ALL AMERICAN FOOD GROUP INC, SB-2/A, 1996-07-10

ALL AMERICAN FOOD GROUP INC
SB-2/A, 1996-07-10
PATENT OWNERS & LESSORS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1996

REGISTRATION NO. 333-4490
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------

AMENDMENT NO. 1
TO
FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------

ALL AMERICAN FOOD GROUP, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

NEW JERSEY
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

5461
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)

22-3259558
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

9 LAW DRIVE
FAIRFIELD, NEW JERSEY 07006
(201) 244-9336
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE
OF BUSINESS)

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

ANDREW THORBURN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ALL AMERICAN FOOD GROUP, INC.
9 LAW DRIVE
FAIRFIELD, NEW JERSEY 07006
(201) 244-9336
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

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

Copies to:

<TABLE>
<S> <C>
DAVID J. LEVENSON, ESQ. HANK GRACIN, ESQ.
ANITA J. FINKELSTEIN, ESQ. LEHMAN & EILEN
VENABLE, BAETJER, HOWARD & CIVILETTI, LLP 50 CHARLES LINDBERGH BLVD., SUITE 505
1201 NEW YORK AVENUE, N.W. UNIONDALE, NY 11553
WASHINGTON, DC 20005 (516) 222-0888
(202) 962-4800
</TABLE>

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

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
As soon as possible after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /

If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE> 2

EXPLANATORY NOTE

This Registration Statement covers the registration of (i) up to 690,000
shares, including shares to cover overallotments, if any, of Common Stock, no
par value per share ("Common Stock"), of All American Food Group, Inc., a New
Jersey corporation (the "Company"), for sale by the Company in an underwritten
public offering; (ii) an additional 1,773,900 shares of Common Stock for resale
from time to time by the holders thereof, who acquired such shares in the
Company's prior private placements, subject to the contractual restriction that
the holders may not sell their shares until six months after completion of the
underwritten offering; (iii) for resale, warrants (the "Underwriter's Warrants")
exercisable to purchase 60,000 shares of Common Stock at a price of $ per
share (130% of the initial public offering price in the underwritten offering)
to be issued to the Underwriter in connection with the underwritten offering;
and (iv) 60,000 shares of Common Stock underlying the Underwriter's Warrants.
The shares of Common Stock issued by the Company in its private placements are
referred to collectively as the "Selling Securityholder Securities" and the
holders thereof as the "Selling Securityholders."

The complete Prospectus relating to the underwritten offering follows
immediately after this Explanatory Note. Following the Prospectus for the
underwritten offering are pages of the Prospectus relating solely to the Selling
Securityholder Securities, including alternative front and back cover pages and
sections entitled "Concurrent Public Offering," "Plan of Distribution," and
"Selling Securityholders," to be used in lieu of the sections entitled
"Concurrent Offering" and "Underwriting" in the Prospectus relating to the
underwritten offering. Certain sections of the Prospectus for the underwritten
offering, such as "Use of Proceeds" and "Dilution," will not be used in the
Prospectus relating to the Selling Securityholder Securities.
<PAGE> 3

ALL AMERICAN FOOD GROUP, INC.

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CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
FORM SB-2 ITEM CAPTION IN PROSPECTUS
------------------------------------------------- -------------------------------------
<C> <S> <C>
PART I
1. Front of Registration Statement and Outside Front
Cover of Prospectus............................ Cover of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside Front and Outside Back Cover
Prospectus..................................... Page of Prospectus
3. Summary Information and Risk Factors............. Prospectus Summary; Risk Factors
4. Use of Proceeds.................................. Use of Proceeds
5. Determination of Offering Price.................. Underwriting
6. Dilution......................................... Dilution
7. Selling Security Holders......................... Concurrent Offering; Selling
Securityholders
8. Plan of Distribution............................. Underwriting; Plan of Distribution
9. Legal Proceedings................................ Business -- Legal Proceedings
10. Director, Executive Officers, Promoters and
Control Persons................................ Management
11. Security Ownership of Certain Beneficial Owners
and Management................................. Principal Shareholders
12. Description of Securities........................ Description of Securities
13. Interest of Named Experts and Counsel............ Not Applicable
14. Disclosure of Commission Position on
Indemnification for Securities Act Management -- Limitation of Liability
Liabilities.................................... and Indemnification Matters
15. Organization Within Last Five Years.............. Business
16. Description of Business.......................... Business
17. Management's Discussion and Analysis or Plan of Management's Discussion and Analysis
Operation...................................... or Plan of Operation
18. Description of Property.......................... Business -- Properties
19. Certain Relationships and Related Transactions... Certain Transactions
20. Market for Common Equity and Related Stockholder Risk Factors -- No Prior Public
Matters........................................ Market for the Common Stock;
Dividend Policy; Description of
Securities
21. Executive Compensation........................... Management -- Executive Compensation
22. Financial Statements............................. Financial Statements
23. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure............ Not Applicable
</TABLE>

<PAGE> 4

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 10, 1996

PROSPECTUS
600,000 SHARES

ALL AMERICAN FOOD GROUP, INC.
COMMON STOCK
(NO PAR VALUE)
------------------------

The 600,000 shares of Common Stock (the "Shares") of All American Food
Group, Inc. (the "Company") offered hereby are being sold by the Company through
Alexander, Wescott & Co., Inc. (the "Underwriter").

The initial public offering price of the Shares will be determined by
negotiation between the Company and the Underwriter. It currently is anticipated
that the initial public offering price per Share will be $6.00. For information
regarding factors to be considered in determining the initial public offering
price see "Underwriting." Prior to this offering (this "Offering"), there has
been no public market for the Common Stock and there can be no assurance that
any significant trading market will develop or be sustained. Application has
been made to list the Shares, and it is anticipated that, upon completion of the
Offering the Shares will be approved for listing, on the Nasdaq SmallCap Market
("Nasdaq").

Upon completion of the Offering, the present directors, executive officers
and principal stockholders of the Company will beneficially own approximately
40.8% of the outstanding Common Stock (assuming no exercise of the option
granted to the Underwriter to cover over-allotments). See "Risk
Factors -- Concentration of Stock Ownership."

The Registration Statement of which this Prospectus is a part also covers
the offering for resale by certain securityholders (the "Selling
Securityholders") of up to 1,773,900 shares of Common Stock (the "Selling
Securityholder Securities"), 60,000 Underwriter's Warrants and the 60,000 shares
of Common Stock underlying the Underwriter's Warrants. The Selling
Securityholders have agreed not to sell any of the Selling Securityholder
Securities for a period of six months following completion of the Offering. The
Company will not receive any proceeds from the sale of shares by the Selling
Securityholders. See "Concurrent Offering."

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

THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK AND SUBSTANTIAL DILUTION. AN INVESTMENT IN THESE SECURITIES SHOULD
BE MADE ONLY BY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. POTENTIAL PURCHASERS SHOULD CAREFULLY CONSIDER THE
MATTERS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE 7
AND "DILUTION".

------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<S> <C> <C> <C> <C>
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ESTIMATED UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SECURITYHOLDERS
</TABLE>

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<TABLE>
<S> <C> <C> <C> <C>
Per Share....................................... $ $ $
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Total(3)........................................ $ $ $
</TABLE>

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(1) Does not include additional compensation to be received by the Underwriter
in the form of (i) a non-accountable expense allowance of 3% of the gross
proceeds of this Offering, or $0.18 per share (for an aggregate amount of
$108,000, or $124,200 if the over-allotment option described in note 3 below
is exercised in full), of which $35,000 has been paid to date; (ii) warrants
to purchase 60,000 additional shares of Common Stock (the "Underwriter's
Warrants"); and (iii) the retention of the Underwriter by the Company for a
period of 24 months commencing upon completion of the Offering at a monthly
fee of $3,000 (for an aggregate fee of $72,000). In addition, the Company
has agreed to indemnify the Underwriter against certain liabilities under
the Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."

(2) Before deducting expenses of the Offering (including the Underwriter's
non-accountable expense allowance) estimated at $ ($ ) per share,
or $ ($ ) per share if the over-allotment option described in note
3 below is exercised in full, payable by the Company. See "Use of Proceeds."

(3) The Company has granted the Underwriter a 30-day over-allotment option to
purchase up to 90,000 additional shares of Common Stock on the same terms
set forth above, solely to cover over-allotments, if any. If the
Underwriter's over-allotment option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions, and Proceeds to Company will
be $ , $ and $ , respectively.

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

The Shares are offered by the Underwriter on a "firm commitment" basis,
subject to prior sale, when, as and if delivered to and accepted by the
Underwriter and subject to the right of the Underwriter to reject any order in
whole or in part. It is expected that delivery of certificates representing the
Shares will be made at the offices of Alexander, Wescott & Co., Inc., 63 Wall
Street, New York, NY 10005, on or about , 1996.
------------------------
ALEXANDER, WESCOTT & CO., INC.
------------------------
The date of this Prospectus is , 1996
<PAGE> 5

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION NOT CONTAINED
HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO PURCHASE,
ANY OF THE SECURITIES OFFERED BY THIS PROSPECTUS, IN ANY JURISDICTION TO OR FROM
ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF
AN OFFER, IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE
ISSUANCE OR SALE OF ANY SECURITIES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET
FORTH HEREIN SINCE THE DATE HEREOF.

THE INSIDE FRONT COVER OF THE PROSPECTUS CONTAINS FOUR PHOTOGRAPHS -- (1) BAGELS
SURROUNDING A CUP OF GOLDBERG'S COFFEE; (2) A BAGEL SANDWICH; (3) A DELI
PLATTER; AND (4) A FRONT VIEW OF ONE OF THE COMPANY'S GOLDBERG'S
STORES -- SURROUNDING THE "GOLDBERG'S" LOGO.

The Company currently is not a reporting company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). As a result of the
offering made hereby, the Company will become subject to the periodic and other
informational requirements of the Exchange Act. The Company intends to
distribute to its shareholders Annual Reports containing audited financial
statements and may distribute quarterly reports as determined by the Board of
Directors of the Company. The Company's fiscal year ends October 31.

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements (including the notes thereto) appearing elsewhere in this Prospectus.
Investors should carefully consider the information set forth under the heading
"Risk Factors." Unless otherwise indicated, the information presented in this
Prospectus assumes that the Underwriter's over-allotment option will not be
exercised. Unless otherwise indicated, references to the Company's Preferred
Stock include both redeemable and non-redeemable preferred stock.

THE COMPANY

All American Food Group, Inc. (together with its wholly owned subsidiaries,
the "Company") franchises two distinct bagel store concepts, distributes bagel
bakery equipment and currently operates four retail bagel stores. All of the
Company's bagels are prepared using the Company's proprietary bagel mix and
dough conditioner, in the "Old World" style, by first boiling and then baking
the dough using the Company's bagel kettle and bagel oven. The Company believes
that this process and the use of its proprietary ingredients and its equipment
ensure the consistent preparation of premium quality bagels with a shine, crust,
texture and overall flavor that distinguish its products from those of its
competitors.

The Company franchises its concepts and operates its bagel stores under the
names "Goldberg's Original Old World Bagels" ("Goldberg's") and "Sammy's New
York Bagels" ("Sammy's"). Stores franchised under the Goldberg's name and
concept offer a traditional bagel/delicatessen menu, consisting of bagels,
spreads, sandwiches, salads, soups and "appetizing" bakery items. Sammy's stores
differ from Goldberg's stores in that they offer bagels and related dairy items
in a kosher store, under national Kof-K Kosher Supervision. Management believes
that Sammy's is the only franchised food chain subject to national kosher
certification currently available in the United States.

The Company's operations are based on those of a group of bagel shops
operating in New York and New Jersey under variations of the "Goldberg" name
since 1938. In October 1993, the Company acquired two such restaurants (one of
which subsequently was sold), together with exclusive franchise rights to their
recipes, flours, mixes and equipment and the prior owners' related bagel bakery
equipment business. (The Goldberg family continues to operate ten bagel stores
that are not affiliated with the Company and, subject to certain noncompetition
covenants, may open additional stores in the future.) In September 1994, the
Company acquired three Sammy's stores (one of which subsequently was sold) and a
commissary. Since its acquisition of the Goldberg's and Sammy's stores, the
Company has engaged in an extensive process of analyzing, standardizing and
documenting all aspects of its retail bagel operations, preparing franchise
materials and developing its franchise system and program. In addition, it
retrofitted one of the Goldberg's locations to serve as a prototype store for
purposes of marketing franchises and training personnel. As of June 30, 1996,
the Company's retail system consisted of six Goldberg's and six Sammy's stores
located in four states, including two Goldberg's and two Sammy's stores owned
and operated by the Company and four Goldberg's and four Sammy's stores operated
under franchise or license arrangements with the Company. As of June 30, 1996,
two additional Goldberg's and four additional Sammy's stores to be operated
under franchise or license arrangements with the Company, and one Company-owned
Goldberg's store, were under development and scheduled to open by October 31,
1996.

The Company also distributes and services its bagel bakery equipment for
use by its franchisees and by unaffiliated purchasers. During the years 1990
through 1995, the Company and its predecessor provided equipment and other
services to over 100 separate stores. The Company specializes in providing
equipment and services to restaurants and bakeries utilizing the "Old World"
method of boiling, then baking bagels utilizing revolving tray ovens. Management
believes that the Company is the only franchiser of bagel stores that provides
its equipment directly to its franchisees.

The Company intends to expand its retail operations primarily through
franchising. Management believes that food service franchising in general, and
the franchising of bagel restaurants in particular, present a unique opportunity
for success in the current consumer and franchise markets. According to industry
and government

3
<PAGE> 7

statistics, U.S. per capita bagel consumption currently is growing at the rate
of 8% annually and annual U.S. per capita bagel consumption rose 40% (from 2.5
to 3.5 pounds) between 1988 and 1993. Management believes that this historical
growth rate has been sustained, if not increased, since 1993. Management also
believes that this increased demand for bagels arises primarily from increased
consumer demand for healthier, low-fat food products and that the versatility,
convenience and relatively low price of bagels add to their appeal. In keeping
with this growing consumer demand, bagel shops were selected by Entrepreneur
magazine as among the "hottest new franchises" for both 1995 and 1996.

Management believes that the Company has a unique combination of
characteristics that will help it to build a successful nationwide chain of
franchised bagel restaurants under both of its concepts. The Company's key
competitive strengths include the following:

- Quality Products. Management believes that the key to the Company's
success lies with the quality of its products. Therefore, all of the
Company's bagels are prepared in the "Old World" style, using the Company's
proprietary bagel mix and dough conditioner, by first boiling and then
baking the dough using the Company's bagel kettle and bagel oven. The
Company believes that this process and the use of its proprietary
ingredients and its equipment ensure the consistent preparation of premium
quality bagels with a shine, crust, texture and overall flavor that
distinguish its products from those of its competitors.

- Experience. The Company's products and operating systems are based
on those developed by the Goldberg family during the 58 years of operation
of its family-owned bagel shops. The Company's products and operating
systems are the product of this half-century of experience.

- Complementary Concepts. Management believes that the Company's
franchise program is unique in offering two complementary bagel concepts.
Management also believes that the availability of these two concepts
uniquely positions the Company to benefit from economies of scale in
purchasing, while permitting it to penetrate distinct segments of the bagel
market.

- Kosher Concept and Production Facilities. Management believes that
Sammy's is the only franchised food chain subject to national kosher
certification currently available in the United States. In addition to the
market for kosher products by consumers requiring kosher foodstuffs by
reason of dietary restrictions in connection with their religious faith,
management believes that a market for kosher products exists among
consumers who are not subject to such restrictions, but who view kosher
certification as a sign of high quality, authenticity and careful
preparation.

- Equipment Business. Management believes that the Company is unique
in designing, manufacturing and distributing its bagel bakery equipment and
providing consulting services in connection with the sale and installation
of such equipment. Management believes that this capability provides the
Company with a distinct advantage in equipping and advising its franchised
outlets and in ensuring the quality of its products.

The Company was incorporated under the laws of the State of New Jersey on
September 27, 1993, under the name "Jutland Food Group, Inc." for the purpose of
establishing a chain of franchised bagel restaurants using the recipes,
procedures, experience and expertise of an existing, well-seasoned bagel
restaurant and bakery operation. The Company changed its name to "All American
Food Group, Inc." on October 24, 1995. Its executive offices are located at 9
Law Drive, Fairfield, New Jersey 07006 and its telephone number is (201)
244-9336.

4
<PAGE> 8

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered by the Company..... 600,000 shares
Common Stock Outstanding Before the
Offering(1)........................... 3,735,200 shares
Common Stock to be Outstanding After the
Offering(1)(2)........................ 4,335,200 shares
Proposed Nasdaq SmallCap Symbol......... "AAFG"
Use of Proceeds......................... Mandatory redemption of 60,000 shares of currently
outstanding Preferred Stock; opening of
Company-owned flagship stores; consolidation,
integration and expansion of existing facilities
including the expansion or relocation of commissary
facilities and the relocation of corporate
headquarters; expansion of equipment inventory;
marketing and promotional activities; and working
capital and general corporate purposes.
Risk Factors............................ The securities offered hereby involve a high degree
of risk and immediate and substantial dilution.
Investors should purchase the securities offered
hereby only if they can afford the loss of their
entire investment. See "Risk Factors" and
"Dilution."
</TABLE>

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

(1) Does not include 60,000 shares of Common Stock issuable upon exercise of the
Underwriter's Warrants. See "Underwriting."

(2) The Company has applied to list the Common Stock on the Nasdaq SmallCap
Market. However, there can be no assurance as to when, if ever, the Common
Stock will be approved for listing or that, if listed, any significant
trading market will develop or be sustained. See "Risk Factors -- Arbitrary
Offering Price," "-- No Prior Public Market for the Common Stock; Possible
Volatility of Stock Price" and "-- Continued Nasdaq Listing; Potential
Adverse Effects of Delisting."

5
<PAGE> 9

SUMMARY OF FINANCIAL DATA

The summary financial data set forth below are derived from the
Consolidated Financial Statements of the Company and its subsidiaries appearing
elsewhere in this Prospectus. The Consolidated Financial Statements of the
Company as of, and for the six months ended, April 30, 1996 and 1995 and for the
three months ended January 31, 1996 and the year ended January 31, 1996, as
aggregated, are unaudited. The summary financial data should be read in
conjunction with, and are qualified in their entirety by reference to, the
Consolidated Financial Statements of the Company and the Notes thereto, and
"Management's Discussion and Analysis or Plan of Operation," included elsewhere
in this Prospectus. At the time of its formation in September 1993, the
Company's fiscal year end was January 31. During calendar year 1995, the Company
changed its fiscal year end to October 31.

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
YEAR
SEPTEMBER 27, NINE THREE MONTHS ENDED
1993 MONTHS ENDED JANUARY 31,
(INCEPTION) TO YEAR ENDED ENDED JANUARY 31, 1996
JANUARY 31, JANUARY 31, OCTOBER 31, 1996 (AGGREGATED)(1)/
1994 1995 1995 (UNAUDITED) (UNAUDITED)
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues................ $ 477,061 $ 1,982,978 $ 2,522,444 $ 720,924 $ 3,243,368
Net Loss................ $ (60,025) $ (1,062,621) $ (999,369) $ (153,205) $ (1,152,574)
Net loss per share...... $ (0.02) $ (0.28) $ (0.26) $ (0.04) $ (0.31)
Weighted average number
of common shares
outstanding........... $3,141,070 $ 3,857,237 $ 3,777,370 $ 3,777,370 $ 3,777,370

SIX MONTHS ENDED APRIL 30,
------------------------------------
1996 1995
(UNAUDITED) (UNAUDITED)
---------------- ----------------
<S> <C> <C>
Revenues................ $1,362,755 $ 1,334,727
Net Loss................ $ (524,154) $ (856,656)
Net loss per share...... $ (0.33) $ (0.20)
Weighted average number
of common shares
outstanding........... $3,777,975 $ 4,196,271
</TABLE>

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

(1) Represents the total of results for the nine-month fiscal period ended
October 31, 1995 and the three-month interim period ended January 31, 1996.

BALANCE SHEET DATA (UNAUDITED):

<TABLE>
<CAPTION>
APRIL 30, 1996
-----------------------------
ACTUAL AS ADJUSTED(1)
----------- --------------
<S> <C> <C>
Current assets.................................................... $ 1,479,672 $ 3,019,672
Current liabilities............................................... $ 917,414 $ 917,414
Working capital................................................... $ 562,258 $ 2,102,258
Total assets...................................................... $ 2,752,069 $ 5,192,069
Total long term debt.............................................. $ 57,817 $ 57,817
Redeemable preferred stock........................................ $ 707,540 $ 207,540
Common stock...................................................... $ 3,360,136 $ 6,300,136
Non-redeemable preferred stock.................................... $ 393,043 $ 393,043
Accumulated deficit............................................... $(2,683,881) $ (2,683,881)
</TABLE>

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

(1) As adjusted to give effect to the sale, by the Company, of the 600,000
Shares of Common Stock offered hereby and the application of the estimated
net proceeds therefrom. See "Use of Proceeds."

6
<PAGE> 10

RISK FACTORS

The securities offered hereby are highly speculative and involve a high
degree of risk and substantial dilution. An investment in these securities
should be made only by investors who can afford the loss of their entire
investment. In addition to the factors set forth elsewhere in this Prospectus,
prospective investors should give careful consideration to the following risk
factors in evaluating the Company and its business before purchasing the
securities offered hereby.

LIMITED OPERATING HISTORY; OPERATING LOSSES

The Company has been in existence for less than three years, the four
stores owned and operated by the Company have been in operation under the
Company's management for 33, 20, 19 and four months, respectively, and four of
the six stores currently in operation under franchise or license arrangements
have been in operation for less than 12 months. Further, the Company incurred
net losses of $1,062,621 and $1,152,574 in its fiscal year ended January 31,
1995 and the 12-month period ended January 31, 1996, respectively (the two
12-month fiscal periods since its formation) and, as of April 30, 1996, had an
accumulated deficit since inception of approximately $2,684,000. Such operating
losses and deficits reflect the cost of developmental and other start-up
activities including, in particular, the acquisition of the Company's initial
retail stores and equipment business and the development of its franchise
program. See "Business -- Overview" and "-- History of the Company." The Company
expects to continue to incur significant losses in the future as it implements
its expansion program. See "Business -- Plan of Operations."

The Company's operations are subject to numerous risks associated with
establishing any new business, including unforeseen expenses, delays and
complications, as well as specific risks of the food service and franchising
industries. There can be no assurance that the Company will achieve or sustain
profitable operations or that it will be able to remain in business. In
particular, there can be no assurance that the Company-owned and operated stores
will operate profitably, that the Company will succeed in opening additional
stores successfully, that stores currently operating under franchise or license
arrangements will operate successfully or that the Company will be successful in
selling additional franchises.

NEED FOR ADDITIONAL WORKING CAPITAL

The Company anticipates that its capital resources, including the net
proceeds from this Offering, will be adequate to satisfy its capital
requirements for at least 12 months following completion of the Offering. See
"Use of Proceeds" and "Management's Discussion and Analysis or Plan of
Operation -- Liquidity and Capital Resources." During that time, the Company
intends to expand through the sale of additional franchises and to seek
additional customers for its bagel bakery equipment, which expansion will
require the expenditure of working capital. The Company's future capital
requirements will depend upon many factors, including the Company's ability to
market its franchises and operate its own stores successfully, as well as market
developments and cash flow from operations. To the extent that the net proceeds
of this Offering and cash generated from operations are insufficient to fund the
Company's activities, the Company will be required to raise additional funds
through bank borrowings or equity or debt financings. There can be no assurance
that additional financing, if required, will be available at all or in amounts
or on terms acceptable to the Company. In addition, any equity financing could
result in dilution to the Company's existing shareholders. Failure to obtain
additional working capital in a timely manner or on acceptable terms could have
a material adverse effect on the Company, its operations, financial results and
prospects. See "Business," "Management's Discussion and Analysis or Plan of
Operation -- Liquidity and Capital Resources" and the Consolidated Financial
Statements of the Company included elsewhere herein.

SEASONAL AND QUARTERLY FLUCTUATIONS

The Company's interim results of operations may be affected by the timing
of the sale of franchises and the opening of new stores, receipt of franchise
and market area developer fees and seasonal factors, such as weather conditions,
in the areas where stores are located. In addition, the Company's results may be
affected by the timing of expenses associated with its expansion.

7
<PAGE> 11

DEPENDENCE ON FRANCHISEES

The Company will realize a substantial portion of its revenues from initial
franchise fees, ongoing royalty payments from its franchisees and the sale of
foodstuffs and equipment to its franchisees. The Company is therefore
substantially dependent upon its ability to attract, retain and contract with
suitable franchisees, and the ability of these franchisees to open and operate
their stores successfully. Should the Company experience difficulty in
attracting suitable franchisees, or should the Company's franchisees encounter
business or operational difficulties, the Company's revenues will be adversely
affected. Such a reduction in revenues may also have an adverse effect on the
Company's ability to sell new franchises and on its financial results and
prospects. Consequently, the Company's financial prospects are directly related
to the success of its franchisees, over which the Company has no direct control.
There can be no assurance that either the Company or its franchisees will be
able to develop new franchises, or operate the Company's bagel stores,
successfully.

EXPANSION

The opening and success of the Company's bagel stores will depend on
various factors, including the availability of suitable sites; the ability of
franchisees to negotiate acceptable lease terms for new locations, to obtain
construction and any other necessary permits in a timely manner, and to meet
construction and opening schedules; the Company's ability to manage its
anticipated expansion and to hire and train personnel; and general and local
economic and business conditions. The foregoing factors are not within the
control of the Company.

The Company's proposed expansion will also require the implementation of
enhanced operational and financial systems and will require additional
management, operational and financial resources. Failure to implement these
systems and add these resources could have a material adverse effect on the
Company's results of operations and financial condition. There can be no
assurance that the Company will be able to manage its expanding operations
effectively or that it will be able to maintain or accelerate its growth. In
addition, there can be no assurance of the viability of the Company's concepts
in new geographic regions or particular local markets.

COMPETITION; EASE OF ENTRY INTO BUSINESS

The food service industry, in general, and the fast-food and take-out
sectors, in particular, are intensely competitive. The Company competes, and can
be anticipated to compete, against well established food service companies with
greater product and name recognition and with substantially greater financial,
marketing and distribution capabilities than the Company's, as well as against a
large number of local food establishments that offer similar or competitive
products. In addition, management believes that the start-up costs associated
with opening a retail food establishment offering similar products on a
stand-alone basis are comparable to the start-up costs of the Company's bagel
stores and, accordingly, such start-up costs are not an impediment to entry into
the retail bagel business. Further, as the demand for bagels increases and
consumers become more familiar with the product, they also may be expected to
become increasingly discriminating in selecting bagels based on quality and
value. There can be no assurance that the Company can compete successfully in
this complex and changing market.

FOOD SERVICE INDUSTRY

Food service businesses are often affected by changes in consumer and
competitive conditions, including changes in consumer tastes; national,
regional, and local economic conditions and demographic trends; traffic
patterns, and the type, number, and location of competing businesses. Adverse
publicity resulting from food quality, illness, injury, or other health concerns
or operating issues stemming from one store or a limited number of stores also
may adversely affect multi-unit chains such as the Company. In addition, factors
such as
inflation, increased food, labor, and employee benefit costs, regional weather
conditions and the unavailability of experienced management and hourly employees
may also adversely affect the food service industry in general, and the
Company's operations, financial results and prospects in particular.

8
<PAGE> 12

GOVERNMENT REGULATION

The Company's franchise operations are subject to regulation by the Federal
Trade Commission (the "FTC") in compliance with the Uniform Franchise Act which
requires, among other things, that the Company prepare and update a
comprehensive disclosure document in connection with the sale and operation of
its franchises. The Company and its franchisees must also comply with state
franchising laws and a wide range of other state and local rules and regulations
applicable to their businesses. See "Business -- Government Regulation."
Continued compliance with this broad federal, state and local regulatory network
is essential and costly, and the failure to comply could have a material adverse
effect on the Company and its franchisees. Violations of franchising laws and/or
state laws and regulations governing substantive aspects of doing business in a
particular state could subject the Company and its affiliates to rescission
offers, monetary damages, penalties, imprisonment and/or injunctive proceedings.
In addition, under court decisions in certain states, absolute vicarious
liability may be imposed upon franchisers based upon claims made against
franchisees. The Company currently does not carry insurance against such claims
although it intends to obtain such coverage in the future. However, there can be
no assurance that the Company will be able to obtain such coverage or that such
coverage will be sufficient to cover potential claims against the Company.

This Prospectus does not constitute, and shall not be construed as, an
offer to sell a Goldberg's or Sammy's franchise. Such offers may be made only by
an Offering Circular in compliance with applicable state law and the Federal
Trade Commission Disclosure Rule. The description of the franchises set forth in
this Prospectus is not intended to be a complete description of a Goldberg's or
Sammy's franchise business.

LACK OF TRADEMARK AND PATENT PROTECTION

The Company has filed a registration application to register the trademark
"Goldberg's Original Old World Bagels" on the United States Patent and Trademark
Office principal register. Otherwise, the Company has no trademark or service
mark protection. While management believes that, in the food service industry,
trademarks and service marks are best protected by use and that the look and
"trade dress" of a retail chain is protected by both general business law and
common law, there can be no assurance that the absence of protected, registered
marks will not have an adverse effect on the Company's competitive position,
business or prospects. Further, although the Company modifies and installs
certain bagel bakery equipment in a proprietary manner, the Company does not
believe these refinements are patentable. Therefore, there can be no assurance
as to whether, to what extent, or for what period of time the Company may enjoy
a competitive advantage based on the availability of such proprietary equipment.
In addition, it is the Company's practice to protect its proprietary dough
conditioner, bagel mix and bagel dough by relying on trade secret laws and
confidentiality agreements. There can be no assurance that the confidentiality
of its trade secrets will be maintained or that others will not independently
develop or obtain access to the same, comparable or improved recipes and
formulas. See "Business -- Trademarks and Service Marks."

DEPENDENCE ON KEY PERSONNEL

The Company is substantially dependent upon the personal efforts and
abilities of its senior management. See "Management." The loss of any of the
Company's senior management personnel could adversely affect the Company until
such time, if any, as a suitable replacement is found. The Company's ability to
develop and market its products and to achieve and maintain its competitive
position depends, in large part, on its ability to attract and retain qualified
personnel. Competition for such personnel is intense and there can be no
assurance that the Company will be able to attract and retain such personnel.

CONCENTRATION OF STOCK OWNERSHIP

Upon completion of this Offering, the Company's present directors,
executive officers and principal shareholders will beneficially own
approximately 40.8% of the Common Stock of the Company. Although other
shareholders will have the opportunity to consider and vote upon those matters
affecting the Company that are submitted to a vote of the shareholders, they
will not have the ability to approve or disapprove any such matters without the
concurrence of the majority of shareholders. Consequently, decisions regarding
the

9
<PAGE> 13

management and operations of the Company will continue to be made by the current
shareholders and purchasers of Common Stock in this Offering will not be able to
influence the management of the Company and its business. Because they will not
be able to control the decisions made by current shareholders with respect to
management and operations of the Company, no one should invest in the Company
unless he or she is willing to entrust all aspects of the Company's business to
the discretion of such shareholders. See "Management" and "Principal
Shareholders."

LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY

As permitted pursuant to the corporate law of the State of New Jersey, the
Company's state of incorporation, the Company's Amended and Restated Certificate
of Incorporation (the "Charter") and Amended and Restated By-Laws (the
"By-Laws") require that the Company indemnify its directors and officers against
certain liabilities incurred in their service in such capacities. In addition,
the Charter provides that the personal liability of directors and officers of
the Company to the Company and its shareholders shall be limited under certain
circumstances. See "Management -- Limitation of Liability and Indemnification
Matters."

SUBSTANTIAL DILUTION

Assuming an initial public offering price of $6.00 per share, purchasers of
the Shares offered hereby will incur immediate dilution in the net tangible book
value from the Offering price of $5.15 per share, or 86% of the initial public
offering price. See "Dilution."

NO DIVIDENDS

The Company has not paid any cash or other dividends on its Common Stock
since its inception and does not anticipate paying any such dividends in the
foreseeable future. It is anticipated that earnings, if any, will be used in the
Company's operations and to finance the expansion of its business. See "Dividend
Policy" and "Management's Discussion and Analysis or Plan of
Operation -- Liquidity and Capital Resources."

DISCRETION IN USE OF PROCEEDS DESIGNATED FOR WORKING CAPITAL

The Company will have broad discretion with respect to the application of
approximately $1,190,000, or 40.5%, of the net proceeds of this Offering. While
such funds are to be applied for working capital and general corporate purposes
in furtherance of the Company's business, investors will be reliant on
management as to the specific application of these amounts. See "Use of
Proceeds."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding an
aggregate of 4,335,200 Shares of Common Stock. Of these, the 600,000 Shares
issued in the Offering will be freely transferable without restriction under the
Securities Act (excluding any Shares purchased in the Offering by any person who
is or thereby becomes an "affiliate" of the Company). All of the 3,735,200
shares outstanding immediately prior to the Offering were issued in private
placements without registration under the Securities Act and, therefore, are
"restricted securities" as that term is defined in Rule 144 under the Securities
Act.

Of the 3,735,200 shares outstanding immediately prior to the Offering,
1,773,900 shares (the "Private Placement Shares") were issued in the Private
Placements and, pursuant to registration rights granted in connection therewith,
all of the Private Placement Shares are being registered for resale pursuant to
the Registration Statement of which this Prospectus forms a part. So long as
such shares remain subject to an effective registration statement, and following
any sale pursuant thereto, such shares will be freely transferable without
restriction under the Securities Act (subject to a contractual limitation on
sales within six months following completion of the Offering). See "Concurrent
Offering." The remaining 1,961,300 shares of Common Stock outstanding prior to
this Offering are "restricted securities." In addition, 240,000 shares
underlying currently outstanding options and 60,000 Shares underlying the
Underwriter's Warrants will, upon issuance, be "restricted securities" and any
shares of Common Stock issued upon conversion of the 1,352,503

10
<PAGE> 14

outstanding shares of Preferred Stock prior to the expiration of the applicable
holding period with respect thereto likewise will be "restricted securities."

The Company is unable to predict the effect that sales of Private Placement
Shares or sales under Rule 144 may have on the then prevailing market price of
the Common Stock, but such sales may have a substantial depressing effect on
such market price. However, holders of the 1,773,900 Private Placement Shares
(approximately 40.9% of the shares of Common Stock to be outstanding immediately
subsequent to this Offering) have agreed not to sell, assign or transfer any of
their shares of Common Stock for at least six months from the effective date of
the Registration Statement of which this Prospectus forms a part, without the
prior consent of the Underwriter. The remaining 1,961,300 shares of Common Stock
that will be "restricted securities" immediately subsequent to the Offering will
become eligible for sale at various time beginning in September 1996. See
"Underwriting."

ARBITRARY OFFERING PRICE

The initial public offering price of the Common Stock will be determined by
negotiation between the Company and the Underwriter. See "Underwriting." Such
price will not necessarily relate to the Company's asset value, earnings, net
worth, financial condition or any other established criteria of value and should
not be regarded as an indication of the actual value or future market price of
the Common Stock.

NO PRIOR PUBLIC MARKET FOR THE COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this Offering there has been no public market for the Company's
Common Stock and there can be no assurance that an active public trading market
for the Company's Common Stock will develop or be sustained. The absence of an
active trading market would adversely affect the liquidity of the Common Stock
and, consequently purchasers of Shares in the Offering could experience
substantial difficulty in selling these securities. The initial public offering
price will be determined by negotiation between the Company and the Underwriter
and may not bear any relationship to the market price for the Common Stock
subsequent to the Offering. See "-- Arbitrary Offering Price" and
"Underwriting." In addition, the trading price for the Common Stock may be
highly volatile and could be subject to significant fluctuations in response to
variations in the Company's quarterly operating results, general conditions in
the food service industry or the general economy, and other factors. In
addition, the stock market is subject to price and volume fluctuations affecting
the market price for public companies generally, or within broad industry
groups, which fluctuations may be unrelated to the operating results or other
circumstances of a particular company. Such fluctuations may adversely affect
the liquidity of the Common Stock, as well as the price that holders may achieve
for their shares upon any future sale.

CONTINUED NASDAQ LISTING; POTENTIAL ADVERSE EFFECTS OF DELISTING

The standards for initial listing on the Nasdaq SmallCap Market require
that a company must have (i) at least $4,000,000 in total assets; (ii) at least
$2,000,000 in capital and surplus; (iii) a minimum bid price of $3.00 per share;
(iv) "public float" (the market value of Common Stock held by non-insiders) of
at least $2,000,000; and (v) at least two market makers in its listed security.
Once listed, a company must maintain (i) at least $2,000,000 in total assets;
(ii) $1,000,000 in capital and surplus; (iii) a minimum bid price of $1.00 per
share; (iv) public float of at least $1,000,000; and (v) at least two market
makers. If a company falls below the bid price maintenance standard, it may
maintain its listing on Nasdaq if the market value of public float is at least
$1,000,000 and the company has at least $2,000,000 in capital and surplus. The
Company has applied to list the Common Stock on the Nasdaq SmallCap Market and
anticipates that the Common Stock will be eligible for listing upon completion
of the Offering and upon official notice of issuance. However, there can be no
assurance that the Company will be able to maintain the standards for continued
listing of the Common Stock. Delisting of the Common Stock would adversely
affect the price of the Common Stock and the ability of holders to sell their
shares. In addition, in order to be relisted on Nasdaq, the Company would be
required to comply with the initial listing requirements, which are
substantially more onerous than the maintenance standards.

11
<PAGE> 15

If the Company were unable to satisfy the Nasdaq maintenance requirements
for continued listing and the share price for Common Stock were to fall below
$5.00 per share, unless the Company satisfies certain asset or revenue tests (at
least $5,000,000 in net tangible assets if in business less than three years, at
least $2,000,000 in net tangible assets if in business at least three years, or
average revenues of at least $6,000,000 for the last three years), the Common
Stock would become subject to the so-called "penny stock" rules promulgated by
the Securities and Exchange Commission (the "Commission"). Under the penny stock
rules, a broker or dealer selling penny stock to anyone other than an
established customer or "accredited investor" (generally, an individual with net
worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with his or her spouse) must make a special suitability determination
for the purchaser and must receive the purchaser's written consent to the
transaction prior to sale, unless the broker or dealer or the transaction
otherwise is exempt. In addition, the penny stock rules require the broker or
dealer to deliver, prior to any transaction, a disclosure schedule prepared by
the Commission relating to the penny stock market, unless the broker or dealer
or the transaction otherwise is exempt. A broker or dealer also is required to
disclose commissions payable thereto and to the registered representative and
current quotations for the securities. In addition, a broker or dealer is
required to send monthly statements disclosing recent price information with
respect to the penny stock held in a customer's account and information with
respect to the limited market in penny stocks. These additional sales practice
and disclosure requirements could adversely effect the level of trading activity
in the secondary market and could impede the sale of the Company's Common Stock
in that market, with a concomitant adverse effect on the price of the Common
Stock in the secondary market.

