
                                                   ------------------------------------------------------
Balance, December 31, 1997                          7,374       74      12,141       (2,826)        9,389
  Issuance of common stock in
    connection with employee stock
    purchase plan                                      27        -          60            -            60
  Exercise of stock options                            12        -          46            -            46
  Issuance of stock options to non-employee             -        -          13            -            13
  Net income                                            -        -           -          324           324
                                                   ------------------------------------------------------
Balance, December 31, 1998                          7,413       74      12,260       (2,502)        9,832
  Repurchase and retirement of common stock          (579)      (6)     (1,381)           -        (1,387)
  Issuance of common stock in
    connection with employee stock
    purchase plan                                      11        -          19            -            19
  Net income                                            -        -           -        1,189         1,189
                                                   ------------------------------------------------------
Balance, December 31, 1999                          6,845     $ 68    $ 10,898     $ (1,313)      $ 9,653
                                                   ======================================================
</TABLE>


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



                                      F-6
<PAGE>   32

                          ATLANTIC PREMIUM BRANDS, Ltd.
                      Consolidated Statements Of Cash Flows
                                 (in thousands)

<TABLE>
<CAPTION>

                                                         December 31,

                                                   1997         1998        1999

                                                   ----         ----        ----
<S>                                              <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                     $    357    $    324    $  1,189
  Adjustments to reconcile net
      income to net cash provided
      by (used in) operating activities,
      net of assets and liabilities of
      acquired businesses
    Loss on disposal of discontinued
      operations                                      -           559         -
    Loss from discontinued operations                  77         742          72
    Extraordinary loss                                -           195
    Depreciation and amortization                   1,041       1,370       2,123
    Amortization of debt discount
      and deferred financing costs                    214         293         246
    Deferred income taxes                             256        (269)         44
    Options issued to non-employee                     40          13         -
    Decrease (increase) in accounts
      receivable, net                               1,471      (1,273)        814
    Decrease (increase) in inventory                 (319)        484      (1,153)
    Decrease (increase) in prepaid
      expenses and other current assets              (145)        154         243
    Increase (decrease) in accounts
      payable                                       2,401      (1,486)      4,964
    Increase (decrease) in accrued
      expenses and income taxes payable              (180)      2,794      (3,459)
                                                ---------------------------------
Net cash provided by
  operating activities                              5,213       3,900       5,083
                                                ---------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property, plant and
    equipment                                        (376)       (889)     (1,954)
  Proceeds from sale of property,
    plant and equipment                              --           179         105
  Cash paid for businesses acquired,
    including deferred acquisition fees and
    net of cash acquired                             (430)    (12,870)       --
  Other                                              --          --            (7)
                                                ---------------------------------
      Net cash used in investing activities          (806)    (13,580)     (1,856)
                                                ---------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (decrease) in bank
    overdraft                                      (1,228)      2,670      (1,110)
  Payments under line of credit, net                 (417)     (5,260)       (175)
  Borrowings (payments) under term
    debt and notes payable, net                    (2,434)     11,761      (1,399)
  Payments of financing costs                        (135)       (352)       --
  Issuance of common stock                          2,388         107          19
  Repurchase of common stock                         --          --        (1,387)
                                                ---------------------------------
      Net cash provided by (used in) financing
        activities                                 (1,826)      8,926      (4,052)
                                                ---------------------------------
Net cash provided by (used in) discontinued
   operations                                      (2,525)      1,344         892
                                                ---------------------------------

NET INCREASE IN CASH                                   56         590          67
Cash, beginning of period                           1,128       1,184       1,774
                                                ---------------------------------
Cash, end of period                              $  1,184    $  1,774    $  1,841
                                                =================================
</TABLE>

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


                                      F-7

<PAGE>   33
                          ATLANTIC PREMIUM BRANDS, LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. BASIS OF PRESENTATION AND DESCRIPTION OF COMPANY:

The accompanying consolidated financial statements present the accounts of
Atlantic Premium Brands, Ltd. and subsidiaries (the "Company"). All significant
inter-company transactions have been eliminated in consolidation. The Company's
financial statements have been restated to classify the results of operations
and net assets of the beverage division as discontinued operations. Accordingly,
all amounts included in the Notes to Consolidated Financial Statements pertain
to continuing operations except where otherwise noted. See further discussion in
Note 3 - "Discontinued Operations".

The Company is engaged in the manufacturing, marketing and distribution of
packaged meat and other food products in Texas, Louisiana, Kentucky, Oklahoma
and surrounding states.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

REVENUE RECOGNITION

The Company records sales when product is delivered to the customers. Discounts
provided, principally based on volume, are recorded as reductions of sales at
the time of the sale.

CASH

Cash consists of cash held in various deposit accounts with financial
institutions. As of December 31, 1999, $246 was restricted to meet minimum
balance funding requirements.

INVENTORY

Inventory is stated at the lower of cost or market and is comprised of raw
materials, finished goods and packaging supplies. Cost is determined using the
first-in, first-out method.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost, net of applicable
depreciation. Depreciation is computed using the straight-line method at annual
rates of 3% to 20% for buildings and building improvements, and 10% to 20% for
equipment, furniture and vehicles. Leasehold improvements are amortized over the
lesser of the lease term or asset life. Additions and improvements that
substantially extend the useful life of a particular asset are capitalized.
Repair and maintenance costs are charged to expense. Upon sale, the cost and
related accumulated depreciation are removed from the accounts.