POTENTIAL ADVERSE EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS

The corporate law of the State of New Jersey, the Company's state of
incorporation, and the Company's Charter, contain provisions that may discourage
proposals or bids to acquire the Company. Such provisions authorize the issuance
of a maximum of 4,000,000 shares of Preferred Stock (of which 1,352,503 shares
were outstanding as of June 30, 1996) on terms which may be fixed by the
Company's Board of Directors without shareholder action. The terms of any series
of Preferred Stock, which may include priority claims to assets and dividends,
and special voting rights, could adversely affect the rights of holders of the
Common Stock. The issuance of Preferred Stock could make the takeover of the
Company or the removal of management of the Company more difficult, discourage
hostile bids for control of the Company in which shareholders may receive
premiums for their shares of Common Stock, or otherwise dilute the rights of
holders, and the market price of the Common Stock. See "Description of
Securities -- Preferred Stock."

LIMITED OFFERING EXPERIENCE OF THE UNDERWRITER

The Underwriter has been in business for approximately two years and, as of
April 30, 1996, employed approximately seven brokers in two offices. The
Underwriter has not previously acted as an underwriter in a public offering.
Consequently, there can be no assurance that the Underwriter's lack of
experience and relatively small size will not adversely affect the Offering and
the subsequent development, if any, of a trading market for the Company's Common
Stock. See "Underwriting."

12
<PAGE> 16

DILUTION

Dilution represents the difference between the public offering price per
share paid by investors who purchase in this Offering and the pro forma net
tangible book value per share immediately after completion of the Offering. Pro
forma net tangible book value per share is determined by dividing the difference
between total tangible assets and total liabilities by the total number of
outstanding shares of Common Stock. At April 30, 1996, after giving effect to
the closing of the Private Placements the Company's net tangible book value per
share of Common Stock was $0.20

After giving effect to the Private Placements, the sale of the 600,000
Company Shares offered hereby, and the initial application of the estimated net
proceeds therefrom as described at "Use of Proceeds," the adjusted pro forma net
tangible book value per share of Common Stock would have been $0.85 at April 30,
1996 (after deducting underwriting discounts and commissions and estimated
expenses of the Company in connection with the Offering in the aggregate amount
of $500,000). Investors purchasing Common Stock in the Offering therefore will
experience immediate dilution of $5.15 in the net tangible book value of their
Common Stock, while existing shareholders will benefit from an immediate
increase of $0.65 per share in the net tangible book value of their Common
Stock.

The following table illustrates the foregoing calculations:

<TABLE>
<S> <C> <C>
Assumed public offering price per share...................................... $6.00
Net tangible book value per share before Offering...................... $0.20
Increase in net tangible book value per share attributable to new
investors............................................................ $0.65
-----
Pro forma net tangible book value per share after Offering................... $0.85
-----
Dilution per share to new investors(1)....................................... $5.15
=====
</TABLE>

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

(1) If the Underwriter's over-allotment option is exercised in full, the
adjusted pro forma net tangible book value after the issuance and sale of
the Common Stock would be $0.93 per share, which would result in dilution
to new investors in the Offering of $5.07 per share.

The following table sets forth, as of April 30, 1996, the number of shares
purchased from the Company, the total consideration paid, the average price per
share paid by existing holders of Common Stock and the price per share to be
paid by purchasers in the Offering, based on an assumed initial public offering
price of $6.00 per Share. See "Capitalization" and "Underwriting."

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing common shareholders................ 3,735,200 86.2% $3,360,136 48.3% $0.90
Purchasers in the Offering.................. 600,000 13.8% 3,600,000 51.7% $6.00
--------- ------ --------- ------
Total.................................. 4,335,200 100.0% $6,960,136 100.0%
========= ====== ========= ======
</TABLE>

13
<PAGE> 17

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Shares offered hereby
are estimated to be $2,940,000 ($3,399,000 if the Underwriter's over-allotment
option is exercised in full). The Company intends to apply the net proceeds
approximately as follows:

(i) $500,000, or 17.0%, for the mandatory redemption of shares of
Preferred Stock redeemable 30 days after the completion of this Offering.

(ii) $400,000, or 13.6%, to open two additional Company-owned flagship
stores;

(iii) $350,000, or 11.9%, to expand or relocate the Company's Lodi, NJ
commissary;

(iv) $250,000, or 8.5%, to expand the Company's inventory of equipment
for resale;

(v) $150,000, or 5.1%, to relocate the Company's corporate
headquarters in order to consolidate and integrate the Company's facilities
at one location;

(vi) $100,000, or 3.4%, for marketing, promotional, advertising and
public relations activities directed toward both retail customers and
potential franchisees; and

(vii) $1,190,000, or 40.5%, for working capital and general corporate
purposes, which may include, among other things, salaries of additional
management personnel and the costs of possible acquisition of businesses
complementary to the Company's operations. Currently, the Company has no
plans, intentions, commitments, understandings or arrangements with respect
to any such acquisitions.

The Company anticipates, based on current plans and assumptions relating to
its operations, that the proceeds of this Offering, together with the proceeds
of the Private Placements and existing resources and cash generated from
operations, if any, will be sufficient to satisfy the Company's contemplated
cash requirements for at least the 12-month period subsequent to completion of
the Offering. There can be no assurance, however, that the Company's cash
requirements during this period will not exceed its available resources. See
"Risk Factors -- Need for Additional Working Capital."

The allocation of the net proceeds of this Offering set forth above
represents the Company's best estimates based upon its current plans and certain
assumptions regarding industry and general economic conditions and the Company's
future revenues and expenditures. If any of these factors change, the Company
may find it necessary or advisable to reallocate some of the proceeds within the
above-described categories or to use portions thereof for other purposes. See
"Risk Factors -- Discretion in Use of Proceeds Designated for Working Capital."

Proceeds not immediately required for the purposes described above will be
invested in short-term United States government securities, short-term bank
certificates of deposit, money market funds or other investment grade
short-term, interest bearing instruments.

14
<PAGE> 18

CAPITALIZATION

The following table sets forth the actual capitalization of the Company at
April 30, 1996, and as adjusted to give effect to the sale of the Common Stock
offered hereby and application of the net proceeds of the Offering as set forth
at "Use of Proceeds." This table should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
APRIL 30, 1996
(UNAUDITED)
-----------------------------
ACTUAL AS ADJUSTED(1)
----------- --------------
<S> <C> <C>
Current liabilities (including current portion of long-term
debt)........................................................... $ 917,414 $ 917,414
Long term debt and other liabilities (excluding current
portion)........................................................ $ 57,817 $ 57,817
Redeemable preferred stock, no par value; Series A, 40,000 shares
issued and outstanding (actual) and 0 shares issued and
outstanding (as adjusted); Series B, 120,000 shares issued and
outstanding (actual), 60,000 shares issued and outstanding (as
adjusted)(2).................................................... $ 707,540 $ 207,540
Non-redeemable convertible preferred stock, no par value; Series
A, 150,000 shares authorized, 150,000 shares issued and
outstanding; Series B 180,000 shares authorized, 60,000 shares
issued and outstanding; Series C, 1,600,000 shares authorized,
982,503 shares issued and outstanding........................... $ 390,043 $ 390,043
Common Stock, no par value; 10,000,000 shares authorized,
3,735,200 shares issued and outstanding, actual; 4,335,200
shares outstanding, as adjusted(1).............................. $ 3,360,136 $ 6,300,136
Retained (deficit)................................................ $(2,683,881) $ (2,683,881)
Total common stock, non-redeemable preferred stock and other
stockholders' equity............................................ $ 1,069,298 $ 4,009,298
=========== ===========
</TABLE>

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

(1) Gives effect to the sale of 600,000 Shares of Common Stock in this
Offering, net of expenses. The Charter has been amended to authorize a
total of 20,000,000 shares of Common Stock.

(2) The Company is obligated to redeem 40,000 shares of Series A Preferred
Stock and 60,000 shares of Series B Preferred Stock at a redemption price
of $5.00 per share within 30 days following completion of the Offering.
Up to an additional 60,000 shares of Series B Preferred Stock are
redeemable at a redemption price of $5.00 per share 24 months following
completion of the Offering. See "Use of Proceeds" and "Description of
Securities."

DIVIDEND POLICY

The Company has not paid any cash or other dividends on its Common Stock
since its inception and does not anticipate paying any such dividends in the
foreseeable future. The Company intends to retain any earnings for use in the
Company's operations and to finance the expansion of its business. See "Risk
Factors -- No Dividends."

15
<PAGE> 19

SELECTED FINANCIAL DATA

The following information is qualified by reference to, and should be read
in conjunction with, the Company's Consolidated Financial Statements and the
Notes thereto and "Management's Discussion and Analysis or Plan of Operation"
contained elsewhere in this Prospectus.

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
SEPTEMBER 27, THREE
1993 MONTHS YEAR ENDED
(INCEPTION) NINE MONTHS ENDED JANUARY 31,
TO YEAR ENDED ENDED JANUARY 31, 1996
JANUARY 31, JANUARY 31, OCTOBER 31, 1996 (AGGREGATED)(1)/
1994 1995 1995 (UNAUDITED) (UNAUDITED)
------------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Store sales.................... 233,371 1,178,638 1,422,341 305,992 1,728,333
Franchising revenue............ 0 0 549,377 272,449 821,826
Equipment and product sales...... 243,744 804,340 550,726 142,483 693,209
----------- ----------- ----------- ----------- ------------
477,061 1,982,978 2,522,444 720,924 3,243,368
Operating expenses:
Cost of sales -- equipment
costs and store operations,
exclusive of depreciation
and amortization............. 241,478 1,602,538 1,739,147 327,685 2,066,832
Cost of sales -- franchising
activities................... 0 0 213,408 0 213,408
Selling, general and
administrative expenses........ 213,585 1,100,919 1,166,365 417,277 1,583,642
Depreciation and amortization.... 64,823 197,347 211,463 59,195 270,658
Deferred acquisition costs....... 0 74,256 170,352 56,784 227,136
Impairment of assets............. 0 676,038 0 0 0
----------- ----------- ----------- ----------- ------------
519,886 3,651,098 3,500,735 860,941 4,361,676
----------- ----------- ----------- ----------- ------------
Operating loss................... (42,825) (1,668,120) (978,291) (140,017) (1,118,308)
Interest expense................. 17,200 38,651 21,078 13,188 34,266
----------- ----------- ----------- ----------- ------------
Loss before extraordinary item... (60,025) (1,706,771) (999,369) (153,205) (1,152,574)
Extraordinary item -- Gain from
extinguishment of debt......... 0 644,150 0 0 0
----------- ----------- ----------- ----------- ------------
Net loss......................... (60,025) (1,062,621) (999,369) (153,205) (1,152,574)
Net loss per share............... $ (0.02) $ (0.28) $ (0.26) $ (0.04) $ (0.31)
Weighted average number of
common shares outstanding...... 3,141,070 3,857,237 3,777,370 3,777,370 3,777,370

<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
APRIL 30, APRIL 30,
------------------------ ----------------------
1996 1995 1996 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Store sales.................... 646,317 1,045,246 340,325 514,581
Franchising revenue............ 434,439 0 161,990 0
Equipment and product sales...... 281,999 289,481 139,516 145,682
----------- ----------- ----------- -----------
1,362,755 1,334,727 641,831 660,263
Operating expenses:
Cost of sales -- equipment
costs and store operations,
exclusive of depreciation
and amortization............. 735,268 1,147,907 407,583 582,762
Cost of sales -- franchising
activities................... 0 0 0
Selling, general and
administrative expenses........ 888,430 728,223 471,153 272,537
Depreciation and amortization.... 126,592 154,696 67,397 71,479
Deferred acquisition costs....... 113,568 113,568 56,784 56,784
Impairment of assets............. 0 0 0 0
----------- ----------- ----------- -----------
1,863,858 2,144,394 1,002,917 983,562
----------- ----------- ----------- -----------
Operating loss................... (501,103) (809,667) (361,086) (323,299)
Interest expense................. 23,051 46,989 9,863 18,001
----------- ----------- ----------- -----------
Loss before extraordinary item... (524,154) (856,656) (370,949) (341,300)
Extraordinary item -- Gain from
extinguishment of debt......... 0 0 0 0
----------- ----------- ----------- -----------
Net loss......................... (524,154) (856,656) (370,949) (341,300)
Net loss per share............... $ (0.33) $ (0.20) $ (0.29) $ (0.09)
Weighted average number of
common shares outstanding...... 3,777,975 4,196,271 3,778,593 3,777,570

BALANCE SHEET DATA:
<CAPTION>
1/31/94 1/31/95 10/31/95 1/31/96 4/30/95 4/30/96
---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Working capital (Deficit)........ (215,481) (539,020) (750,544) (518,662) (758,359) 562,258
Total assets..................... 2,085,163 1,743,561 1,348,100 1,881,669 1,656,902 2,752,069
Total liabilities................ 1,203,188 1,170,207 1,244,097 1,163,471 1,324,848 975,231
Redeemable preferred stock....... 0 0 0 0 0 707,540
Common stock..................... 577,000 1,277,000 876,150 2,018,650 874,400 3,360,136
Non-redeemable preferred stock... 0 54,000 1,022,580 1,028,580 656,600 393,043
Additional paid in capital....... 365,000 365,000 365,000 365,000 365,000 0
Accumulated deficit.............. (60,025) (1,122,646) (2,159,727) (2,258,932) (1,563,946) (2,683,881)
</TABLE>

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

(1) Represents the total of results for the nine-month fiscal period ended
October 31, 1995 and the three-month interim period ended January 31, 1996.

16
<PAGE> 20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
the Company's Consolidated Financial Statements and the Notes thereto included
elsewhere in this Prospectus. The discussion of results, causes and trends
should not be construed to imply any conclusion that such results or trends will
necessarily continue in the future. For purposes of the following discussion,
the Company's results for the nine months ended October 31, 1995, as reflected
in its audited financial statements for the period then ended, have been
combined with its unaudited, interim results for the three months ended January
31, 1996 to reflect results for the 12-month period ended January 31, 1996
("Fiscal 1996"), which have been compared to the results for the full fiscal
year ended January 31,1995 ("Fiscal 1995").

RESULTS OF OPERATIONS -- THREE-MONTH PERIODS ENDED APRIL 30, 1996 AND 1995

Sales revenues for the three months ended April 30, 1996 (the "1996
Quarter") were $641,831, a decrease of $18,432, or 3%, from $660,263 for the
three months ended April 30, 1995 (the "1995 Quarter"). This decrease is
attributable to (i) a decrease in store sales of $174,256, or 34%, to $340,325
in the 1996 Quarter from $514,581 in the 1995 Quarter, as a result of a
reduction from five to four stores operated by the Company and (ii) a decrease
in equipment sales of $54,367, or 41%, to $79,854 in the 1996 Quarter from
$134,221 in the 1995 Quarter, primarily due to the fact that, during 1996, the
Company has focused on franchising activities rather than on sales of equipment
to unaffiliated purchasers, which decreases were substantially offset by (iii)
an increase in commissary sales of $48,201, or 320%, to $59,662 in the 1996
Quarter from $11,461 in the 1995 Quarter and (iv) the commencement of
franchising activities during 1996, which resulted in franchising revenues of
$161,990 during the 1996 Quarter, $150,000 of which was initial, non-recurring
franchise or market development fees.

Management anticipates that future equipment and commissary sales will be
dependent upon the Company's franchising activities rather than on sales to
unaffiliated purchasers and that such sales will increase or decrease in direct
proportion to the Company's success in expanding its system of franchise stores.

Cost of sales decreased by $175,179, or 30%, to $407,583 in the 1996
Quarter from $582,762 in the 1995 Quarter, primarily as a result of decreased
store and equipment sales, and, to a lesser extent, to a shift in the mix of the
Company's revenues, as decreased store and equipment sales were partially
replaced by franchise fees. Cost of sales as a percentage of product sales
decreased to 85% in the 1996 Quarter from 88% in the 1995 Quarter, reflecting
the net effect of a decrease in cost of sales attributable to the sale of two
Company-owned stores (partially offset by the opening of one additional store)
and an increase attributable to the upgrading of the Company's Lodi, New Jersey
commissary and production facility and increases in payroll and fixed overhead
costs associated with expansion of this facility.

Selling, general and administrative expenses increased by $198,616, or 73%,
to $471,153 in the 1996 Quarter from $272,537 in the 1995 Quarter. This increase
is primarily due to (i) an increase in salaries and related costs of $116,687,
or 170%, to $185,271 in the 1996 Quarter from $68,584 in the 1995 Quarter as a
consequence of expansion of the Company's workforce and, to a lesser degree,
increases in compensation to its continuing employees and (ii) an increase in
selling expenses of $35,408, or 55%, to $99,715 in the 1996 Quarter from $64,307
in the 1995 Quarter, primarily due to increased travel expenses related to
franchise sales efforts, visits to proposed retail locations and provision of
on-site store training and assistance.

In the future, management anticipates that selling expenses will continue
to be directly related to the level of the Company's franchising activities.

Depreciation and amortization decreased by $4,082, or 6%, to $67,397 in the
1996 Quarter from $71,479 in the 1995 Quarter, primarily as a consequence of the
fact that the Company owned and operated one fewer store during the 1996 Quarter
than during the 1995 Quarter.

Interest expense decreased by $8,138, or 45%, to $9,863 in the 1996 Quarter
from $18,001 in the 1995 Quarter as a consequence of a reduction in the
Company's outstanding debt between those two periods.

The net loss for the 1996 Quarter was $370,949, which represented an
increase of 9%, as compared to the net loss of $341,300 for the 1995 Quarter. To
date, the Company has operated at a loss as a result of the

17
<PAGE> 21

application of resources in excess of revenues to develop its operating
infrastructure in anticipation of additional franchise sales, Company-store
growth and commissary sales. Consequently, total revenues are not yet sufficient
to support the Company's overhead. Management anticipates that, during the
fiscal year ending October 31, 1996, the Company's revenues will increase due to
additional franchise sales, increased royalty income from existing, as well as
new, franchises, increased commissary revenues generated by sales to franchised
stores, increased sales in existing Company-owned stores and sales revenues from
newly opened, Company-owned stores. There can be no assurance, however as to
whether, and to what extent, the Company will actually experience additional
revenues from any of these sources. The Company's ability to operate profitably
in the future is substantially dependent upon its ability to sell store and area
development franchises and to open additional franchise stores. See "Risk
Factors -- Limited Operating History; Operating Losses," "-- Expansion" and
"-- Dependence on Franchisees" and "Business -- Plan of Operations."

RESULTS OF OPERATIONS -- SIX-MONTH PERIODS ENDED APRIL 30, 1996 AND 1995

Sales revenues for the six months ended April 30, 1996 (the "1996 Half")
were $1,362,755, an increase of $28,028, or 2%, from $1,334,727 for the six
months ended April 30, 1995 (the "1995 Half"). This increase is attributable to
(i) the commencement of franchising activities during 1996, which resulted in
franchising revenues of $434,439 during the 1996 Half, $415,000 of which was
initial, non-recurring franchise or market development fees and (ii) an increase
in commissary sales of $92,352, or 284%, to $124,819 during the 1996 Half from
$32,467 in the 1995 Half, as a consequence of a greater number of franchised
stores and a concomitant increase in demand for product during the 1996 Half,
which increases were substantially offset by (iii) a decrease in store sales of
$398,929, or 38%, to $646,317 in the 1996 Half from $1,045,246 in the 1995 Half,
as a result of a reduction from five to three stores operated by the Company
during the first three months and from five to four stores operated by the
Company during last three months of the 1996 Half, and (ii) a decrease in
equipment sales of $99,834, or 39%, to $157,180 in the 1996 Half from $257,014
in the 1995 Half, primarily due to the fact that, during 1996, the Company has
focused on franchising activities rather than on sales of equipment to
unaffiliated purchasers.

Management anticipates that future equipment and commissary sales will be
dependent upon the Company's franchising activities rather than on sales to
unaffiliated purchases and that such sales will increase or decrease in direct
proportion to the Company's success in expanding its system of franchise stores.

Cost of sales decreased by $412,639, or 36%, to $735,268 in the 1996 Half
from $1,147,907 in the 1995 Half. This decrease is primarily due to decreased
store and equipment sales. Cost of sales as a percentage of product sales
decreased to 79% in the 1996 Half from 86% in the 1995 Half, reflecting the net
effect of a decrease in equipment sales and an increase attributable to the
upgrading of the Company's Lodi, New Jersey commissary and production facility
and increases in payroll and fixed overhead costs associated with expansion of
this facility. To the extent that future increases in the Company's total
revenues are attributable to franchise fees, market development fees and
franchise royalties, cost of sales will decrease as a percentage of revenues.

Selling, general and administrative expenses increased by $160,207, or 22%,
to $888,430 in the 1996 Half from $728,223 in the 1995 Half. This increase is
primarily due to (i) an increase in salaries and related costs of $125,664, or
60%, to $336,010 in the 1996 Half from $210,346 in the 1995 Half and (ii) an
increase in selling expenses of $38,084, or 27%, to $181,404 in the 1996 Half
from $143,320 in the 1995 Half, primarily due to increased travel expenses
related to franchise sales efforts, visits to proposed retail locations and
provision of on-site store training and assistance.

Depreciation and amortization decreased by $28,104, or 18%, to $126,592 in
the 1996 Half from $154,696 in the 1995 Half, primarily as a consequence of the
fact that the Company owned and operated two fewer stores during first three
months and one fewer store during the last three months of the 1996 Half than
during the comparable periods of 1995 Half.

Interest expense decreased by $23,938, or 51%, to $23,051 in the 1996 Half
from $46,989 in the 1995 Half as a consequence of a reduction in the Company's
outstanding debt between those two periods.

The net loss for the 1996 Half was $524,154, which represented a decrease
of 39%, as compared to the net loss of $856,656 for the 1995 Half. To date, the
Company has operated at a loss as a result of the application of resources in
excess of revenues to develop its operating infrastructure in anticipation of
additional franchise

18
<PAGE> 22

sales, Company-store growth and commissary sales. Consequently, total revenues
are not yet sufficient to support the Company's overhead. Management anticipates
that, during the fiscal year ending October 31, 1996, the Company's revenues
will increase due to additional franchise sales, increased royalty income from
existing, as well as new, franchises, increased commissary revenues generated by
sales to franchised stores, increased sales in existing Company-owned stores and
sales revenues from newly opened, Company-owned stores. There can be no
assurance, however as to whether, and to what extent, the Company will actually
experience additional revenues from any of these sources. The Company's ability
to operate profitably in the future is substantially dependent upon its ability
to sell store and area development franchises and to open additional franchise
stores. See "Risk Factors -- Limited Operating History; Operating Losses,"
"-- Expansion" and "-- Dependence on Franchisees" and "Business -- Plan of
Operations."

RESULTS OF OPERATIONS -- 12-MONTH PERIODS ENDING JANUARY 1996 AND 1995

Sales revenues for Fiscal 1996 were $3,243,368, an increase of $1,260,390,
or 64%, from revenues of $1,982,978 for Fiscal 1995. The increase is primarily
attributable to the commencement of franchising activities during Fiscal 1996,
resulting in revenues of $821,826 in that year (consisting of $810,277 of
Initial Franchise Fees and $11,549 of ongoing Royalty Revenue), and to an
increase of $708,362, or 60% ($1,887,000 in Fiscal 1996 from $1,178,638 in
Fiscal 1995) as a consequence of having a full year of retail and wholesale
operations under the Company's ownership in Fiscal 1996, as compared to only
four months of operations under the Company's ownership subsequent to the
acquisition of the Sammy's stores on September 29, 1994 in Fiscal 1995. These
increases were partially offset by a decrease in revenues from equipment sales
to $534,542 in Fiscal 1996 from $804,340 in Fiscal 1995. This decrease of
$269,798, or 34%, is attributable primarily to the fact that, during Fiscal
1996, the Company focused on franchising activities rather than on sales of
equipment to unaffiliated purchasers. During Fiscal 1996, the Company entered
into 11 single-store franchise agreements and three multi-unit Market
Development Agreements, representing commitments to build an aggregate of 28
stores over a period of 60 months. See "Business -- Franchising."

Cost of sales increased by $677,702, or 42%, to $2,280,240 in Fiscal 1996
(including $213,408 attributable to cost of sales in connection with franchising
activities) from $1,602,538 in Fiscal 1995. This increase is primarily due to
increased product sales. In addition, cost of sales as a percentage of product
sales increased to 85% in Fiscal 1996 from 81% in Fiscal 1995 as a consequence
of (i) the write down of certain equipment inventory below cost in the amount of
$107,000 to reflect current market value and (ii) the upgrading of the Company's
Lodi, New Jersey commissary and production facility and increases in payroll and
fixed overhead costs associated with expansion of this facility.

Selling, general and administrative expenses increased by $487,723, or 44%,
to $1,583,642 in Fiscal 1996 from $1,100,919 in Fiscal 1995. This increase is
primarily due to (i) an increase in salaries and related costs of $241,513, or
78%, to $551,500 in Fiscal 1996 from $309,987 in Fiscal 1995 as a consequence of
expansion of the Company's workforce during Fiscal 1996 and, to a lesser degree,
increases in compensation to its continuing employees; (ii) an increase in
occupancy costs of $133,806, or 90%, to $284,344 in Fiscal 1996 from $148,538 in
Fiscal 1995, due to the rental of new and larger administrative offices and
additional storage space, and the payment of a full year of rent for the
Company-owned stores and Lodi, New Jersey commissary for Fiscal 1996; and (iii)
an increase in selling expenses of $36,218, or 12%, to $347,390 in Fiscal 1996
from $311,172 in 1995, primarily due to increased travel expenses related to
franchise sales efforts, visits to proposed retail locations and provision of
on-site store training and assistance.

Depreciation and amortization increased by $73,331, or 37%, to $270,658 in
Fiscal 1996 from $197,347 in Fiscal 1995 and deferred acquisition costs
increased by $152,880, or 206%, in Fiscal 1996 as compared to $74,256 in Fiscal
1995. Both of these increases are directly attributable to the fact that the
Company's operations for Fiscal 1996 included a full year of operations of
Sammy's, while in Fiscal 1995 the Company operated Sammy's for only four months.

During Fiscal 1995, the Company recognized an impairment of certain
long-lived assets acquired in connection with the acquisition of the Goldberg
Companies in September 1993, resulting in a charge to operations of $676,038.
Also during Fiscal 1995, the Company recorded an extraordinary item in the
amount of $644,150, resulting from the early extinguishment of debt. This debt
originally was issued in connection

19
<PAGE> 23

with the acquisition of the Goldberg Companies and was renegotiated during
Fiscal 1995 as a consequence of the impairment of certain assets acquired in
that transaction. See "Business -- History of the Company." The Company recorded
no comparable impairment or early extinguishment during Fiscal 1995.

The net loss for Fiscal 1996 was $1,152,574, which represented an increase
of 8%, as compared to the net loss of $1,062,621 for Fiscal 1995. To date, the
Company has operated at a loss as a result of the application of resources in
excess of revenues to develop its operating infrastructure in anticipation of
additional franchise sales, Company-store growth and commissary sales.
Consequently, total revenues are not yet sufficient to support the Company's
overhead. Management anticipates that, during the fiscal year ending October 31,
1996, the Company's revenues will increase due to additional franchise sales,
increased royalty income from existing, as well as new, franchises, increased
commissary revenues generated by sales to franchised stores, increased sales in
existing Company-owned stores and sales revenues from newly opened,
Company-owned stores. There can be no assurance, however as to whether, and to
what extent, the Company will actually experience additional revenues from any
of these sources. The Company's ability to operate profitably in the future is
substantially dependent upon its ability to sell store and area development
franchises and to open additional franchise stores. See "Risk Factors -- Limited
Operating History; Operating Losses," "-- Expansion" and "-- Dependence on
Franchisees" and "Business -- Plan of Operations."

In addition, management anticipates that the costs and expenses of
operating the Company and its business will increase with the expansion of the
business. While management anticipates that most of such costs will increase in
proportion to increased sales and other business activity and, in some instances
may decline as a consequence of the Company's ability to avail itself of volume
discounts for both products and services, certain expenses may be expected to
increase more than proportionately. In particular, members of senior management
historically have been compensated at levels that the Company deems appropriate
for a development stage enterprise, but that management believes are
substantially below compensation levels in operating companies in the Company's
business. See "Management -- Executive Compensation." As the Company grows, it
is anticipated that executive compensation will be increased to levels
competitive with those of senior executives in operating companies comparable in
size to the Company.

LIQUIDITY AND CAPITAL RESOURCES

The Company requires significant capital to fund its working capital needs
and its planned expansion. Revenues are not yet sufficient to support the
Company's operating expenses and are not expected to reach such levels during
the next year. Cash used by operating activities for the 1996 Half was $844,940.
Cash and cash equivalents at April 30, 1996 aggregated $896,132 and the Company
had working capital of $562,258.

The aggregate amount of accounts payable and accrued expenses was $824,866
at April 30, 1996. It is the Company's policy to pay its vendors within 30 days
(unless alternative payment terms are available on advantageous terms). The
Company has been able to purchase inventory as required.

Since its formation in 1993, the Company has funded its operations and
capital expenditures primarily through capital contributions from its founders
and private placements of its equity securities and by utilizing vendor credit.

In April 1996, the Company completed private placements of its Common Stock
(the "Private Placements") pursuant to which it received proceeds of $2,413,986,
net of expenses of $48,514. Of the net proceeds, $410,000 consisted of property
in the form of two unopened retail bagel stores in the final stages of
construction. The proceeds from the Private Placements to date have been used to
fund (i) the Company's operations; (ii) the voluntary redemption of shares of
the Company's Preferred Stock; (iii) a reduction in trade payables; and (iv) the
acquisition of capital assets. The Company intends to apply the remainder of
these proceeds for working capital purposes.

The Company intends to apply the net proceeds from this Offering, estimated
to be $2,940,000 ($3,399,000 if the Underwriter's over-allotment option is
exercised in full) to redeem Preferred Stock, open Company-owned flagship
stores, expand or relocate its commissary, relocate the Company's headquarters,
expand its equipment inventory, expand its marketing and promotional activities
and for working capital and general corporate purposes. See "Use of Proceeds."

20
<PAGE> 24

BUSINESS

OVERVIEW

All American Food Group, Inc. (together with its wholly owned subsidiaries,
the "Company") franchises two distinct bagel store concepts, distributes bagel
bakery equipment and currently operates four retail bagel stores. All of the
Company's bagels are prepared using the Company's proprietary bagel mix and
dough conditioner, in the "Old World" style, by first boiling and then baking
the dough using the Company's own bagel kettle and bagel oven. The Company
believes that this process and the use of its proprietary ingredients and its
equipment ensure the consistent preparation of premium quality bagels with a
shine, crust, texture and overall flavor that distinguish its products from
those of its competitors.

As of June 30, 1996, the Company's retail system consisted of seven
Goldberg's and six Sammy's stores located in four states, including two
Goldberg's stores and two Sammy's stores owned and operated by the Company and
five Goldberg's and four Sammy's stores operated under franchise or license
arrangements with the Company. As of June 30, 1996, three additional Goldberg's
and three additional Sammy's stores to be operated under franchise or license
arrangements with the Company, and one Company-owned Goldberg's store, were
under development and expected to open by October 31, 1996.

The Company also assembles, distributes and services its bagel bakery
equipment for use by its franchisees and by unaffiliated purchasers. During the
years 1990 through 1995, the Company or its predecessor provided equipment and
other services to over 100 separate stores. The Company specializes in providing
equipment and services to restaurants and bakeries utilizing the "Old World"
method of boiling then baking bagels utilizing revolving tray ovens. Management
believes that the Company is the only franchiser of bagel stores that provides
its equipment to its franchisees.

PLAN OF OPERATIONS

The Company anticipates increasing its revenue, thereby generating
operating cash flow in the future, by implementing the following actions:

- Expanding franchise operations. The Company expects to increase the
sale of franchises by (i) advertising in national and regional publications
and business magazines and (ii) upgrading its promotional material. In
addition, depending upon the availability and utilization of existing
personnel, the Company may hire additional sales personnel. The Company
expects to increase its sale of franchises by opening additional
Company-owned flagship stores to generate interest from experienced
multi-store developers to enter into multi-unit Market Area Agreements.
Management anticipates that the sale of additional franchise territories
and the opening of additional stores in such territories should result in
increases in franchise revenues.

- Increasing product sales. The Company intends to open new
Company-owned retail stores and expects increased sales from its commissary
to new franchise stores. The Company continuously develops new products,
which management believes will lead to increased sales as the variety of
products grows. The Company has retained an advertising firm to help
increase store revenues, increase franchise sales and promote brand name
recognition. See "-- Advertising."

21
<PAGE> 25

- Making acquisitions. The Company intends to acquire other bagel
stores or complementary outlets which provide entry into new markets.
Management anticipates that, over a period of time, these acquisitions will
increase revenues significantly. However, the Company currently has no
plans, intentions, commitments, understandings or arrangements with respect
to any such acquisitions.

HISTORY OF THE COMPANY

The Company was formed for the purpose of establishing a chain of
franchised bagel restaurants using the recipes, procedures, experience and
expertise of an existing, well-seasoned bagel restaurant and bakery operation.
In October 1993, the Company acquired all the assets of Howberg Bakery Equipment
Co., Inc. (the "Equipment Company"), Bagels of New Milford, Inc. and Goldberg's
Famous Bagels of Orangeburg, Inc. (together, the "Goldberg Companies"), each a
retail and wholesale bagel and related foodstuff company. (The Goldberg family
continues to operate ten bagel stores that are not affiliated with the Company
and, subject to certain noncompetition covenants, may open additional stores in
the future.) See "-- Renegotiation of Certain Acquisition Terms."

The assets of the Goldberg Companies consisted of two bagel stores operated
by the Goldberg family of Westwood, New Jersey (one of which subsequently was
sold), including the exclusive franchise rights to the recipes, flour, mixes and
proprietary equipment used in these stores. The Goldberg family has been
operating retail bagel shops for over 50 years under variations of the Goldberg
name.

The Equipment Company was engaged in the manufacture, assembly, sale and
service of equipment used in the production of bagels. In connection with the
sale of equipment, the Equipment Company also provided consulting services in
the area of store design, equipment layout, training, food preparation and
virtually all other aspects of the retail food business. The Company currently
operates the business of the Equipment Company under the name "All American
Equipment Company."

On September 29, 1994, the Company completed the acquisition of 100% of the
outstanding stock of four interrelated corporations operating three retail
stores (one of which subsequently was sold) and a commissary under the trade
name "Sammy's New York Bagels."

Since its acquisition of the Goldberg's and Sammy's stores, the Company has
engaged in an extensive process of analyzing, standardizing and documenting all
aspects of its retail bagel operations, preparing franchise materials and
developing its franchise system and program. In addition, it retrofitted one of
the Goldberg's locations to serve as a prototype store for purposes of marketing
franchises and training personnel.

The Company was incorporated as a subsidiary of Jutland Enterprises Inc.
under the laws of the State of New Jersey on September 27, 1993, under the name
"Jutland Food Group, Inc." and changed its name to "All American Food Group,
Inc." on October 24, 1995.

Shortly after the Company's incorporation, Jutland Enterprises Inc., a
Delaware corporation, acquired 937,500 shares of the Company's Common Stock for
consideration consisting of $300,000 in cash and $277,000 in assets and Andrew
Thorburn, Chairman and President of the Company, acquired an additional 312,500
shares of the Company's Common Stock in exchange for 400,000 shares of Jutland
Enterprises Inc. common stock. Jutland Enterprises Inc. subsequently distributed
to its stockholders the shares of the Company's Common Stock issued to it in
1993 and no longer is a shareholder of the Company. The Company's executive
offices are located at 9 Law Drive, Fairfield, New Jersey 07006 and its
telephone numbers are (201) 244-9336 or (800) 922-4350.

THE BAGEL BUSINESS

Management believes that food service franchising in general, and the
franchising of bagel restaurants in particular, present a unique opportunity for
success in the current consumer and franchise markets. According to industry and
government statistics, U.S. per capita bagel consumption currently is growing at
the rate of 8% annually and annual U.S. per capita consumption rose 40% (from
2.5 to 3.5 pounds) between 1988 and 1993. Management believes that this
historical growth rate has been sustained, if not increased, since 1993.
Management also believes that this increased demand for bagels arises primarily
from increased consumer

22
<PAGE> 26

demand for healthier, low-fat food products and that the versatility,
convenience and relatively low price of bagels add to their appeal. In keeping
with this growing consumer demand, bagel shops were selected by Entrepreneur
magazine as among the "hottest new franchises" for both 1995 and 1996.

Inasmuch as most flavors of bagels have no fat or cholesterol, they
represent an attractive alternative to doughnuts, pastries and other breakfast
baked goods, while at the same time offering substantially more versatility and
variety than more traditional bread products. Further, because bagels can be
used in sandwiches, bagel restaurants can be expected to attract customers
throughout the day. Management believes that lunch time business accounts for
approximately 40% of a typical bagel store's daily business. And, since
customers frequently desire to purchase bagels for home consumption, bagel
restaurants also can rely upon take-out trade for a significant portion of their
revenues.

While bagels historically have been a staple ethnic food along the East
Coast and in certain other urban areas throughout the country, management
believes that there is a substantial potential market in smaller urban and
suburban areas. Further, until recently the retail bagel industry has been
composed almost exclusively of one and two-store operations and a few larger
regional chains, some of which have indicated the intention to expand to a
national scope. Management believes that there is a significant market for high
quality bagels and that there is a significant market niche for companies able
to provide such bagels on a consistent basis through a nationwide system of
retail outlets. The Company believes that its system of producing bagels in each
store using proprietary ingredients and its equipment is the optimal method for
delivering fresh, consistently high quality products to a large and
geographically dispersed market.

COMPETITIVE STRENGTHS

Management believes that the Company has a unique combination of
characteristics that will help it to successfully build a nationwide chain of
franchised bagel restaurants under both of its concepts. The Company's key
competitive strengths include the following:

Quality Products. Management believes that the key to the Company's
success lies with the quality of its products. Therefore, all of the
Company's bagels are prepared, in the "Old World" style, using the
Company's proprietary bagel mix and dough conditioner, by first boiling and
then baking the dough using the Company's bagel kettle and bagel oven. The
Company believes that this process and the use of its proprietary
ingredients and its equipment results in premium quality bagels with a
shine, crust, texture and overall flavor that distinguish its products from
those of its competitors. Bagels sold in Goldberg's restaurants are
produced on-site, in order to provide continuous availability of oven-fresh
products. In order to ensure full compliance with the requirements for
kosher certification, the Company produces pre-formed, uncooked bagels for
its Sammy's stores at its central commissary in Lodi, New Jersey and ships
such bagels frozen to the stores on a weekly basis for on-site preparation.
See "-- Kosher Certification and Supervision."

Experience. The Company's products and operating systems were
developed based on the experience of the Goldberg family of Westwood, New
Jersey during the 58 years of operation of its family-owned bagel shops.
Based on this half century of experience and management's experience in
operating and franchising other food concepts, the Company has analyzed,
standardized and documented all aspects of its retail bagel operations to
develop its operating and franchise systems. See "-- Franchising" and
"Management."