OTHER ASSETS

Other assets consist of deferred acquisition costs, cash surrender value of life
insurance, and deferred financing costs. Deferred financing costs are being
amortized over 5 to 7 years, representing the term of the related debt, using
the effective interest method.

INTANGIBLE ASSETS

The excess of cost over the fair market value of tangible net assets and
trademarks of acquired businesses is amortized on a straight-line basis over the
periods of expected benefit, which range from 10 to 40 years. Amortization
expense for each of the years ended December 31, 1997, 1998 and 1999 was $350,
$465 and $570, respectively. Accumulated amortization as of December 31, 1998
and 1999 was $1,187



                                      F-8

<PAGE>   34
and $1,757, respectively. Subsequent to an acquisition, the Company continually
evaluates whether events and circumstances have occurred that indicate the
remaining estimated useful life of an intangible asset may warrant revision or
that the remaining balance of an intangible asset may not be recoverable. When
factors indicate that an intangible asset should be evaluated for possible
impairment, the Company uses an estimate of the related business' undiscounted
future cash flows over the remaining life of the asset in measuring whether the
intangible asset is recoverable.

ADVERTISING

Advertising expenditures are expensed in the period in which the advertising
first takes place.

INCOME TAXES

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

INCOME PER COMMON SHARE

Basic income per common share is based upon the weighted-average number of
common shares outstanding. Diluted income per common share assumes the exercise
of all options which are dilutive, whether exercisable or not. The dilutive
effect of stock options is measured under the treasury stock method.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company selectively uses derivative financial instruments to manage its
market and interest rate risk, however it does not use nor hold derivative
positions for trading purposes. In 1998, the Company entered into a derivative
financial instrument in connection with the issuance of warrants to purchase
shares of common stock. The structure of the transaction, as discussed further
in Note 10, requires that increases in the value of the common stock underlying
the warrants be recognized currently as interest expense in the income
statement. Subsequent to the effective date of this transaction, the market
price of the Company's common stock was generally lower than the exercise price
for the warrants, and accordingly, no interest expense was recorded for these
warrants.

STOCK-BASED COMPENSATION

The Company applies the intrinsic value-based method of accounting for its fixed
plan stock options. As such, compensation expense is recorded on the date of
grant only if the current market price of the underlying stock exceeds the
exercise price.



                                      F-9
<PAGE>   35

SUPPLEMENTAL CASH FLOW INFORMATION

                                               CASH PAID           CASH PAID
                                               FOR TAXES          FOR INTEREST

         Year ended December 31, 1997
           Related parties                             -                 292
           Other                                     112               1,171
         Year ended December 31, 1998
           Related parties                             -                 200
           Other                                     414               1,968
         Year ended December 31, 1999
           Related parties                             -                 200
           Other                                     974               2,045

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities 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.

RECLASSIFICATIONS

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

3. DISCONTINUED OPERATIONS:

During the fourth quarter of 1998, the Company decided to sell substantially all
the assets of its beverage division. The beverage division has been accounted
for as a discontinued operation and prior years' financial statements have been
restated. Interest expense has been allocated to the beverage division based on
its net assets as a percentage of total consolidated net assets.

The sale was recorded in three separate transactions. Effective December 1,
1998, certain assets were sold for cash of approximately $2,200. Effective
January 11, 1999, additional assets were sold for cash of approximately $900.
Effective February 2, 1999, the Company completed its disposition of the
beverage division when it sold the remaining assets and liabilities for
approximately $400 in cash and notes.

In connection with the sale of the beverage division, the Company recorded
liabilities related to severance, legal and accounting expenses, investment
banking and lease obligations which have no future benefit. These expenses total
$1,300 and include investment banking fees of $260 which were paid to related
parties, Sterling Advisors, LP and Elfman Venture Partners, Inc., and the
related liabilities are classified in accrued expenses in the accompanying
consolidated balance sheet at December 31, 1998. These liabilities have been
paid as of December 31, 1999.

Selected statements of income data for discontinued operations is as follows:

                                           FOR THE YEARS ENDED DECEMBER 31,
                                       1997               1998            1999
--------------------------------------------------------------------------------

Net sales                             $21,150            19,597            -
Operating income (loss)                    78              (729)         (72)
Income tax benefit                         30               341            -
Loss from discontinued
   operations                             (77)             (742)         (72)
--------------------------------------------------------------------------------



                                      F-10

<PAGE>   36
Net assets of discontinued operations are as follows:

                                                           DECEMBER 31,
                                                     1998               1999
--------------------------------------------------------------------------------

Current assets                                     1,297                276
Property, plant and equipment, net                   334                  -
Other assets                                         370                  -
Current liabilities                                 (760)                 -
-------------------------------------------------------------------------------
Net assets of discontinued operations              1,240                276
-------------------------------------------------------------------------------

4. INVENTORY:

Inventory consisted of the following as of December 31:

                                              1998             1999
                                              ----             ----

         Raw materials                      $      140      $      423
         Finished goods                          2,998           3,821
         Packaging supplies                      1,319           1,366
                                            ----------      ----------
           Total                            $    4,457      $    5,610
                                            ==========      ==========

5. PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment as of December 31, 1998 and 1999 are summarized as
follows:

                                                            1998        1999
                                                            ----        ----

         Land                                             $     664   $    664
         Buildings and building improvements                  7,397      7,589
         Equipment and furniture                              4,564      5,334
         Leasehold improvements                                 475        499
         Vehicles                                             1,397      2,110
                                                          --------------------
                                                             14,497     16,196
         Less - accumulated depreciation and amortization    (2,209)    (3,647)
                                                          --------------------
         Property, plant and equipment, net               $  12,288   $ 12,549
                                                          ====================
Depreciation expense for the years ended December 31, 1997, 1998 and 1999 was
$691, $1,197 and $1,563, respectively.

6. ACQUISITIONS:

As of March 20, 1998, the Company acquired substantially all of the assets and
certain liabilities of J.C. Potter Sausage Company (Potter) for approximately
$10,500 in cash plus related transaction costs. At that time, an outstanding
$7,450 term loan and $8,500 revolving line of credit were refinanced. The new
debt consisted of an $11,000 term note, a $15,000 line of credit and a $6,500
senior subordinated note with detachable put warrants (see Note 10).

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 upon fair values. The excess of the purchase price over the fair
values of the tangible assets acquired and liabilities assumed has been recorded
as goodwill and is being amortized on a straight-line basis over 5 years for the
portion related to transaction costs and over 40 years for the remainder.



                                      F-11

<PAGE>   37
7. OTHER ASSETS:

Other assets are comprised of the following as of December 31, 1998 and 1999:

                                                              1998         1999
                                                              ----         ----

Deferred financing costs and intangible assets                599          614
Cash surrender value of life insurance and other assets        98           64
                                                            ------------------
                                                              697          678
Less - accumulated amortization                               (92)        (241)
                                                            ------------------
Other assets, net                                           $ 605        $ 437
                                                            ==================

Amortization of deferred financing costs of $176, $92 and $246 has been included
within interest expense in the accompanying consolidated income statements for
the years ended December 31, 1997, 1998 and 1999, respectively.

8. SIGNIFICANT SUPPLIERS AND CUSTOMERS:

For the year ended December 31, 1997, no single supplier accounted for more than
10% of the Company's total product purchases. A single customer accounted for
approximately 47% of the Company's net sales.

For the year ended December 31, 1998, two suppliers provided approximately 18%
and 13%, respectively, of the Company's total product purchases. A single
customer accounted for approximately 43% of the Company's net sales.

For the year ended December 31, 1999, a single supplier provided approximately
17% of the Company's total product purchases. A single customer accounted for
approximately 43% of the Company's net sales.

9. INCOME TAXES:

Income taxes (benefits) for the years ended December 31, 1997, 1998 and 1999,
were allocated as follows:

                                                   1997       1998       1999
                                                   ----       ----       ----


Income from continuing operations                   (80)       (450)    (1,086)
Loss from discontinued operations                    30         341        -
Loss on disposal of discontinued operations           -         288        -
Extraordinary loss                                    -         122        -
                                                 ------------------------------
                                                 $  (50)        301     (1,086)
                                                 ==============================

Income taxes (benefits) consisted of the following:

                                            1997        1998     1999
                                            ----        ----     ----

Current:
         Federal                           $ (10)      (591)      (853)
         State                               (40)      (250)      (190)
Deferred:
         Federal                            (231)       (64)       (38)
         State                               (25)        (7)        (6)
                                           ----------------------------
                                            (306)      (912)    (1,086)
Decrease in valuation allowance              226        462         -
                                           ----------------------------
Total income taxes                         $ (80)      (450)    (1,086)
                                           ============================




                                      F-12
<PAGE>   38
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities at December 31, 1998 and 1999 are
presented below:

                                                             1998       1999
                                                             ----       ----

Deferred tax assets attributable to:
     Net operating loss carryforwards                      $   429    $   497
     Net liabilities related to discontinued
       operations                                              798          -
     Inventory                                                  61         63
     Accrued expenses                                          100        270
     Accounts receivable                                        94        136
     Other                                                      76        101
                                                           ------------------
           Net deferred tax assets                           1,558      1,067
                                                           ------------------
Deferred tax liabilities attributable to:
         Property, plant and equipment                         206        270
         Other                                                 242        215
                                                           ------------------
           Deferred tax liabilities                            447        485
                                                           ------------------
                                                           $ 1,112        582
                                                           ==================

As of December 31, 1999, the Company has approximately $1,300 of net operating
loss carryforwards for tax purposes, expiring through 2010.

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities and projected future taxable
income in making this assessment. Based upon the level of projected future
taxable income over the periods in which the deferred tax assets are deductible,
management believes it is more likely than not that the Company will realize the
benefits of these deductible differences at December 31, 1999. The amount of the
deferred tax asset considered realizable, however, could be reduced in the near
term if estimates of future taxable income during the net operating loss
carryforward periods are reduced.

The items which gave rise to differences between income taxes in the
consolidated income statements and income taxes computed at the Federal
statutory rate are summarized below:

                                             1997          1998            1999
                                             ----          ----            ----

Statutory Federal income tax rate          (34.0)%      (34.0)%          (34.0)%
State income taxes, net of
  Federal income tax effect                 (3.3)        (5.0)            (5.5)
Nondeductible amortization of goodwill     (17.4)        (4.4)            (7.1)
Reduction of valuation allowance            43.9         20.4               -
Other                                       (4.8)         3.2              0.3
                                           -------------------------------------
Total                                      (15.6)%      (19.8)%          (46.3)%
                                           =====================================

10. DEBT AND EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF DEBT:

Long-term debt as of December 31, 1998 and 1999, consisted of the following:


                                                                 1998     1999
                                                                 ----     ----