Complementary Concepts. Management believes that the Company's
franchise program is unique in offering two complementary bagel
concepts -- Goldberg's, which offers a traditional bagel/ delicatessen
menu, and Sammy's, which offers bagels and related dairy items in a kosher
store. Management believes that the availability of these two complementary
concepts uniquely positions the Company to benefit from economies of scale
in purchasing, while permitting it to penetrate distinct segments of the
bagel market.

Kosher Concept and Production Facilities. Management believes that
Sammy's is the only franchised food chain subject to national kosher
certification currently available in the United States.

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<PAGE> 27

Kof-K Kosher Supervision estimates that the kosher market currently
generates over $2 billion in sales annually from 20,000 certified kosher
products. With over 6 million Jews nationally, another 6 million Muslims
and Seventh Day Adventists subject to similar dietary restrictions, and a
significant segment of the secular market that views kosher certification
as a sign of high quality, authenticity and careful preparation, this
market has experienced average annual sales growth of 20% or more since
1990. In order to ensure consistency in the quality of its products and
achieve economies in kosher supervision, the Company operates a central
commissary from which all Sammy's stores receive frozen pre-formed,
uncooked bagels on a weekly basis for on-premises preparation. Management
anticipates that, in the future, it will utilize this facility for the
production of bagels for sale to Goldberg's as well as Sammy's franchisees.
See "-- Properties."

Equipment Business. Management believes that the Company is unique in
designing and distributing its bagel bakery proprietary equipment and in
its ability to provide consulting services in all areas of the retail bagel
business, including store design, equipment layout, training and food
preparation. Management also believes that these unique capabilities
provide the Company with a distinct advantage in equipping and advising its
franchised outlets and in ensuring the quality of its products. In
addition, since the Company continues to provide equipment to unaffiliated
bagel shops and bakeries, equipment sales represent an additional source of
revenue to the Company. Management believes that equipment sales will
benefit from continued demand for bagels nationwide. See "-- Plan of
Operations" and "-- The Bagel Business."

MENUS AND FORMAT

The Company's aim is to provide consumers with superior products,
consisting primarily of fresh bagels, spreads, salads and complementary items,
and superior service in a pleasant and attractive environment. All of the
Company's bagels are prepared using the Company's proprietary bagel mix and
dough conditioner, in the "Old World" style, by first boiling and then baking
the dough, using the Company's bagel kettle and bagel oven. The Company believes
that this process and the use of its proprietary ingredients and its equipment
ensures the consistent preparation of premium quality bagels with a shine,
crust, texture and overall flavor that distinguish its products from those of
its competitors.

Goldberg's offers a traditional bagel/delicatessen menu, consisting of a
variety of flavors of bagels, spreads, sandwiches (served on freshly baked
bagels), salads, soups and "appetizing" bakery items. Sammy's offers bagels and
related dairy items in a kosher store, under National Kof-K Kosher Supervision.
Goldberg's bagels are prepared on-site "from scratch" and Sammy's bagels are
prepared from frozen pre-formed dough delivered to the stores weekly and baked
on the premises, in each case providing a continuous supply of fresh product and
permitting customers to enjoy the aroma of freshly baked bagels. Both concepts
also offer an array of hot and cold beverages including coffee, tea, juices and
soft drinks. Depending upon local competitive and other conditions, Goldberg's
and Sammy's stores generally are open between the hours of 6 a.m. and 6 p.m.
seven days a week.

The Company's restaurants typically are located in strip-style neighborhood
and community shopping centers or other high-traffic areas and consist of an
overall area of between 800 and 2,000 square feet, including a dining area
providing seating for between eight and 30 customers, a take-out counter, and
kitchen, food preparation and storage areas. Decor is intended to evoke a 1938
bagel shop, and includes an original photo montage of New York City scenes from
that era, additional vintage photographs and memorabilia, wainscoting and a tin
ceiling.

KOSHER CERTIFICATION AND SUPERVISION

All of the Sammy's stores have earned certification from the
internationally recognized Kof-K Kosher Supervision ("Kof-K"), ensuring that
they operate in strict compliance with Kashruth, the Orthodox Jewish laws
pertaining to the content and preparation of kosher foods and related matters.

Kof-K, headquartered in Teaneck, New Jersey, is one of two universally
recognized and accepted organizations responsible for certifying kosher products
and establishments. Founded almost 30 years ago,

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<PAGE> 28

Kof-K employs more than 150 experts in Kashruth and food service, as well as an
international network of regional and local coordinators and Rabbinical
representatives.

Prior to certifying an establishment as meeting Kashruth requirements,
Kof-K supervises and inspects the cleaning of the proposed site and obtains a
complete list of all products and ingredients to be used, as well as all food
handling and preparation procedures to be followed. Once Kof-K has established
that each relevant item complies with the requirements of Kashruth, it issues an
initial certification for the store. Throughout preopening preparations, Kof-K
works with the local religious community to enlist support for the new store and
to provide assurance that it will meet the Kashruth requirements. After opening,
Kof-K representatives inspect the store on a regular basis to ensure continued
compliance with Kashruth standards.

Management believes that the kosher status of the Sammy's stores places
them in a unique niche as the only franchised food chain subject to national
kosher certification currently available in the United States.

FRANCHISING

Neither the following discussion, nor the other information contained in
this Prospectus, constitutes, and neither shall be construed as, an offer to
sell a Goldberg's or Sammy's franchise. Such offers may be made only by an
Offering Circular in compliance with applicable state law and the Federal Trade
Commission Disclosure Rule. The description of the franchises set forth in this
Prospectus is not intended to be a complete description of a Goldberg's or
Sammy's franchise business.

The Company offers single-unit franchises, as well as Market Development
Agreements covering a number of stores to be opened in a designated area within
a specified period of time. The Company currently is authorized to sell its
franchises in 32 states and expects to receive authorization to sell in an
additional 18 states by August 31, 1996. The Company has entered into a Market
Development Agreement for the State of Ohio, covering 15 retail stores, a Market
Development Agreement for the State of Arizona, covering 15 retail stores, and a
licensing agreement covering the country of Israel.

The Company seeks franchisees committed to the Company's high standards of
product quality and customer service. All franchised stores must operate in
strict compliance with the standards and procedures set out in the Company's
operations manuals. Each store must be under the management of a manager who has
completed the Company's training program, although franchisees are not required
to participate in the day-to-day management of their stores. The Company
conducts regular inspections (both scheduled and unannounced) to ensure that
franchises are operating in accordance with Company standards and procedures.
The Company provides support to its franchisees covering equipment and technical
issues 24 hours a day and seven days a week through a toll-free hotline.

Exclusivity. Each franchise agreement provides the franchisee with an
exclusive area, within which the Company is not permitted to sell another
franchise. Such exclusive areas, which are determined on a unit-by-unit basis
based on population density, traffic patterns and other relevant considerations,
generally range from a radius of four blocks in densely populated urban areas to
one mile or more in suburban locations.

Market Development Agreements provide that, if the franchisee meets his
store opening schedule, the Company will not sell other franchises within the
developer's territory. Development territories typically range from a radius of
ten blocks to certain extensive market areas ("Designated Market Areas").

Real Estate and Local Regulation. Franchisees are obligated to purchase or
lease (for a term of at least ten years) the sites for their units. Franchisees
may designate a specific location or a locality in which they wish to operate,
subject to the exclusivity rights of other Goldberg's and Sammy's franchisees.
The Company provides assistance and guidance in site selection and lease
negotiation, and must approve all sites prior to lease execution. In addition,
the Company provides plans and specifications for a prototype store, as well as
assistance in obtaining financing, permits and licenses, and with construction
of leasehold improvements. Franchisees are expected to bear the expense of any
modification of the prototype plans and specifications required to meet local
building, fire or health codes and lease and other similar requirements, as well
as the costs of remodeling, fireproofing or other leasehold improvements.
Franchises also are responsible for, and expected to bear the expense of, local
licensing matters related to occupancy and operation of the business.

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<PAGE> 29

Financing. The Company does not offer direct or indirect financing in
connection with its franchises. Similarly, it does not guarantee the debt, lease
or other obligations of any franchisee. The Company will, however, render
assistance in arranging financing and negotiating leases.

Training and Field Support. Prior to opening, each franchisee (or an owner
thereof) and at least one manager of each franchised Goldberg's or Sammy's
restaurant must complete a 13-day training program including approximately 35
and 70 hours of classroom and on-the-job training, respectively, covering areas
essential to the management and operation of both a retail and wholesale bagel
business, including bagel preparation and production; store operating
procedures; accounting and cost control; employee matters; in-and out-of-store
marketing; ordering; catering; equipment maintenance; and sanitation matters.
All training is conducted by senior Company personnel at the Company's corporate
headquarters in Fairfield, New Jersey, or in nearby Company-owned stores. As of
the date of this Prospectus, the Company had not established a permanent
schedule for its training courses, but instead schedules such courses as needed
to meet the opening schedules of new stores. The Company does not charge for
this training and provides all participants with their midday meal, but
franchisees are expected to defray living expenses for themselves and their
employees during the training sessions. Similar training is required of all new
managers subsequently hired and is provided by the Company.

Refresher and ongoing training is available to franchisees on an
individualized basis, through consultative meetings at franchise sites, at
corporate stores and at corporate headquarters.

The Company provides on-site and other supervisory guidance and assistance
in connection with the opening of each Goldberg's and Sammy's store. Once open,
the Company conducts regular operational visits and provides ongoing guidance
and assistance based upon the results of such visits and review of reports
submitted to it. Such guidance and assistance may relate to standards, methods
and operating procedures; preparation of authorized food, beverages and other
products and services; selection, purchase and preparation of food, beverage and
other products, as well as fixtures, equipment, signs, materials and supplies;
formulation and implementation of advertising and promotional programs; and
establishment and operation of administrative, bookkeeping, accounting,
inventory control, sales and general operating procedures.

The Company periodically distributes operational bulletins and newsletters
to its franchisees and provides ongoing assistance with technical and equipment
problems through its 24-hour hotline, as well as personal consultations either
at the franchise site or at the Company's executive offices.

Pricing. Prices are set by individual franchisees, pursuant to guidelines
provided by the Company, in light of local competitive and market conditions.

Purchasing. Franchisees are required to purchase bagel mix and/or dough
conditioner, in the case of Goldberg's stores, and prepared dough, in the case
of Sammy's stores, directly from the Company. In addition, all franchisees are
required to purchase the Company's bagel kettle and bagel oven. Management
believes that purchase of these items from the Company is essential to
maintaining the Company's quality control standards, and to ensuring the
consistent high quality of the bagels offered at all of its Goldberg's and
Sammy's stores.

With respect to other items used in the operation of its stores, the
Company designates approved types and brands of products. In certain instances
the Company may designate a single supplier or a limited group of suppliers for
a product or brand of product, in order to increase the volume of purchases from
suppliers and permit the Company's franchisees as a whole to benefit from
discounts associated with quantity purchasing.

In the event that a franchisee proposes to purchase any brand or type of
product not previously approved for purchase by the Company or to purchase
approved items from a supplier not previously approved, the franchisee is
required to submit to the Company information regarding the manufacturer's or
supplier's business reputation, delivery and service performance, reliability,
financial condition and credit worthiness. In addition, in the case of
previously unapproved products, the franchisee must submit samples for review by
the Company to determine compliance with the Company's specifications and
standards. The Company then reviews the submission and, within 30 days, makes a
determination whether or not to approve the supplier or product.

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<PAGE> 30

The Company provides its franchisees with operational and accounting forms
for use in the operation of their stores. The Company also provides its
franchisees with promotional and advertising materials and other marketing
tools.

Advertising. Each franchisee is responsible for developing local
advertising and promotional materials, all of which are subject to prior review
and approval by the Company. In addition, the Company administers promotional
funds for the benefit of all of its Goldberg's and Sammy's franchisees.
Franchisees are obligated to contribute to the applicable fund a promotional fee
equal to 1% of gross sales. Franchisees also may be required to participate in
local or regional advertising cooperatives. Contributions to such cooperatives
will be at least 1% of gross sales, and will be controlled by the local
cooperative. See "-- Advertising." Stores owned and operated by the Company are
required to contribute to the promotional funds and to participate in
advertising cooperatives on the same basis as franchised stores.

Franchise Fees and Royalty Payments. Current franchise agreements provide
for an initial single unit payment of $25,000 for either a Goldberg's or a
Sammy's store. If a franchisee opens additional stores, either under a Market
Development Agreement or pursuant to additional single-unit franchise
arrangements, the initial payment is $17,500 per unit. In addition, franchisees
of both concepts pay a bi-weekly royalty and service fee equal to 5% of gross
sales. Franchisees also must contribute a minimum of 1% of gross sales to a
local or regional advertising cooperative.

Start-Up Time and Costs. Franchisees are required to enter into a lease
within 60 days of execution of a franchise agreement and to open within 120 days
following first possession of the leased premises. Subject to such factors as
the time to obtain a lease, financing or building permits, zoning and local
ordinances, weather conditions and availability of materials and equipment,
franchise stores generally can be expected to open within four to six months
following execution of a franchise agreement.

While costs vary based on location and type of store, the Company currently
estimates that the cost to a new franchisee to open a typical Goldberg's or
Sammy's restaurant, including initial franchise fees, equipment, signs, opening
inventory and other start-up costs, but exclusive of real estate costs (purchase
price, lease payments and/or improvements) generally is in the range of $105,000
to $177,500 for either a Goldberg's or Sammy's store. In addition, the Company
estimates that rent for a typical Goldberg's or Sammy's store currently is
between $12,000 and $45,000 annually and that a new franchisee will incur
between $30,000 and $80,000 in real estate related expenses with respect to each
store.

Term and Termination. Each franchise agreement runs for an initial term of
ten years, subject to renewal for up to two additional five-year terms upon
agreement of the franchisee to refurbish and redecorate or secure new premises.
The Company has the right to terminate franchise agreements for a variety of
reasons, including failure to open a restaurant or complete training; loss or
surrender of restaurant premises; material misrepresentation; conviction of a
felony; failure to attend required training programs; unauthorized assignment of
a restaurant; unauthorized use of trademarks or confidential information;
failure to comply with Company specifications or procedures; failure to make
payments due to third parties; failure to make payments due to the Company or to
submit required reports; and sanitation problems.

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<PAGE> 31

STORE LOCATIONS

The following table sets forth, by location, the number of Company owned,
franchised and licensed Goldberg's and Sammy's restaurants open or under
development, as of June 30, 1996:

COMPANY-OWNED STORES:

<TABLE>
<CAPTION>
DATE OPENED
LOCATION CONCEPT (PROJECTED)
------------------------------------------------------------- ----------- -----------
<S> <C> <C>
60 Dutch Hill Road, Orangeburg, NY........................... Goldberg's 1/93
1443 Queen Anne Road, Teaneck, NJ............................ Sammy's 3/93
40 N. James Road, Columbus, OH............................... Sammy's 11/94
197 Bleecker Street, New York, NY............................ Goldberg's 2/96
Rockland Plaza Space #25, Nanuet, NY......................... Goldberg's (7/96)
</TABLE>

FRANCHISED AND LICENSED STORES:

<TABLE>
<CAPTION>
DATE OPENED
LOCATION CONCEPT (PROJECTED)
------------------------------------------------------------- ----------- -----------
<S> <C> <C>
1033 East River Road, New Milford, NJ........................ Goldberg's 2/91
134 North Avenue, New Rochelle, NY........................... Sammy's 3/92
4951 East Grant Road, Tucson, AZ............................. Goldberg's 9/95
421 Route 59, Monsey, NY..................................... Sammy's 11/95
Lane Avenue Shopping Center, Columbus, OH.................... Sammy's 12/95
6449 Oracle Avenue, Tucson, AZ............................... Goldberg's 1/96
21A Wyckoff Avenue, Waldwick, NJ............................. Goldberg's 6/96
Columbus, OH................................................. Sammy's 6/96
1312 Grandview Avenue, Grandview, OH......................... Sammy's (7/96)
1865 2nd Avenue, New York, NY................................ Goldberg's (8/96)
480 Pleasant Valley Way, West Orange, NJ..................... Sammy's (9/96)
7111 East 22nd Street, Tucson, AZ............................ Goldberg's (9/96)
Dempster Street, Skokie, IL.................................. Sammy's (9/96)
White Plains, NY............................................. Sammy's (10/96)
</TABLE>

TRADEMARKS AND SERVICE MARKS

In April 1995, the Company filed a registration application to register the
trademark "Goldberg's Original Old World Bagels" on the United States Patent and
Trademark Office principal register. That application currently is pending.
Members of the Goldberg family currently operate ten independent bagel bakeries
using the name "Goldberg" in northern New Jersey and Rockland County, New York,
which are not affiliated with the Company.

Management believes that, in the food service industry, trademarks and
service marks are most effectively protected by constant, continued and evolving
use of various distinctive identifying symbols. The Company is not dependent
upon particular registered marks and does not believe that the registration of
such marks would materially enhance its competitive position, business or
prospects.

The Company provides bagel ovens and kettles and other bagel bakery
equipment to its franchisees and to unaffiliated purchasers and believes that
this equipment is uniquely suited to the production of high quality bagels.
Although the Company modifies and installs this equipment in a proprietary
manner, the Company does not believe these modifications and refinements are
patentable. It is the Company's practice to protect its proprietary dough
conditioner, bagel mix and bagel dough by relying on trade secret laws and
confidentiality agreements. There can be no assurance that the confidentiality
of its trade secrets will be maintained or that others will not independently
develop or obtain access to the same, comparable or improved recipes and
formulas. See "Risk Factors -- Lack of Trademark and Patent Protection."

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<PAGE> 32

COMPETITION

The Company competes, and can be anticipated to compete, against well
established food service companies with greater product and name recognition and
with larger financial, marketing and distribution capabilities than the
Company's, as well as innumerable local food establishments that offer similar
products. The food service industry in general, and the take-out sector in
particular, are intensely competitive with respect to food quality, concept,
location, service and price.

The bagel industry is highly fragmented and has traditionally been
dominated by "mom and pop" operators, which, management believes, creates a
unique growth opportunity for the Company's expansion. In addition, there is a
growing number of national, regional and local chains, operating both owned and
franchised bagel stores, including a number of such chains that have indicated
the intention to expand to a national scope. The Company believes that its most
direct competitors are Manhattan Bagel Company, Inc. ("Manhattan"), Einstein
Brothers Bagel, Inc. ("Einstein Brothers"), Bruegger's Corporation
("Bruegger's") and Chesapeake Bagels ("Chesapeake"). Management believes that
Manhattan's retail system currently consists of approximately 160 company owned,
franchised and licensed stores in 15 states; Einstein Brothers' retail system
consists of over 100 company owned and franchised stores in 14 states;
Bruegger's owns and operates 40 retail bagel bakeries with an additional 235
franchised bakeries, and Chesapeake has approximately 119 owned units in
operation.

Recently, the bagel industry has witnessed both rapid expansion and entry
from large companies not traditionally in the bagel industry. Boston Chicken,
Inc. provided a convertible loan to Einstein Brothers, which under certain
conditions can be converted into a majority equity interest in Einstein
Brothers. Further, Einstein Brothers recently acquired Noah's New York Bagels, a
West Coast chain consisting of approximately 40 stores, and announced plans for
a public offering. Quality Dining Inc. also recently announced its plan to
acquire Bruegger's and BAB Holdings Inc. of Chicago, which owns the Big Apple
Bagels chain ("Big Apple"), recently agreed to acquire Chesapeake.

There are also several regional bagel chains with well under 100 units, all
of which may be expected to compete with the Company, including Big Apple, Big
City Bagel and Bon Jour Bagel Cafe. The Company's stores also compete with
take-out and fast-food restaurants, delicatessens and prepared food stores,
bakeries, supermarkets and convenience stores. The Company believes that the
start-up costs associated with opening a retail food establishment offering
similar products on a stand-alone basis are competitive with the start-up costs
associated with commencing a Goldberg's or Sammy's store and accordingly, such
start-up costs are not an impediment to entry into the retail bagel business.
See "Risk Factors -- Competition; Ease of Entry into Business."

As a franchiser, the Company competes for qualified franchisees with a wide
variety of other investment opportunities both within and outside of the food
service industry. Management believes that the consistent quality of its
products, the efficiency of its operating systems, its proprietary ingredients,
its equipment and its franchisee support arrangements will permit it to compete
effectively, particularly against other franchisers of bagel stores.

ADVERTISING

The Company presently advertises and plans to continue advertising, its
franchises in current stores, franchise trade shows, newspapers and business
opportunity magazines. The Company and its franchisees also advertise products
in newspapers, through direct mailing and on radio and television. See
"-- Franchising."

The Company administers promotional funds ("Promotional Funds") to support
promotion and marketing programs designed to expand awareness of and demand for
Goldberg's and Sammy's products. Each Promotional Fund furnishes Goldberg's or
Sammy's franchisees, as the case may be, with promotional, advertising and
marketing materials, which may include such items as direct mail pieces, media
materials and brochures. The Company retains sole discretion over creative
concepts, materials and endorsements used in the Promotional Funds' programs and
over associated geographic, market and media placement and

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<PAGE> 33

allocation. The Promotional Funds may pay the cost of preparing materials,
employing advertising agencies and administering regional and local promotional
and advertising programs and public relations activities.

Franchisees are obligated to contribute to the appropriate Promotional Fund
a promotional fee equal to 1% of gross sales.

In the future, franchisees also may be required to participate in local or
regional advertising cooperatives. The cooperatives are expected to be made up
of franchisees within a given Designated Market Area for the purpose of pooling
advertising funds in order to purchase advertising effectively and efficiently.
Each franchisee will be entitled to one vote within the cooperative for each
store owned, and advertising purchases will be determined by majority vote.
Contributions will be determined by the members of each cooperative, and will
range from a required minimum of 1% of gross sales. Stores owned and operated by
the Company are required to contribute to the promotional funds and to
participate in advertising cooperatives on the same basis as franchised stores
within the same Designated Market Areas.

Each franchisee is responsible for developing local advertising and
promotional materials, all of which are subject to prior review and approval by
the Company.

RENEGOTIATION OF CERTAIN ACQUISITION TERMS

Total consideration for the acquisition of the Goldberg Companies consisted
of cash, a two-year promissory note, stock, and a two-year consulting contract
with Howard Goldberg. In connection with this acquisition, the Company also
agreed to lease certain premises owned by Mr. Goldberg for use as its equipment
warehouse and executive offices, and Mr. Goldberg entered into a noncompetition
agreement with the Company for a term extending for two years after the
termination or expiration of his consulting agreement with the Company. See
"-- History of the Company."

Subsequent to the acquisition of the Goldberg Companies by the Company,
various elements of the transaction were renegotiated by the parties. This
renegotiation reflected a number of intervening events, including Mr. Goldberg's
default under the mortgage on the property occupied by the Company pursuant to
the original acquisition agreement, various financial disputes between the
Company and Mr. Goldberg, Mr. Goldberg's desire to decrease his time commitment
to the Company, and the Company's desire to extend the term of Mr. Goldberg's
noncompetition agreement with the Company.

A final reconciliation of all matters relating to the acquisition of the
Goldberg Companies or arising in connection therewith was concluded in October
1995. The terms of this reconciliation included the satisfaction of certain
alleged defaults by the Company to Mr. Goldberg, the satisfaction of certain
defaults by Mr. Goldberg under the mortgage on the property occupied by the
Company, the reconciliation and settlement of outstanding financial matters,
certain modifications of Mr. Goldberg's consulting Agreement and an extension of
Mr. Goldberg's noncompetition agreement with the Company to December 31, 1997.

GOVERNMENT REGULATION

The Company and its franchisees are required to comply with federal, state,
and local government regulations applicable to consumer food service businesses
generally, including those relating to the preparation and sale of food, minimum
wage requirements, overtime, working and safety conditions, and citizenship
requirements, as well as regulations relating to zoning, construction, health,
business licensing and employment. The Company believes that it and its
franchisees are in material compliance with these provisions. Continued
compliance with this broad federal, state and local regulatory network is
essential and costly and the failure to comply with such regulations may have an
adverse effect on the Company and its franchisees. See "Risk
Factors -- Government Regulation."

The Company's franchise operations are subject to regulation by the Federal
Trade Commission ("FTC") in compliance with the FTC's rule entitled "Disclosure
Requirements and Prohibitions Concerning Franchising and Business Opportunity
Ventures," which requires, among other things, that the Company prepare and
update periodically a comprehensive disclosure document, known as the Uniform
Franchise Offering Circular ("UFOC"), in connection with the sale and operation
of its franchises. In addition, some

30
<PAGE> 34

states require a franchiser to register its franchise with the state before it
may offer the franchise. The Company believes that its UFOC, together with any
applicable state versions or supplements, complies with both the FTC guidelines
and all applicable state laws regulating franchising in those states in which it
has offered franchises.

In addition to the rules governing the offer and sale of franchises, the
Company is also subject to a number of state laws, as well as foreign laws (to
the extent it offers franchises outside of the United States), that regulate
substantive aspects of the franchiser-franchisee relationship, including, but
not limited to, those concerning termination and non-renewal. Currently, 18
states, the District of Columbia, Puerto Rico and the Virgin Islands, have
franchise termination and non-renewal laws. These laws govern the termination
and/or non-renewal of the franchise agreement and, by and large, require the
franchiser to have good cause, reasonable cause or just cause in order to
terminate the franchise agreement or not to renew the franchise agreement. In
addition, some of these laws provide for longer cure periods than currently
contemplated by the Company's franchise agreements.

Each store will be subject to regulation by federal agencies and to
licensing and regulation by state and local health, sanitation, safety, fire and
other departments. Difficulties in obtaining or the failure to obtain required
licenses or approvals could delay or prevent the opening of a new store. The
Company believes that it is in substantial compliance with the applicable laws
and regulations governing its operations.

While the Company intends to comply with all federal, state and foreign
laws and regulations, there can be no assurance that it will continue to meet
the requirements of such laws and regulations, which, in turn, could result in a
withdrawal of approval to franchise in one or more jurisdictions. Any such loss
of approval would have a material adverse effect upon the Company's ability to
successfully market its franchises. Violations of franchising laws and/or state
laws and regulations regulating substantive aspects of doing business in a
particular state could subject the Company and its affiliates to rescission
offers, monetary damages, penalties, imprisonment and/or injunctive proceedings.
The state laws and regulations concerning termination and non-renewal of
franchisees are not expected to have a material impact on the Company's
operations. In addition, under court decisions in certain states absolute
vicarious liability may be imposed upon franchisers based upon claims made
against franchisees. The Company currently does not carry insurance against such
claims although it intends to obtain coverage in the future. However, there can
be no assurance that the Company will be able to obtain such coverage or that
such coverage will be sufficient to cover claims against the Company. Further,
there can be no assurance that existing or future franchise regulations will not
have an adverse effect on the Company's ability to expand its franchise program.

PROPERTIES

The Company's executive offices are located at 9 Law Drive, Fairfield, New
Jersey 07006. The Company first occupied this location on January 1, 1995. The
headquarters consist of approximately 3,425 square feet. The Company's lease on
its headquarters location commenced January 1, 1995 and expires on February 28,
2000. The lease provides a renewal option of one five-year term. The Company
also rents 3,800 square feet of industrial space in Lodi, New Jersey, for use as
a bagel producing commissary, and for the distribution and assembly of its
equipment. The commissary operates under kosher supervision and produces bagels
for all Company-owned and franchised Sammy's stores. See "-- Kosher
Certification and Supervision." The Company believes the commissary is adequate
to its production needs through the end of 1996, but thereafter will be
inadequate to fulfill such needs.

The Company purchases bagel bakery equipment from outside vendors for
distribution to Company-owned and franchised stores either directly from the
manufacturer or in one consolidated shipment from the Company's Lodi warehouse.
The Lodi facility currently is operating at full capacity, and management
expects that additional space will be needed for the Company to continue to
effectively distribute equipment to its franchisees.

The Company intends to consolidate its current executive offices,
commissary operations, and equipment warehousing, in one central facility as
soon as practicable after the completion of the Offering described herein. The
Company is now investigating several suitable sites in the central New Jersey
area, and expects to

31
<PAGE> 35

lease a facility of approximately 15,000 square feet, of which 5,000 will be
devoted to executive offices, 8,000 to the bagel commissary, and 2,000 to the
warehousing of bagel equipment. Such a facility is expected to be adequate to
the Company's needs for the foreseeable future. See "Use of Proceeds."

The following table sets forth the location, size and certain information
pertaining to the lease, on each of the Company's two Goldberg's stores, two
Sammy's stores and its commissary.

<TABLE>
<CAPTION>
LEASE TERMS
AREA --------------------------------------
LOCATION CONCEPT (SQ. FT.) COMMENCEMENT EXPIRATION RENEWALS
- --------------------------------------- ----------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
1443 Queen Anne Road, Teaneck, NJ...... Sammy's 750 8/01/91 7/31/03 None
60 Dutch Hill Road, Orangeburg, NY..... Goldberg's 1,400 6/01/92 5/31/97 One five
year term
40 N. James Road, Columbus, Ohio....... Sammy's 2,600 11/01/93 10/31/03 None
10 Dell Glen Avenue, Lodi, NJ.......... Commissary 3,800 10/01/93 04/30/98 One five
year term
197 Bleecker Street, New York, NY...... Goldberg's 1,260 11/01/94 10/31/03 None
</TABLE>

EMPLOYEES

At June 30, 1996, the Company had 64 employees, consisting of 30 full-time
and 34 part-time employees. The Company has never experienced a work stoppage
and no employees are represented by any labor union. The Company believes that
its employee relations are good.

LEGAL PROCEEDINGS

From time to time the Company is involved in litigation arising in the
ordinary course of its business. The Company is not currently engaged in any
legal proceedings which are expected, individually or in the aggregate, to have
a material adverse effect on the Company.

32
<PAGE> 36

MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The current directors, executive officers and key personnel of the Company
are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- -------------------------------------------------- --- ----------------------------------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Andrew Thorburn................................... 53 Chairman of the Board, President and
Chief Executive Officer
Chris R. Decker................................... 48 Director, Executive Vice President, CFO
and Chief Administrative Officer
John Chitvanni.................................... 47 Director
Anthony G. Foster................................. 39 Chief Operating Officer
Guy McNeil........................................ 37 Vice President, Operations
KEY PERSONNEL
Raymond Johnson................................... 30 District Manager
Larry Wiese....................................... 30 Director of Design and Equipment
Tom Lisker........................................ 64 Consulting Advertising Director
</TABLE>

Each director is elected to hold office until the next annual meeting of
shareholders and until his successor is elected and qualified or until his
earlier resignation or removal. All officers serve at the discretion of the
Board of Directors.

The following sets forth certain biographical information with respect to
the directors, executive officers and key employees of the Company.

DIRECTORS AND EXECUTIVE OFFICERS

ANDREW THORBURN has been President, Chief Executive Officer and Chairman of
the Board of Directors of the Company since October 1993. From 1987 until
October 1993, he was President of All American Enterprises, Inc., Somerset, New
Jersey, an unrelated company that was the franchiser of Treats Bakery Stores
("Treats") and Perkits Frozen Yogurt ("Perkits"). From December 1994 to February
23, 1996, he served as Chairman of the Board of Blue Chip Computerware, Inc.
("Blue Chip"), which became a shareholder of the Company on July 1, 1994. See
"Principal Shareholders." He also served as President of Jutland Enterprises
Inc., founder of the Company, from March 1988 to October 1993. He has been in
the food industry since 1985 and, from 1985 to 1988, was a franchisee of Arby's,
Schlotsky's and Treats in various locations in New Jersey and New York. Prior to
1985, he was Chief Marketing Officer of H.C. Copeland and Associates, Inc., a
subsidiary of the Travelers Insurance Company, which he helped to develop from a
start-up venture into a national sales company with 600 employees.

CHRIS R. DECKER became Chief Financial and Administrative Officer of the
Company in May 1995, after serving for two years, first as a Divisional
Controller and later Assistant Corporate Controller, for Leslie Fay Corporation,
a leading apparel manufacturer. Previously, Mr. Decker, a certified public
accountant, worked with Mr. Thorburn as a consultant to various franchised food
operations, including Arby's and Schlotsky's. From 1988 to 1993, he and Mr.
Thorburn were chief operating officers and franchisers of Treats and Perkits.
Prior to that time, Mr. Decker had worked for eight years at Deloitte & Touche,
where he served as an audit supervisor during his last two years.

JOHN CHITVANNI joined the Company's Board of Directors in March 1994. He
has been President of National Restaurant Search, a national search firm in the
hospitality industry, since 1984. He has 25 years of experience in the food
industry and previously was employed by Brigham's, Inc. and as a Regional
Manager for Dunkin Donuts Corp. Mr. Chitvanni attended Boston State College. He
has served as a guest speaker at industry conventions, written articles for
various industry publications and was a contributing author for the book "Dining
in Corporate America."

33
<PAGE> 37

ANTHONY G. FOSTER has been Chief Operating Officer of the Company since
January 1, 1996. Prior to that time, he spent five years with Arby's Inc., where
he had most recently been Vice President of Franchising and he previously served
as National Franchise Director for McMaid, Inc. and United Consumers Club of
Mericille, Indiana. From 1982 to 1986, Mr. Foster was with the 7-Eleven Division
of Southland Corporation, where he was responsible for all franchise development
in New England and approximately 40% of the personnel function for the 425
stores and corporate offices in the Northeast Division. He received his BS in
Management and Industrial Relations from the University of Bridgeport.

GUY MCNEIL became Vice President, Operations, of the Company in November
1995. From October 1994 until November 1995, Mr. McNeil was a consultant in the
food service industry and actively involved in personal business ventures for
his own account. Until October, 1994, he was Director of Operations for Mrs.
Field's Cookies, where he supervised 142 stores and 12 district managers in the
Northeastern U.S. and Canada. From 1984 through 1989, he was the East Coast
Director of Village Inn Restaurants, where he was responsible for 26 stores and
four area managers in Eastern and Central Florida. Mr. McNeil earned his
business degree at Muskingum College in New Concord, Ohio.

In addition to the foregoing directors, for a period of five years
following completion of the Offering, the Underwriter has the right, at its
option, to designate one member of the Board of Directors or a nonvoting
representative to the Board. As of the date hereof, the Underwriter had not made
any such designation. See "Underwriting."

KEY PERSONNEL

RAYMOND JOHNSON has been with the Company as District Manager since March
25, 1996. His prior food service experience includes the development and
successful operation of restaurants under the Rainbow Cafe (Charlotte, NC), T.G.
Armadillos (Harrisonburg, VA) and Ball Meade (Harrisonburg, VA) concepts between
1986 and 1995. Mr. Johnson attended James Madison University where he majored in
Hotel and Restaurant Management.

LARRY WIESE has been with the Company as Director of Design and Equipment
since its formation and, from 1990 until 1993 was employed by the Howberg
Equipment Company, one of the Company's predecessor companies, where he was
responsible for purchasing, shipping, and scheduling for construction and
installation of bagel equipment nationally.

TOM LISKER has been associated with the Company and its predecessors since
1986 in his capacity as a principal of LGS, Inc., an advertising agency located
in New York City. Mr. Lisker serves as a consultant to the Company on
advertising and promotional campaigns, public relations and the development of
store design and concepts. He has extensive experience in the food service
industry and has provided advertising, public relations and promotional advice
for a number of clients within the industry, including General Foods, General
Mills, Howard Johnson's and Lum's Restaurants.

DIRECTORS' COMPENSATION

Directors of the Company currently receive no compensation for their
service as such.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted pursuant to the corporate law of the State of New Jersey, the
Company's state of incorporation, the Charter and By-Laws require that the
Company indemnify its directors and officers against certain liabilities
incurred in their service in such capacities to the fullest extent permitted by
applicable law. These provisions would provide indemnification for liabilities
arising under the federal securities laws to the extent that such
indemnification is found to be enforceable under, and to be in accordance with
applicable law. In addition, as permitted by New Jersey law, the Charter
eliminates the personal liability of the directors and officers to the Company
or its shareholders for monetary damages for breaches of such director's or
officer's duty of care or other duties as a director or officer; except
liabilities for any breach of duty based upon an act or omission (a) in breach
of such person's duty of loyalty to the corporation or its shareholders, (b) not
in good

34
<PAGE> 38

faith or involving a knowing violation of law or (c) resulting in receipt by
such person of an improper personal benefit. This limitation on liability could
have the effect of limiting directors' and officers' liabilities for violations
of the federal securities laws.

OMNIBUS STOCK PLAN

The Company has adopted the All American Food Group, Inc. Omnibus Stock
Plan (the "Plan") to promote the long-term growth and profitability of the
Company by (i) providing key directors, officers and employees of the Company
and its subsidiaries with incentives to improve shareholder value and contribute
to the growth and financial success of the Company and (ii) enabling the Company
to attract, retain and reward the best available persons for positions of
substantial responsibility. As described more fully below, the Plan provides for
grants of options to purchase specified numbers of shares of Common Stock at
predetermined prices.

The following discussion represents only a summary of certain of the Plan
terms and is qualified in its entirety by reference to the complete Plan, a copy
of which has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part.

Shares Available; Maximum Awards; Participants. A total of 150,000 shares
of the Company's Common Stock has been reserved for issuance pursuant to options
granted pursuant to the Plan. The Company has granted, or prior to completion of
the Offering expects to grant, a total of options to directors,
executive officers and certain key personnel. The Plan allows the Company to
grant options to employees, officers and directors of the Company and its
subsidiaries; provided that only employees of the Company and its subsidiaries
may receive incentive stock options under the Plan.

Stock Option Features. Under the Plan, options to purchase the Company's
Common Stock may take the form of incentive stock options ("ISOs") under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") or
nonqualified stock options ("NQSOs"). As required by Section 422 of the Code,
the aggregate fair market value (as defined in the Plan) of shares of Common
Stock (determined as of the date of grant of the ISO) with respect to which ISOs
granted to an employee are exercisable for the first time in any calendar year
may not exceed $100,000. The foregoing limitation does not apply to NQSOs.

Initially, each option will be exercisable over a period, determined by the
Board of Directors or the Compensation Committee of the Board of Directors of
the Company, in its discretion, of up to ten years from the date of grant.
Options may be exercisable during the option period at such time, in such
amounts, and in accordance with such terms and conditions and subject to such
restrictions as are determined by the Board or the Compensation Committee and
set forth in option agreements evidencing the grant of such options; provided
that no option may be exercisable less than six months from its date of grant.