Subordinated promissory note to former shareholders
   of Prefco, bearing interest at 9% annually,
   payable in quarterly installments of interest,
   with all outstanding principal and interest due
   March 2001                                                    1,400    1,400
Subordinated promissory note to former shareholder
   of Richard's, bearing interest at 6.35%
   annually, payable in quarterly installments
   of interest, with all outstanding principal and
   interest due July 2001                                          875      875



                                      F-13

<PAGE>   39
Subordinated promissory note to former
   shareholders of Grogan's, effective
   October 1998, bearing interest
   at 8% annually, payable in quarterly
   installments of interest, with all
   outstanding principal and interest
   due September 2001                                              200      200
Subordinated promissory note to former
   shareholders of Partin's, bearing interest
   at 8% annually, payable in quarterly installments
   of interest, with all outstanding principal and
   interest due December 2003                                      225      225
Senior subordinated note bearing interest at 10%,
   principal due in quarterly installments beginning
   June 30, 2003, with all outstanding principal and
   interest due March 31, 2005                                   6,500    6,500
Term note bearing interest at prime rate plus 1% or
   adjusted LIBOR plus 2.5%, principal due in varying
   amounts payable monthly through March 2003                   10,312    8,913
Capital lease obligations and other                                348      992
                                                              -----------------
   Total                                                        19,860   19,105
Less: Current maturities                                        (1,378)  (1,964)
   Unamortized debt discount                                    (1,403)  (1,155)
                                                              -----------------
   Long-term debt, net of current maturities and
         unamortized debt discount                            $ 17,079  $15,986
                                                              =================

The future maturities of long-term debt as of December 31, 1999, are as follows:

   2000                                                             $ 1,964
   2001                                                               4,882
   2002                                                               2,503
   2003                                                               5,549
   2004                                                               3,396
   2005 and thereafter                                                  811
                                                                    -------
                                                                    $19,105
                                                                    =======

In conjunction with the acquisition of J.C. Potter, on March 29, 1998, the
Company refinanced its senior revolver and term debt. The new debt consists of
an $11,000 term note, a $15,000 line of credit and a $6,500 senior subordinated
note with detachable put warrants.

The term note bears interest at either the bank's prime rate plus 1% or adjusted
LIBOR plus 2.5%, at the Company's option. This loan is due in varying amounts
payable monthly through March 2003 and is secured by substantially all the
assets of the Company.

Under the terms of the line of credit agreement, which expires in March 2003,
the Company is permitted to borrow up to $15,000, subject to advance formulas
based on accounts receivable, inventory and letter of credit obligations
outstanding. Amounts borrowed are due on demand and bear interest at either the
bank's prime rate plus 1% or adjusted LIBOR plus 2.5%. Interest is payable
monthly and amounts are secured by substantially all the assets of the Company.
The weighted average interest rates related to the line of credit existing at
December 31, 1998 and 1999, were 8.53% and 8.98%, respectively. As of December
31, 1999, approximately $250 of standby letters of credit were outstanding under
the line of credit facility.

The $6,500 senior subordinated note, maturing on March 31, 2005 bears interest
at 10%. Principal is payable in quarterly installments beginning June 30, 2003.
The subordinated debt was issued with detachable put warrants to purchase
666,947 shares of nonvoting common stock at $3.38 per share and a contingent
warrant to purchase up to a maximum of 428,753 shares of nonvoting common stock
at $3.38 per share based upon the equity value of the Company on certain dates.
The warrants were recorded at



                                      F-14
<PAGE>   40

an estimated fair value of $1,435, and the related discount on the senior
subordinated note was recorded for the same amount. This discount is being
amortized over the seven year term of the note as additional interest expense.
Amortization of the debt discount was $160 and $247 for the years ended December
31, 1998 and 1999, respectively.

In connection with the Company's line of credit and term note agreements, the
Company is required to meet certain financial and non-financial covenants.

In connection with the debt refinancing, the Company recorded an extraordinary
loss of $195, net of an income tax benefit of $122, related to the write off of
deferred financing costs. The Company incurred financing costs related to the
new line of credit and term note which have been deferred and are being
amortized over the terms of the related debt instruments.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS:

The carrying amounts reported in the balance sheet for accounts receivable, and
accounts payable approximate fair value because of the short maturity of those
instruments.

Fair value of the Company's long-term debt is estimated using discounted cash
flow analyses, based on the Company's current incremental borrowing rates for
similar types of borrowing arrangements. The aggregate face value of the
Company's long-term debt as of December 31, 1998 and 1999, was $19,860 and
$19,105, respectively. The face amount of the Company's long-term debt
approximated its fair value as of December 31, 1998 and 1999.

Fair value of the put warrants is estimated using the Black-Scholes option
pricing model. The carrying amount and fair value of the put warrants as of
December 31, 1998 were approximately $1,435 and $751, respectively. The carrying
amount and fair value of the put warrants as of December 31, 1999 were
approximately $1,435 and $400, respectively.


12. INCOME PER COMMON SHARE:

The weighted average shares used to calculate basic and diluted income per
common share for the years ended December 31, 1997, 1998 and 1999 are as
follows:

                                                  1997        1998      1999
                                                  ----        ----      ----

      Weighted average shares outstanding
          for basic income per common share     6,846,013   7,384,372  7,054,284

      Dilutive effect of stock options            256,837     191,864    139,464
                                                --------------------------------
      Weighted average shares outstanding
          for diluted income per common share   7,102,850   7,576,236  7,193,748
                                                ================================

Options to purchase 1,199,659 shares of common stock at prices ranging from
$2.50 to $6.50 per share were outstanding during 1998 and 1999, respectively,
but were not included in the computation of diluted income per common share
because the options' exercise price was greater than the average weighted market
price of the common stock during the year.

Put warrants to purchase up to a maximum of 1,095,700 shares of common stock at
$3.38 per share were outstanding as of December 31, 1998 and December 31, 1999,
but were not included in the computation of diluted income per common share
because the warrants' exercise price was greater than the weighted average
market price of the common stock.



                                      F-15

<PAGE>   41
13. STOCK OPTIONS:

Prior to April 1999, the Company had a stock option plan (the Old Plan) and a
Director's stock option plan (the Director Plan). In April 1999, the Company
adopted a 1999 Amended and Restated Stock Option Plan (the Option Plan), which
amended and restated both the Old Plan and the Director Plan into the Option
Plan. The Plan authorizes the Company to grant, to eligible individuals, options
for the purchase of shares of the Company's common stock.

Under the terms of the Option Plan, the Company may issue up to 3,000,000
options to directors, officers, advisors, full-time employees and other eligible
individuals. In general, the option exercise price equals the stock's market
price on the date of grant and the options vest during periods of up to ten
years. Under the terms of the Option Plan, the Company issues 10,000 options to
eligible outside directors at the beginning of each year of service. These
options vest quarterly over one year. No compensation expense was recognized for
the issuance of options under the Old Plan, the Director Plan or the Option Plan
during 1997, 1998 and 1999.

The Company has elected to account for its stock-based compensation plans using
the intrinsic value method. The Company has computed for pro forma disclosure
purposes the value of all options granted subsequent to 1994, using the
Black-Scholes option pricing model; the following assumptions were used for
option grants:


                                             1998                    1999
                                             ----                    ----

Risk-free interest rate (range)          5.00% - 5.56%           5.56% - 5.75%
Expected dividend yield                      0.00%                   0.00%
Expected lives                             5-6 years               5-6 years
Expected volatility                           52%                     53%

Adjustments were made for options forfeited prior to vesting. Had compensation
expense for these plans been determined based on the fair value at the grant
date, the Company's net income and income per common share reflected on the
accompanying consolidated income statements would have been reduced to the
following pro forma amounts:

                                            1997          1998         1999
                                            ----          ----         ----

Net income:
      As reported                           $ 357        $ 324      $ 1,189
      Pro forma                               255           18          848
Basic income per common share:
      As reported                             .05          .04          .18
      Pro forma                               .04            -          .12
Diluted income per common share:
      As reported                             .05          .04          .18
      Pro forma                               .04            -          .12

Because the fair value method of accounting has not been applied to options
granted prior to 1995, the resulting pro forma compensation expense may not be
representative of that to be expected in future years.

The following table summarizes option activity and related information.

<TABLE>
<CAPTION>

                                         1997                         1998                         1999
                                              WEIGHTED                     WEIGHTED                     WEIGHTED
                                               AVERAGE                      AVERAGE                      AVERAGE
                                              EXERCISE                     EXERCISE                     EXERCISE
                                SHARES          PRICE        SHARES          PRICE        SHARES          PRICE
<S>                             <C>           <C>            <C>           <C>          <C>            <C>
Outstanding, beginning
  of year                         693,236       $ 3.00         866,236        $2.98      1,653,192       $3.01
Granted                           178,400         2.89         845,491         3.01        310,571        2.33
Exercised                               -            -         (58,535)        2.40              -           -
Forfeited or expired               (5,400)        3.21               -            -       (259,104)       4.36
Outstanding, end
  of year                         866,236       $ 2.98       1,653,192         3.01      1,704,659        2.66
                                 =============================================================================
Exercisable, end
  of year                         552,344         3.34         692,410         3.30      1,136,852        2.39
Weighted average
  fair value of
  options granted                               $  .88                        $1.46                      $ .88
</TABLE>




                                      F-16

<PAGE>   42
The Company has a Retirement Savings Plan (401(k) plan) whereby employees may
contribute up to the limits established by the Internal Revenue Service.
Matching contributions are made by the Company equal to 50% of employee
contributions, subject to certain limitations. The Company's matching
contributions during 1997, 1998 and 1999 were $58, 107 and $208, respectively.

During 1997, the Company approved an Employee Stock Purchase Plan (the "Stock
Purchase Plan"). The Stock Purchase Plan qualified as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code. All regular
full-time employees, as defined, of the Company (including officers) are
eligible to participate in the Stock Purchase Plan. Directors who are not
employees are not eligible. A maximum of 250,000 shares of the Company's common
stock is reserved for issuance under the Stock Purchase Plan. The Stock Purchase
Plan allows the eligible employees to purchase common stock of the Company,
through payroll deductions, at a discounted price from the market price. The
exercise price under the plan is 85% of the lesser of the market value of the
Company's common stock on two defined dates during the plan year.

14. REPURCHASE OF COMPANY COMMON STOCK:

On May 13, 1999, the Company completed the repurchase of 573,810 shares of
Common Stock at a purchase price of $2.40 per share, for an aggregate purchase
price of $1,377. The Company purchased these shares from Bobby L. and Betty Ruth
Grogan, who received the shares in connection with the Company's October 1996
acquisition of Grogan's Sausage, Inc. and Grogan's Farms, Inc.

In December 1999, the Company repurchased 4,800 shares of Common Stock on the
open market for an aggregate purchase price of $10.