The exercise price of options granted pursuant to the Plan is determined by
the Board or the Compensation Committee, in its discretion; provided that the
exercise price of an ISO may not be less than 100% of the fair market value (as
defined in the Plan) of the shares of the Company Common Stock on the date of
grant. The exercise price of options granted pursuant to the Plan is subject to
adjustment as provided in the Plan to reflect stock dividends, splits, other
recapitalizations or reclassifications or changes in the market value of the
Company Common Stock. In addition, the Plan provides that, in the event of a
proposed change in control of the Company (as defined in the Plan), the Board or
the Compensation Committee is to take such actions as it deems appropriate to
effectuate the purposes of the Plan and to protect the grantees of options,
which action may include (i) acceleration or change of the exercise dates of any
option; (ii) arrangements with grantees for the payment of appropriate
consideration to them for the cancellation and surrender of any option; and
(iii) in any case where equity securities other than Common Stock are proposed
to be delivered in exchange for or with respect to Common Stock, arrangements
providing that any option shall become one or more options with respect to such
other equity securities. Further, in the event the Company dissolves and
liquidates (other than pursuant to a plan of merger or reorganization), then
notwithstanding any restrictions on exercise set forth in the Plan or any grant
agreement pursuant thereto (i) each grantee shall have the right to exercise his
option at any time up to ten days prior to the effective date of such
liquidation and dissolution; and (ii) the Board or the Compensation Committee
may make arrangements with the grantees for the

35
<PAGE> 39

payment of appropriate consideration to them for the cancellation and surrender
of any option that is so canceled or surrendered at any time up to ten days
prior to the effective date of such liquidation and dissolution. The Board or
the Compensation Committee also may establish a different period (and different
conditions) for such exercise, cancellation, or surrender to avoid subjecting
the grantee to liability under Section 16(b) of the Exchange Act.

The shares purchased upon the exercise of an option are to be paid for by
the optionee in cash or cash equivalents acceptable to the Compensation
Committee. In addition, the Plan provides for broker-assisted cashless exercises
in the discretion of the Compensation Committee.

Except as permitted pursuant to Rule 16b-3 under the Exchange Act, and in
any event in the case of an ISO, an option is not transferable except by will or
the laws of descent and distribution. In no case may the options be exercised
later than the expiration date specified in the option agreement.

Plan Administration. The Plan initially will be administered by the Board
of Directors or a Compensation Committee of the Board of Directors. At such
time, if any, as the Company is required to register pursuant to Section 12 of
the Exchange Act, the Plan will be administered by a Compensation Committee of
the Board of Directors, which will consist of at least two directors who are
"disinterested persons" within the meaning of Rule 16b-3, and "outside
directors" within the meaning of Section 162(m) of the Code. While members of
the Compensation Committee, directors are not permitted to receive discretionary
grants of options pursuant the Plan.

The Compensation Committee will decide when and to whom to make grants, the
number of shares to be covered by the grants, the vesting schedule, the type of
awards and the terms and provisions relating to the exercise of the awards. The
Compensation Committee may interpret the Plan and may at any time adopt such
rules and regulations for the Plan as it deems advisable. The Board of Directors
may at any time amend or terminate the Plan and change its terms and conditions,
except that, without shareholder approval, no such amendment may (i) materially
increase the maximum number of shares as to which awards may be granted under
the Plan; (ii) materially increase the benefits accruing to Plan participants;
or (iii) materially change the requirements as to eligibility for participation
in the Plan.

Accounting Effects. Under current accounting rules, neither the grant of
options at an exercise price not less than the current fair market value of the
underlying Common Stock, nor the exercise of options under the Plan, is expected
to result in any charge to the earnings of the Company.

Certain Federal Income Tax Consequences. The following is a brief summary
of certain Federal income tax aspects of awards under the Plan based upon the
Federal income tax laws in effect on the date hereof. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.

Incentive Stock Options. An optionee will not realize taxable income upon
the grant of an ISO. In addition, an optionee will not realize taxable income
upon the exercise of an ISO, provided that such exercise occurs no later than
three months after the optionee's termination of employment with the Company
(one year in the event of a termination on account of disability). However, an
optionee's alternative minimum taxable income will be increased by the amount
that the fair market value of the shares acquired upon exercise of an ISO,
generally determined as of the date of exercise, exceeds the exercise price of
the option. If an optionee sells the shares of Common Stock acquired upon
exercise of an ISO, the tax consequences of the disposition depend upon whether
the disposition is qualifying or disqualifying. The disposition of the shares is
qualifying if made more than two years after the date the ISO was granted and
more than one year after the date the ISO was exercised. If the disposition of
the shares is qualifying, any excess of the sale price of the shares over the
exercise price of the ISO would be treated as long-term capital gain taxable to
the option holder at the time of the sale. If the disposition is not qualifying,
i.e., a disqualifying disposition, the excess of the fair market value of the
shares on the date the ISO was exercised over the exercise price would be
compensation income taxable to the optionee at the time of the disposition, and
any excess of the sale price of the shares over the fair market value of the
shares on the date the ISO was exercised would be capital gain.

36
<PAGE> 40

Unless an optionee engages in a disqualifying disposition, the Company will
not be entitled to a deduction with respect to an ISO. However, if an optionee
engages in a disqualifying disposition, the Company generally will be entitled
to a deduction equal to the amount of compensation income taxable to the
optionee.

Nonqualified Stock Options. An optionee will not realize taxable income
upon the grant of an NQSO. However, when the optionee exercises the NQSO, the
difference between the exercise price of the NQSO and the fair market value of
the shares acquired upon exercise of the NQSO on the date of exercise is
compensation income taxable to the optionee. The Company generally will be
entitled to a deduction equal to the amount of compensation income taxable to
the optionee.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following summary compensation table sets forth certain information
regarding compensation paid during each of the indicated fiscal periods to the
person serving as the Company's Chief Executive Officer during the last year. No
executive officers received salary and bonus in an amount exceeding $100,000
during any of the fiscal periods.

<TABLE>
<CAPTION>
NAME AND FISCAL ANNUAL
PRINCIPAL POSITION PERIOD(1) SALARY
---------------------------------------------------------- --------- -------
<S> <C> <C>
Andrew Thorburn, Chief Executive Officer.................. 1996 $13,000
1995 $39,000
1994 $26,000
1993 $ 0
</TABLE>

- ---------------
(1) The Company's 1996 fiscal period was from November 1, 1995 to January 31,
1996, its 1995 fiscal period was from February 1, 1995 to October 31, 1995,
its 1994 fiscal period was from February 1, 1994 through January 31, 1995
and its 1993 fiscal period was from September 27, 1993 (inception) through
January 31, 1994.

CERTAIN TRANSACTIONS

On August 15, 1994, the Company entered into an agreement with Blue Chip,
then the holder of 375,000 shares (23.0%) of the Common Stock of the Company
then outstanding, pursuant to which Blue Chip purchased an additional 825,000
shares of Common Stock for consideration consisting of 200,000 shares of the
common stock of Blue Chip and $50,000 cash. Blue Chip acquired its initial
375,000 shares on July 1, 1995 in exchange for 200,000 shares of Blue Chip
common stock and 100,000 shares of the common stock of Jutland Enterprises Inc.

In December 1994, Andrew Thorburn, the Company's President, Chief Executive
Officer and Chairman of the Board of Directors, joined the Board of Directors of
Blue Chip, and was elected Chairman shortly thereafter. Mr. Thorburn resigned
from the Blue Chip Board of Directors on February 23, 1996.

In March of 1995, the Company exchanged 825,000 shares of its Series C
redeemable Convertible Preferred Stock for 825,000 shares of its Common Stock
owned by Blue Chip. Subsequently, during 1995, Blue Chip purchased an additional
475,000 shares of the Series C Preferred Stock for which the Company received
aggregate consideration of $475,000. During 1996, the Company voluntarily
redeemed 402,000 shares of the Series C Preferred Stock held by Blue Chip at an
aggregate cost of $402,000. See "Description of Securities -- Preferred Stock."

The Company believes the each of the foregoing transactions has been on
terms no less favorable to the Company than those that could have been obtained
from unaffiliated parties. It is the Company's intent that, in the future,
transactions with affiliated parties will be approved by a majority of the
Company's disinterested directors or otherwise as permitted by applicable law.
Any such future transactions are expected to be on terms no less favorable to
the Company than could be obtained from unaffiliated parties.

37
<PAGE> 41

PRINCIPAL SHAREHOLDERS

The following table sets forth, as of June 30, 1996, certain information as
to the beneficial ownership of Common Stock of each of the Company's directors,
all officers and directors as a group, and each person known by the Company to
be the beneficial owner of more than 5% of the Company's Common Stock.

<TABLE>
<CAPTION>
PERCENTAGE
AMOUNT AND NATURE OF OF COMMON STOCK
BENEFICIAL OWNERSHIP ---------------------
NAME AND ADDRESS OF IMMEDIATELY BEFORE BEFORE AFTER
BENEFICIAL STOCKHOLDER OFFERING(1)(2) OFFERING OFFERING
----------------------- --------------------- -------- --------
<S> <C> <C> <C>
Andrew Thorburn........................................... 702,399 18.80% 16.20%
9 Law Drive
Fairfield, NJ 07006
Chris R. Decker........................................... 200,421(3) 5.23% 4.52%
9 Law Drive
Fairfield, NJ 07006
John Chitvanni............................................ 60,465(4) 1.60% 1.38%
910 West Lake Street
Roselle, IL 60172
Anthony G. Foster......................................... 10,000 * *
9 Law Drive
Fairfield, NJ 07006
Guy McNeil................................................ 10,000 * *
9 Law Drive
Fairfield, NJ 07006
Blue Chip Computerware, Inc............................... 927,617(5) 20.98% 18.48%
33 Dubon Court
Farmingdale, NY 11735
Mario and Ann Caputo...................................... 200,000(6) 5.35% 4.61%
3 Libby Road
Norwalk, CT 06850
All officers and directors as a group (6 persons)......... 983,285(7) 25.31% 21.92%
</TABLE>

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

* Less than 1%.

(1) Except as otherwise indicated, each of the parties listed has sole voting
and investment power with respect to all shares of Common Stock indicated.
Beneficial ownership is calculated in accordance with Rule 13-d-3(d) under
the Exchange Act.

(2) Unless otherwise indicated, shares held are Common Stock.

(3) Consists of 100,421 shares of Common Stock and currently exercisable options
(expiring January 1, 2001) to purchase 100,000 shares of Common Stock at
$1.00 per share.

(4) Consists of 465 shares of Common Stock held by Mr. Chitvanni, 10,000 shares
of Common Stock held jointly with his spouse and currently exercisable
options (expiring November 1, 2000) to purchase 50,000 shares of Common
Stock at a per share price of $.50.

(5) Consists of 236,200 shares of Common Stock and 679,617 shares of Series C
Convertible Preferred Stock held by Blue Chip Computerware, Inc. and 5,900
shares of Common Stock and 5,900 shares of Series C Preferred Stock held
individually by the President of Blue Chip Computerware, Inc.

(6) Consists of 100,000 shares of Common Stock individually held by each of
Mario and Ann Caputo, husband and wife.

(7) Includes all shares reflected above as beneficially owned by Messrs.
Thorburn, Decker, Chitvanni, Foster and McNeil.

38
<PAGE> 42

DESCRIPTION OF SECURITIES

GENERAL

The authorized capital stock of the Company consists of an aggregate of
24,000,000 shares of capital stock, consisting of 20,000,000 shares of Common
Stock, no par value, and 4,000,000 shares of Preferred Stock, no par value. As
of April 30, 1996, there were outstanding 3,735,200 shares of Common Stock and
190,000, 180,000, and 982,503 shares of Series A, Series B and Series C
Preferred Stock, respectively.

COMMON STOCK

Holders of Common Stock have one vote per share on each matter submitted to
a vote of the shareholders. Holders of the Common Stock do not have preemptive
rights to purchase additional shares of Common Stock or other subscription
rights. The Common Stock carries no conversion rights and is not subject to
redemption or to any sinking fund provisions. All shares of Common Stock are
entitled to share equally in dividends from legally available sources as
determined by the Board of Directors, subject to any preferential dividend
rights of the Preferred Stock (described below). Upon dissolution or liquidation
of the Company, whether voluntary or involuntary, holders of the Common Stock
are entitled to receive assets of the Company available for distribution to the
stockholders, subject to the preferential rights of the Preferred Stock. As of
April 30, 1996, there were 297 holders of record of the Company's Common Stock.

PREFERRED STOCK

Preferred Stock may be issued from time to time in one or more series. The
Board of Directors is authorized to determine the rights, preferences,
privileges and restrictions granted to, and imposed upon any series of Preferred
Stock and to fix the number of shares of any series of Preferred Stock and the
designation of any such series, subject, to the consent of the existing holders
of preferred stock, in certain instances. The issuance of Preferred Stock could
be used, under certain circumstances, as a method of preventing a takeover of
the Company and could permit the Board of Directors, without any action of the
holders of the Common Stock to issue Preferred Stock which could have a
detrimental effect on the rights of holders of the Common Stock, including loss
of voting control. Anti-takeover provisions that could be included in the
Preferred Stock when issued may depress the market price of the Company's
securities and may limit stockholders' ability to receive a premium on their
shares of Common Stock by discouraging takeover and tender offer bids.

The Company has issued three series Preferred Stock, designated Series A
Partially Redeemable Convertible Preferred Stock ("Series A Preferred Stock"),
Series B Redeemable Convertible Preferred Stock ("Series B Preferred Stock") and
Series C Convertible Preferred Stock ("Series C Preferred Stock" and,
collectively with the Series A Preferred Stock and the Series B Preferred Stock,
"Convertible Preferred Stock").

Each share of Convertible Preferred Stock is convertible, at the election
of the holder thereof, into shares of the Common Stock of the Company on a
one-for-one basis, subject to adjustment in the event of certain events
including (i) stock dividends, splits and reverse splits; (ii)
reclassifications; (iii) issuances of warrants or rights to holders of Common
Stock at a price per share less than the then-current market price of the Common
Stock (as defined); (iv) other dividends or distributions to shareholders of
assets or evidences of indebtedness; and (v) mergers, consolidations, sales of
all or substantially all of the Company's assets, statutory exchanges of its
securities and similar transactions. The Convertible Preferred Stock has no
preference as to dividends, which are payable only as and when declared by the
Board of Directors, and need not be declared, notwithstanding the declaration of
dividends with respect to any other class or series of the Company's capital
stock. The Convertible Preferred Stock has no preference upon liquidation of the
Company, but instead participates pro rata, on a share-for-share basis, with
shares of Common Stock in respect of any funds otherwise available for
distribution to shareholders upon such liquidation. Holders of Convertible
Preferred Stock have no voting rights, except as required by applicable law.

The Company is obligated to redeem 40,000 shares (or such lesser number of
shares as is then outstanding) of the Series A Preferred Stock at a price of
$5.00 per share in the event that it engages in an

39
<PAGE> 43

underwritten initial public offering of its Common Stock yielding net proceeds
to the Company (after the deduction of offering costs, commissions, attorneys'
fees and other costs and expenses associated therewith) of more than $2,000,000.
Therefore, upon completion of the Offering made hereby, the Company intends to
redeem 40,000 shares. See "Use of Proceeds."

The Company is obligated to redeem 60,000 shares (or such lesser number of
shares as is then outstanding) of the Series B Preferred Stock at a price of
$5.00 per share in the event that it receives a capital infusion of more than
$1,000,000 (net of any offering costs, commissions, attorneys' fees and other
costs and expenses associated therewith). Therefore, upon completion of the
Offering made hereby, the Company expects to redeem 60,000 such shares. See "Use
of Proceeds." In addition, if the Company engages in an initial public offering
of its Common Stock and shares of Series B Preferred Stock remain outstanding 24
months thereafter, the Company is obligated to redeem 60,000 such shares (or
such lesser number of shares as is then outstanding) at a price of $5.00 per
share. The Company, at its election, also may redeem some or all of the shares
of Preferred Stock outstanding at any time upon payment of a redemption price
equal to $5.00 plus a premium thereon equal to 6% per annum measured from
September 1994 to the effective date of such redemption.

The Series C Preferred Stock is not subject to mandatory redemption by
either the Company or at the election of the holders thereof.

WARRANTS

In connection with the completion of this Offering, for nominal
consideration the Company will grant to the Underwriter warrants (the
"Underwriter's Warrants") to purchase 60,000 shares of Common Stock at an
initial exercise price of $ per share (130% of the initial public offering
price future shares sold in the Offering.) The Underwriter's Warrants are
exercisable for a period of four years commencing one year from the date of this
Prospectus. The shares of Common Stock issuable upon exercise of the
Underwriter's Warrants are identical to the Shares being sold in this Offering.
The Underwriter's Warrants contain anti-dilution provisions providing for
adjustment in the number of Warrants and the exercise price thereof under
certain circumstances. The Underwriter's Warrants also grant the holders thereof
certain rights of registration of the shares of Common Stock issuable upon
exercise of such Warrants. The Company is registering the Underwriter's
Warrants, as well as the underlying Common Stock pursuant to the Registration
Statement of which this prospectus forms a part. See "Underwriting" and
"Concurrent Offering."

TRANSFER AGENT

The transfer agent for the Company's Common and Preferred Stock is
Continental Stock Transfer and Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding an
aggregate of 4,335,200 shares of Common Stock. Of these, the 600,000 Shares
issued in the Offering will be freely transferable without restriction under the
Securities Act (excluding any shares purchased in the Offering by any person who
is or thereby becomes an "affiliate" of the Company). All of the 3,735,200
shares outstanding immediately prior to the Offering were issued in private
placements without registration under the Securities Act and, therefore, are
"restricted securities" as that term is defined in Rule 144 under the Securities
Act.

40
<PAGE> 44

Common Stock outstanding prior to this Offering are "restricted securities" as
that term is defined under Rule 144. In addition, 240,000 shares underlying
currently outstanding options and 60,000 shares underlying the Underwriter's
Warrants will, upon issuance, be restricted securities and any shares of Common
Stock issued upon conversion of the 1,352,503 outstanding shares of Preferred
Stock prior to the expiration of the applicable holding period with respect
thereto likewise will be "restricted securities."

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are aggregated) who has satisfied a two-year holding period may
sell within any three-month period a number of restricted shares which does not
exceed the greater of 1% of the then outstanding shares of such class of
securities or the average weekly trading volume during the four calendar weeks
prior to such sale. Sales under Rule 144 are also subject to certain
requirements as to the manner of sale, notice and the availability of current
public information about the Company. Rule 144 also permits, under certain
circumstances, the sale of shares by a person who is not an affiliate of the
Company with respect to restricted securities that satisfy a three-year holding
period, without regard to the volume or other resale limitations.

UNDERWRITING

Alexander, Wescott & Co., Inc., the Underwriter, has agreed, subject to the
terms and conditions contained in the Underwriting Agreement, to purchase
600,000 Shares of Common Stock. The Underwriter is committed to purchase and pay
for all of the Shares offered hereby if any are purchased. The Common Stock is
being offered by the Underwriter subject to prior sale, when, as and if
delivered to and accepted by the Underwriter and subject to approval of certain
legal matters by counsel and to certain other conditions, such as no adverse
changes in the Company and market conditions.

The Underwriter has been in business for approximately two years and, as of
April 30, 1996, employed approximately seven brokers in two offices. Prior to
this Offering, the Underwriter has not acted as an underwriter in a public
offering. See "Risk Factors -- Limited Offering Experience of the Underwriter."

The Underwriter has advised the Company that it proposes to offer the
Common Stock to the public at the initial public offering price set forth on the
cover page of this Prospectus. The Underwriter may allow to certain dealers who
are members of the NASD concessions, not in excess of $ per share, of which
not in excess of $ per share may be reallowed to other dealers who are
members of the NASD. After the commencement of the Offering, the public offering
price, concession and reallowance may be changed by the Underwriter.

The Company has granted the Underwriter an over-allotment option,
exercisable during the 30-day period commencing with the date of this
Prospectus, to purchase from the Company at the initial offering price less
underwriting discounts, up to an aggregate of 90,000 additional shares of Common
Stock for the sole purpose of covering overallotments, if any. The Company will
be obligated, pursuant to this over-allotment option, to sell such additional
shares to the Underwriter.

The Company has agreed to pay to the Underwriter a non-accountable expense
allowance of 3% of the gross proceeds of the Offering, of which $35,000 has been
paid as of the date of this Prospectus. The Company has also agreed to pay all
expenses in connection with qualifying the Common Stock offered hereby for sale
under the laws of such states as the Underwriter may designate, including
expenses of counsel retained for such purpose by the Underwriter.

41
<PAGE> 45

In connection with the Offering, the Company has agreed to sell to the
Underwriter, for nominal consideration, the Underwriter's Warrants. The
Underwriter's Warrants initially are exercisable at a price of 120% of the per
share initial public offering price of the Shares offered hereby, for a period
of four years commencing one year from the date of this Prospectus. The shares
of Common Stock issuable upon exercise of the Underwriter's Warrants are
identical to the Shares being sold in this Offering. The Underwriter's Warrants
contain anti-dilution provisions providing for adjustment in the number of
Warrants and the exercise price thereof under certain circumstances. The
Underwriter's Warrants also grant the holders thereof certain rights of
registration of the shares of Common Stock issuable upon exercise of such
Warrants.

The Company will retain the Underwriter to provide investment banking
services for a period of 24 months following completion of the Offering at a
monthly fee of $3,000.

For a period of five years following completion of the Offering, the
Underwriter has the right, at its option, to designate one member of the Board
of Directors or a nonvoting representative to the Board.

The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act.

The Underwriter has informed the Company that it does not expect sales to
any accounts over which it exercises discretionary authority to exceed 5% of the
shares of Common Stock offered by the Company.

The holders of Common Stock outstanding as of the effective date of the
Registration Statement of which this Prospectus forms a part who are officers or
directors of the Company have agreed not to, directly or indirectly, sell, offer
to sell, grant an option for the sale of, transfer, assign, pledge, hypothecate
or otherwise encumber any of such shares of Common Stock (983,285 shares in the
aggregate) for a period of 24 months from the date of this Prospectus. See
"Principal Shareholders."

The Company has agreed with the Underwriter that, except as described in
this Prospectus, for a period of 90 days from the date of this Prospectus, it
will not issue any securities or grant options or warrants to purchase any
securities of the Company without the Underwriter's consent.

The foregoing does not purport to be a complete statement of the terms and
conditions of the Underwriting Agreement and related documents, copies of which
are on file at the offices of the Underwriter, the Company and the Commission.
See "Additional Information."

PRICING THE OFFERING

Prior to this Offering, there has been no public market for any of the
Company's securities. Consequently, the initial public offering price of the
Common Stock will be determined by negotiation between the Company and the
Underwriter. Factors to be considered in determining such price, in addition to
prevailing market conditions, include an assessment of the Company's prospects.
The public offering price of the Shares does not bear any relationship to the
Company's asset value, earnings, net financial condition, or other established
criteria of value applicable to the Company and should not be regarded as an
indication of the actual value or future market price of the Shares. Such prices
are subject to change as a result of market conditions and other factors, and no
assurance can be given that the Shares can be resold at its public offering
price.

CONCURRENT OFFERING

Concurrently with the offering, the Company is also registering for resale,
from time to time, on behalf of the owners thereof, the Selling Securityholder
Securities consisting of 1,773,900 shares of Common Stock acquired by the
holders thereof in the Company's Private Placements, subject to the contractual
restriction that the holders may not sell their shares for six months following
completion of the Offering. See "Management's Discussion and Analysis or Plan of
Operation -- Liquidity and Capital Resources."

The Company will not receive any proceeds from sale of securities by the
Selling Securityholders.

42
<PAGE> 46

LEGAL MATTERS

The validity of the securities offered hereby has been passed upon for the
Company by Venable, Baetjer, Howard & Civiletti, LLP, a partnership including
professional corporations, Washington, D.C. Lehman & Eilen, Uniondale, New York
will pass upon certain legal matters for the Underwriter.

EXPERTS

The financial statements of the Company at January 31, 1994, January 31,
1995 and October 31, 1995 and for the fiscal periods then ended, appearing in
this Prospectus and Registration Statement of which this Prospectus forms a part
have been audited by DelSanto and DeFreitas, Certified Public Accountants,
independent auditors, as set forth in their report thereon appearing elsewhere
herein and in the Registration Statement, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a registration statement under
the Securities Act with respect to the securities offered by this Prospectus. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits thereto. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto, which may be examined without charge at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at the Regional Offices of the Commission at 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
may be obtained from the Public Reference Section of the Commission in
Washington, D.C. upon payment of the prescribed fees. Statements contained in
this Prospectus as to the contents of any contract or other documents referred
to herein are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

The Company will, upon completion of the Offering, be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
and, in accordance therewith, will file reports and other information with the
Commission. Such reports and other information may be inspected and copied at
the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such materials can be obtained at prescribed
rates from the Commission at such address.

43
<PAGE> 47

ALL AMERICAN FOOD GROUP, INC., AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
AUDITED FINANCIAL STATEMENTS
Report of DelSanto & DeFreitas, Certified Public Accountants......................... F- 2
Consolidated Balance Sheets as of October 31, 1995, January 31, 1995 and January 31,
1994............................................................................... F- 3
Consolidated Statements of Operations for the Nine Months Ended October 31, 1995, the
Year Ended January 31, 1995 and the Period from September 27, 1993 (inception) to
January 31, 1994................................................................... F- 4
Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 1995, the
Year Ended January 31, 1995 and the Period from September 27, 1993 (inception) to
January 31, 1994................................................................... F- 5
Consolidated Statements of Stockholders' Equity for the Nine Months Ended October 31,
1995, the Year Ended January 31, 1995 and the Period from September 27, 1993
(inception) to January 31, 1994.................................................... F- 6
Notes to Consolidated Financial Statements........................................... F- 7
INTERIM FINANCIAL STATEMENTS
(UNAUDITED)
Consolidated Balance Sheets as of April 30, 1996 and 1995............................ F-20
Consolidated Statements of Operations for the Six Months Ended April 30, 1996 and
1995............................................................................... F-21
Consolidated Statements of Operations for the Three Months Ended April 30, 1996 and
1995............................................................................... F-21
Consolidated Statements of Operations for the Three Months Ended January 31, 1996 and
1995............................................................................... F-21
Consolidated Statements of Cash Flows for the Six Months Ended April 30, 1996 and
1995............................................................................... F-22
Consolidated Statements of Common Stock, Non-Redeemable Preferred Stock and Other
Stockholders' Equity for the Six Months Ended April 30, 1996 and 1995.............. F-23
Notes to Consolidated Financial Statements........................................... F-24
</TABLE>

F-1
<PAGE> 48

REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
All American Food Group, Inc. and Subsidiaries

Fairfield, New Jersey

We have audited the accompanying balance sheet of All American Food Group,
Inc. (formerly Jutland Food Group, Inc.) as of January 31, 1994 and the
consolidated balance sheets of All American Food Group, Inc. and subsidiaries
(Note 1) as of January 31, 1995, and October 31, 1995 and the related statements
of operations and cash flows for the period September 27, 1993 (inception) to
January 31, 1994, and the consolidated statements of operations and cash flows
for the year ended January 31, 1995, and nine month period ended October 31,
1995 and the statements of stockholders' equity for the period September 27,
1993 (inception) to January 31, 1994, year ended January 31, 1995, and nine
month period ended October 31, 1995.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our 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 the audit provides a reasonable basis for our opinion.

In our report dated November 17, 1994 we were unable to form an opinion on
the financial statements for the period from September 27, 1993 (inception)
through January 31, 1994 because of the lack of an accounting system. The audit
of these financial statements has been extended to include alternative tests and
procedures of the evidence supporting the amounts and disclosures in the
financial statements. Accordingly our present opinion on the financial
statements for the period from September 27, 1993 (inception) through January
31, 1994, as presented herein, is different from that expressed in our previous
report.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of All American Food Group,
Inc. as of January 31, 1994, the consolidated financial position of All American
Food Group, Inc. and subsidiaries as of January 31, 1995 and October 31, 1995,
the results of operations and cash flows and changes in stockholders' equity for
the period September 27, 1993 (inception) to January 31, 1994 and the
consolidated statements of operations and cash flows and changes in
stockholders' equity for the year ended January 31, 1995, and nine month period
ended October 31, 1995 in conformity with generally accepted accounting
principles.

/s/ DelSanto & DeFreitas

DelSanto & DeFreitas
Closter, New Jersey

July 1, 1996

F-2
<PAGE> 49

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31, JANUARY 31,
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash......................................................... $ 53,703 $ 55,472 $ 274,261
Accounts and notes receivable, net of allowances for possible
losses of $15,000, $50,000 and $30,000 respectively........ 189,817 95,980 172,900
Inventories.................................................. 123,649 182,364 141,864
Prepaid expenses............................................. 25,251 30,000 10,000
----------- ----------- -----------
Total Current Assets.................................... 392,420 363,816 599,025
Property, Plant and Equipment, at cost less accumulated
depreciation and amortization of $145,589, $134,802 and $14,193
respectively................................................... 517,902 711,686 377,057
Intangible Assets, net of accumulated amortization of $230,339,
$127,129, and $42,656 respectively............................. 342,117 561,579 612,855
Acquisition Costs, net of accumulated amortization of $40,324,
$24,456, and $5,002 respectively............................... 65,427 81,295 80,749
Excess of cost over net assets acquired, net of accumulated
amortization of $2,972 in 1994................................. -- -- 404,602
Security Deposits................................................ 30,234 25,185 10,875
Investment in Jutland Enterprises Inc.'s common stock............ -- -- --
----------- ----------- -----------
Total Assets............................................ $ 1,348,100 $ 1,743,561 $ 2,085,163
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Notes payable -- acquisition................................. $ -- $ 200,000 $ 585,000
Accounts payable and accrued expenses........................ 1,027,221 573,687 211,264
Capitalized lease obligations -- current maturities.......... 75,653 71,064 --
Loans from stockholders -- current maturities................ 34,049 37,529 --
Current maturities of long-term debt......................... 6,041 20,556 18,242
----------- ----------- -----------
Total Current Liabilities............................... 1,142,964 902,836 814,506
Notes payable -- acquisition..................................... -- -- 375,000
Capitalized lease obligations.................................... 84,502 143,215 --
Loans from stockholders.......................................... 15,041 45,809 --
Deferred tax liability........................................... -- 78,000 --
Long-term debt................................................... 1,590 347 13,682
----------- ----------- -----------
Total Liabilities....................................... 1,244,097 1,170,207 1,203,188
----------- ----------- -----------
Commitments and contingencies
Stockholders' Equity:
Common stock, no par value, 10,000,000 shares authorized,
1,891,300, 2,711,300 and 1,250,000 shares issued and
outstanding respectively................................... 876,150 1,277,000 577,000
Convertible preferred stock, no par value, Series A, 190,000
shares authorized, 190,000, 120,000 and 0 shares issued and
outstanding respectively; Series B, 180,000 shares
authorized, 80,000, 180,000 and 0 shares issued and
outstanding, respectively; Series C, 1,600,000 shares
authorized, 1,369,500, 0 and 0 shares issued and
outstanding respectively................................... 1,022,580 54,000 --
Additional paid-in capital................................... 365,000 365,000 365,000
Accumulated deficit.......................................... (2,159,727) (1,122,646) (60,025)
----------- ----------- -----------
104,003 573,354 881,975
----------- ----------- -----------
Total Liabilities and Stockholders' Equity.............. $ 1,348,100 $ 1,743,561 $ 2,085,163
=========== =========== ===========
</TABLE>

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

F-3
<PAGE> 50

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
SEPTEMBER 27,
NINE MONTHS 1993
ENDED YEAR ENDED (INCEPTION) TO
OCTOBER 31, JANUARY 31, JANUARY 31,
1995 1995 1994
----------- ----------- --------------
<S> <C> <C> <C>
Revenues:
Retail store sales................................ $1,422,341 $ 1,178,638 $ 233,317
Franchising revenue............................... 549,377 -- --
Equipment and product sales....................... 550,726 804,340 243,744
---------- ----------- ----------
2,522,444 1,982,978 477,061
---------- ----------- ----------
Operating expenses:
Cost of Sales -- equipment costs and store
operations, exclusive of depreciation and
amortization.................................... 1,739,147 1,602,538 241,478
Cost of Sales -- franchising activities, exclusive
of depreciation and amortization................ 213,408 -- --
Selling, general and administrative expenses...... 1,166,365 1,100,919 213,585
Depreciation and amortization..................... 211,463 197,347 64,823
Deferred acquisition costs........................ 170,352 74,256 --
Impairment of assets.............................. -- 676,038 --
---------- ----------- ----------
3,500,735 3,651,098 519,886
---------- ----------- ----------
Operating loss......................................... (978,291) (1,668,120) (42,825)
Interest expense....................................... 21,078 38,651 17,200
---------- ----------- ----------
Loss before extraordinary item......................... (999,369) (1,706,771) (60,025)
Extraordinary item -- Gain from extinguishment of
debt................................................. -- 644,150 --
---------- ----------- ----------
Net loss............................................... $ (999,369) $(1,062,621) $ (60,025)
========== =========== ==========
Shares outstanding:
Weighted average number of common shares
outstanding..................................... 1,886,300 1,966,167 1,250,000
Additional shares................................. 1,891,070 1,891,070 1,891,070
---------- ----------- ----------
Adjusted shares outstanding............................ 3,777,370 3,857,237 3,141,070
========== =========== ==========
Net loss per share before extraordinary item........... $ (0.26) $ (0.44) $ (0.02)
========== =========== ==========
Net gain per share -- extraordinary item............... -- $ 0.16 --
========== =========== ==========
Net loss per share after extraordinary item............ $ (0.26) $ (0.28) $ (0.02)
========== =========== ==========
</TABLE>

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

F-4
<PAGE> 51

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS SEPTEMBER 27,
ENDED YEAR ENDED (INCEPTION) TO
OCTOBER 31, JANUARY 31, JANUARY 31,
1995 1995 1994
----------- ----------- --------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss.......................................... $(999,369) $(1,062,621) $ (60,025)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization................ 211,463 197,347 64,823
Provision for possible losses on accounts
receivable................................. (35,000) 20,000 30,000
Gain on sale of subsidiary and retail
store...................................... (34,369) -- --
Issuance of common stock for services........ 1,750 -- --
Impairment of assets......................... -- 676,038 --
Early extinguishment of debt................. -- (644,150) --
Decrease (increase) in:
Accounts receivable..................... (108,837) 56,920 (202,900)
Inventories............................. 58,715 (40,500) (5,074)
Prepaid expenses........................ 4,749 (20,000) --
Security deposits....................... (16,800) (10,420) --
Increase (decrease) in:
Accounts payable and accrued expenses... 497,437 335,905 141,800
--------- ----------- ----------
Total adjustments.................. 579,108 571,140 28,649
--------- ----------- ----------
Net cash (used in) operating
activities....................... (420,261) (491,481) (31,376)
--------- ----------- ----------
Cash Flows from Investing Activities:
Capital expenditures.............................. (43,503) (137,345) (300,000)
Proceeds from sale of subsidiary and retail store,
net of cash balance of subsidiary............... 64,953 -- --
Payment for Sammy's stock acquisition............. -- (75,000) --
Acquisition costs paid............................ -- (20,000) (16,287)
--------- ----------- ----------
Net cash provided by (used in) investing
activities................................. 21,450 (232,345) (316,287)
--------- ----------- ----------
Cash Flows from Financing Activities:
Proceeds from issuance of preferred stock......... 541,480 -- --
Redemption of preferred stock..................... (100,000) -- --
Proceeds from sale of corporate stockholder's
stock........................................... -- 700,000 --
Cash overdraft acquired as part of Sammy's
acquisition..................................... -- (6,291) --
Proceeds from issuance of common stock and
additional capitalization....................... -- 665,000
Proceeds from capitalized lease obligations....... 17,843 20,361 --
Payments of capitalized lease obligations......... (52,587) (20,814) --
Proceeds from loans from stockholders............. 33,250 -- --
Payments of loans from stockholders............... (38,702) (17,129) --
Proceeds from issuance of long-term debt.......... 3,250 -- --
Payments of long-term debt........................ (7,492) (21,090) (3,076)
Payments of acquisition indebtedness.............. -- (150,000) (40,000)
--------- ----------- ----------
Net cash provided by financing activities.... 397,042 505,037 621,924
--------- ----------- ----------
Net (decrease) increase in cash........................ (1,769) (218,789) 274,261
Cash and cash equivalents -- beginning of period....... 55,472 274,261 --
--------- ----------- ----------
Cash and cash equivalents -- end of period............. $ 53,703 $ 55,472 $ 274,261
========= =========== ==========
</TABLE>

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

F-5
<PAGE> 52

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK ADDITIONAL
----------------------- ----------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
--------- ---------- --------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
PERIOD FROM INCEPTION
(SEPTEMBER 27, 1993 TO
JANUARY 31, 1994):
Initial capitalization.... 937,500 $ 577,000 -- -- -- -- $ 577,000
Common stock issuance..... 312,500 0 -- -- -- -- 0
Capital contribution...... -- -- -- -- $365,000 -- 365,000
Net Loss.................. -- -- -- -- -- $ (60,025) (60,025)
--------- ---------- --------- ---------- -------- ----------- -----------
BALANCE AT JANUARY 31,
1994.................... 1,250,000 577,000 0 0 365,000 (60,025) 881,975
Year Ended January 31,
1995:
Common stock issuance..... 1,461,300 700,000 -- -- -- -- 700,000
Preferred stock
issuance................ -- -- 300,000 $ 54,000 -- -- 54,000
Net Loss.................. -- -- -- -- -- (1,062,621) (1,062,621)
--------- ---------- --------- ---------- -------- ----------- -----------
BALANCE AT JANUARY 31,
1995.................... 2,711,300 1,277,000 300,000 54,000 365,000 (1,122,646) 573,354
Nine Months Ended October
31, 1995:
Conversion of common stock
to preferred stock...... (825,000) (402,600) 825,000 402,600 -- -- 0
Common stock issuance for
services................ 5,000 1,750 -- -- -- 1,750
Preferred stock
issuance................ -- -- 614,500 565,980 -- 565,980
Preferred stock
redemption.............. -- -- (100,000) -- -- (100,000) (100,000)
Retained deficit of
subsidiary sold......... -- -- -- -- -- 62,288 62,288
Net Loss.................. -- -- -- -- -- (999,369) (999,369)
--------- ---------- --------- ---------- -------- ----------- -----------
BALANCE AT OCTOBER 31,
1995.................... 1,891,300 $ 876,150 1,639,500 $1,022,580 $365,000 $(2,159,727) $ 104,003
========= ========== ========= ========== ======== =========== ===========
</TABLE>

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

F-6
<PAGE> 53

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) ORGANIZATION --

All American Food Group, Inc. (the "Company"), was incorporated by Jutland
Enterprises Inc., ("Enterprises"), a Delaware corporation, on September 27, 1993
under the laws of the State of New Jersey. The Company was formed for the
purpose of acquiring and operating a retail bagel business and a bakery
equipment distribution and assembly business. At incorporation, Enterprises
acquired 937,500 shares of the Company's common stock in exchange for $300,000
and $277,000 of assets. During the fiscal year ended January 31, 1994,
Enterprises contributed $365,000 to the Company as additional paid-in capital.

Shortly after incorporation, Mr. Andrew Thorburn, Chief Executive Officer
of the Company and Chief Executive Officer of Enterprises, acquired 312,500
shares of the Company in exchange for 400,000 shares of Enterprises' common
stock. Since the transferor had no historical cost basis for his acquisition of
the Enterprises' stock, no value has been assigned to the shares transferred to
the Company.

The Company was incorporated under the name Jutland Food Group, Inc., and
changed its name to All American Food Group, Inc. on October 24, 1995.

Effective October 31, 1995 the Company changed its fiscal year end from
January 31st to October 31st.