15. COMMITMENTS:

OPERATING LEASES

The Company leases warehouses, office buildings and most of its delivery
vehicles under operating leases. These leases have remaining terms ranging from
one to five years. Rental expense under these leases for the years ended
December 31, 1997, 1998 and 1999 was $1,559, $1,681 and $1,734, respectively. As
of December 31, 1999, future minimum lease payments under these operating leases
are as follows:

2000                                                          $1,066
2001                                                             174
2002                                                             174
2003                                                             174
2004                                                             206
                                                              $1,794


16. RELATED PARTY TRANSACTIONS:

The Company had a consulting agreement (the Agreement) with Elfman Venture
Partners, Inc. and Sterling Advisors, LP, a partnership owned by certain
stockholders of the Company (the Managers). The term of the Agreement was
through December 31, 2001. The Agreement provided that the Company would pay a
base fee of $300 per year, which would increase 5% for each year the Agreement
remains in effect. The Agreement also stipulated adjustments to the base fee for
future acquisitions or sales. During each



                                      F-17

<PAGE>   43
year the Agreement was in effect, the Company was also required to grant options
to purchase 25,000 shares of the Company's $.01 par value common stock. Such
options vested on each December 31 at an exercise price equal to the market
price on the preceding January 1 (see Note 13).

The Agreement was amended effective July 1, 1997 in connection with the Potter
acquisition (see Note 6). This amendment (the Potter Amendment) provided for an
aggregate payment to the Advisors of $750 for services provided in connection
with the Potter acquisition and the related financing, in lieu of all other fees
that would have been payable under the Agreement for the period July 1, 1997
through December 31, 1998.

The Agreement was further amended effective as of December 1, 1998 in connection
with the Beverage Division disposition (see Note 3). This amendment (the
Beverage Amendment) provides for an aggregate payment to the Advisors of $260
for services provided in connection with the disposition of the Beverage
Division, in lieu of all other base fees that would have been payable under the
Agreement for the period from January 1, 1999 through July 15, 1999.

Subsequent to July 15, 1999, there is no consulting agreement in place with the
Managers. It is expected that future payments to the Managers will be related to
services provided for specific transactions entered into by the Company.




                                      F-18

<PAGE>   44
17. BUSINESS SEGMENT INFORMATION:

The Company's operations have been classified into two business segments: food
processing and food distribution. The food processing segment includes the
processing and sales of sausage and related food products to distributors and
retailers in Oklahoma, Louisiana, Texas, Kentucky and other surrounding states.
The food distribution segment includes the purchasing, marketing and
distribution of packaged meat products to retailers and restaurants, primarily
in Texas.

Summarized financial information, by business segment, for continuing operations
in 1997, 1998 and 1999 is as follows (corporate overhead not specifically
associated with a segment has been presented separately):

                                       1997          1998            1999

Net sales to external customers:
      Food processing                 $ 22,941      $ 49,218        $ 59,861
      Food distribution                133,763       137,476         147,492
                                      --------------------------------------
                                      $156,704      $186,694        $207,353
                                      ======================================
Interest expense:
      Food processing                 $    638      $    315        $    128
      Food distribution                    408           194             130
                                      --------------------------------------
                                      $  1,046      $    509        $    258
                                      ======================================
Depreciation and amortization:
      Food processing                 $    753      $  1,384        $  1,732
      Food distribution                    241           267             264
                                      --------------------------------------
                                      $    994      $  1,651        $  1,996
                                      ======================================

Income from continuing operations
          before income taxes:
      Food processing                 $    592      $  4,662        $  4,204
      Food distribution                  1,210         1,756           2,531
                                      --------------------------------------
                                      $  1,802      $  6,418        $  6,735
                                      ======================================
Capital expenditures:
      Food processing                 $    321      $    821        $  1,791
      Food distribution                     26            92             137
                                      --------------------------------------
                                      $    347      $    913        $  1,928
                                      ======================================
Segment assets:
      Food processing                 $ 13,388      $ 26,129        $ 26,778
      Food distribution                 15,809        15,820          14,957
                                      --------------------------------------
                                      $ 29,197      $ 41,949        $ 41,735
                                      ======================================

Inter-segment sales and related receivables and payables among the segments
during 1997, 1998, and 1999, for the purpose of this presentation, have not been
eliminated.

The following are reconciliations of reportable segment revenues, profit or
loss, assets, and other significant items to the Company's consolidated totals:

                                         1997          1998           1999
Net sales:
      Total for reportable
        segments                      $156,704      $186,694        $207,353
      Elimination of inter-segment
        net sales                       (5,655)       (5,876)        (10,654)
                                      --------------------------------------
    Total consolidated net sales      $151,049      $180,818        $196,699
                                      ======================================


                                      F-19

<PAGE>   45
Income from continuing operations
       before income tax:
      Total for reportable
       segments                       $  1,802      $  6,418        $  6,735
      Corporate                         (1,287)       (4,148)         (4,388)
                                      --------------------------------------
      Total consolidated income
       from continuing operations     $    515      $  2,270        $  2,347
                                      ======================================

Assets:
      Total for reportable
        segments                      $ 29,197      $ 41,949        $ 41,735
      Corporate                            878         2,476           2,540
      Net assets of discontinued
        operations                       3,169         1,240             276
                                      --------------------------------------
      Consolidated total assets       $ 33,244      $ 45,665        $ 44,551
                                      ======================================
Other significant items:
Interest expense
      Total for
        reportable segments           $  1,046      $    509        $    258
      Corporate                            449         1,697           2,233
                                      --------------------------------------
      Consolidated interest expense   $  1,495      $  2,206        $  2,491
                                      ======================================

Depreciation and amortization:
      Total for reportable
        segments                      $    994      $  1,651        $  1,996
      Corporate                             47            12             127
                                      --------------------------------------
      Consolidated depreciation
        and amortization              $  1,041      $  1,663        $  2,123
                                      ======================================
Capital expenditures:
      Total for
        reportable segments           $    347      $    913        $  1,928
      Corporate                             29           (24)             26
                                      --------------------------------------
      Consolidated capital
         expenditures                 $    376      $    889        $  1,954
                                      ======================================

18. 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.


19. ACCRUED EXPENSES:

Accrued expenses consist of the following at December 31:

                                              1998     1999

Compensation and benefits                    $ 1,465  $  956
Liabilities related to Beverage Division
   disposal, not assumed by buyers             1,298       -
Acquisition-related accrued liabilities          750       -
Other                                          1,090     266
                                             ---------------
Total                                        $ 4,602  $1,222
                                             ===============


                                      F-20
<PAGE>   46
20. QUARTERLY FINANCIAL DATA (UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                      Quarter Ended
                                                      -------------

1999                                    March 31      June 30  September 30  December 31
----                                    --------      -------  ------------  -----------
<S>                                     <C>           <C>         <C>           <C>
Net sales............................   $45,907       47,393      48,990        54,410
                                        =======       ======      ======        ======
Gross profit.........................   $ 6,576        5,997       6,511         6,865
                                        =======       ======      ======        ======
Income from continuing operations....   $   534          296         260           171
Loss from discontinued operations....       -             -           -            (72)
                                        -------       ------      ------        ------
Net income...........................   $   534          296         260            99
                                        =======       ======      ======        ======
Weighted average shares:
  Basic .............................     7,413        7,100       6,839         6,846
  Effect of stock options............       186          160         124            75
                                        -------       ------      ------        ------
  Diluted ...........................     7,599        7,260       6,963         6,921
                                        =======       ======      ======        ======
Basic income (loss) per share:
  Continuing operations..............   $   .07          .04         .04           .02
  Discontinued operations............         -            -           -          (.01)
  Net income ................           $   .07          .04         .04           .01
Diluted income (loss) per share:
  Continuing operations..............   $   .07          .04         .04           .02
  Discontinued operations............         -            -           -          (.01)
  Net income ........................   $   .07          .04         .04           .01

<CAPTION>

                                                      Quarter Ended
                                                      -------------

1998                                    March 31      June 30  September 30  December 31
----                                    --------      -------  ------------  -----------
<S>                                     <C>           <C>         <C>           <C>
Net sales..........................     $36,861       45,810      46,745        51,402
                                        ========      ======      =======       =======
Gross profit.......................     $ 4,040        6,279       6,530         7,099
                                        ========      ======      =======       =======
Income from continuing operations       $   809          338         255           417
Loss from discontinued
 operations........................         (65)         (62)        (46)       (1,127)
Extraordinary loss                         (195)           -           -             -
                                        -------       ------      -------       -------
Net income (loss)..................     $   549          276         209          (710)
                                        =======       ======      =======       =======
Weighted average shares:
  Basic ...........................       7,374        7,403       7,432         7,384
  Effect of stock options..........         247          217         175           192
                                       --------       ------      -------       -------
  Diluted .........................       7,621        7,620       7,607         7,576
                                       ========       ======      =======       =======
Basic income (loss) per share:
  Continuing operations............    $    .11          .05         .03           .06
  Discontinued operations                  (.01)        (.01)       (.01)         (.15)
  Extraordinary loss     ..........        (.03)           -           -             -
  Net income (loss)................    $    .07          .04         .02          (.09)
Diluted income (loss) per share:
  Continuing operations............    $    .10          .04         .03           .06
  Discontinued operations                  (.01)           -        (.01)         (.15)
  Extraordinary loss...............        (.02)           -           -             -
  Net income (loss)................    $    .07          .04         .02          (.09)
</TABLE>