Initial Acquisition --

On October 20, 1993, the Company completed the acquisition of substantially
all the assets of three interrelated companies, Howberg Bakery Equipment Co.,
Inc., Bagels of New Milford, Inc. and Goldberg's Famous Bagels of Orangeburg,
Inc., hereinafter referred to as the "Goldberg's acquisition," or the "Goldberg
assets," for approximately $1,612,000. Under the terms of the acquisition, the
purchase price consisted of cash consideration of $300,000, a $1,000,000 two
year note, (see Note 7), the assumption of a note in the amount of $35,000 and
$277,000 of consideration provided by Enterprises. In each case the seller of
the assets was Howard Goldberg, hereinafter referred to as "Goldberg."

In accordance with Accounting Principle Board Opinion No. 16, the
acquisition has been accounted for under the purchase method. Under such
accounting policy, the cost of the acquisition is reported on the basis of the
value of the consideration given or the estimated fair value of the net assets
acquired, whichever is more readily determinable.

The consideration given of $1,612,000 has been used for the assignment of
cost to the tangible and identifiable intangible assets with the excess assigned
to goodwill. This excess of the aggregate purchase price over the estimated fair
value of the net assets of the acquired business, in the approximate amount of
$408,000, is recognized as goodwill and is being amortized over 40 years. The
values assigned to identifiable assets and goodwill were subsequently
re-evaluated and adjusted as discussed below.

Simultaneously with the acquisition of the Goldberg assets, various other
agreements and covenants, including a consulting agreement, lease agreement,
security agreement, lease assignments, non-compete agreements, franchise and
tradename rights, consents to use corporate names, and mutual indemnifications
were also entered into by the parties.

During fiscal year ended January 31, 1995, the $1,000,000 note and other
aspects of the initial transaction were re-evaluated and re-negotiated as
discussed below and in Note 7.

F-7
<PAGE> 54

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

Goldberg Contract Re-negotiations and Preferred Stock Issuance --

On September 29, 1994, the Company completed a re-evaluation of the assets
acquired, a reconciliation of all outstanding indebtedness related to the
acquisition, and a re-negotiation of its contractual relationship with Goldberg
(the "Reconciliation Agreement"). As a result, certain provisions of the
original purchase agreement, the consulting agreement and the lease agreement
were modified. Further, as discussed in Note 1 (n), the Company recognized an
impairment to the values it had originally assigned to the assets it purchased.

Under the terms of the Reconciliation Agreement, the Company exchanged
indebtedness of approximately $886,000 for an immediate cash payment of $11,500,
an additional cash payment of $50,000 paid on January 10, 1995, 120,000 shares
of newly issued Series A Convertible Preferred Stock, and an assumption of a
note in the approximate amount of $126,250 representing the remaining mortgage
owed by Goldberg on the building then occupied by the Company (the "Citizen's
debt" or the "Citizen's mortgage"). Additionally the Company received from
Goldberg 240,000 shares of Enterprises common stock.

Each share of Series A Convertible Preferred Stock is convertible into one
share of common stock, can be redeemed by the Company for $5.00 a share, and
provides that in the event of a capital infusion of $2,000,000 or more into the
Company, 40,000 shares must be redeemed by the Company for $5.00 per share. The
Series A Preferred Stock was recorded at $54,000, approximating fair market
value at the reconciliation date.

Due to the absence of a readily ascertainable market value, the Company has
assigned no value to the 240,000 shares of Enterprises' common stock.

This re-negotiation has been accounted for as an early extinguishment of
debt, resulting in an extraordinary gain from the early extinguishment of debt
in the amount of $644,150.

Additional provisions of the Reconciliation Agreement include a security
interest by Goldberg in 937,000 shares of common stock of the company held by
Enterprises, a security interest by Goldberg in the two retail establishments,
the termination of the rent obligation under the lease, and an extension and
modification of the consulting agreement and non-compete agreement.

In October of 1995, further re-negotiations took place as a result of which
a) ownership of the Company's retail store in New Milford, NJ was transferred to
Goldberg, b) Goldberg's responsibilities under the consulting agreement were
reduced to three days a week and extended to December 31, 1996, c) the non-
compete and non-disclosure provisions were extended to December 31, 1997, d)
Goldberg assumed responsibility for the Citizen's debt, e) Goldberg assumed
responsibility for $25,000 of the Company's payables and f) and an additional
70,000 shares of Series A Preferred Stock, valued at $23,500, were issued to
Goldberg.

Subsequently, in January 1996, the Citizen's mortgage was satisfied by
Goldberg.

"Sammy's New York Bagels" Stock Acquisition --

On September 29, 1994, the company completed the acquisition, hereinafter
referred to as the "Sammy's acquisition," of 100% of the outstanding stock of
four interrelated corporations, Queen Anne Distributors, Inc., Rochelle
Distributors, Inc., G.I.D. Distributors, Inc., and Sammy's New York Bagels,
Inc., conducting business under the trade name "Sammy's New York Bagels,"
hereinafter referred to as "Sammy's."

F-8
<PAGE> 55

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

"Sammy's New York Bagels" Stock Acquisition -- (continued)

Under the terms of the acquisition, the Company purchased the stock of the
Sammy's corporations in exchange for cash of $75,000, assumption of indebtedness
of approximately $441,000 and issuance of 180,000 shares of newly issued Series
B Convertible Preferred Stock. Each share of the Series B Preferred Stock is
convertible into one share of the Company's common stock, can be redeemed by the
Company for $5.00 a share, and must be partially redeemed by the Company under
certain circumstances as described below.

The redemption provisions of the Series B Preferred Stock provide that
60,000 shares are redeemable at $5.00 per share within 30 days of a single
equity infusion of more than $1,000,000, and an additional 60,000 are redeemable
at $5.00 per share 24 months after an initial public offering of the Company's
common stock.

In accordance with Accounting Principle Board Opinion No. 16, the Sammy's
acquisition has been accounted for under the purchase method. The cost of the
acquisition is recorded at $516,000 based on the amount of the cash
consideration paid and the indebtedness assumed. No value has been assigned to
the Series B Preferred Stock issued as part of the consideration in the
acquisition. The accompanying consolidated financial statements include the
elimination of the investment in parent and equity in subsidiaries, and adjust
for the purchase of the assets acquired. The allocation of the assigned values
to the assets has been determined by management. The acquisition arrangement
provides for employment contracts and non-compete agreements.

(b) BUSINESS --

During the nine months ended October 31, 1995, the Company changed its
business focus and became principally engaged in the development of a retail
chain of franchised bagel stores, including the operation of Company-owned
stores for training and marketing and promotional activities, and the
distribution of bagel bakery equipment and related products to the franchise
system. The Company markets both single unit and market development franchise
agreements. The Company, in the normal course of business, also markets stores
it acquires to individuals who operate as franchisees. The Company franchises
its concepts under the names "Goldberg's Original Old World Bagels" and "Sammy's
New York Bagels." During the nine months ended October 31, 1995, the Company
ceased to be actively engaged in the sales of bagel bakery equipment to
independent retail operators.

The accompanying consolidated financial statements include the accounts of
All American Food Group, Inc. and its subsidiaries as disclosed above. The
acquisition of all subsidiaries, represented by the "Sammy's" transaction,
occurred on September 29, 1994. Accordingly, the consolidated balance sheet
includes the accounts of the subsidiaries as of October 31, 1995 and January 31,
1995. The accompanying consolidated statements of operation and cash flows only
includes activities of the subsidiaries for the nine months ended October 31,
1995 and the period from September 29, 1994 through January 31, 1995. All
significant inter-company balances and transactions have been eliminated.

(d) CASH AND CASH EQUIVALENTS --

At October 31, 1995, January 31, 1995 and January 31, 1994 cash represented
monies on deposit in financial institutions.

F-9
<PAGE> 56

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

(e) CONCENTRATION OF CREDIT RISK --

The Company maintains cash and cash equivalents with various financial
institutions. Company policy is designed to limit exposure with any one
institution. Credit risk with respect to trade accounts receivable is minimal,
due to the terms under which the Company transacts its business.

(f) INVENTORIES --

Inventories are stated at the lower of cost (first-in, first-out ("FIFO"))
or market.

(g) PROPERTY, PLANT AND EQUIPMENT --

Equipment, fixtures and leasehold improvements are recorded at cost.
Equipment under capital leases is recorded at the net present value of the
associated lease payments. Major replacements or improvements are capitalized.
Maintenance and repairs are charged to earnings as incurred. For financial
statement purposes, depreciation and amortization are computed using the
straight-line method over the estimated useful lives of the assets, which range
from three to ten years.

(h) INTANGIBLE ASSETS AND AMORTIZATION --

Intangible assets consist primarily of specifically identifiable items such
as a favorable lease agreement, a retail license, non-compete agreements,
customer lists, drawings and blueprints, a proprietary formula and kosher
certification. The values assigned to intangible assets are based on an
independent appraisal and management's estimates, and are being amortized on a
straight-line basis over the estimated useful lives of such assets, which range
from three and one-half to nine and one-half years.

(i) ACQUISITION COSTS --

Acquisition costs represent fees incurred in the Goldberg and Sammy's
acquisitions and are being amortized over their useful lives of five years.

(j) EXCESS OF COST OVER ACQUIRED NET ASSETS AND AMORTIZATION --

Goodwill represents the excess of the purchase price (cost) over the
estimated fair value of the net assets in the Goldberg acquisition as described
in Note 1. Goodwill is being amortized on a straight-line basis over the
estimated useful life of forty years.

(k) VALUATION OF NON-CURRENT INVESTMENTS --

The non-current portfolio of securities represented by the investment in
Enterprises' common stock is carried at zero value. Currently there is no market
for the shares. Any gain realized from the disposition of these securities will
be recognized at the time of disposition.

(l) FRANCHISE REVENUE RECOGNITION --

As discussed above the Company began franchising activities during the nine
months ended October 31, 1995. Franchise revenue includes the sale of single
unit franchises, the sale of market development franchises and ongoing royalty
and advertising fees.

F-10
<PAGE> 57

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

(l) FRANCHISE REVENUE RECOGNITION -- (CONTINUED)

Single unit franchise agreements provide for payment of a franchise fee, a
weekly royalty and a weekly advertising fund contribution based on gross sales.
The Company's material obligations under the terms of single unit franchise
agreements consist of assisting in the site selection for the franchisee's store
and providing training for the franchisee and/or a store manager. Initial
franchise fees from these agreements are recognized as revenues when all
material obligations have been performed. As of October 31, 1995, all material
obligations under then outstanding single unit franchise agreements had been
performed.

Market development agreements provide for the payment by the market
developer based on the population of the territory covered by such market
development agreement. Franchise fees from market development agreements are
recognized as revenue by the Company when all material obligations required of
the Company have been performed. As of October 31, 1995, all material
obligations under then-outstanding market development agreements had been
performed.

The market developer is responsible for the site selection, training and
ongoing support for each single unit franchise sold in his territory. For
providing such services, the market developer receives one-half (50%) of fees
collected from single unit franchises in his territory. The Company recognizes
revenue and associated market developer expense from single unit franchises sold
by the market developer when a location has been found for the franchisee and
the Company has no further obligations.

The Company recognizes franchise royalty revenue when it is earned.

Franchise revenue for the nine months ended October 31, 1995 of $549,377
consists of initial non-recurring franchise fees of $297,500, initial
non-recurring revenues from the sale of Company-owned stores of $247,777 and
ongoing royalties of $4,100.

(m) NET LOSS PER SHARE --

Net loss per common share was determined by dividing net loss by the
weighted average number of common shares outstanding, as adjusted to reflect all
shares and options issued within the twelve months prior to May 3, 1996, (the
date the Company filed a registration statement for an initial public offering),
that were issued for consideration per share or at an exercise per share less
than the anticipated public offering price of $6.00 per share. These additional
shares have been treated as if they were outstanding for all periods presented.
The treasury stock method has been used to determine the net increase in the
number of shares outstanding. As such, the computation of fully diluted net loss
per share was anti-dilutive in each of the periods presented; therefore, the
amounts reported for primary and fully-diluted loss are the same.

(n) LONG-LIVED ASSETS -- IMPAIRMENT OF ASSETS --

In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," the Company
records impairment losses on long-lived assets used in operations, including
goodwill and intangible assets, when events and circumstances indicate that the
assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets.
During the fiscal year ending January 31, 1995, the application of SFAS No. 121
resulted in the Company recognizing an intangible asset and goodwill impairment
charge of $676,038. As disclosed in Note 1, this adjustment was the result of
the re-evaluation of the assets it had purchased and a reconciliation of all
outstanding indebtedness and contractual obligations with Goldberg. This
re-evaluation resulted in the Company reducing the estimated cash flows
attributed to the Goldberg assets. In

F-11
<PAGE> 58

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

(n) LONG-LIVED ASSETS -- IMPAIRMENT OF ASSETS -- (CONTINUED)

determining the magnitude of adjustment, the Company developed its best estimate
of future undiscounted operating cash flows, and determined that these cash
flows would not be sufficient to recover the carrying value of the intangible
assets and goodwill. As a result, goodwill has been written off entirely, and
the carrying value of the identifiable intangible assets has been reduced by
approximately $290,000, during the fiscal year ended January 31, 1995.

(o) STOCK OPTIONS --

The Company has granted stock options to employees and certain key vendors
with an exercise price not less than fair market value per share of common stock
on the date the option was granted. The Company accounts for stock option grants
in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees" and, accordingly, recognizes no compensation or other expense for the
stock option grants.

2. INVENTORY:

A summary of inventory is as follows:

<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31, JANUARY 31,
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Equipment and parts.......................... $ 69,544 $ 166,364 $ 126,864
Food and paper goods......................... 54,105 16,000 15,000
--------- --------- ---------
Total inventories....................... $ 123,649 $ 182,364 $ 141,864
========= ========= =========
</TABLE>

3. FIXED ASSETS:

Fixed assets and accumulated depreciation consists of the following:

<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31, JANUARY 31, ESTIMATED
1995 1995 1994 USEFUL LIVES
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Machinery and equipment -- retail stores..... $ 333,237 $ 555,715 $ 218,000 7 years
Office furniture and warehouse equipment..... 169,951 111,906 92,450 7 years
Trucks and delivery vehicle.................. 26,370 26,370 5,800 3 to 5 years
Leasehold improvements -- retail stores...... 133,933 152,497 75,000 Term of lease
---------- ---------- ---------
663,491 846,488 391,250
Accumulated depreciation and amortization.... (145,589) (134,802) (14,193)
---------- ---------- ---------
Fixed assets net of accumulated
depreciation............................... $ 517,902 $ 711,686 $ 377,057
========== ========== =========
</TABLE>

As disclosed in Note 10, certain debt is secured by fixed assets.

F-12
<PAGE> 59

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

4. INTANGIBLE ASSETS:

Identifiable intangible assets, recorded as a result of the Goldberg's and
Sammy's acquisitions, and accumulated amortization consist of the following:

<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31, JANUARY 31, ESTIMATED
1995 1995 1994 USEFUL LIVES
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Kosher certification............. $ 145,771 $ 157,771 -- 5 years
Favorable lease agreement........ 6,250 22,500 $ 35,000 3 1/2 years
Non-compete agreements........... 192,507 214,507 189,015 4 years
Customer lists................... 74,432 93,434 148,862 4 years
Proprietary formula.............. 107,338 121,338 165,134 5 years
Retail store license............. -- 27,000 50,000 9 1/2 years
Drawings and blueprints.......... 46,158 52,158 67,500 5 years
---------- ---------- ---------
Total intangible assets.......... 572,456 688,708 655,511
Accumulated amortization......... (230,339) (127,129) (42,656)
---------- ---------- ---------
Total intangible assets, net of
accumulated amortization....... $ 342,117 $ 561,579 $ 612,855
========== ========== =========
</TABLE>

5. ACQUISITION COSTS:

Acquisition costs represent fees incurred in consummating the Goldberg's
and Sammy's acquisitions. These costs are being amortized over an estimated
useful life of five years. Acquisition costs and accumulated amortization are as
follows:

<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31, JANUARY 31,
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Total acquisition costs...................... $ 105,751 $ 105,751 $85,751
Accumulated amortization..................... (40,324) (24,456) (5,002)
--------- --------- --------
Net acquisition costs........................ $ 65,427 $ 81,295 $80,749
========= ========= =======
</TABLE>

6. INVESTMENT IN JUTLAND ENTERPRISES INC. COMMON STOCK:

The Company acquired stock in Enterprises from Andrew Thorburn as part of
its initial capitalization, as discussed in Note 1. Consistent with the
transferor's cost basis, this stock has been assigned no value by the Company.

The Company received additional shares of Enterprises in separate
transactions involving Blue Chip Computerware, Inc., discussed in Note 11, and
in the re-negotiations with Goldberg discussed in Note 1. Due to the absence of
a readily ascertainable market value, no value has been assigned to these
shares.

7. NOTE PAYABLE -- GOLDBERG ASSET ACQUISITION:

The Company issued a $1,000,000 two year note as part of the consideration
given in the purchase of the Goldberg assets as disclosed in Note 1.

As part of the 1994 Goldberg re-negotiation also discussed at Note 1, the
Company was obligated to Citizen's First National Bank of New Jersey for the
remaining Citizen's mortgage balance of approximately $126,250. The Company
defaulted on its obligation to pay such mortgage, and Citizen's brought an
action

F-13
<PAGE> 60

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

7. NOTE PAYABLE -- GOLDBERG ASSET ACQUISITION -- (CONTINUED)

against various parties, including the Company, to foreclose on the mortgage.
The outstanding balance on the Citizen's mortgage, including unpaid interest and
late charges, of $150,000 and the balance due to Goldberg of $50,000, are
reflected as a current liability in the accompanying consolidated financial
statements at January 31, 1995. In October 1995 Goldberg re-assumed
responsibility for the Citizen's mortgage. Subsequent to October 31, 1995 the
mortgage was satisfied.

8. EQUIPMENT LEASE OBLIGATIONS:

The Company and its subsidiaries are obligated under various equipment
lease arrangements which have been capitalized in the accompanying financial
statements. Property, plant, and equipment presented on the consolidated balance
sheet includes approximately $259,000 of assets capitalized under these lease
arrangements. Accumulated depreciation recorded on these assets approximated
$54,000 at October 31, 1995. These lease obligations are due in monthly
installments including interest expense at annual interest rates ranging from
8.3% to 24.5%. The lease obligations are payable through dates ranging from
February 1996 through November 1999.

The future minimum payments required under the lease arrangements, with
their present value at October 31, 1995, are as follows:

<TABLE>
<CAPTION>
PRESENT INTEREST MINIMUM
YEAR ENDED OCTOBER 31, VALUE EXPENSE PAYMENTS
----------------------------------------------- -------- ------- --------
<S> <C> <C> <C>
1996........................................... $ 75,653 $23,976 $ 99,629
1997........................................... 58,828 9,784 68,612
1998........................................... 25,120 2,686 27,806
1999........................................... 554 6 560
-------- ------- --------
$160,155 $36,452 $196,607
======== ======= ========
</TABLE>

9. LOANS FROM STOCKHOLDERS:

Loans from stockholders primarily consist of obligations assumed in the
Sammy's acquisition. These loans are due in monthly installments including
interest expense at annual rates ranging from 5.0% to 16.76%. The loans are
payable through dates ranging from February 1996 through February 1999.

The future minimum payments required under the loans, with their present
value at October 31, 1995, are as follows:

<TABLE>
<CAPTION>
PRESENT INTEREST MINIMUM
YEAR ENDED OCTOBER 31, VALUE EXPENSE PAYMENTS
-------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
1996.............................................. $34,049 $2,245 $36,294
1997.............................................. 9,587 636 10,223
1998.............................................. 4,057 180 4,237
1999.............................................. 1,397 15 1,412
------- ------ -------
$49,090 $3,076 $52,166
======= ====== =======
</TABLE>

F-14
<PAGE> 61

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

10. LONG-TERM DEBT:

Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31, JANUARY 31,
1995 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Minimum payment on note payable to Tilden
Financial Corporation in monthly
installments of $1,521 including interest,
through October 1995, secured by
equipment.................................. -- $12,222 $31,924
Minimum payment on note payable to Bank of
New York in monthly installments of $347
plus interest at the bank's prime rate plus
1.5% per annum, through February 1997,
secured by equipment....................... $ 6,041 8,681 --
Notes payable to individual in monthly
installments of $153 including interest at
the annual rate of 12.5%, payable through
September 1996............................. 1,590 -- --
------- ------- -------
7,631 20,903 31,924
Current portion of long-term debt............ 6,041 20,556 18,242
------- ------- -------
Long-term debt............................... $ 1,590 $ 347 $13,682
======= ======= =======
</TABLE>

11. BLUE CHIP COMPUTERWARE INC. STOCK SUBSCRIPTION:

On July 1, 1994 and August 15, 1994, the Company entered into two separate
stock purchase agreements with Blue Chip Computerware Inc. ("Blue Chip"), a
publicly traded company whose stock trades under the symbol BCHP. Under the
terms of the agreements, the Company issued a total of 1,460,000 newly issued
shares of common stock, of which 1,200,000 shares were issued to Blue Chip and
260,000 shares were issued to a financial services firm for arranging the
transaction. Consequently, Blue Chip became the owner of 44% of the then-issued
and outstanding common stock of the Company.

In exchange for the 1,460,000 shares, the Company received, in aggregate,
$50,000, 100,000 shares of Enterprises common stock owned by the Blue Chip, and
400,000 shares of Blue Chip common stock. The 400,000 shares of Blue Chip common
stock were subsequently sold in two separate transactions to a third party. The
aggregate proceeds from the sale of the 400,000 shares was $650,000.

In the accompanying consolidated financial statements, the value assigned
to the common stock issued to Blue Chip is $700,000, comprised of the $50,000
cash paid to the company by Blue Chip, and $650,000 paid for the 400,000 shares
of Blue Chip common stock sold. No value has been assigned to the 100,000 shares
of Enterprises, due to the absence of a readily ascertainable market value.

In February 1995, the Company exchanged 825,000 shares of the Company's
newly issued Series C Convertible Preferred Stock for 825,000 shares of the
common stock acquired by Blue Chip, reducing Blue Chip's holdings of common
stock to 19%. See Note 13.

12. INCOME TAXES:

The Company has adopted SFAS No. 109 and is a C Corporation subject to
federal and state income taxes. The Company has changed its fiscal year end to
October 31 for tax purposes. At October 31, 1995, there

F-15
<PAGE> 62

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

12. INCOME TAXES -- (CONTINUED)

were consolidated net operating loss carry-forwards of approximately $750,000
expiring in 2010. Due to the current period operating loss, no amount has been
provided for corporate income taxes.

In accordance with SFAS No. 109, the difference between the tax bases and
the assigned value of the assets for financial reporting purposes of
approximately $650,000 resulting from the Goldberg and Sammy's acquisitions will
not result in taxable or deductible amounts in future years and no deferred
asset or liability has been recognized because of the magnitude of the net
operating loss carryforward. In the event the Company generates taxable income
in excess of the net operating loss carryforward, a deferred tax liability will
be recognized.

13. RELATED PARTY TRANSACTIONS:

As of January 31, 1995, Blue Chip held 44% of the Company's common stock.
In March 1995, Blue Chip and the Company entered into an agreement whereby Blue
Chip exchanged 825,000 shares of the Company's common stock for 825,000 shares
of the Company's Series C Convertible Preferred Stock, thereby reducing its
holdings of common stock to 19%. During the nine months ended October 31, 1995,
Blue Chip purchased an additional 425,000 shares of the Company's Series C
Preferred Stock at a price of $1.00 per share. Each share of the Series C
Preferred Stock may be redeemed by the Company for $5.00 a share, and can be
converted into one share of the Company's common stock. The Company has no
obligation to redeem any of the Series C Preferred shares.

Additionally, during this period, the Company's President purchased 70,000
shares of Series C Preferred Stock at the price of $1.00 per share.

14. EXTRAORDINARY ITEM -- GAIN FROM EXTINGUISHMENT OF DEBT:

On September 29, 1994, and as further explained in Note 1, the Company
completed a re-negotiation and reconciliation of all outstanding indebtedness
and contractual obligations with Goldberg. This reconciliation resulted in the
extinguishment of the unpaid remaining balance due of $874,400 on the original
$1,000,000 note issued in connection with the Goldberg acquisition in exchange
for the assumption of the Citizen's mortgage in the amount of $126,250, a
$50,000 payment to Goldberg, and the issuance of 120,000 shares of the Company's
Series A Preferred Stock valued at $54,000. For financial reporting purposes, an
extraordinary item consisting of a $644,150 gain from the extinguishment of debt
has been recognized. Due to the operating losses in excess of the gain, an
accrual for income taxes attributable to the gain has not been provided.

15. STOCK OPTIONS:

The Company has granted options to purchase 80,000 shares of the Company's
common stock to a supplier. The options were issued in two transactions; 30,000
options with an exercise price of $0.50 per share were issued on February 1,
1995 and 50,000 options with an exercise price of $1.00 per share were issued on

F-16
<PAGE> 63

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

15. STOCK OPTIONS -- (CONTINUED)

August 1, 1995. The options expire five years after their issue date and are
exercisable at any time during the period they are outstanding. The following
summarizes the activity during the periods presented:

<TABLE>
<CAPTION>
OPTION PRICE
SHARES PER SHARE
------ --------------
<S> <C> <C>
Options outstanding at January 31, 1995.............. None
Granted......................................... 80,000 $0.50 to $1.00
------
Options outstanding at October 31, 1995.............. 80,000 $0.50 to $1.00
======
</TABLE>

16. SUPPLEMENTAL CASH FLOW INFORMATION:

<TABLE>
<CAPTION>
SEPTEMBER 27,
NINE MONTHS 1993
ENDED YEAR ENDED (INCEPTION) TO
OCTOBER 31, JANUARY 31, JANUARY 31,
1995 1995 1995
----------- ----------- --------------
<S> <C> <C> <C>
Interest paid............................. $21,078 $ 21,640 $ 0
Income taxes paid......................... $ 0 $ 0 $ 0
Non-cash investing and financing
activities:
Exchange of accounts receivable for note
payable -- acquisition.................. $50,000 $ -- $ --
Issuance of preferred stock for debt...... 23,500 54,000 --
Acquisition of Sammy's for assumption of
debt.................................... -- 441,000
Issuance of common stock for assets....... -- -- 277,000
Goldberg assets acquired for assumption
and issuance of debt.................... -- -- 1,035,000
------- --------- ----------
$73,500 $ 495,000 $1,312,000
======= ========= ==========
</TABLE>

17. COMMITMENTS AND CONTINGENCIES:

(a) SAMMY'S FRANCHISING FEES --

During the first sixty months after the Sammy's acquisition, the former
shareholders of the sellers are entitled to receive monthly payments equal to
10% of the single unit franchising fees paid to the Company and, during the
first twelve months after the acquisition and 20% of the fees collected on
international licensing or franchising. At October 31, 1995 $8,100 was due and
payable under this provision.

(b) LEASES --

The Company rents real and personal property under various non-cancelable
leases expiring at various dates through 2003. Certain of the leases include
renewal options and provisions for additional rental payments based on various
formulas such as cost of living adjustments, real estate tax and operating
expense escalations and escalations based on gross revenues. Total rent expense
charged to operations for the nine months ended October 31, 1995 approximated
$166,000. Included in this amount is approximately $7,000 of contingent rental
expense. Total rent expense charged to operations for the year ended January 31,
1995 and the period of September 27, 1993 (inception) to January 31, 1994
approximates $148,000 and $21,000 respectively all of which represented minimum
rental obligations.

F-17
<PAGE> 64

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

17. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)

(b) LEASES -- (CONTINUED)

Minimum annual rental commitments under leases in effect at October 31,
1995 are summarized as follows:

<TABLE>
<CAPTION>
EQUIPMENT
YEAR ENDED OCTOBER 31, REAL ESTATE & OTHER
------------------------------------------------------- ----------- ---------
<S> <C> <C>
1996................................................... $ 134,000 $17,000
1997................................................... 129,000 1,000
1998................................................... 114,000 --
1999................................................... 113,000 --
2000................................................... 80,000 --
Later years............................................ 203,000 --
--------- -------
Total minimum lease payments........................... $ 773,000 $18,000
========= =======
</TABLE>

In connection with the Goldberg acquisition the Company entered into a
consulting agreement which was modified in September of 1994, and further
re-negotiated in October 1995. The modified consulting agreement provides for
monthly consulting fees of $4,333 payable through December 1996, aggregating
$61,000 at October 31, 1995. Goldberg is prohibited from conducting any business
activity in competition with the operations of the Company through December
1996.

(d) EMPLOYMENT AGREEMENTS --

The Company entered into employment contracts with the three principal
former shareholders of Sammy's as part of the acquisition. The employment
contracts provide for annual salaries through December 31, 1996 and include
non-compete covenants through December 31, 1998. The Company's aggregate
obligation for future payments under these agreements was $237,000 at October
31, 1995.

Total compensation expenses under these contracts for the nine months ended
October 31, 1995 and the year ended January 31, 1995 were $170,352 and $74,256,
respectively and have been reflected as deferred acquisition costs on the
accompanying Statement of Operations.

(e) OBLIGATION TO REDEEM PREFERRED STOCK --

The agreements governing the Sammy's and Goldberg's acquisitions contain
provisions under which the Company must redeem shares of convertible preferred
stock. Under the Sammy's agreement 60,000 shares of the Series B Preferred Stock
are redeemable at $5.00 per share within 30 days of a single equity infusion of
more than $1,000,000, and an additional 20,000 shares are redeemable at $5.00
per share within 24 months of an initial public offering. The Goldberg agreement
stipulates that the Company must redeem 40,000 shares of the Series A Preferred
stock at $5.00 per share after an initial public offering of at least
$2,000,000.

18. SUBSEQUENT EVENTS:

In addition to certain subsequent events disclosed above, the following
additional material events have occurred subsequent to the date of these
financial statements.

F-18
<PAGE> 65

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OCTOBER 31, 1995

18. SUBSEQUENT EVENTS -- (CONTINUED)

(a) PRIVATE PLACEMENTS --

Subsequent to October 31, 1995, the Company completed private placements
(the "Private Placements") of its common stock pursuant to which it received an
aggregate of $2,413,986, net of expenses of $48,514. Included in the proceeds
was property consisting of two retail bagel stores in the final stages of
construction, valued at $410,000. The proceeds from the Private Placements to
date have been used to (i) fund the Company's operations; (ii) the voluntary
redemption of shares of the Company's Preferred Stock; (iii) reduce trade
payables; and (iv) acquire capital assets. The Company intends to apply the
remainder of these proceeds for working capital purposes.

(b) PREFERRED STOCK TRANSACTIONS --

The Company sold 100,000 shares of Series B Preferred Stock to the former
owners of Sammy's for consideration of $1.00 per share. In connection with this
transaction the Company's obligation to redeem Series B Preferred Stock within
24 months an initial public offering increased from 20,000 shares to 60,000
shares.

The Company voluntarily redeemed 416,997 shares of Series C Preferred
Stock. Of this total, 401,997 shares were redeemed from an affiliate, Blue Chip,
for consideration of $1.00 per share, equivalent to the price Blue Chip paid to
acquire the shares. This was done in connection with the financial
reorganization of Blue Chip.

(d) STOCK OPTIONS --

The Company granted options to purchase 160,000 shares of the Company's
common stock; 60,000 options where granted to various suppliers and 100,000
options were granted to the Company's Chief Financial Officer. The options are
exercisable $1.00 per share and expire in 2001.

F-19
<PAGE> 66

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
APRIL 30,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash.................................................................... $ 896,132 $ 21,339
Accounts and notes receivable, net of allowances for possible losses of
$15,000 in 1996 and 1995............................................... 374,555 94,782
Inventories............................................................. 97,485 170,664
Prepaid expenses........................................................ 111,500 30,000
----------- -----------
Total Current Assets............................................... 1,479,672 316,785
Property, Plant and Equipment, at cost less accumulated depreciation and
amortization of $197,426 and $162,868 respectively........................ 909,176 712,590
Intangible Assets, net of accumulated amortization of $294,522 and $165,254
respectively.............................................................. 277,934 523,454
Acquisition Costs, net of accumulated amortization of $50,899 and $29,744
respectively.............................................................. 54,852 76,007
Security Deposits........................................................... 30,435 28,066
Investment in Jutland Enterprises Inc.'s common stock....................... -- --
----------- -----------
Total Assets....................................................... $ 2,752,069 $ 1,656,902
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Notes payable -- acquisition............................................ $ -- $ 150,000
Accounts payable and accrued expenses................................... 824,866 763,778
Capitalized lease obligations -- current maturities..................... 73,377 92,074
Loans from stockholders -- current maturities........................... 14,425 56,038
Current maturities of long-term debt.................................... 4,746 13,254
----------- -----------
Total Current Liabilities.......................................... 917,414 1,075,144
Capitalized lease obligations............................................... 48,933 138,092
Loans from stockholders..................................................... 8,884 29,738
Deferred tax liability...................................................... -- 78,000
Long-term debt.............................................................. -- 3,874
----------- -----------
Total Liabilities.................................................. 975,231 1,324,848
----------- -----------
Redeemable preferred stock, no par value Series A, 40,000 shares issued and
outstanding, Series B, 120,000 shares issued and outstanding.............. 707,540 --
----------- -----------
Commitments and contingencies
Common stock, no par value, 10,000,000 shares authorized, 3,735,200 and
1,886,300 shares issued and outstanding respectively...................... 3,360,136 874,400
Non-redeemable convertible preferred stock, no par value, Series A, 190,000
shares authorized, 150,000 and 120,000 shares issued and outstanding
respectively; Series B, 180,000 shares authorized, 60,000 shares and
80,000 shares issued and outstanding respectively; Series C, 1,600,000
shares authorized, 982,503 and 1,025,000 shares issued and outstanding
respectively.............................................................. 393,043 656,600
Other Stockholders' Equity:
Additional paid-in capital.............................................. -- 365,000
Accumulated deficit..................................................... (2,683,881) (1,563,946)
----------- -----------
1,069,298 332,054
----------- -----------
Total Liabilities and Stockholders' Equity.............................. $ 2,752,069 $ 1,656,902
=========== ===========
</TABLE>

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

F-20
<PAGE> 67

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED APRIL THREE MONTHS ENDED APRIL THREE MONTHS ENDED
30, 30, JANUARY 31,
------------------------ ------------------------ -----------------------
1996 1995 1996 1995 1996 1995
----------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Retail store sales............ $ 646,317 $1,045,246 $ 340,325 $ 514,581 $ 305,992 $ 530,665
Franchising revenue........... 434,439 -- 161,990 -- 272,449 --
Equipment and product sales... 281,999 289,481 139,516 145,682 142,483 143,799
----------- ---------- ----------- ---------- ---------- ----------
1,362,755 1,334,727 641,831 660,263 720,924 674,464
----------- ---------- ----------- ---------- ---------- ----------
Operating expenses:
Cost of Sales -- equipment
costs and store operations,
exclusive of depreciation
and amortization............ 735,268 1,147,907 407,583 582,762 327,685 565,145
Selling, general and
administrative expenses..... 888,430 728,223 471,153 272,537 417,277 455,686
Depreciation and
amortization................ 126,592 154,696 67,397 71,479 59,195 83,217
Deferred acquisition costs.... 113,568 113,568 56,784 56,784 56,784 56,784
----------- ---------- ----------- ---------- ---------- ----------
1,863,858 2,144,394 1,002,917 983,562 860,941 1,160,832
----------- ---------- ----------- ---------- ---------- ----------
Operating loss.................... (501,103) (809,667) (361,086) (323,299) (140,017) (486,368)
Interest expense.................. 23,051 46,989 9,863 18,001 13,188 28,988
----------- ---------- ----------- ---------- ---------- ----------
Net loss.......................... $ (524,154) $ (856,656) $ (370,949) $ (341,300) $ (153,205) $ (515,356)
=========== ========== =========== ========== ========== ==========
Adjusted net loss for net loss per
common share calculation:
Net loss...................... $ (524,154) $ (856,656) $ (370,949) $ (341,300)
Increase in carrying amount of
redeemable preferred
stock....................... (707,540) -- (707,540) --
----------- ---------- ----------- ----------
Net loss attributable to
common stock................ $(1,231,694) $ (856,656) $(1,078,489) $ (341,300)
=========== ========== =========== ==========
Shares outstanding:
Weighted average number of
common shares outstanding... 1,886,905 2,305,201 1,887,523 1,886,500 1,886,300 2,710,437
Additional shares............. 1,891,070 1,891,070 1,891,070 1,891,070 1,891,070 1,891,070
----------- ---------- ----------- ---------- ---------- ----------
Adjusted shares outstanding....... 3,777,975 4,196,271 3,778,593 3,777,570 3,777,370 4,601,507
=========== ========== =========== ========== ========== ==========
Net loss per common share......... $ (0.33) $ (0.20) $ (0.29) $ (0.09) $ (0.04) $ (0.11)
=========== ========== =========== ========== ========== ==========
</TABLE>

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

F-21
<PAGE> 68

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30,
-----------------------
1996 1995
---------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss........................................................ $ (524,154) $(856,656)
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities:
Depreciation and amortization.............................. 126,592 154,696
Provision for possible losses on accounts receivable....... -- (35,000)
Decrease (increase) in:
Accounts receivable................................... (184,738) 129,563
Inventories........................................... 26,164 21,780
Receivable from sale of common stock.................. 150,000
Prepaid expenses...................................... (86,249) (20,000)
Security deposits..................................... (200) (12,551)
Increase (decrease) in:
Accounts payable and accrued expenses................. (202,355) 278,611
---------- ---------
Total adjustments................................ (320,786) 667,099
---------- ---------
Net cash (used in) operating activities.......... (844,940) (189,557)
---------- ---------
Cash Flows from Investing Activities:
Capital expenditures............................................ (33,109) (86,789)
---------- ---------
Net cash (used in) investing activities.................... (33,109) (86,789)
---------- ---------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock.......................... 2,003,986 --
Proceeds from issuance of preferred stock....................... 200,000 200,000
Redemption of preferred stock................................... (416,997) (100,000)
Proceeds from capitalized lease obligations..................... -- 17,844
Payments of capitalized lease obligations....................... (37,845) (38,840)
Proceeds from loans from stockholders........................... -- 20,000
Payments of loans from stockholders............................. (25,781) (31,223)
Payments of long-term debt...................................... (2,885) (10,357)
---------- ---------
Net cash provided by financing activities.................. 1,720,478 57,424
---------- ---------
Net decrease in cash................................................. 842,429 (218,922)
Cash and cash equivalents -- beginning of period..................... 53,703 240,261
---------- ---------
Cash and cash equivalents -- end of period........................... $ 896,132 $ 21,339
========== =========
Supplemental information: Interest expense paid...................... $ 22,856 $ 21,640
Corporate income taxes paid.............. $ 0 $ 0

Supplemental schedule of non-cash investing and financing activities:
Non-cash transactions consisted of the exchange of common stock
for capital assets valued at $410,000 in 1996.
</TABLE>

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

F-22
<PAGE> 69

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON STOCK, NON-REDEEMABLE PREFERRED
STOCK AND OTHER STOCKHOLDERS' EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED APRIL 30, 1996
---------------------------------------------------------------------------------------------
COMMON STOCK PREFERRED STOCK ADDITIONAL
----------------------- ----------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
--------- ---------- --------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1995..... 1,891,300 $ 876,150 1,639,500 $1,022,580 $365,000 $(2,159,727) $ 104,003
Six Months Ended April 30, 1996:
Conversion of preferred stock to
common stock.................. 70,000 70,000 (70,000) (70,000) -- -- 0
Common stock issuance........... 1,773,900 2,413,986 -- -- -- -- 2,413,986
Preferred stock issuance........ -- -- 200,000 200,000 -- -- 200,000
Preferred stock redemption...... -- -- (416,997) (416,997) -- -- (416,997)
Increase in carrying amount of
redeemable preferred stock.... -- -- (160,000) (342,540) (365,000) -- (707,540)
Net Loss........................ -- -- -- -- -- (524,154) (524,154)
--------- ---------- --------- ---------- --------- ----------- ----------
Balance at April 30, 1996....... 3,735,200 $3,360,136 1,192,503 $ 393,043 $ 0 $(2,683,881) $1,069,298
========= ========== ========= ========== ======== =========== ==========

<CAPTION>
FOR THE SIX MONTHS ENDED APRIL 30, 1995
---------------------------------------------------------------------------------------------
COMMON STOCK PREFERRED STOCK ADDITIONAL
----------------------- ----------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
--------- ---------- --------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1994..... 2,711,300 $1,277,000 300,000 $ 54,000 $365,000 $ (607,290) $1,088,710
Six Months Ended April 30, 1995:
Conversion of common stock to
preferred stock............... (825,000) (402,600) 825,000 402,600 -- -- 0
Preferred stock issuance........ -- -- 200,000 200,000 -- -- 200,000
Preferred stock redemption...... -- -- (100,000) -- -- (100,000) (100,000)
Net Loss........................ -- -- -- -- -- (856,656) (856,656)
--------- ---------- --------- ---------- --------- ----------- ----------
Balance at April 30, 1995....... 1,886,300 $ 874,400 1,225,000 $ 656,600 $365,000 $(1,563,946) $ 332,054
========= ========== ========= ========== ======== =========== ==========
</TABLE>

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

F-23
<PAGE> 70

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
APRIL 30, 1996

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) BASIS OF PRESENTATION --

The consolidated financial statements included herein have been prepared by
All American Food Group, Inc. and subsidiaries (the "Company"). In the opinion
of management, the information furnished reflects all adjustments necessary for
a fair presentation of the results for the reported interim periods. Results of
operations for interim periods are not necessarily indicative of results for the
full year.

(b) ORGANIZATION --

The Company was incorporated under the name Jutlands Food Group, Inc. on
September 27, 1993 under the laws of the State of New Jersey. On October 20,
1993, the Company acquired substantially all of the assets of Howberg Bakery
Equipment Co., Inc., Bagels of New Milford, Inc. and Goldberg's Famous Bagels of
Orangeburg, Inc., hereinafter referred to as the "Goldberg acquisition." The
assets acquired consisted of a bagel equipment business and two retail bagel
stores. On September 29, 1994, the Company acquired all of the outstanding stock
of four interrelated corporations all conducting business under the tradename
"Sammy's New York Bagels," hereinafter referred to as the "Sammy's acquisition."
The acquisition consisted of three certified kosher retail bagel stores and a
bagel production facility, all operating under rabbinical supervision. Both of
these acquisitions have been accounted for under the purchase method of
accounting in accordance with Accounting Principle Board Opinion No. 16.
Effective October 31, 1995 the company changed its fiscal year to October 31st.
The Company changed its name to All American Food Group, Inc. on October 24,
1995.

The Company is principally engaged in the development of a retail chain of
franchised bagel stores, including the operation of a certain number of
Company-owned stores for training and marketing and promotional activities, and
the distribution of bagel bakery equipment and related products to the franchise
system. The Company markets both single unit and market development franchise
agreements. The Company, in the normal course of business, also markets stores
it acquires to individuals who operate as franchisees. The Company franchises
its concepts under the names "Goldberg's Original Old World Bagels" and "Sammy's
New York Bagels."

The Company no longer actively engages in the sales of bagel bakery
equipment to independent retail operators.

(d) PRINCIPLES OF CONSOLIDATION --

The consolidated financial statements include the accounts of All American
Food Group, Inc. and its subsidiaries. All significant inter-company balances
and transactions have been eliminated in consolidation.

(e) CASH AND CASH EQUIVALENTS --

At April 30, 1996 cash represented monies on deposit in financial
institutions.

(f) CONCENTRATION OF CREDIT RISK --

The Company maintains cash and cash equivalents with various financial
institutions. Company policy is designed to limit exposure with any one
institution. Credit risk with respect to trade accounts and notes receivable is
minimal, due to the terms under which the Company transacts its business.

F-24
<PAGE> 71

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

(g) INVENTORIES --

Inventories are stated at the lower of cost (first-in, first-out ("FIFO"))
or market.

(h) PROPERTY, PLANT AND EQUIPMENT --

(i) INTANGIBLE ASSETS --

The values assigned to intangible assets are based on an independent
appraisal and management's estimates, and are being amortized on a straight-line
basis over their estimated useful lives, which range from three and one-half to
five years.

(j) ACQUISITION COSTS --

Acquisition costs represent fees incurred in the Goldberg and Sammy's
acquisitions are being amortized over their useful lives of five years.

(k) VALUATION OF NON-CURRENT INVESTMENTS --

The non-current portfolio of securities represented by the investment in
the common stock of Jutland Enterprises Inc. ("Enterprises") is carried at zero
value. Currently there is no market for the shares. Any gain realized from the
disposition of these securities will be recognized at the time of disposition.

(l) FRANCHISE REVENUE RECOGNITION --

Franchise revenue includes the sale of single unit franchises, the sale of
market development franchises and ongoing royalty and advertising fees.

Single unit franchise agreements provide for payment of a franchise fee, a
weekly royalty and a weekly advertising fund contribution based on gross sales.
The Company's material obligations under the terms of single unit franchise
agreements are assisting in the site selection and training of the franchisee.
Initial franchise fees from these agreements are recognized as revenues when all
material obligations have been performed. As of April 30, 1996, all material
obligations under then-outstanding single unit franchise agreements had been
performed.

Market development agreements provide for the payment by the market
developer based on the population of the territory covered by such market
development agreement. Franchise fees from market development agreements are
recognized as revenue by the Company when all material obligations required of
the Company have been performed. As of April 30, 1996, all material obligations
under then-outstanding market development agreements had been performed.

The market developer is responsible for the site selection, training and
ongoing support for each single unit franchise sold in his territory. The market
developer receives one-half (50%) of all fees collected

F-25
<PAGE> 72

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

(l) FRANCHISE REVENUE RECOGNITION -- (CONTINUED)

from single unit franchises in his territory. The Company recognized revenue and
associated market developer expense from single unit franchises sold by the
market developer when a location has been found for the franchisee, and the
Company has no further obligations.

The Company recognizes franchise royalty revenue when it is earned.

Substantially all franchise revenue for the six months ended April 30,
1996, ($415,000) represented initial non-recurring franchise fees. Ongoing
royalties for the period amounted to $19,439. No franchise revenue was
recognized during the six months ended April 30, 1995.

(m) NET LOSS PER SHARE --

Net loss per common share was determined by dividing net loss, as adjusted,
by the weighted average number of common shares outstanding, as adjusted. The
net loss for the six months ended April 30, 1996 was adjusted by an increase of
$707,540 representing the increase in the carrying amount of redeemable
preferred stock. (See Note 11). The weighted average number of common shares
outstanding was adjusted by an increase of 1,891,070 shares for all periods
presented. These additional shares represent the number of shares and options
issued within the twelve months prior to May 3, 1996, when the Company filed a
registration statement for an initial public offering (IPO), that were issued
for consideration per share or at an exercise per share less than the
anticipated IPO price of $6.00 per share. The treasury stock method has been
used to determine the net increase in the number of shares outstanding. As such
the computation of fully diluted net loss per share was anti-dilutive in each of
the periods presented; therefore, the amounts reported for primary and fully
diluted loss are the same.

(n) LONG-LIVED ASSETS --

The Company retroactively adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
effective February 1, 1994. The Company records impairment losses on long-lived
assets used in operations, including goodwill and intangible assets, when events
and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets. The adoption of SFAS No. 121 had no
material impact on the Company's financial condition or results of operations
for the six months ended April 30, 1996 and 1995.

(o) STOCK OPTIONS --

F-26
<PAGE> 73

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

2. INVENTORIES:

Inventories at April 30, consist of the following:

<TABLE>
<CAPTION>
1996 1995
------- --------
<S> <C> <C>
Food and paper products.................................. $39,872 $ 16,000
Equipment and parts...................................... 57,613 154,664
------- --------
Total inventories........................................ $97,485 $170,664
======= ========
</TABLE>

3. FIXED ASSETS:

Fixed assets and accumulated depreciation at April 30, consists of the
following:

<TABLE>
<CAPTION>
ESTIMATED
1996 1995 USEFUL LIVES
---------- --------- -------------
<S> <C> <C> <C>
Machinery and equipment -- retail
stores............................... $ 492,973 $ 555,715 7 years
Office furniture and warehouse
equipment............................ 171,500 140,876 7 years
Trucks and delivery vehicle............ 26,370 26,370 3 to 5 years
Leasehold improvements -- retail
stores............................... 233,931 152,497 Term of lease
Construction in progress............... 181,828 --
---------- ---------
1,106,602 875,458
Accumulated depreciation............... (197,426) (162,868)
---------- ---------
Fixed assets net of accumulated
depreciation......................... $ 909,176 $ 712,590
========== =========
</TABLE>

At April 30, 1996 certain debt is secured by approximately $259,000 of
fixed assets.

4. INTANGIBLE ASSETS:

Intangible assets and accumulated amortization at April 30, are as
following:

<TABLE>
<CAPTION>
ESTIMATED
1996 1995 USEFUL LIVES
--------- --------- ------------
<S> <C> <C> <C>
Kosher certification....................... $ 145,771 157,771 5 years
Non-compete agreements..................... 192,507 214,507 4 years
Favorable lease agreement.................. 6,250 22,500 3 1/2 years
Customer lists............................. 74,432 93,434 4 years
Proprietary formula........................ 107,338 121,338 5 years
Retail store license....................... -- 27,000 9 1/2 years
Drawings and blueprints.................... 46,158 52,158 5 years
--------- ---------
Total intangible assets.................... 572,456 688,708
Accumulated amortization................... (294,522) (165,254)
--------- ---------
Total intangible assets, net............... $ 277,934 $ 523,454
========= =========
</TABLE>

F-27
<PAGE> 74

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

5. ACQUISITION COSTS:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Acquisition costs....................................... $105,751 $105,751
Accumulated amortization................................ (50,899) (29,744)
-------- --------
Net acquisition costs................................... $ 54,852 $ 76,007
======== ========
</TABLE>

6. INVESTMENT IN JUTLAND ENTERPRISES INC. COMMON STOCK:

As part of its initial capitalization, the Company acquired 400,000 shares
of Enterprises common stock from Andrew Thorburn, the Chief Executive Officer of
Enterprises and subsequently the Chief Executive Officer of the Company.
Consistent with the transferor's cost basis, this stock has been assigned no
value by the Company.

The Company received 340,000 additional shares of Enterprises in separate
transaction involving Blue Chip Computerware, Inc., and in the re-negotiations
with Howard Goldberg. Due to the absence of a readily ascertainable market value
no value has been assigned to these shares.

7. EQUIPMENT LEASE OBLIGATIONS:

The Company and its subsidiaries are obligated under various equipment
lease arrangements which have been capitalized in the accompanying financial
statements. Property, plant, and equipment presented on the consolidated balance
sheet includes approximately $259,000 of assets capitalized under these leasing
arrangements. Accumulated depreciation recorded on these assets approximated
$65,000 at April 30, 1996. These lease obligations are due in monthly
installments including interest expense at annual interest rates ranging from
8.3% to 24.5%. The lease obligations are payable through dates ranging from June
1996 through November 1999.

The future minimum payments required under the lease arrangements with
their present value at April 30, 1996 are as follows:

<TABLE>
<CAPTION>
PRESENT INTEREST MINIMUM
YEAR ENDED APRIL 30, VALUE EXPENSE PAYMENTS
----------------------------------------------- -------- ------- --------
<S> <C> <C> <C>
1997.................................... $ 73,377 $13,988 $ 87,365
1998.................................... 40,308 5,173 45,481
1999.................................... 8,625 368 8,993
-------- ------- --------
$122,310 $19,529 $141,839
======== ======= ========
</TABLE>

8. LOANS FROM STOCKHOLDERS:

F-28
<PAGE> 75

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

8. LOANS FROM STOCKHOLDERS -- (CONTINUED)

The future minimum payments required under the loans, with their present
value at April 30, 1996, are as follows:

<TABLE>
<CAPTION>
PRESENT INTEREST MINIMUM
YEAR ENDED APRIL 30, VALUE EXPENSE PAYMENTS
-------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
1997....................................... $14,425 $1,083 $15,508
1999....................................... 5,433 303 5,736
1998....................................... 3,451 79 3,530
------- ------ -------
$23,309 $1,465 $24,774
======= ====== =======
</TABLE>

9. LONG-TERM DEBT:

Long-term debt at April 30, is summarized as follows:

<TABLE>
<CAPTION>
1996 1995
------ -------
<S> <C> <C>
Note payable to Tilden Financial Corporation payable in
monthly installments of $1,521 including interest,
through October 1995, secured by equipment............... $ -- $ 9,030
Note payable to bank payable in monthly installments of
$405 plus interest at 1.5% above the prime rate, through
February 1997, secured by equipment...................... 3,532 8,098
Note payable to individual in monthly installments of $153
including interest at the annual rate of 12.5%, payable
through September 1996................................... 1,214 --
------ -------
4,746 17,128
Less current portion....................................... 4,746 13,254
------ -------
Long-term debt............................................. $ -- $ 3,874
====== =======
</TABLE>

10. INCOME TAXES:

The Company has adopted SFAS No. 109 and is a C Corporation subject to
federal and state income taxes. The Company has changed its fiscal year end to
October 31 for tax purposes. At April 30, 1996, there were consolidated net
operating loss carryforwards of approximately $750,000 and $397,000 expiring in
2010 and 2011, respectively. Due to the current period operating loss, no amount
has been provided for corporate income taxes.

In accordance with SFAS No. 109, the difference between the tax bases and
the assigned value of the assets for financial reporting purposes of
approximately $525,000 resulting from the Goldberg and Sammy's acquisitions will
not result in taxable or deductible amounts in future years, and no deferred
asset or liability has been recognized because of the magnitude of the net
operating loss carryforward. In the event the Company generates taxable income
in excess of the net operating loss carryforward, a deferred tax liability will
be recognized.

F-29
<PAGE> 76

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

11. REDEEMABLE AND NON-REDEEMABLE PREFERRED CONVERTIBLE PREFERRED STOCK:

The Company issued 190,000 shares of Series A and 180,000 shares of Series
B Convertible Preferred Stock in connection with the Goldberg's and Sammy's
acquisitions, respectively. The Certificate of Designation stipulates that
certain of these shares are redeemable if certain events occur as follows:

Series A Shares:

In the event that the Company completes an underwritten initial public
offering of its common stock yielding net proceeds to the Company (after
deduction of offering costs, commissions, attorneys fees, or other costs and
expenses in connection with such offering) of more than $2,000,000, then within
30 days following the closing of such offering, the Company will offer to redeem
the lesser of 40,000 shares or the number of shares of Series A Preferred Stock
then outstanding, at a redemption price of $5.00 per share. The holder of Series
A Preferred Stock can accept the offer or can convert the shares held into an
equal number of shares of common stock of the Company.

Series B Shares:

In the event that the Company completes, in a single transaction, a capital
infusion of more than $1,000,000 (net of any offering costs, commissions,
attorneys fees, or other costs and expenses in connection with such equity
infusion), then within 30 days following the closing of such offering, the
Company shall offer to redeem the lesser of 60,000 shares or the number of
shares of Series B Preferred Stock then outstanding, at a redemption price of
$5.00 per share. The holder of Series B Preferred Stock can accept the offer or
can convert the shares held into an equal number of shares of the common stock
of the Company.

In the event that the Company completes an underwritten initial public
offering of its common stock and any shares of Series B Preferred Stock remain
outstanding 24 months following the effective date of the registration statement
filed with the Securities and Exchange Commission in respect of such initial
public offering, then within 3 days following the expiration of such 24 month
period, the Company shall offer to redeem the lesser of 60,000 shares, or the
number of shares of Series B Preferred Stock then outstanding, at a redemption
price of $5.00 per share. The holder of Series B Preferred Stock can accept the
offer or can convert the shares held into an equal number of shares of the
common stock of the Company.

At April 30, 1996 the present value of the amount necessary to redeem the
maximum number of shares of Series A and Series B Convertible Preferred Stock
has been reflected in the accompanying consolidated financial statements as
Redeemable Preferred Stock, Series A and Series B. In the calculation of these
amounts, it has been assumed the Company will complete its initial public
offering on July 31, 1996.

The following presents the previous carrying amounts of the Series A and
Series B Preferred Stock, the carrying amount April 30, 1996, the accretion
(increase in the carrying amount) for the six months ended April 30, 1996 and
the redemption amounts for the preferred shares. At April 30, 1996, the
accretion created a charge to paid in capital of $365,000 and a charge to
non-redeemable preferred stock of $342,540.

<TABLE>
<CAPTION>
ACCRETION FOR
CARRYING AMOUNT THE
CARRYING AMOUNT AT APRIL 30, SIX MONTHS ENDED REDEMPTION
AT OCTOBER 31, 1995 1996 APRIL 30, 1996 AMOUNT
------------------- --------------- ---------------- ----------
<S> <C> <C> <C> <C>
Series A................... $54,000 $ 192,196 $192,196 $200,000
Series B................... -0- $ 515,344 $515,344 $600,000
------- --------- -------- --------
$54,000 $ 707,540 $707,540 $800,000
======= ========= ======== ========
</TABLE>

F-30
<PAGE> 77

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

11. REDEEMABLE AND NON-REDEEMABLE PREFERRED CONVERTIBLE PREFERRED
STOCK -- (CONTINUED)

Series B Shares -- (continued)

The maturity schedule of the redemptions is as follows:

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, AMOUNT
------------------------------------------------------------------ --------
<S> <C>
1997....................................................... $500,000
1999....................................................... 300,000
--------
800,000
Less deferred interest..................................... 92,460
--------
Carrying amount at April 30, 1996.......................... $707,540
========
</TABLE>

Series C Preferred Stock:

The Company has also issued a total of 982,503 shares of Series C
Non-redeemable Convertible Preferred stock in a series of transactions. The
Certificate of Designation for this series provides that the Company may, at its
sole option, redeem all or part of the stock for $5.00 a share, subject to the
holder's election to convert the shares into an equal number of common shares of
the Company. The shares have no conditions under which the Company must redeem
all or portion of theses shares.

As discussed in Note 12, Related Party Transactions, the Company agreed to
a voluntary redemption of 416,997 shares of this stock during the six months
ended April 30, 1996. The Company does not intend to voluntarily redeem any
additional shares of non-redeemable preferred stock.

12. RELATED PARTY TRANSACTIONS:

As described above, during the six months ended April 30, 1996 the Company
voluntarily redeemed 416,997 shares of Series C Preferred Stock. Of this total
401,997 shares were redeemed from an affiliate, Blue Chip Computerware, Inc.,
for consideration of $1.00 per share, equivalent to the price Blue Chip paid to
acquire the shares. This was done in connection with the financial
reorganization of Blue Chip.

13. STOCK OPTIONS:

The Company has granted options to purchase 240,000 shares of the Company's
common stock, consisting of 140,000 options where granted to various suppliers
and 100,000 options were granted to the Company's Chief Financial Officer. The
options are exercisable at prices ranging from $.50 to $1.00 per share and
expire five years after they were issued on dates ranging from January 31, 2000
through January 31, 2001.

F-31
<PAGE> 78

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

13. STOCK OPTION -- (CONTINUED)

The options are exercisable at any time during the period they are
outstanding. The following summarized the activity during the periods presented.

<TABLE>
<CAPTION>
OPTION PRICE
SHARES PER SHARE
------- ----------------
<S> <C> <C>
Options outstanding at February 1, 1995............ None
Granted....................................... 30,000 $0.50
-------
Options outstanding at April 30, 1995.............. 30,000 $0.50
Granted....................................... 50,000 $1.00
-------
Options outstanding at October 31, 1995............ 80,000 $0.50 to $1.00
Granted....................................... 160,000 $1.00
-------
Options outstanding at April 30, 1996.............. 240,000 $0.50 to $1.00
=======
</TABLE>

14. COMMITMENTS AND CONTINGENCIES:

(a) SAMMY'S FRANCHISING FEES --

During the first sixty months after the Sammy's acquisition, the former
shareholders of the sellers are entitled to receive monthly payments equal to
10% of the single unit franchising fees paid to the Company, and during the
first twelve months after the acquisition and 20% of the fees collected on
international licensing or franchising. At April 30, 1996 there was no
outstanding liability under this provision.

(b) LEASES --

The Company rents real and personal property under various non-cancelable
leases expiring at various dates through 2003. Certain of the leases include
renewal options and provisions for additional rental payments based on various
formulas such as cost of living adjustments, real estate tax and operating
expense escalations and escalations based on gross revenues. Total rent expense
charged to operations approximated $114,000 and $111,000 for the six months
ended April 30, 1996 and 1995, respectively. These amounts included contingent
rental expense of approximately $6,000 and $3,000, respectively.

Minimum annual rental commitments under leases in effect at April 30, 1996
are summarized as follows:

<TABLE>
<CAPTION>
EQUIPMENT
YEAR ENDED APRIL 30, REAL ESTATE & OTHER
------------------------------------------------------ ----------- ---------
<S> <C> <C>
1997........................................... $ 186,000 $10,000
1998........................................... 171,000 --
1999........................................... 160,000 --
2000........................................... 156,000 --
2001........................................... 119,000 --
Later years.................................... 521,000 --
----------- -------
Total minimum lease payments................... $ 1,313,000 $10,000
=========== =======
</TABLE>

F-32
<PAGE> 79

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
APRIL 30, 1996

14. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)

The total compensation expense under these agreements for the six months
ended April 30, 1996 and for the six months ended April 30, 1995 was $113,568
and such amounts have been reflected as deferred acquisition costs on the
accompanying Statement of Operations.

15. PRIVATE PLACEMENTS:

During the six months ended April 30, 1996, the Company completed private
placements (the "Private Placements") of its common stock pursuant to which it
received an aggregate of $2,413,986, net of expenses of $48,514. Included in the
proceeds was property consisting of two retail bagel stores in the final stages
of construction, valued at $410,000. The proceeds from the Private Placements to
date have been used to (i) fund the Company's operations; (ii) the voluntary
redemption of shares of the Company's Preferred Stock; (iii) reduce trade
payables; and (iv) acquire capital assets. The Company intends to apply the
remainder of these proceeds for working capital purposes.

16. SUBSEQUENT EVENTS -- REGISTRATION STATEMENT:

On May 3, 1996, the Company filed a registration statement in connection
with an initial public offering of its common stock with the Securities and
Exchange Commission. The contemplated offering consists of 600,000 shares to be
sold at an initial price of $6.00 a share, through a firm commitment
underwriting by Alexander Wescott & Co., Inc.

F-33
<PAGE> 80

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, BY ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER,
SOLICITATION OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THE PROSPECTUS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Dilution.............................. 13
Use of Proceeds....................... 14
Capitalization........................ 15
Dividend Policy....................... 15
Selected Financial Data............... 16
Management's Discussion and Analysis
or Plan of Operation................ 17
Business.............................. 21
Management............................ 33
Certain Transactions.................. 37
Principal Shareholders................ 38
Description of Securities............. 39
Shares Eligible for Future Sale....... 40
Underwriting.......................... 41
Concurrent Offering................... 42
Legal Matters......................... 43
Experts............................... 43
Additional Information................ 43
Index to Financial Statements......... F-1
</TABLE>

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

Until , 1996 (25 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligations of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.

600,000 SHARES

ALL AMERICAN FOOD GROUP, INC.

COMMON STOCK

------------------------
PROSPECTUS
------------------------

ALEXANDER, WESCOTT & CO., INC.

, 1996

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 81

SUBJECT TO COMPLETION, DATED JULY 10, 1996

ALTERNATIVE PROSPECTUS

1,773,900 SHARES

ALL AMERICAN FOOD GROUP, INC.

COMMON STOCK

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

This Prospectus relates to 1,773,900 shares of the Common Stock, no par
value, of All American Food Group, Inc., a New Jersey corporation (the
"Company"), issued to the holders thereof in private placements by the Company.
The shares of Common Stock referred to above are sometimes referred to herein as
the "Selling Securityholder Securities" and the holders thereof as the "Selling
Securityholders."

The securities offered by the Selling Securityholders pursuant to this
Prospectus may be sold from time to time by the Selling Securityholders or by
their transferees. The distribution of the securities offered hereby by the
Selling Securityholders may be effected in one or more transactions that may
take place on the over-the-counter market, including ordinary brokers'
transactions, privately negotiated transactions or through sales to one or more
dealers for resale of such securities as principals, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated brokerage fees
or commissions may be paid by the Selling Securityholders.

The Selling Securityholders, and intermediaries through whom such
securities are sold, may be deemed underwriters within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation. The Company has agreed to indemnify the
Selling Securityholders against certain liabilities, including liabilities under
the Securities Act.

On the date of this Prospectus, a registration statement under the
Securities Act with respect to an underwritten public offering by the Company
(the "Offering") of 600,000 shares of Common Stock, through Alexander, Westcott
& Co., Inc. (the "Underwriter"), was declared effective by the Securities and
Exchange Commission (the "Commission"). The Company will receive approximately
$2,940,000 in net proceeds from the Offering (assuming no exercise of the
Underwriter's over-allotment option) after payment of underwriting discounts and
commissions and estimated expenses of the Offering. The Company will not receive
any proceeds from the sale of Selling Securityholder Securities by the Selling
Securityholders.

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

THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK AND SUBSTANTIAL DILUTION. INVESTMENT IN THESE SECURITIES SHOULD
BE MADE ONLY BY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. POTENTIAL PURCHASERS SHOULD CAREFULLY CONSIDER THE
MATTERS SET FORTH UNDER "RISK FACTORS" BEGINNING ON PAGE 7.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is , 1996

A-1

<PAGE> 82

SELLING SECURITYHOLDERS

An aggregate of up to 1,773,900 shares of Common Stock may be offered for
resale by the Selling Securityholders.

The following table sets forth certain information with respect to each
Selling Securityholder for whom the Company is registering Common Stock for
resale to the public. The Company will not receive any of the proceeds from the
sale of such securities.

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF
COMMON STOCK OWNED
AND MAXIMUM NUMBER
SELLING SECURITYHOLDERS TO BE SOLD
- ------------------------------------------------------------------------- ------------------
<S> <C>
Alexander Wollman........................................................ 1,000
Allan I. Grossman........................................................ 1,000
Andrew and Denise Halpern................................................ 3,000
Andrew Chitvanni......................................................... 3,000
Andrew Lefkowitz......................................................... 5,000
Angela Rundell........................................................... 10,000
Anita R. Fuller.......................................................... 50,000
Ann and Gary Stanford.................................................... 2,000
Ann Caputo............................................................... 100,000
Anthony and Ellen Goneconti.............................................. 2,400
Anthony G. Foster........................................................ 10,000
Associates in Internal Medicine, Richard E. Handelsman MD, trustee....... 5,000
Austin Depalma........................................................... 2,000
Barbara Levitt Astrowsky................................................. 1,000
Bernard Karmel & Judith M. Gardner (JTWROS).............................. 1,000
Bernhardt Karp........................................................... 2,500
Cal A. Massaro........................................................... 5,000
Carl Anthony Massaro Sr.................................................. 5,000
Carla Massaro and Jodi Schaschl.......................................... 5,000
Catherine Bross.......................................................... 8,000
Charles Glassman, MD..................................................... 2,000
Charles Mayer............................................................ 4,000
Christopher W. Eni....................................................... 11,500
Cindy Eni Yingling....................................................... 11,500
Craig Nice............................................................... 18,750
Dan Cortigiano........................................................... 7,000
David and Lorraine Kiornblatt............................................ 4,800
David and Marlene E. Dal Santo........................................... 15,000
Dee Fornaro.............................................................. 1,800
Dietz & Watson Inc. Union Employee Pension Plan.......................... 6,000
Dietz & Watson Inc. Pension Plan......................................... 11,500
Dr. Richard Saffran...................................................... 5,000
Edward and Therese Malone................................................ 4,800
Eleonore L. Giacchino and George E. Giacchino............................ 9,000
Eleven Congers Inc....................................................... 91,100
Elliot Leffel............................................................ 3,000
Eugene Chitvanni......................................................... 61,000
Frank Tarantino.......................................................... 3,000
George Muraski........................................................... 1,000
George Watson............................................................ 2,500
Gerald A. Bardeson....................................................... 10,000
</TABLE>

A-2
<PAGE> 83

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF
COMMON STOCK OWNED
AND MAXIMUM NUMBER
SELLING SECURITYHOLDERS TO BE SOLD
- ------------------------------------------------------------------------- ------------------
<S> <C>
Gerald Gedney............................................................ 5,000
Glenn and Merilag Mendoza................................................ 2,000
Gregory S. Vojonvic...................................................... 8,500
Guy McNeil............................................................... 10,000
Harold Greenberg......................................................... 25,000
Helen A. Pappas.......................................................... 10,000
Helga Wollman............................................................ 1,000
Henry Bareket............................................................ 2,000
Herbert L. and Francine Wilson........................................... 5,000
Markan Associates........................................................ 18,000
Howard Paul Cagen........................................................ 2,500
Irvin R. Goldstein....................................................... 2,500
James A. Ashbaugh........................................................ 2,000
James B. Yates........................................................... 150,000
James L. Benjamin........................................................ 5,000
Jay S. Youngerman........................................................ 5,000
Jeanne E. Harvey......................................................... 1,250
Joan H. Facelle M.D. Money Purchase Plan DTD 10-7-89..................... 8,000
Joan H. Facelle FBO Joan H. Facelle IRA.................................. 15,000
Joan Kalish.............................................................. 5,000
John Fitzpatrick, MD..................................................... 1,000
John Mocio............................................................... 1,000
John Mocio, Jr........................................................... 500
John W. and Valerie A. Chitvanni......................................... 10,000
Joseph A. and Sonia E. Conti............................................. 10,000
Joseph Zampella.......................................................... 100,000
Kenneth L. Terminini and Diane P. Cowell................................. 1,000
Kenneth S. Kopchik....................................................... 2,500
Klarberg Raiola and Associates........................................... 5,000
Larry Laimo.............................................................. 28,040
Lee Purser............................................................... 5,000
Lisker Group............................................................. 71,250
Louis J. Eni............................................................. 11,500
Louis Starace............................................................ 3,000
Lynette S. Bardeson...................................................... 10,000
M&A Investment Partnership............................................... 10,000
Marc and Jodi Weintraub.................................................. 5,000
Maria Tina Ursini........................................................ 13,000
Mario Caputo............................................................. 100,000
Mark Albahary............................................................ 4,000
Mark J. Meagher.......................................................... 10,000
Mary Anne Riordan........................................................ 10,000
Michael Brennock......................................................... 47,400
Michael Innerfield MD.................................................... 4,800
Michael J. and Adeline Brennock.......................................... 100,000
Michael J. Bellich....................................................... 1,200
Myrna Mirow.............................................................. 12,500
Napoli Assurance Co...................................................... 15,000
Nelli and Illya Rabukhin................................................. 1,000
</TABLE>

A-3
<PAGE> 84

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF
COMMON STOCK OWNED
AND MAXIMUM NUMBER
SELLING SECURITYHOLDERS TO BE SOLD
- ------------------------------------------------------------------------- ------------------
<S> <C>
Nickolas Farese.......................................................... 1,000
Pamela D. and Thomas J. Chiatroni........................................ 1,000
Patricia and Raymond Pistey Sr........................................... 3,900
Patricia M. Gedney....................................................... 5,000
Ramapo Valley Surgical Assoc. Retirement Trust DTD 10-1-89 FBO Bobb
Vladeck................................................................ 4,000
Ramapo Valley Surgical Assoc. Retirement Trust DTD 10-1-89 FBO Thomas L.
Facelle IRA............................................................ 20,000
Regina and Joseph Matties................................................ 1,000
Richard Bellich.......................................................... 5,000
Rick Stockton............................................................ 5,000
Riry Muhlrad............................................................. 4,800
Robert and Janice Rosenberg.............................................. 5,000
Robert E. Riodan and Francis A. Carille.................................. 25,000
Robert Goldberg, MD...................................................... 4,000
Rosemary Mocio........................................................... 32,035
Charles Rosenberg........................................................ 12,500
Ruth Dietz Eni........................................................... 11,500
Sandra K. and Gerald D. Bardeson......................................... 20,000
Sandra Silvia............................................................ 100,000
Scott Minuto............................................................. 2,000
Sheila E. Stein.......................................................... 10,000
Stephen and Lauri Hill................................................... 1,200
Steven and Janine Kolinsky............................................... 2,925
Steven Kolinsky and Stephen Hill......................................... 10,000
Sushi Bhardwaj........................................................... 2,000
Terri Shechtman.......................................................... 25,000
The Restoration Group.................................................... 15,250
Thomas F. and Carolyn L. O'Rourke........................................ 3,000
Thomas L. Bumgardner..................................................... 7,000
Thomas L. Facelle Trustee FBO Thomas L. Facelle IRA...................... 15,000
Thomas L. Facelle, MD.................................................... 9,500
Thomas W. Bardeson....................................................... 10,000
Timothy E. Hibsman....................................................... 11,700
Timothy J. Riordan and Sheila O'Neill Riordan............................ 5,000
Victor D'Albora.......................................................... 1,000
</TABLE>

A-4
<PAGE> 85

PLAN OF DISTRIBUTION

The sale of the Selling Securityholder Securities by the Selling
Securityholders may be effected from time to time in transactions (which may
include block transactions by or for the account of the Selling Securityholders)
in the over-the-counter market or in negotiated transactions, through the
writing of options on the securities, a combination of such methods of sale or
otherwise. Sales may be made at fixed prices which may be changed, at market
prices prevailing at the time of sale or at negotiated prices.

The Selling Securityholders may effect such transactions by selling their
securities directly to purchasers, through broker-dealers acting as agents for
the Selling Securityholders or to broker-dealers who may purchase shares as
principals and thereafter sell the securities from time to time in the
over-the-counter market in negotiated transactions or otherwise. Such
broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders or the purchasers
for whom such broker-dealers may act as agents or to whom they may sell as
principals or otherwise (which compensation as to a particular broker-dealer may
exceed customary commissions).

The Selling Securityholders holding shares of Common Stock have agreed not
to sell, assign, hypothecate or otherwise transfer any such shares for a period
of six months following completion of the underwritten public offering.

The Selling Securityholders and broker-dealers, if any, acting in
connection with such sale might be deemed to be underwriters within the meaning
of Section 2(11) of the Securities Act and any commission received by them and
any profit on the resale of the securities might be deemed to be underwriting
discounts and commissions under the Securities Act.

CONCURRENT PUBLIC OFFERING

On the date of this Prospectus, a Registration Statement was declared
effective under the Securities Act with respect to an underwritten offering by
the Company of 600,000 shares of Common Stock and up to 90,000 additional shares
of Common Stock to cover over-allotments, if any.

A-5
<PAGE> 86

[ALTERNATE PAGE]

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

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY
OFFER TO BUY, ANY SECURITIES OFFERED HEREBY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER, OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN CONTAINED IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Dividend Policy....................... 15
Selected Financial Data............... 16
Management's Discussion and Analysis
or Plan of Operation................ 17
Business.............................. 19
Management............................ 30
Certain Transactions.................. 34
Description of Securities............. 36
Principal Shareholders................
Shares Eligible for Future Sale....... 37
Selling Securityholders...............
Plan of Distribution..................
Concurrent Public Offering............
Legal Matters......................... 40
Experts............................... 40
Additional Information................ 40
Index to Financial Statements......... F-1
</TABLE>

1,773,900 SHARES

ALL AMERICAN FOOD
GROUP, INC.

COMMON STOCK

------------------------
PROSPECTUS
------------------------

, 1996

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

A-6
<PAGE> 87

ALL AMERICAN FOOD GROUP, INC.

PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 14A:3-5 of the New Jersey Business Corporation Act (the "NJBCA")
gives the Company power to indemnify each of its directors and officers against
expenses and liabilities in connection with any proceedings involving him by
reason of his being or having been a director or officer if (a) he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Company and (b) with respect to any criminal proceeding,
he had no reasonable cause to believe his conduct was unlawful. However, in a
proceeding by or in the right of the Company, there shall be no indemnification
in respect of any liabilities or expenses if the officer or director shall have
been adjudged liable to the Company unless the court in such proceeding
determines he is entitled to indemnification for such liabilities and/or
expenses. Furthermore, no indemnification shall be made to or on behalf of a
director or officer if a judgment or other final adjudication adverse to such
director or officer establishes that his acts or omissions (a) were in breach of
his duty of loyalty to the Company and its stockholders, (b) were not in good
faith or involved a knowing violation of law or (c) resulted in receipt by the
director or officer of an improper personal benefit. The NJBCA defines an act or
omission in breach of a person's duty of loyalty as an act or omission which
that person knows or believes to be contrary to the best interests of the
Company or its stockholders in connection with a matter in which he has a
material conflict of interest. If a director or officer is successful in a
proceeding, the statute mandates that the Company indemnify him against
expenses.

The Company's Restated Certificate of Incorporation, as permitted by New
Jersey law, eliminates the personal liability of the directors and officers to
the Company or its shareholders for monetary damages for breaches of such
director's or officer's duty of care or other duties as a director or officer;
except liabilities for any breach of duty based upon an act or omission (a) in
breach of such person's duty of loyalty to the corporation or its shareholders,
(b) not in good faith or involving a knowing violation of law or (c) resulting
in receipt by such person of an improper personal benefit. This limitation on
liability could have the effect of limiting directors' and officers' liability
for violations of the federal securities laws. In addition, the Company's
Restated Certificate of Incorporation and Restated By-Laws provide broad
indemnification rights to directors and officers so long as the director or
officer acted in a manner believed in good faith to be in or not opposed to the
best interest of the Company and with respect to criminal proceedings if the
director had no reasonable cause to believe his or her conduct was unlawful. The
Company believes that the protection provided by these provisions will help the
Company attract and retain qualified individuals to service as officers and
directors. These provisions would provide indemnification for liabilities
arising under the federal securities laws to the extent that such
indemnification is found to be enforceable under, and to be in accordance with,
applicable law and generally will limit the remedies available to a shareholder
who is dissatisfied with a Board decision protected by these provisions, and
such shareholder's only remedy may be to bring a suit to prevent the Board's
action.