                                      F-21
<PAGE>   47
                                INDEX TO EXHIBITS

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

 3.1      Certificate of Incorporation of the Company, including all amendments
          thereto (11)
 3.2      By-Laws of the Company (1)
 4.1      Specimen Stock Certificate (1)
 4.2      Registration Rights Agreement between T. Rowe Price Strategic Partners
          Fund, L.P. and the Company (1)
 4.3      Atlantic Premium Brands, Ltd. Employee Stock Purchase Plan dated
          November 1, 1997 (2)
 4.4      $1.4 million Subordinated Note made by ABEV Acquisition Corp. in favor
          of Franklin Roth and Allen Pauly (4)
 4.5      6.35% Subordinated Non-Negotiable Promissory Note due July 31, 2001
          made by Richard's Cajun Foods Corp. and the Company in favor of J.L.
          Richard in the original principal amount of $850,000 (6)
 4.6      8% Subordinated Non-Negotiable Promissory Note due September 30, 2001
          made by Grogan's Merger Corp. in favor of Bobby L. Grogan and Betty R.
          Grogan in the original principal amount of $219,593 (6)
 4.7      8% Subordinated Non-Negotiable Promissory Note due December 31, 2003
          made by Grogan's Farm, Inc. in favor of Jefferson Davis and Roger
          Davis in the original principal amount of $219,593 (6)
 4.8      Secured Promissory Note dated as of March 20, 1998 of the Company and
          certain of its subsidiaries payable to Fleet Capital Corporation in
          the original principal amount of $11,000,000 (6)
 4.9      Loan and Security Agreement dated as of March 20, 1998 among Fleet
          Capital Corporation, the Company and certain of its subsidiaries (6)
 4.10     Stock Pledge Agreement dated as of March 20, 1998 between the Company
          and Fleet Capital Corporation (6)
 4.11     Atlantic Premium Brands, Ltd. and Subsidiaries Senior Subordinated
          Note and Warrant Purchase Agreement dated as of March 20, 1998 among
          the Company, certain of its subsidiaries and Banc One Capital
          Partners, LLC ("Banc One") (6)
 4.12     Senior Subordinated Note due March 31, 2005 of the Company payable to
          Banc One dated as of March 20, 1998 in the original principal amount
          of $6,500,000 (6)
 4.13     Atlantic Premium Brands, Ltd. Warrant Certificate Common Stock
          Purchase Warrant of Banc One dated as of March 20, 1998 (6)
 4.14     Atlantic Premium Brands, Ltd. Warrant Certificate Contingent Common
          Stock Purchase Warrant of Banc One dated as of March 20, 1998 (6)
 4.15     Put Option Agreement dated as of March 20, 1998 between the Company
          and Banc One (6) 4.16 Registration Rights Agreement dated as of March
          20, 1998 between the Company and Banc One (6) 4.17 Shareholders
          Agreement dated as of March 20, 1998 among the Company, certain of its
          Shareholders and Banc One (6)
 4.18     Preemptive Rights Agreement dated as of March 20, 1998 between the
          Company and Banc One (6) 4.19 Debt Subordination Agreement dated as of
          March 20, 1998 among Banc One Capital Partners, LLC, the Company,
          certain of its subsidiaries and Fleet Capital Corporation (6)
 4.20     Lien Subordination Agreement dated as of March 20, 1998 between Fleet
          Capital Corporation and Banc One Capital Partners, LLC (6)


<PAGE>   48

10.1      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 (1)
10.2      Consulting Agreement dated March 15, 1996 by and between the Company,
          Sterling Advisors, L.P. and Elfman Venture Partners, Inc. (3)
10.3      Amendment to Consulting Agreement dated as of October 16, 1996 among
          the Company, Sterling Advisors, L.P. and Elfman Venture Partners, Inc.
          (6)
10.4      Second Amendment to Consulting Agreement dated as of September 7, 1997
          among the Company, Sterling Advisors, L.P. and Elfman Venture
          Partners, Inc. (6)
10.5      Third Amendment to Consulting Agreement dated as of December 1, 1998
          among the Company, Sterling Advisors, L.P. and Elfman Ventures
          Partners, Inc. (10)
10.6      Form of Tax Indemnification Agreement (1)
10.7      Stock Purchase Agreement dated as of January 23, 1996 among the
          Company, ABEV Acquisition Corp., Franklin Roth and Allen Pauly (4)
10.8      Asset Purchase Agreement dated as of March 6, 1998 among Potter's
          Acquisition Corp., J.C. Potter Sausage Company, Potter's Farm, Inc.,
          Potter Rendering Co. and Potter Leasing Company, Ltd. (6)
10.9      Asset Purchase Agreement dated as of November 24, 1998 between the
          Company and Canada Dry Potomac Corporation (9)
10.10     Asset Purchase Agreement dated February 2, 1999 between the Company
          and Master Distributors, Inc. (9)
10.11     Stock Purchase Agreement dated April 23, 1999 among the Company and
          Bobby L. Grogan and Betty Ruth Grogan (12)
10.12     The Company's 1999 Amended and Restated Stock Option Plan (11)
10.13     Employment Agreement dated October 29, 1996 between the Company and
          Alan F. Sussna (5)
10.14     Employment Agreement dated as of April 6, 1998 between the Company and
          Thomas M. Dalton (7)
10.15     Employment Agreement dated August 10, 1998 between the Company and
          Steven Englander (8)
21        Subsidiaries of the Company (6)
23.1      Consent of KPMG LLP (*)
23.2      Consent of Arthur Andersen LLP (*)
27        Financial Data Schedule (*)

------------------
* Filed herewith
(1) Filed as an exhibit to the Company's Registration Statement No. 33-69438 or
    the amendments thereto and incorporated herein by reference.
(2) Filed as an exhibit to the Company's Form S-8 Registration Statement No.
    333-39561 and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
    quarter ended March 31, 1996 and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Current Report on Form 8-K dated
    March 15, 1996, filed with the Securities and Exchange Commission on
    April 1, 1996, and incorporated herein by reference.
(5) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
    quarter ended September 30, 1996 and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Annual Report on Form 10-K for the year
    ended December 31, 1997, and incorporated herein by reference.
(7) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
    quarter ended March 31, 1998, and incorporated herein by reference.
(8) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
    quarter ended September 30, 1998, and incorporated herein by reference.


<PAGE>   49

(9) Filed as an exhibit to the Company's Current Report on Form 8-K dated
    February 2, 1999, filed with the Securities and Exchange Commission on
    February 16, 1999, and incorporated herein by reference.

(10) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
     year ended December 31, 1998, and incorporated herein by reference.

(11) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
     quarter ended June 30, 1999, and incorporated herein by reference.

(12) Filed as an exhibit to the Company's Current Report on Form 8-K dated
     May 21, 1999, filed with the Securities and Exchange Commission on May 24,
     1999, and incorporated herein by reference.