II-1
<PAGE> 88

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following expenses will be incurred in connection with the proposed
offering hereunder. All of such expenses will be borne by the Company. With the
exception of the registration fees, all amounts shown are estimates:

<TABLE>
<S> <C>
SEC registration fees.......................................................... $ 5,227.15
NASD registration fee.......................................................... 2,016.00
Legal fees and expenses........................................................ 50,000.00
Underwriter's nonaccountable expense allowance................................. 108,000.00
Accounting fees and expenses................................................... 40,000.00
Blue sky fees and expenses (including counsel fees)............................ 25,000.00
Printing and engraving expenses................................................ 40,000.00
Transfer agent fees and expenses............................................... 2,500.00
Miscellaneous.................................................................. 27,256.85
-----------
Total.......................................................................... $300,000.00
===========
</TABLE>

- ---------------
* To be furnished by amendment.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The following sets forth certain information regarding sales of, and other
transactions with respect to, securities of the Company issued within the past
three years, which sales and other transactions were not registered pursuant to
the Securities Act of 1933, as amended (the "Securities Act"). All of such sales
and transactions were exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) thereof or as otherwise indicated
herein.

In September 1993, in connection with the formation of the Company, Jutland
Enterprises Inc. ("Enterprises") acquired 937,500 shares of the Company's Common
Stock for consideration consisting of $300,000 in cash and $277,000 in assets.
Prior to January 31, 1994 (the end of the Company's first (partial) fiscal
year), Jutland contributed an additional $365,000 to the Company as additional
paid-in capital. Shortly after formation of the Company, Andrew Thorburn, the
Chief Executive Officer of the Company and of Enterprises, acquired 312,500
shares of the Company's Common Stock for consideration consisting of 400,000
shares of Enterprises common stock.

In July and August 1994, the Company entered into two separate stock
purchase agreements with Blue Chip Computerware, Inc. ("Blue Chip"). Under the
agreements, the Company issued 260,000 shares of Common Stock to a financial
services firm in exchange for its services in arranging the transaction and
1,200,000 shares of the Common Stock to Blue Chip in exchange for $50,000 in
cash, 100,000 shares of the common stock of Enterprises and 400,000 shares of
the common stock of Blue Chip. The Company subsequently sold the shares of Blue
Chip common stock for $650,000.

In September 1994 and October 1995, the Company issued 120,000 and 70,000
shares, respectively, of Series A Partially Redeemable Convertible Preferred
Stock to Howard Goldberg in connection with the Company's acquisition of the
assets of the Goldberg Companies and as part of the reconciliation of all
outstanding indebtedness and other obligations incurred in connection therewith.

In September 1994, as part of the consideration for the acquisition of four
corporations conducting business as "Sammy's New York Bagels," the Company
issued an aggregate of 180,000 shares of Series B Redeemable Convertible
Preferred Stock to the shareholders of the acquired corporations. Each share of
Preferred Stock currently is convertible into one share of Common Stock.

In March 1995, the Company issued 825,000 shares of Series C Convertible
Preferred Stock to Blue Chip in exchange for 825,000 shares of Common Stock held
by Blue Chip. During the nine months ended October 31, 1995, Blue Chip purchased
425,000 shares of Series C Convertible Preferred Stock at a price of $1.00 per
share. Additionally, during this period, the President of the Company purchased
70,000 shares of

II-2
<PAGE> 89

Series C Preferred Stock at the price of $1.00 per share. During the three-month
period ended January 31, 1996, Blue Chip purchased an additional 50,000 shares
of Series C Convertible Preferred Stock at the price of $1.00 per share.

Subsequent to October 31, 1995, the Company has sold an aggregate of
1,773,900 shares of Common Stock in two separate private placements at a
purchase price of either $1.00 or $2.00 per share. In connection with the
private placements, the Company has received $2,414,000 (net of expenses of
$48,000) including cash and other consideration valued at $410,000 which was
accepted in the form of two retail bagel stores in the final stages of
construction.

ITEM 27. EXHIBITS.

The following exhibits are filed as part of this Registration Statement:

<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement. (Revised).
1.2** Letter of Intent.
3.1** Restated Certificate of Incorporation of the Company.
3.2** Certificate of Designations for Series A, B & C Preferred Stock.
3.3* Form of Second Restated Certificate of Incorporation of the Company. (Revised).
3.4** Amended and Restated By-Laws of the Company.
3.5* Form of Second Amended and Restated By-Laws of the Company. (Revised).
4.1** Form of Specimen of Common Stock Certificate.
4.2** Underwriter's Warrant Agreement.
5.1+ Opinion of Counsel re: legality of securities being registered.
10.1** Form of Goldberg's Franchise Agreement.
10.2** Form of Sammy's Franchise Agreement.
10.3** Agreement dated January 12, 1993 with Kof-K Kosher Supervision.
10.4** All American Food Group, Inc. Omnibus Stock Plan.
11* Earnings per Share Calculation.
21.1** Subsidiaries of the Company.
23.1* Consent of DelSanto & DeFreitas (contained in Part II).
23.2+ Consent of Counsel (included in their opinion filed as Exhibit 5.1).
24.1** Powers of Attorney.
27.1* Financial Data Schedule.
</TABLE>

- ---------------
* Filed herewith.

** Previously filed.

+ To be filed by amendment.

ITEM 28. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) To file, during any period in which it offers or sales securities,
a post-effective amendment to this Registration Statement to;

II-3
<PAGE> 90

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement;

(iii) Include any additional or changed material information on the
plan of distribution.

(2) For determining liability under the Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.

(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission (the
"Commission") such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.

The undersigned registrant hereby undertakes:

(1) For determining any liability under the Act, to treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant under Rule 424(b)(1) ,or (4), or
497(h) under the Act as part of this Registration Statement as of the time
the Commission declared it effective.

(2) For determining any liability under the Act, to treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and the offering of the securities at that time as the initial
bona fide offering of those securities.

II-4
<PAGE> 91

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM SB-2 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED IN FAIRFIELD, NEW JERSEY, ON THIS 9TH DAY OF JULY, 1996.

ALL AMERICAN FOOD GROUP, INC.

By: /s/ Andrew Thorburn

------------------------------------
ANDREW THORBURN
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ --------------------------------- -------------
<C> <S> <C>
/s/ ANDREW THORBURN Chairman of the Board of July 9, 1996
- ------------------------------------------ Directors, President and Chief
ANDREW THORBURN Executive Officer

/s/ CHRIS R. DECKER Director, Executive Vice July 9, 1996
- ------------------------------------------ President and Chief Financial
CHRIS R. DECKER* Officer (Principal Financial
and Accounting Officer)
/s/ JOHN CHITVANNI Director July 9, 1996
- ------------------------------------------
JOHN CHITVANNI*

*/s/ ANDREW THORBURN
- ------------------------------------------
ANDREW THORBURN
ATTORNEY-IN-FACT
</TABLE>

II-5
<PAGE> 92

CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated July 1, 1996 covering the financial statements for
the nine months ended October 31, 1995, the year ended January 31, 1995, and for
the period September 27, 1993 (inception) to January 31, 1994, in Amendment No.
1 to the Registration Statement on Form SB-2 of All American Food Group, Inc.
(No. 333-4990) to be filed with the Securities and Exchange Commission on or
about July 9, 1996, and the related Prospectus contained therein.

/s/ DELSANTO AND DEFREITAS
--------------------------------------
DELSANTO AND DEFREITAS

Closter, New Jersey
July 9, 1996

II-6
<PAGE> 93

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DOCUMENT PAGE NO.
- ----------- ---------------------------------------------------------------------- ----------
<C> <S> <C>
1.1* Form of Underwriting Agreement........................................
1.2** Letter of Intent......................................................
3.1** Restated Certificate of Incorporation of the Company..................
3.2** Certificate of Designations for Series A, B & C Preferred Stock.......
3.3* Form of Second Restated Certificate of Incorporation of the Company
(Revised).............................................................
3.4** Amended and Restated By-Laws of the Company...........................
3.5* Form of Second Amended and Restated By-Laws of the Company
(Revised).............................................................
4.1** Form of Specimen of Common Stock Certificate..........................
4.2** Underwriter's Warrant Agreement.......................................
5.1+ Opinion of Counsel re: legality of securities being registered........
10.1** Form of Goldberg's Franchise Agreement................................
10.2** Form of Sammy's Franchise Agreement...................................
10.3** Agreement dated January 12, 1993 with Kof-K Kosher Supervision........
10.4** All American Food Group, Inc. Omnibus Stock Plan......................
11* Earnings per Share Calculation........................................
21.1** Subsidiaries of the Company...........................................
23.1* Consent of DelSanto & DeFreitas (contained in Part II)................
23.2+ Consent of Counsel (included in their opinion filed as Exhibit 5.1)...
24.1** Powers of Attorney....................................................
27.1* Financial Data Schedule...............................................
</TABLE>

- ---------------
* Filed herewith.

** Previously filed.

+ To be filed by amendment.

<PAGE> 1
EXHIBIT 1.1

UNDERWRITING AGREEMENT

______________________, 1996

Alexander, Wescott & Co., Inc.
63 Wall Street
New York, New York 10005

Dear Sirs:

All American Food Group, Inc., a New Jersey corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to you ("ALWC"), 600,000 shares of the common stock, no par
value (the "Common Stock") of the Company (the "Firm Shares"). In addition,
solely for the purpose of covering over-allotments, the Company proposes to
grant to ALWC the option to purchase up to 90,000 additional shares of Common
Stock (the "Additional Shares"). The Firm Shares and the Additional Shares are
hereinafter collectively referred to as the "Shares". The Shares are more
fully described in the Registration Statement and Prospectus referred to below.

The Company confirms as follows its agreement with ALWC:

1. REGISTRATION STATEMENT AND PROSPECTUS: The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission"), in
accordance with the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder (the "Rules and
Regulations", and together with said Act, the "Act"), a registration statement
on Form SB-2 (File No. 333-4490) and may have filed one or more amendments
thereto, including in such registration statement and in certain amendments
thereto a related preliminary prospectus for the registration under the Act of
the Shares. In addition, subject to the provisions of Section 4(e) hereof, the
Company has filed or will promptly file a further amendment to such
registration statement prior to the effectiveness of such registration
statement, unless an amendment is not required pursuant to Rule 430A of the
Rules and Regulations. As used in this Agreement, the term "Registration
Statement" means such registration statement, including the prospectus,
financial statements and schedules thereto, exhibits and other documents filed
as part thereof, as amended when, and in the form in which, it is declared
effective by the Commission, and, in the event any post-effective amendment
thereto is filed thereafter and on or before the Closing Date (as hereinafter
defined), shall also mean (from and after the date such post-effective
amendment is effective under the Act) such registration statement as so
amended, provided that such Registration Statement, at the time it becomes
effective, may omit such information as is permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A of the
Rules and Regulations, which information ("Rule 430 Information") shall be
deemed to be included in such Registration Statement when a final prospectus is
filed with the Commission in accordance with Rules 430A and 424(b)(1) or (4) of
the Rules and Regulations; the term "Preliminary Prospectus" means each
prospectus included in the Registration Statement, or any amendments thereto,
before it becomes effective under the Act, the form of prospectus omitting Rule
430A Information included in the Registration Statement when it becomes
effective, if applicable (the "Rule 430A Prospectus"), and any prospectus filed
by the Company with the consent of ALWC pursuant to Rule 424(a) under the Act;
the term "Prospectus" means the final prospectus included as part of the
Registration Statement, except that (i) if any prospectus (including any
preliminary prospectus) which differs from such prospectus included in the
Registration Statement is provided to ALWC for use in connection with the
offering of the Shares (whether or not
<PAGE> 2
such differing prospectus is required to be filed by the Company pursuant to
Rule 424(b) under the Act), the term "Prospectus" as used herein shall mean
such differing prospectus from and after the date on which it shall have been
first used, and (ii) in the event any supplement to or amendment of such
prospectus is made after the date on which the Registration Statement is
declared effective and on or prior to the Closing Date, the term "Prospectus"
shall also mean (with respect to any supplement, from and after the date such
supplement is first used or, with respect to any amendment, the date such
amendment is effective under the Act) such prospectus as so supplemented or
amended; and the term "Effective Date" means (i) if the Company and ALWC have
determined not to proceed pursuant to Rule 430A under the Act, the date on
which the Registration Statement becomes effective, or (ii) if the Company and
ALWC have determined to proceed pursuant to Rule 430A under the Act, the date
of this Agreement.

2. AGREEMENTS TO SELL AND PURCHASE: Subject to the terms and
conditions herein set forth, the Company agrees to sell to ALWC and ALWC agrees
to purchase from the Company, the Firm Shares at a purchase price of $_____ per
Firm Share.

Subject to the terms and conditions herein set forth, the Company
further agrees to sell to ALWC, and ALWC shall have the right to purchase from
the Company, up to 90,000 Additional Shares at a purchase price of $_____ per
Additional Share. Additional Shares may be purchased solely for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. Additional Shares may be purchased at any time and from time to time
on or before the thirtieth day following the date of this Agreement upon
written notice from ALWC to the Company specifying the number of Additional
Shares to be purchased.

ALWC will offer the Shares for sale at the initial public offering
price set forth on the cover of the Prospectus. After the initial public
offering, ALWC may from time to time increase or decrease the public offering
price, in ALWC's sole discretion, by reason of changes in general market
conditions or otherwise.

3. DELIVERY AND PAYMENT: Delivery of and payment for the Firm Shares
shall be made at 10:00 A.M., New York City time, on _ ______________, 1996
(such time and date are referred to herein as the "Closing Date"), at the
offices of ALWC at 63 Wall Street, New York, New York 10005.

Delivery of and payment for Additional Shares shall be made at said
offices of ALWC, or at such other place, and at such time(s) and date(s) (each
an "Optional Closing Date") as may be agreed upon in writing by ALWC and the
Company; provided, however, that in no event may an Optional Closing Date be
(i) earlier than the Closing Date, or (ii) earlier than three or later than ten
business days after the date on which the related notice to purchase Additional
Shares is given, or (iii) earlier than the fifth business day following the
Closing Date or the most recent Optional Closing Date.

The Closing Date, the Optional Closing Date and the time and place of
delivery of and payment for the Shares and Additional Shares may be varied by
agreement between ALWC and the Company. Delivery of certificates for the Shares
(in definitive form, registered in such names and in such denominations as ALWC
shall request at least two business days prior to the Closing Date by written
notice to the Company) shall be made to ALWC against payment of the purchase
price therefor by certified or official bank check or checks payable in New
York Clearing House funds to the order of the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares, the
Company agrees to

2
<PAGE> 3
make such certificates available for inspection at the offices of ALWC at least
24 hours prior to the Closing Date and each Optional Closing Date, as the case
may be.

On the Closing Date, at the time of the delivery and payment for the
Firm Shares, the Company shall (i) pay to ALWC as a non-accountable expense
allowance a sum equal to $.________ per Share for each Firm Share purchased by
ALWC hereunder (or an aggregate of $__________________ in respect of the Firm
Shares), less the $35,000 heretofore paid to you in respect thereof, by
certified or official bank check or checks payable in New York Clearing House
funds payable to the order of, and in accordance with instructions from, ALWC,
and (ii) issue, sell and deliver to ALWC, for an aggregate purchase price of
$10, a warrant to purchase up to an aggregate of 60,000 Shares (the
"Underwriter's Warrant") in substantially in the form filed as an exhibit to
the Registration Statement. The shares of Common Stock issuable upon exercise
of the Underwriter's Warrant are hereinafter referred to collectively as the
"Underwriter's Warrant Shares". The Underwriter's Warrant will be exercisable
at an initial exercise price of $____ per Share at any time and from time to
time, in whole or in part, during a five-year period commencing one year
following the Effective Date. The Company has granted ALWC certain
registration rights with respect to the Underwriter's Warrant and the
securities issuable upon exercise thereof, as set forth in said Underwriter's
Warrant.

On each Optional Closing Date, at the time of the delivery and payment
for the Additional Shares, the Company shall pay to ALWC as a non-accountable
expense allowance, a sum equal to $.___ per Additional Share for each
Additional Share purchased by ALWC on such date by certified or official bank
check or checks payable in New York Clearing House funds payable to the order
of, and in accordance with instructions from, ALWC.

4. COVENANTS AND AGREEMENTS OF THE COMPANY: (A) The Company
covenants and agrees with ALWC as follows:

(a) The Company will notify ALWC promptly by telephone and (if
requested by ALWC) will confirm such advice in writing, (1)
when the Registration Statement has become effective and when
any post-effective amendment thereto becomes effective, (2) if
Rule 430A under the Act is used, or the Prospectus is
otherwise required to be filed with the Commission pursuant to
Rule 424(b) under the Act, when the Prospectus is filed with
the Commission pursuant to Rule 424(b) under the Act, (3) of
any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus or for additional
information, (4) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement, preventing or suspending the use of the Preliminary
Prospectus, the Prospectus, the Registration Statement or any
amendment or supplement thereto, or refusing to permit the
effectiveness of the Registration Statement ("Stop Order"), or
the initiation of any proceedings for any of those purposes,
(5) of the happening of any event during the period mentioned
in paragraph (f) below which in the reasonable judgment of the
Company makes any statement made in the Registration Statement
or the Prospectus untrue or which requires the making of any
changes in the Registration Statement or the Prospectus in
order to make the statements therein not misleading, and (6)
of the receipt of any comments from the Commission or the Blue
Sky or securities authorities of any jurisdiction regarding
the Registration Statement, any post-effective amendment
thereto, the Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto. The Company will

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<PAGE> 4
use its best efforts to prevent the issuance of any Stop Order
by the Commission or any notification from the Blue Sky or
securities authorities of any jurisdiction suspending the
qualification or registration of the Shares for sale in such
jurisdictions, and if at any time the Commission shall issue
any Stop Order, or if the Blue Sky or securities authorities
of any jurisdiction shall issue notification suspending the
qualification or registration of the Shares, the Company will
make every reasonable effort to obtain the withdrawal of such
Stop Order or notification at the earliest possible moment.
The Company will promptly advise ALWC of its receipt of any
notification with respect to the suspension of the
qualification or registration of the Shares for offer or sale
in any jurisdiction or the initiation or threatening of any
action or proceeding for such purpose.

(b) Prior to any public offering of the Shares by ALWC, the
Company will cooperate with ALWC and its counsel in
registering or qualifying the Shares for offer or sale under
the Blue Sky or securities laws, rules or regulations of such
jurisdictions as ALWC may reasonably request; provided that in
no event shall the Company be obligated to register or qualify
to do business as a foreign corporation in any jurisdiction
where it is not now so registered or qualified or to take any
action which would subject it to general service of process,
or to taxation as a foreign corporation doing business, in any
jurisdiction where it is not now so subject. The Company will
pay all fees and expenses relating to the registration or
qualification of the Shares under such Blue Sky or securities
laws of such jurisdictions as ALWC may designate (including
the legal fees, expenses and disbursements of counsel to ALWC
for the registration or qualification of the Shares in such
jurisdictions as ALWC shall determine). After registration,
qualification or exemption of the Shares for offer and sale in
such jurisdictions, and for as long as any offering pursuant
to this Agreement continues, the Company, at ALWC's reasonable
request, will file and make such statements or reports, and
pay the fees applicable thereto, at such times as are or may
be required by the laws, rules or regulations of such
jurisdictions in order to maintain and continue in full force
and effect the registration, qualification or exemption for
offer or sale of the Shares in such jurisdictions. After the
termination of the offering contemplated hereby, and as long
as any of the Shares are outstanding, the Company will use its
best efforts to file and make, and pay all fees applicable
thereto, such statements and reports and renewals of
registration as are or may be required by the laws, rules or
regulations of such jurisdictions to maintain and continue in
full force and effect the registration, qualification or
exemption for secondary market transactions in the Shares, in
the various jurisdictions in which the Shares were originally
registered, qualified or exempted for offer or sale.

(c) The Company will furnish to ALWC, without charge, four
manually-signed copies of the Registration Statement as
originally filed on Form SB-2 and of any amendments (including
post-effective amendments thereto), including financial
statements and schedules, if any, and all consents,
certificates and exhibits (including those incorporated
therein by reference to the extent not previously furnished to
ALWC), heretofore or hereafter made, signed by or on behalf of
its officers whose signatures are required thereon and a
majority of its board of directors.

(d) The Company will use its best efforts to cause the
Registration Statement to become effective under the Act.
Upon such effectiveness, if the Company and ALWC have

4
<PAGE> 5
determined not to proceed pursuant to Rule 430A under the Act,
the Company will timely file a Prospectus pursuant to, and in
conformity with, Rule 424(b), if required, and if the Company
and ALWC have determined to proceed pursuant to Rule 430A
under the Act, the Company will timely file a Prospectus
pursuant to, and in conformity with, Rules 424(b) and 430A
under the Act.

(e) The Company will give ALWC and its counsel advance notice of
its intention to file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus,
whether before or after the effective date of the Registration
Statement, and will not file any such amendment or supplement
unless the Company shall have first delivered copies of such
amendment or supplement to ALWC and its counsel and ALWC and
its counsel shall have given ALWC's consent to the filing of
such amendment or supplement, which consent shall not be
unreasonably withheld or delayed. Any such amendment or
supplement shall comply with the Act.

(f) From and after the Effective Date, the Company will deliver to
ALWC, without charge, as many copies of the Prospectus or any
amendment or supplement thereto as ALWC may reasonably
request. The Company consents to the use of the Prospectus or
any amendment or supplement thereto by ALWC and by all dealers
to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for such period of time
thereafter as the Prospectus is required by law to be
delivered in connection therewith. If during such period of
time any event shall occur which in the reasonable judgment of
the Company or counsel to ALWC should be set forth in the
Prospectus in order to make the statements therein, in light
of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the
Prospectus to comply with law, the Company will forthwith
prepare and duly file with the Commission an appropriate
supplement or amendment thereto, and will deliver to ALWC,
without charge, such number of copies thereof as ALWC may
reasonably request.

(g) The Company will promptly pay all expenses in connection with
(1) the preparation, printing, filing, distribution and
mailing (including, without limitation, express delivery
service) of the Registration Statement, each preliminary
prospectus, the Prospectus, and the preliminary and final
forms of Blue Sky memoranda (if any); (2) the issuance and
delivery of the Shares; (3) the fees and expenses of legal
counsel and independent accountants for the Company relating
to, among other things, opinions of counsel, audits, review of
unaudited financial statements and cold comfort review; (4)
the fees and expenses of a registrar or transfer agent for the
Common Stock; (5) the printing, filing, distribution and
mailing (including, without limitation, express delivery
service) of this Agreement and the Selected Dealer Agreement;
(6) furnishing such copies of the Registration Statement, the
Prospectus and any preliminary prospectus, and all amendments
and supplements thereto, as may reasonably be requested for
use in connection with the offering and sale of the Shares by
ALWC or by dealers to whom Shares may be sold; (7) any fees
and communication expenses with respect to filings required to
be made by ALWC with the National Association of Securities
Dealers, Inc. (the "NASD"); and (8) the listing of the Shares
on the Nasdaq SmallCap market.

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<PAGE> 6
(h) On the Closing Date, the Company shall sell to ALWC, the
Underwriter's Warrant to purchase 60,000 Shares for an
aggregate purchase price of $10.

(i) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than by notice given by ALWC
pursuant to Section 8 hereof) or if for any reason the Company
shall be unable to perform its obligations hereunder, unless
such termination or inability to perform is due, in whole or
in material part, to the default, omission, action or failure
of ALWC, the Company will reimburse ALWC for all of its
out-of-pocket expenses (including the fees and expenses of
counsel to ALWC) reasonably incurred by it in connection
herewith through the date of such termination, less the
$35,000 advance paid in respect thereof. In the event such
advance exceeds ALWC's accountable out-of-pocket expenses, the
difference shall be refunded to the Company.

(j) For a period of ninety (90) days after the commencement of the
public offering of the Shares by ALWC, without the prior
written consent of ALWC, the Company will not offer, issue,
sell, contract to sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any securities
of the Company, except as provided for and as contemplated by
this Agreement or as specifically disclosed in the
Registration Statement respecting certain post-offering
issuances to Company employees.

(k) On or prior to the Closing Date, the Company shall obtain from
each of its officers and directors, and the holders of stock
options or other rights to acquire shares of Common Stock,
except the outstanding shares of convertible preferred stock,
his enforceable written agreement, in form and substance
reasonably satisfactory to counsel to ALWC, that for a period
of twenty-four (24) months after the Effective Date (or any
longer period required by any jurisdiction in which the offer
and sale of the Shares is to be registered or qualified), he
will not offer for sale, sell, contract to sell, assign,
pledge, transfer, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any securities
of the Company (including without limitation any shares of
Common Stock), owned by him as of the Closing Date or
subsequently acquired, whether upon exercise of warrants,
stock options or otherwise, without the prior written consent
of ALWC (the "Lock-up Letter").

(l) The Company has reserved and, so long as the Underwriter's
Warrant remains exercisable in accordance with its terms, so
long as the Underwriter's Warrant remains exercisable in
accordance with its terms, shall continue to reserve and keep
available the maximum number of shares of its authorized but
unissued Common Stock and other securities which are issuable
upon exercise of the Underwriter's Warrant.

(m) For a period of five years after the date of this Agreement,
the Company shall:

(1) retain DelSanto and DeFreitas or another firm of
independent public accountants, reasonably acceptable
to ALWC, as its auditors, and at its own expense,
shall cause such independent certified public
accountants to review (but not audit) the Company's
financial statements and those of its subsidiaries
for each of the first three fiscal quarters of each
fiscal year prior to the announcement of quarterly

6
<PAGE> 7
financial information, the filing of the Company's
10-Q quarterly reports and the mailing of quarterly
financial information to its stockholders;

(2) cause the Company's Board of Directors to meet not
less frequently than twice in each calendar year,
upon proper notice for each such meeting to be
distributed to directors prior to such meeting (or
upon proper waiver of such notice), together with
minutes of the preceding meeting, provided that if
not practicable, such minutes shall be distributed as
soon thereafter as is reasonably possible;

(3) distribute to its security holders, within 120 days
after the end of each fiscal year, or such longer
period as may be permitted by applicable law, an
annual report (containing certified financial
statements of the Company and its subsidiaries)
prepared in accordance with those required under Rule
14a-3(b) of Regulation 14A promulgated by the
Commission under the Securities Exchange Act of 1934,
as amended; and

(4) appoint a transfer agent for the Common Stock and
warrant agent for the Warrants, in each case
reasonably acceptable to ALWC.

(n) For a period of five years after the date of this Agreement,
the Company shall furnish ALWC, free of charge, with the
following:

(1) within 90 days after the end of each fiscal year,
financial statements for the Company and its
subsidiaries certified by the independent certified
public accountants referred to in Section 4(m)(1)
above, including a balance sheet, statement of
operations, statement of stockholders' equity and
statement of cash flows, in each case for the Company
and its subsidiaries, with supporting schedules,
prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal
year and for the twelve months then ended,
accompanied by a copy of the certificate or report
thereon of such independent certified public
accountants;

(2) (x) for so long as the Company is a reporting company
under any of Sections 12(b), 12(g) or 15(d) of the
Securities Exchange Act, as amended, and the rules
and regulations of the Commission promulgated
thereunder (collectively, the "Exchange Act"),
promptly after filing with the Commission, copies of
all reports and proxy soliciting material which the
Company is required to file under the Exchange Act,
or (y) at such times as the Company is not a
reporting company under the aforesaid provisions of
the Exchange Act, as soon as practicable after the
end of each of the first three fiscal quarters of
each fiscal year, financial statements of the Company
and its subsidiaries, including a balance sheet,
statement of operations, statement of stockholders'
equity and statement of cash flows as at the end of,
or for each such fiscal quarter and the comparable
period of the preceding year, which statements need
not be audited;

(3) as soon as practicable after they have first been
distributed to stockholders of the Company, copies of
each annual and interim financial or other report or

7
<PAGE> 8
communication sent by the Company to its stockholders
(except to the extent duplicative of information
furnished pursuant to any other clause of this
Section 4(n));

(4) as soon as practicable following release or other
dissemination, copies of every press release and
every material news item and article in respect of
the Company or its affairs released or otherwise
disseminated by the Company;

(5) promptly upon request therefor, copies of the
Company's daily transfer sheets prepared by the
Company's transfer agent and warrant agent and a list
of stockholders; and

(6) such additional documents and information with
respect to the Company and its affairs and the
affairs of its subsidiaries, if any, as ALWC may from
time to time reasonably request.

(o) The Company agrees, for a period of five years after the date
of this Agreement, to use its best efforts to cause the
Company's Board of Directors to nominate a designee of ALWC
for election to the Company's Board of Directors, and to
solicit proxies for the election of such designee as a
director of the Company, so long as, during such time, ALWC
elects to select such a designee and such designee otherwise
meets the qualification for election as director of the
Company. At least 60 days prior to the earlier of any
election of the Board of Directors or the commencement of any
solicitation of proxies for such election, the Company shall
notify ALWC of the date of such election or of the
commencement of such solicitation. ALWC shall have the right
to furnish written notice to the Company of the name of the
person designated by ALWC to serve as director no more than 30
days following receipt of such notice. In the absence of such
notice from ALWC, the director then serving and previously
designated by ALWC, if any, shall be nominated and shall stand
for reelection. In the event ALWC shall choose not to
designate a representative for election to the Company's Board
of Directors, a representative designated by ALWC shall be
duly authorized to attend all meetings of the Company's Board
of Directors in a nonvoting observer capacity and, in such
event, the Company shall give such representative copies of
all notices, minutes, consents, and other materials that it
provides its directors; provided, however, that such
representative shall agree to hold in confidence and trust and
to act in a fiduciary manner with respect to all information
so provided. If the Company maintains a liability insurance
policy offering coverage for acts or omissions of its officers
and directors, it agrees to include ALWC's designee as an
insured under such policy.

(p) On or prior to the Effective Date, the Company will have
obtained the listing of the Shares on the Nasdaq SmallCap
Market, subject only to notice of issuance and the
registration of such securities under the Exchange Act. For a
period of five years from the date of this Agreement, the
Company agrees, at its sole cost and expense, to use its best
efforts to ensure that its securities continue to be listed on
the Nasdaq SmallCap Market (or such other market or exchange
to which ALWC reasonably consents), provided that the Company
otherwise complies with the prevailing requirements for such
listing.

8
<PAGE> 9
(q) For a period of two years after the date of this Agreement,
the Company will not seek to amend its certificate of
incorporation to authorize the issuance of any other class of
its capital stock, including, without limitation, any
preferred stock, without the prior written consent of ALWC,
which consent shall not be unreasonably withheld, conditioned
or delayed.

(r) Within thirty days after the date of this Agreement, the
Company shall apply for listing in Standard and Poor's
Corporation Reports, and use its best efforts to ensure the
Company's continued listing for a period of not less than five
years, provided that the Company's otherwise complies with
prevailing requirements for such listing.

(s) The Company agrees, at its own cost and expense, to deliver to
ALWC and its counsel, within a reasonable period after the
last Optional Closing Date, or the expiration of the period in
which ALWC may exercise the over-allotment option, two bound
volumes containing copies of all documents and correspondence
filed with, or received from, the Commission and the NASD
relating to the offering of the Shares and the closing
thereof, including related matters.

(t) The Company will make generally available to its security
holders and deliver to ALWC as soon as it is practicable to do
so (but in no event later than the 45th day after the end of
the twelve-month period beginning at end of fiscal quarter of
the Company during which the Registration Statement becomes
effective, or, if the Registration Statement becomes effective
during the Company's last fiscal quarter, the 90th day after
the end of such twelve-month period), an earnings statement of
the Company and its subsidiaries (which need not be audited)
covering a period of at least twelve consecutive months
commencing after the effective date of the Registration
Statement, which shall satisfy the requirements of Section
11(a) of the Act.

(u) The Company will, promptly upon ALWC's reasonable request,
prepare and file with the Commission any amendments or
supplements to the Registration Statement, any Preliminary
Prospectus or the Prospectus and take any other action, which
in the reasonable opinion of Lehman & Eilen, counsel to ALWC,
may be reasonably necessary or advisable in connection with
the distribution of the Shares, and will use its best efforts
cause the same to become effective as promptly as reasonably
possible.

(v) The Company will furnish to ALWC as early as practicable prior
to the Closing Date and any Optional Closing Date, as the case
may be, but no less than two full business days prior thereto,
a copy of the latest available unaudited interim financial
statements of the Company and its subsidiaries which have been
reviewed by the Company's independent certified public
accountants, as stated in their letters to be furnished
pursuant to Section 7(e) hereof; provided, however, that if
that latest available unaudited interim financial statements
theretofore have been included in the Registration Statement,
a Preliminary Prospectus, a Rule 430A Prospectus or a
Prospectus previously filed with the Commission, no additional
financial statements need be furnished pursuant hereto. Any
such financial statements will be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries
are generally consolidated in reports furnished to the
Company's stockholders.

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<PAGE> 10
(w) The Company will apply the net proceeds from the issuance and
sale of the Shares for the purposes and in the manner set
forth under the caption "Use of Proceeds" in the Prospectus,
and will file on a timely basis such reports with the
Commission with respect to the sale of the Shares and the
application of the proceeds therefrom as may be required
pursuant to Rule 463 under the Act. The Company will operate
its business in such a manner and, pending application of the
net proceeds of the offering for the purposes and in the
manner set forth under the caption "Use of Proceeds" in the
Prospectus, will invest such net proceeds in certain types of
securities so as not to become an "investment company" as such
term is defined under the Investment Company Act of 1940, as
amended (the "Investment Company Act").

(x) The Company has filed a registration statement on Form 8-A
covering the Shares pursuant to Section 12(b) of the Exchange
Act and will use its best efforts to cause said registration
statement to become effective on the Effective Date. The
Company will comply with all registration, filing and
reporting requirements of the Exchange Act, which may from
time to time be applicable to the Company. The Company shall
comply with the provisions of all undertakings contained in
the Registration Statement.

(y) Prior to the Closing Date or any Optional Closing Date, as the
case may be, the Company shall neither issue any press release
or other communication, directly or indirectly, nor hold any
press conference with respect to the offering of the Shares,
the Company, its subsidiaries or its business, results of
operations, condition (financial or otherwise), property,
assets, liabilities or prospects of the Company or any of its
subsidiaries, without the prior written consent of ALWC, which
consent shall not unreasonably be denied or delayed; provided,
however, that if counsel to the Company is of the opinion that
the issuance of a press release or other communication or a
press conference is required to comply with or avoid a
violation of applicable law, and having been so informed ALWC
declines to consent thereto, the Company shall be permitted to
issue such press release or other communication or hold such
press conference in the manner advised by its counsel.

(z) For a period of ninety (90) days after the date hereof, the
Company will not, directly or indirectly, take any action
designed, or which will constitute or which might reasonably
be expected to cause or result in, stabilization or
manipulation of the market price of the Shares, or the
facilitation of the sale or resale of the Shares.

(aa) Neither the Company nor any of its subsidiaries will grant any
person or entity registration rights with respect to any of
its securities, except such rights as are subordinate to the
registration rights contained in the Underwriter's Warrant
Agreement and are exercisable no earlier than six months after
the securities to be registered upon exercise of such
registration rights have been offered for sale pursuant to an
effective registration statement under the Act and registered
or qualified for sale under the Blue Sky or state securities
law, rules or regulations of the jurisdictions in which such
securities are to be offered for sale.

(bb) The Company hereby agrees to retain ALWC in an exclusive
investment banking advisory capacity for a period of twenty
four (24) months following the Closing Date at

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<PAGE> 11
a fee of $3,000 per month, such fee to be due and payable upon
the first of the month immediately following the Closing Date
and the first of each month thereafter.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY: (A) The Company
represents and warrants to ALWC that:

(a) When the Registration Statement becomes effective, and at all
times subsequent thereto to and including the Closing Date and
each Optional Closing Date, and during such longer period as
the Prospectus may be required to be delivered in connection
with sales by ALWC or any dealer, and during such longer
period until any post-effective amendment thereto shall become
effective, the Registration Statement (and any post-effective
amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the
Commission any amendment or supplement to the Registration
Statement or the Prospectus) will contain all material
statements which are required to be stated therein in
accordance with the Act, will comply in all material respects
with the Act, and will not contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein
not misleading, and no event will have occurred which should
have been set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not then
been set forth in such an amendment or supplement; if a Rule
430A Prospectus is included in the Registration Statement at
the time it becomes effective, the Prospectus filed pursuant
to Rules 430A and 424(b) (1) or (4) will contain all Rule 430A
Information and all statements which are required to be stated
therein in accordance with the Act, will comply in all
material respects with the Act, and will not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading; and each
Preliminary Prospectus, as of the date filed with the
Commission, did not include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not
misleading; except that no representation or warranty is made
in this Section 5(A)(a) with respect to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 6(b)
with respect to ALWC expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto.

(b) Neither the Commission nor the Blue Sky or securities
authorities of any jurisdiction has issued an order suspending
the effectiveness of the Registration Statement, preventing or
suspending the use of any Preliminary Prospectus, the
Prospectus, the Registration Statement, or any amendment or
supplement thereto, refusing to permit the effectiveness of
the Registration Statement, or suspending the registration or
qualification of the Shares, nor has the Commission or any of
such authorities instituted or, to the knowledge of the
Company, threatened to institute any proceedings with respect
to such an order.

(c) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of New Jersey, its
jurisdiction of incorporation. The Company and each of its
subsidiaries have full corporate power and authority and has
obtained all necessary consents, authorizations, approvals,
orders, licenses, certificates, declarations and permits

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<PAGE> 12
of and from, and have made all required filings with, all
federal, state, local and other governmental authorities and
all courts and other tribunals, to own, lease, license and use
their properties and assets and to carry on their respective
businesses in the manner described in the Prospectus, except
where the failure to do so will not have a material adverse
effect on the business, properties or financial condition of
the Company and its subsidiaries, taken as a whole. All such
consents, authorizations, approvals, orders, licenses,
certificates, declarations, permits and filings are in full
force and effect and the Company and/or its subsidiaries, are
in all material respects complying therewith. The Company and
its subsidiaries are duly registered or qualified to do
business as foreign corporations and are in good standing in
each other jurisdiction in which their ownership, leasing,
licensing, or use of property and assets or the conduct of
their respective businesses require such registration or
qualification, except where the failure to be so qualified
does not have a material adverse effect on the business,
properties or financial condition of the Company and its
subsidiaries, taken as a whole.

(d) The authorized capital stock of the Company consists of
____________ shares of Common Stock, of which _____________
shares are outstanding and ____________ shares of Preferred
Stock, of which _____________ shares are outstanding. Each
outstanding share of capital stock of the Company and each
subsidiary of the Company, is duly authorized, validly issued,
fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and has not been issued
and is not owned or held in violation of any preemptive rights
of stockholders. There is no commitment, plan or arrangement
to issue, and no outstanding option, warrant or other right
calling for the issuance of, any share of capital stock of the
Company, or that of any of its subsidiaries or any security or
other instrument which by its terms is convertible into,
exercisable for, or exchangeable for capital stock of the
Company or that of any of its subsidiaries, except as
disclosed in the Prospectus. There is outstanding no security
or other instrument which by its terms is convertible into or
exchangeable for capital stock of the Company or that of any
of its subsidiaries, except as disclosed in the Prospectus.

(e) The financial statements of the Company and its subsidiaries,
together with the related notes and schedules, included in the
Registration Statement and the Prospectus fairly present the
financial position, the results of operations and the other
information purported to be shown therein at the respective
dates and for the respective periods to which they apply.
Such financial statements have been prepared in accordance
with generally accepted accounting principles and are prepared
in accordance with the books and records of the Company and
its subsidiaries. The accountants whose reports on the
audited financial statements are filed with the Commission as
a part of the Registration Statement are, and during the
periods covered by their report(s) included in the
Registration Statement and the Prospectus were, independent
certified public accountants with respect to the Company and
its subsidiaries within the meaning of the Act. No other
financial statements are required by Form SB-2 or otherwise to
be included in the Registration Statement or the Prospectus.
Except as disclosed in the Prospectus, there has at no time
been a material adverse change in the condition (financial or
otherwise), results of operations, business, property, assets,
liabilities or prospects of the Company or any of its
subsidiaries from the latest information set forth in the
Registration Statement or the Prospectus.

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<PAGE> 13
(f) There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal), or investigation
pending or threatened (or any basis therefor known to the
Company or any of its subsidiaries) with respect to or
affecting the Company or any of its subsidiaries, their
operation, businesses, property or assets, or related to the
offer for sale or the offer of franchises for the operation of
a Goldberg's Original Old World Bagels or Sammy's New York
Bagels facility, except as disclosed in the Prospectus or such
as individually or in the aggregate do not now have and are
not expected to have a material adverse effect upon the
operations, businesses, property, assets, condition (financial
or otherwise) or prospects of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries
are in violation of, or in default with respect to, any law,
rule, regulation, order, judgment, or decree, except as
disclosed in the Prospectus or such as individually or in the
aggregate do not now have and are not expected to have a
material adverse effect upon the operations, businesses,
property, assets, condition (financial or otherwise) or
prospects of the Company or any of its subsidiaries; nor is
the Company or any of its subsidiaries required to take any
action in order to avoid any such violation or default. At
all times since the Company and its subsidiaries began
offering for sale franchises for the operation of Goldberg's
Original Old World Bagels or Sammy's New York Bagels
facilities, the Company and its subsidiaries have been, and
currently are, in compliance with all material requirements of
all laws, rules and regulations applicable to the offer for
sale or sale of franchises in all jurisdictions in which the
Company and its subsidiaries have offered for sale or sold, or
are offering for sale or proposes to offer or to sell
franchises for the operation of a Goldberg's Original Old
World Bagels or Sammy's New York Bagels facility.

(g) The Company and its subsidiaries have good and marketable
title in fee simple absolute to all real properties and good
title to all other properties and assets which the Prospectus
indicates are owned by them, free and clear of all liens,
security interests, pledges, charges, mortgages and other
encumbrances (except as disclosed in the Prospectus or which
are not material in amount). The properties held under lease
by the Company and its subsidiaries are held by it under valid
and enforceable leases and the interests of the Company and
its subsidiaries in such leases are free and clear of all
liens, encumbrances and defects, except as disclosed in the
Prospectus or which are not material in amount, and the
Company and its subsidiaries are in full compliance with all
material terms and conditions thereunder and such leases are
in full force and effect. No real property owned, leased,
licensed or used by the Company or its subsidiaries is
situated in an area which is, or to the knowledge of the
Company or its subsidiaries will be, subject to zoning, use,
or building code restrictions which would prohibit (and no
state of facts relating to the actions or inaction of another
person or entity or his or its ownership, leasing, licensing,
or use of any real or personal property exists or will exist
which would prevent) the continued effective ownership,
leasing, licensing, or use of such real property in the
business of the Company or its subsidiaries as presently
conducted or as the Prospectus indicates any of them
contemplate conducting (except as disclosed in the
Prospectus).

(h) Neither the Company nor any of its subsidiaries nor any other
party is now or, to the knowledge of the Company, is expected
by the Company or any of its subsidiaries to be in violation
or breach of, or in default with respect to complying with,
any material

13
<PAGE> 14
provision of any indenture, mortgage, deed of trust,
debenture, note or other evidence of indebtedness, contract,
agreement, instrument, lease or license, or arrangement or
understanding which is material to the Company and its
subsidiaries, taken as a whole, and each such indenture,
mortgage, deed of trust, debenture, note or other evidence of
indebtedness, contract, agreement, instrument, lease or
license is in full force and is the legal, valid and binding
obligation of the Company and/or its subsidiaries, and to the
knowledge of the Company and its subsidiaries, of the other
contracting party and is enforceable as to them in accordance
with its terms. The Company and its subsidiaries enjoy
peaceful and undisturbed possession under all leases and
licenses under which they are operating. Neither the Company
nor any of its subsidiaries is a party to or bound by any
contract, agreement, instrument, lease, license, arrangement
or understanding, or subject to any charter or other
restriction, which has had or is expected in the future to
have a material adverse effect on the condition (financial or
otherwise), results of operations, businesses, property,
assets or liabilities of the Company and its subsidiaries,
taken as a whole. Neither the Company nor any of its
subsidiaries is in violation or breach of, or in default with
respect to, any term of its Certificate of Incorporation or
By-laws.

(i) Goldberg's Original Old World Bagels and Sammy's New York
Bagels are trademarks of the Company. Except for said
trademarks, neither the Company nor any of its subsidiaries
owns or has any licensed rights to, in or under any patents,
patent applications, trademarks, trademark applications, trade
names, service marks, copyrights, technology, know-how or
other intangible properties or assets (all of the foregoing
being herein called "Intangibles") that are material to the
business of the Company and its subsidiaries, taken as a
whole. There is no right under any Intangibles of the Company
or its subsidiaries necessary to the business of the Company
and its subsidiaries as presently conducted or as proposed to
be conducted as indicated in the Prospectus, except as
disclosed in the Prospectus. Neither the Company nor any of
its subsidiaries has received notice of infringement with
respect to asserted Intangibles of others. To the knowledge
of the Company and its subsidiaries, there is no infringement
by others of Intangibles of the Company or its subsidiaries.
To the knowledge of the Company and its subsidiaries, there is
no Intangible of others which has had or may in the future
have a materially adverse effect on the condition (financial
or otherwise), results of operations, businesses, property,
assets, liabilities or prospects of the Company and its
subsidiaries, taken as a whole.

(j) Neither the Company, its subsidiaries, any director or officer
of the Company or its subsidiaries, or to the knowledge of the
Company and its subsidiaries, any agent, employee, or other
person authorized to act on behalf of the Company or its
subsidiaries has, directly or indirectly: used any corporate
funds of the Company or its subsidiaries for unlawful
contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful
payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or
campaigns from corporate funds of the Company or its
subsidiaries; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, as relates to the business
of the Company and its subsidiaries; or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful
payment in connection with the business of the Company or its
subsidiaries.

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<PAGE> 15
(k) The material terms of any contract, agreement, instrument,
lease or license required to be described in the Registration
Statement or the Prospectus have been properly described
therein. Any contract, agreement, instrument, lease or
license required to be filed as an exhibit to the Registration
Statement has been filed with the Commission as an exhibit to
or has been incorporated as an exhibit by reference into the
Registration Statement.

(l) The Company has all requisite corporate power and authority to
execute, deliver and perform under the terms and conditions of
this Agreement and the Underwriter's Warrant. All necessary
corporate proceedings of the Company have been duly taken to
authorize the execution, delivery and performance by the
Company of this Agreement and the Underwriter's Warrant. This
Agreement has been duly authorized, executed and delivered by
the Company, is a legal, valid, and binding agreement of the
Company, and is enforceable as to the Company in accordance
with its terms. The Underwriter's Warrant has been duly
authorized by the Company and, when executed and delivered by
the Company, assuming the due execution and delivery thereof
by the other parties thereto, will be a legal, valid and
binding agreement of the Company, enforceable against the
Company in accordance with its terms. No consent,
authorization, approval, order, license, certificate,
declaration or permit of or from, or filing with, any
governmental or regulatory authority, agent, board or other
body is required for the issue and sale of the Shares by the
Company and the execution, delivery or performance by the
Company of this Agreement or the Underwriter's Warrant (except
filings with and orders of the Commission pursuant to the Act
which have been or will be made or obtained prior to the
Closing Date, and such filings, consents or permits as are
required under Blue Sky or securities laws in connection with
the transactions contemplated by this Agreement). No consent
of any party to any contract, agreement, instrument, lease,
license, arrangement or understanding to which the Company or
any of its subsidiaries are a party, or to which any of their
properties or assets are subject, is required for the
execution, delivery or performance of this Agreement or the
Underwriter's Warrant; and the execution, delivery and
performance of this Agreement and the Underwriter's Warrant
will not violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time
or both) entitle any party to terminate or call a default
under any such contract, agreement, instrument, lease,
license, arrangement or understanding, result in the creation
or imposition of, any lien, security interest, pledge, charge,
or other encumbrance upon any of the property or assets of the
Company or its subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, loan or credit agreement,
lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries
are subject or violate or result in a breach of any term of
the Certificate of Incorporation or By-laws of the Company or
any of its subsidiaries, or violate, result in a breach of, or
conflict with any law, rule, regulation, order, judgment or
decree binding on the Company or any of its subsidiaries or to
which any of their operations, businesses, properties or
assets are subject.

(m) The Shares are duly authorized, and when issued, paid for and
delivered in accordance with this Agreement, will be validly
issued, fully paid, and nonassessable, without any personal
liability attaching to the ownership thereof, and will not be
issued in violation

15
<PAGE> 16
of any preemptive rights of stockholders. ALWC will receive
good title to the Shares and the Underwriter's Warrant
purchased by it, upon payment of the purchase price therefor
in accordance with the provisions thereof and of this
Agreement, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements and
voting trusts (collectively, "Encumbrances").

(n) The Underwriter's Warrant Shares are duly authorized and
validly reserved for issuance and, when issued, paid for and
delivered upon exercise of the Underwriter's Warrant, in
accordance with the provisions thereof and of this Agreement
will be validly issued, fully paid and nonassessable and will
not be issued in violation of any preemptive rights of
stockholders; and the holders of the Underwriter's Warrant
Shares will receive good title to them, free and clear of all
Encumbrances.

(o) The Shares and the Underwriter's Warrant conform to all
statements relating thereto contained in the Registration
Statement and the Prospectus.

(p) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, and except as
otherwise may be stated therein, (i) neither the Company, nor
its subsidiaries have entered into any transaction or incurred
any liability or obligation, contingent or otherwise, which is
material to the Company and its subsidiaries, taken as a
whole, except in the ordinary course of business, (ii) there
has not been any change in the outstanding capital stock of
the Company or its subsidiaries, or any issuance of options,
warrants or rights to purchase the capital stock of the
Company or its subsidiaries, or any material increase in the
long-term debt of the Company or its subsidiaries, or any
material adverse change in the business, condition (financial
or otherwise) or results of operations of the Company or its
subsidiaries, (iii) no loss or damage (whether or not insured)
to the properties of the Company or its subsidiaries has been
sustained which is material to the Company and its
subsidiaries, taken as a whole, (iv) neither the Company nor
its subsidiaries have paid or declared any dividend or other
distribution with respect to their stock, and (v) there has
not been any change, contingent or otherwise, in the direct or
indirect control of the Company or its subsidiaries nor, to
the best knowledge of the Company and its subsidiaries, do
there exist any circumstances which would likely result in
such a change.

(q) Neither the Company, its subsidiaries, nor any officers or
directors of the Company or its subsidiaries or Affiliates (as
defined in Rule 405 of the Rules and Regulations), has taken
or will take, directly or indirectly, prior to the termination
of the offering contemplated by this Agreement, any action
designed to stabilize or manipulate the price of any security
of the Company, or which has caused or resulted in, or which
might in the future reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security
of the Company, to facilitate the sale or resale of any of the
Shares.

(r) Neither the Company nor its subsidiaries, have incurred,
directly or indirectly, any liability for a fee, commission or
other compensation on account of the employment of a broker or
finder in connection with the offering of the Shares
contemplated by this Agreement.

16
<PAGE> 17
(s) The Company is not conducting, and does not intend to conduct,
its business in a manner in which it would become an
"investment company" as defined in Section 3(a) of the
Investment Company Act.

(t) The Company has obtained, or prior to the Closing Date will
obtain a Lock-up Letter, from each of its officers and
directors and holders of stock options or other rights to
acquire shares of Common Stock as contemplated by Section 4(k)
hereof.

(u) Except as disclosed in the Prospectus, no person or entity has
the right to require registration of shares of Common Stock or
other securities of the Company because of the filing or
effectiveness of the Registration Statement who has not waived
such right.

(v) The Company and its subsidiaries have adequately insured their
properties against loss or damage by fire, maintain adequate
insurance against liability for negligence and maintain such
other insurance as is usually maintained by companies engaged
in the same or similar businesses, including product liability
insurance.

(w) The Company and its subsidiaries have filed all federal, state
and local tax returns required to be filed (or have obtained
extensions therefor) and have paid all taxes shown on such
returns and all assessments received by it to the extent that
payment has become due, except federal payroll taxes in the
approximate amount of $________________ . The Company and its
subsidiaries have made adequate accruals for all taxes which
may be owed by them but have not been paid.

(y) DelSanto & DeFreitas, who have certified certain financial
statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder.

(z) The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability;
(iii) access to cash and cash equivalents is permitted only in
accordance with management's general or specific
authorization; and (iv) the recorded accountability for cash
and cash equivalents is compared with the existing cash and
cash equivalents at reasonable intervals and appropriate
action is taken with respect to any differences.

(aa) There are no business relationships or related party
transactions of the nature described in Item 404 of Regulation
S-B of the Rules and Regulations involving the Company, any of
its subsidiaries and any person referred to in Items 401 or
404, except as required to be described in the Prospectus and
as so described.

6. INDEMNIFICATION AND CONTRIBUTION:

(a) The Company agrees to indemnify and hold harmless ALWC, its
officers, directors, partners, employees, agents and counsel,
and each person, if any, who controls ALWC

17
<PAGE> 18
within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act, against any and all loss, liability,
claim, damage, and expense whatsoever (which shall include,
for all purposes of this Section 6, but not be limited to,
attorneys' fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation) as
and when incurred arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a
material fact contained (1) in any Preliminary Prospectus, the
Rule 430A Prospectus, the Registration Statement, or the
Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto, or (2) in any application
or other document or communication (in this Section 6
collectively called an "application") executed by or on behalf
of the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order
to qualify the Shares under the Blue Sky or securities laws
thereof (or the rules and regulations promulgated thereunder)
or filed with the Commission or any securities exchange or
automated quotation system; or any omission or alleged
omission to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in
reliance upon and in conformity with written information
furnished to the Company as stated in Section 6(b) by ALWC for
inclusion in any Preliminary Prospectus, the Rule 430A
Prospectus, the Registration Statement, of the Prospectus, or
any amendment or supplement thereto, or in any application, as
the case may be, provided that the Company will not be liable
pursuant hereto with respect to any such statement or omission
made in any Preliminary Prospectus that is corrected in the
Prospectus (or and amendment or supplement thereto) if the
person asserting such loss, liability, damage, claim or
expense purchased shares from ALWC but was not sent or given a
copy of the Prospectus (as amended or supplemented) at or
prior to the written confirmation of the sale of the Shares to
such person in any case where such delivery is required by the
Act, unless such failure to deliver was the result of
noncompliance, by the Company, with Section 4(f) hereof, or
(ii) any breach of any representation, warranty, covenant or
agreement of the Company contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including
liabilities arising under this Agreement.

If any action is brought against ALWC or any of its officers,
directors, partners, employees, agents or counsel, or any controlling persons
of ALWC (each, an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of
the institution of such action (but the failure so to notify shall not relieve
the Company from any liability it may have pursuant to this Section 6(a)) and
the Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the sole expense of such indemnified party
or parties, unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel reasonably satisfactory to
such indemnified party or parties to have charge of the defense of such action
or such indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are

18
<PAGE> 19
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its prior written consent. The Company agrees
promptly to notify ALWC of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of the Shares, any Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or any application.

(b) ALWC agrees to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person,
if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, and each
Selling Shareholder, to the same extent as the foregoing
indemnity from the Company to ALWC in Section 6(a), but only
with respect to statements or omissions, if any, made in any
Preliminary Prospectus, the Rule 430A Prospectus, the
Registration Statement, or the Prospectus (as from time to
time amended and supplemented), or any amendment or supplement
thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company
by ALWC expressly for inclusion in any Preliminary Prospectus,
the Rule 430A Prospectus, the Registration Statement, or the
Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be. For all purposes of this
Agreement, the public offering price, the amounts of the
selling concession and re-allowance set forth in the
Prospectus and the information as to the stabilization set
forth on the inside front cover, under the heading "Risk
Factors - Inexperience of Underwriter" and in the ___________
paragraph under "Underwriting" constitute the only information
furnished in writing by or on behalf of ALWC expressly for
inclusion in any Preliminary Prospectus, the Rule 430A
Prospectus, the Registration Statement or the Prospectus (as
from time to time amended or supplemented), or any amendment
or supplement thereto, or in any application, as the case may
be. If any action shall be brought against the Company or any
other person so indemnified based upon any Preliminary
Prospectus, the Rule 430A Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereto, or any application, and in respect of which indemnity
may be sought against ALWC pursuant to this Section 6(b), ALWC
shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the
provisions of Section 6(a).

(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant
to Section 6(a) or 6(b) (subject to the limitations thereof)
but it is found in a final judicial determination, not subject
to further appeal, that such indemnification may not be
enforced in such case, even though this Agreement expressly
provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the
Act, the Exchange Act, or otherwise, then the Company
(including for this purpose any contribution made by or on
behalf of any director of the Company, any officer of the
Company who signed the Registration Statement, and any
controlling person of the Company), as one entity, and ALWC
(including for this purpose any contribution made by or on
behalf of any directors, officers, partners, employees,

19
<PAGE> 20
agents or controlling persons of ALWC), as a second entity,
shall contribute to the losses, liabilities, claims, damages
and expenses whatsoever to which any of them may be subject,
so that ALWC is responsible for the proportion thereof equal
to the percentage which the aggregate underwriting discount
set forth on the cover page of the Prospectus represents of
the initial public offering price of the Shares set forth on
the cover page of the Prospectus and the Company is
responsible for the remaining portion, in proportion to the
net proceeds from the offering received by them; provided,
however, that if applicable law does not permit such
allocation, then other relevant equitable considerations such
as the relative fault of the Company and ALWC in the aggregate
in connection with the facts which resulted in such losses,
liabilities, claims, damages and expenses shall also be
considered. The relative fault, in the case of an untrue
statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether
such statement, alleged statement, omission, or alleged
omission relates to information supplied by the Company or by
ALWC, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission.
The Company and ALWC agree that it would be unjust and
inequitable if the respective obligations of the Company and
ALWC for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities,
claims, damages and expenses or by any other method of
allocation that does not reflect the equitable considerations
referred to in this Section 6(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation.
For purposes of this Section 6(c), each person, if any, who
controls ALWC within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each
director of the Company, shall have the same rights to
contribution as the Company, subject in each case to the
provisions of this Section 6(c). Anything in this Section
6(c) to the contrary notwithstanding, no party shall be liable
for contribution with respect to the settlement of any claim
or action effected without its written consent. This Section
6(c) is intended to supersede any right to contribution under
the Act, the Exchange Act, or otherwise.

7. CONDITIONS OF ALWC'S OBLIGATIONS: The obligations of ALWC
hereunder are subject to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to ALWC, as of the date
hereof, as of the Closing Date, and each Optional Closing Date, as the case may
be, to the performance by the Company of its obligations hereunder, and to the
following additional conditions:

(a) Notification that the Registration Statement has become
effective shall be received by ALWC not later than 6:30 p.m.,
New York City time, on the date of this Agreement or at such
later date and time as shall be consented to in writing by
ALWC. If the Company has elected to rely upon Rule 430A of
the Rules and Regulations, the price of the Shares and any
price-related information previously omitted from the
effective Registration Statement pursuant to such Rule 430A
shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) of the Rules and Regulations within
the prescribed time period, and prior to the Closing Date the
Company shall have provided evidence reasonably satisfactory
to ALWC of such timely filing, or a post-effective

20
<PAGE> 21
amendment providing such information shall have been promptly
filed and declared effective in accordance with the
requirements of Rule 430A of the Rules and Regulations.

(b) The Commission shall not have issued a Stop Order and no Blue
Sky or securities authority of any jurisdiction shall have
issued an order suspending the registration or qualification
of the Securities, and no proceedings for such purpose shall
have been instituted or shall be pending, or to the knowledge
of the Company, be threatened or contemplated by the
Commission or the Blue Sky or securities authorities of any
such jurisdiction.

(c) ALWC shall have received an opinion, dated the Closing Date
and satisfactory in form and substance to counsel for ALWC
from Venable, Baetjer, Howard & Civiletti, LLP, counsel to the
Company and its subsidiaries, to the effect that:

(1) The Company is a corporation validly existing in good
standing under the laws of New Jersey, its
jurisdiction of incorporation, with full corporate
power and authority to own its property and conduct
its business in the manner described in the
Prospectus. Each subsidiary of the Company is
validly existing and in good standing in its
jurisdiction of incorporation, with full corporate
power and authority to own its property and conduct
its business. To the knowledge of such counsel,
after reasonable investigation, the Company and its
subsidiaries have obtained all necessary consents,
authorizations, approvals, orders, licenses,
certificates, declarations and permits of and from,
and have made all required filings with, all federal,
state, local and other governmental authorities and
all courts and other tribunals, to own, lease,
license and use their respective properties and
assets and to carry on their respective businesses in
the manner described in the Prospectus, except where
the failure to do so will not have a material adverse
effect on the business, properties or financial
condition of the Company and its subsidiaries,
considered as a single enterprise. The Company and
its subsidiaries are duly registered or qualified to
do business as foreign corporations and are in good
standing in the States of
_________________________________________ , which, to
the knowledge of such counsel, after reasonable
investigation, are the only jurisdictions in which
their ownership, leasing, licensing, or use of
property and assets or the conduct of their
respective businesses require such registration or
qualification.

(2) The authorized capital stock of the Company consists
of ___________ shares of Common Stock, of which
_______ shares are outstanding and ___________
shares of Preferred Stock, of which ___________
shares are outstanding. Each outstanding share of
such capital stock is duly authorized, validly
issued, fully paid, and nonassessable, with no
personal liability attaching to the ownership
thereof, has not been issued and is not owned or held
in violation of any preemptive right of stockholders.
Each outstanding share of the capital stock of the
Company's subsidiaries is duly authorized, validly
issued, fully paid, and nonassessable, with no
personal liability attaching to the ownership thereof
has not been issued and is not owned or held in
violation of any preemptive rights of stockholders.
To the knowledge of such counsel, after reasonable
investigation, there is no

21
<PAGE> 22
commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling
for the issuance of, any share of capital stock of
the Company, or its subsidiaries, or any security or
other instrument which by its terms is convertible
into, exercisable for, or exchangeable for capital
stock of the Company or its subsidiaries, except as
disclosed in the Prospectus. To the knowledge of
such counsel, after reasonable investigation, there
is outstanding no security or other instrument which
by its terms is convertible into or exchangeable for
capital stock of the Company or its subsidiaries,
except as disclosed in the Prospectus.

(3) To the knowledge of such counsel, after reasonable
investigation, there is no litigation, arbitration,
claim, governmental or other proceeding (formal or
informal), or investigation pending or threatened,
with respect to the Company, its subsidiaries, or any
of their operations, businesses, property or assets,
or related to the offer for sale or the sale of
franchises for the operation of a Goldberg's
Original Old World Bagels and Sammy's New York Bagels
facility, except as disclosed in the Prospectus or
such as individually or in the aggregate do not now
have and are not expected to have a material adverse
effect on the operations, business, property, assets
or condition (financial or otherwise) of the Company
and subsidiaries, considered as a single enterprise.
To the knowledge of such counsel, after reasonable
investigation, neither the Company nor its
subsidiaries are in violation of, or in default with
respect to, any law, rule, regulation, order,
judgment or decree, except as disclosed in the
Prospectus or such as individually or in the
aggregate do not now have and are not expected to
have a material adverse effect on the operations,
businesses, property, assets or condition (financial
or otherwise) of the Company and its subsidiaries,
considered as a single enterprise; nor is the
Company, or its subsidiaries, required to take any
action in order to avoid any such violation or
default.

(4) To the knowledge of such counsel, after reasonable
investigation, except as disclosed in the Prospectus,
neither the Company, its subsidiaries, nor any other
party is now in violation or breach of, or in default
with respect to complying with, any material
provision of any indenture, mortgage, deed of trust,
debenture, note or other evidence of indebtedness,
contract, agreement, instrument, lease or license, or
arrangement or understanding which is material to the
Company and its subsidiaries, considered as a single
enterprise and each such indenture, mortgage, deed of
trust, debenture, note or other evidence of
indebtedness, contract, agreement, instrument, lease
or license is in full and force and is the legal,
valid and binding obligation of the Company or its
subsidiaries.

(5) Neither the Company nor its subsidiaries are in
violation or breach of, or in default with respect
to, any term of their respective Certificates of
Incorporation or By-laws.

(6) The Company has all requisite corporate power and
authority to execute, deliver and perform this
Agreement and the Underwriter's Warrant. All
necessary corporate proceedings of the Company have
been taken to authorize the

22
<PAGE> 23
execution, delivery, and performance by the Company
of this Agreement and the Underwriter's Warrant.
This Agreement and the Underwriter's Warrant have
been duly authorized, executed and delivered by the
Company, constitute legal, valid, and binding
agreements of the Company, and (subject to applicable
bankruptcy, insolvency, reorganization and other laws
affecting the enforceability of creditors' rights
generally, and the application of equitable
principles affecting the enforceability of remedies
in the nature of specific enforcement, and except as
the enforceability of the indemnification and
contribution provisions of this Agreement and the
Underwriter's Warrant may be limited under applicable
securities laws) is enforceable as to the Company in
accordance with its terms. The Underwriter's Warrant
has been duly authorized by the Company and, when
executed, issued and delivered by the Company and
paid for by ALWC in accordance with the provisions of
this Agreement, will be a legal, valid and binding
obligation of the Company, enforceable against the
Company in accordance with the terms hereof and
thereof, except as may be limited by applicable
bankruptcy, insolvency, registration and other laws
affecting the enforceability of creditors' rights
generally and the application of equitable principles
affecting the availability of remedies in the nature
of specific enforcement.

(7) All legally required proceedings in connection with
the authorization, issue and sale of the Shares by
the Company in accordance with the provisions of this
Agreement have been taken, and, to the knowledge of
such counsel, after reasonable investigation, no
consent, authorization, approval, order, license,
certificate, declaration or permit of or from, or
filing with, any governmental or regulatory
authority, agency, board, bureau or other body or is
required for the execution, delivery or performance
by the Company of this Agreement and the
Underwriter's Warrant (except filings with and orders
of the Commission pursuant to the Act which have been
made or received and matters under Blue Sky or state
securities laws, rules or regulations, as to which
such counsel need not express an opinion).

(8) No consent of any party to any material contract,
agreement, instrument, lease or license, or
arrangement or understanding known to such counsel,
to which the Company or its subsidiaries are a party,
or to which any of the property or assets of the
Company or its subsidiaries are subject, is required
for the execution, delivery or performance of this
Agreement or the Underwriter's Warrant; and the
execution, delivery and performance of this Agreement
and the Underwriter's Warrant will not violate,
result in a breach of, conflict with, or (with or
without the giving of notice or the passage of time
or both) entitle any party to terminate or call a
default under any such contract, agreement,
instrument, lease, license, arrangement or
understanding, result in the creation or imposition
of any lien, security interest, pledge, charge or
other encumbrance upon any of the property or assets
of the Company or its subsidiaries pursuant to the
terms of any indenture, mortgage, deed of trust, loan
or credit agreement, lease or other agreement or
instrument to which the Company or its subsidiaries
are a party or by which the Company or its
subsidiaries are bound or to which any of the
property or assets of the Company or its subsidiaries
are subject, known to such

23
<PAGE> 24
counsel, or violate or result in a breach of any term
of the Certificate of Incorporation or By-laws of the
Company or its subsidiaries, or violate, result in a
breach of, or conflict with any law, rule,
regulation, order, judgment or decree binding on the
Company or its subsidiaries or to which any of the
operations, businesses, property or assets of the
Company or its subsidiaries are subject.

(9) The Shares are duly authorized. Upon payment of the
purchase price therefor in accordance with the
provisions thereof and of this Agreement, the
Underwriter's Warrant will be duly delivered. The
Shares, when issued, paid for and delivered in
accordance with the provisions of this Agreement,
will be duly issued, fully paid and nonassessable,
without any personal liability attaching to the
ownership thereof, and will not be issued in
violation of any preemptive rights of stockholders.
Upon payment of the purchase price therefor in
accordance with the provisions thereof and of this
Agreement, ALWC will receive good title to the Shares
and the Underwriter's Warrant purchased by it from
the Company, free and clear of all Liens.

(10) The Underwriter's Warrant Shares are duly authorized
and have been validly reserved for issuance, and when
issued, paid for and delivered upon exercise of the
Underwriter's Warrant in accordance with the
provisions of the Underwriter's Warrant will be duly
authorized, duly issued, fully paid, and
nonassessable, with no personal liability attaching
to the ownership thereof, and will not have been
issued in violation of any preemptive rights of
stockholders, and the holders of the Underwriter's
Warrant Shares will receive good title to them, free
and clear of all Encumbrances.

(11) The Shares and the Underwriter's Warrant Shares
conform to all statements relating thereto contained
in the Registration Statement and the Prospectus.

(12) To the knowledge of such counsel, any contract,
agreement, instrument, lease or license required to
be described in the Registration Statement or the
Prospectus has been properly described therein. To
the knowledge of such counsel, any contract,
agreement, instrument, lease, or license required to
be filed as an exhibit to the Registration Statement
has been filed with the Commission as an exhibit to
or has been incorporated as an exhibit by reference
into the Registration Statement.

(13) The Shares are duly authorized for listing on the
Nasdaq SmallCap market, subject to notice of
issuance.

(14) To the knowledge of such counsel, except as disclosed
in the Prospectus, no person or entity has the right
to require registration of shares of Common Stock or
other securities of the Company or its subsidiaries
because of the filing or effectiveness of the
Registration Statement who has not waived such right.

24
<PAGE> 25
(15) Neither the Company nor its subsidiaries are an
"investment company" by reason of its assets and
operations as defined in Section 3(a) of the
Investment Company Act.

(16) None of the shares of Common Stock issued by the
Company prior to the date hereof have been offered
and sold by the Company in violation of the Act or
applicable Blue Sky or state securities laws or rules
or regulations. All shares of Common Stock
outstanding as of the date hereof have been duly
authorized and validly issued, and are fully paid and
non-assessable, with no personal liability attaching
to the ownership thereof, and have not been issued in
violation of any preemptive rights of stockholders.

(17) The statements in the Prospectus under captions
"Business", "Risk Factors", "Use of Proceeds",
"Management" and "Description of Capital Stock" have
been reviewed by such counsel and insofar as such
statements refer to descriptions of agreements,
instruments, leases or franchises, summarize the
status of litigation or other proceedings, or the
provisions of orders, judgments or decrees, or
constitute statements of law, descriptions of
statutes, rules or regulations, or conclusions of
law, such statements fairly present the information
called for and are accurate and complete in all
material respects.

(18) At all times during which the Company or its
subsidiaries offered for sale franchises for the
operation of a Goldberg's Original Old World Bagels
and Sammy's New York Bagels facility, the Company and
its subsidiaries were in compliance with all material
requirements of all laws, rules and regulations
applicable to the offer for sale or sale of
franchises in all jurisdictions in which the Company
or its subsidiaries have offered for sale or sold,
franchises for the operation of a Goldberg's Original
Old World Bagels and Sammy's New York Bagels
facility;

(19) (i) except for liabilities and obligations incurred
in the ordinary course of business, to the knowledge
of such counsel, after due inquiry, there are no
claims (absolute, accrued, contingent or otherwise),
against the Company or its subsidiaries related to
the offer for sale or the sale of franchises for the
operation of Goldberg's Original Old World Bagels and
Sammy's New York Bagels, except as disclosed in the
Prospectus or such as individually or in the
aggregate do not have and are not expected to have a
material adverse effect upon the operations,
businesses, property, assets or condition (financial
or otherwise) of the Company or its subsidiaries;
(ii) no franchisee has a cause of action against the
Company or its subsidiaries under applicable federal
or state laws, rules and regulations governing the
offer and sale of franchises arising out of the offer
and sale by the Company or its subsidiaries of the
franchise(s) purchased by such franchisee; and (iii)
neither the Company nor its subsidiaries have been
charged with any violation of any state or other
applicable law or administrative regulation in
respect of the offer for sale or sale of such
franchises; and

25
<PAGE> 26
(20) The Registration Statement has become effective under
the Act, and to the knowledge of such counsel, no
Stop Order has been issued and no proceedings for
that purpose have been instituted or threatened.

(21) The Registration Statement, any Rule 430A Prospectus,
and the Prospectus, and any amendment or supplement
thereto (except for the financial statements and the
notes and schedules related thereto, and other
financial information and statistical data contained
therein or omitted therefrom, as to which such
counsel need express no opinion), comply as to form
in all material respects with the applicable
requirements of the Act.

(22) Such counsel has participated in conferences with
officers and other representatives of the Company,
its subsidiaries, representatives of the independent
certified public accountants for the Company and its
subsidiaries and representatives of ALWC at which the
contents of the Registration Statement and Prospectus
and related matters were discussed and, although such
counsel has not verified and is not passing upon and
does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained
in the Registration Statement and Prospectus, or any
amendment or supplement thereto, on the basis of the
foregoing, no facts have come to the attention of
such counsel which lead them to believe that either
the Registration Statement or any amendment thereto
at the time such Registration Statement or such
amendment became effective or the Prospectus as of
its date or any amendment or supplement thereto as of
its date contained an untrue statement of a material
fact or omitted to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading (it being understood that such
counsel need express no comment with respect to the
financial statements, and the notes and schedules
related thereto, and other financial information and
statistical data included in the Registration
Statement or Prospectus).

(23) To the knowledge of such counsel, since the effective
date of the Registration Statement, no event has
occurred which should have been set forth in an
amendment or supplement to the Registration Statement
or the Prospectus which has not been set forth in
such an amendment or supplement.

In rendering such opinion, counsel for the Company may rely (i) as to
matters involving the application of laws other than the laws of the United
States, and the laws of the State of New Jersey, to the extent counsel for the
Company deems proper and to the extent specified in such opinion, upon an
opinion or opinions of local counsel (in form and substance reasonably
satisfactory to counsel for ALWC) acceptable to counsel for ALWC, familiar with
the applicable laws, in which case the opinion of counsel for the Company shall
state that the opinion or opinions of such other counsel are satisfactory in
scope, form and substance to counsel for the Company and that reliance thereon
by counsel for the Company is reasonable; (ii) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the
Company; and (iii) to the extent they deem proper, upon written statements or
certificates of officers of departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to counsel for ALWC.

26
<PAGE> 27
(d) ALWC shall have received letters addressed to you and dated
the date hereof and the Closing Date from DelSanto &
DeFreitas, independent certified public accountants for the
Company and its subsidiaries, addressed to ALWC, and in form
and substance satisfactory to ALWC, to the effect that:

(1) Such accountants are independent public accountants
as required by the Act and the rules and regulations
of the Commission thereunder and no information need
be supplied with respect to them in answer to Item 13
of Form SB-2.

(2) In their opinion, the financial statements and
related notes and schedules of the Company and its
subsidiaries examined by them, at all dates and for
all periods referred to in their report therein, and
included in the Registration Statement and the
Prospectus on their authority as experts comply as to
form in all material respects with the applicable
accounting requirements of the Act and the Rules and
Regulations of the Commission promulgated thereunder.

(3) On the basis of limited procedures not constituting
an audit, including a reading of the latest available
unaudited interim financial statements of the Company
and its subsidiaries and the financial data and
accounting records of the Company and its
subsidiaries, inquiries of officials of the Company
and its subsidiaries and others responsible for
financial and accounting matters, a reading of the
minute books of the Company and its subsidiaries,
including without limitation the minutes (if any) of
meetings or consents in lieu of meetings of the
stockholders and of the Board of Directors (and any
executive committee, audit committee or other
committees thereof) of the Company and its
subsidiaries, and other specified procedures and
inquiries requested by you, if any, nothing has come
to their attention which causes them to believe that:

(i) the unaudited financial statements of the
Company and its subsidiaries contained in the
Registration Statement and the Prospectus (if
any) do not comply as to form in all material
respects with the applicable accounting
requirements of the Act and the Rules and
Regulations of the Commission promulgated
thereunder or were not prepared in conformity
with generally accepted accounting principles
applied on a basis consistent, in all
material respects, with those followed in the
preparation of the audited financial
statements therein;

(ii) except as disclosed in, or as contemplated by
the Registration Statement or the Prospectus,
during the period from the date of the last
audited balance sheet of the Company and its
subsidiaries included in the Registration
Statement and the Prospectus to a specified
date not more than five (5) days prior to the
date of such letter there were any decreases,
as compared with the corresponding period of
the preceding year, in net sales and
revenues, cost of sales, selling general and
administrative expenses, income (loss) from
operations, the total or per share amounts of
net income, or weighted number of shares
outstanding;

27
<PAGE> 28
(iii) except as disclosed in or contemplated by the
Registration Statement and the Prospectus,
during the period from the date of the last
audited balance sheet of the Company and its
subsidiaries included in the Registration
Statement and Prospectus to a specified date
not more than five (5) days prior to the date
of such letter, there has been any change in
the capital stock or other securities of the
Company and its subsidiaries or any payment
or declaration of any dividend or other
distribution in respect thereof or in
exchange therefor, or any increase in the
long-term debt of the Company and its
subsidiaries or any decrease in the net
current assets or net assets of the Company
and its subsidiaries as compared with the
amounts shown on the last audited balance
sheet of the Company and its subsidiaries,
included in the Registration Statement and
the Prospectus (other than in the ordinary
course of business); and

(iv) On the basis of their examinations referred
to in their report and consent included in
the Registration Statement and Prospectus and
the indicated procedures and inquiries
referred to above, nothing has come to their
attention which, in their judgment, would
cause them to believe or indicate that the
financial statements and related notes and
schedules of the Company and its subsidiaries
included in the Registration Statement and
Prospectus do not present fairly the
financial position and results of operations
of the Company and its subsidiaries, as at
the dates and for the periods indicated, in
conformity with generally accepted accounting
principles applied on a consistent basis, and
are not in all material respects a fair
presentation of the information purported to
be shown.

(4) In addition to their examination referred to in their
report included in the Registration Statement and the
Prospectus and the inquiries and limited procedures
referred to in clause (iii) of this Section 7(d),
they have performed other procedures, not
constituting an audit, with respect to the numerical
data, percentages, dollar amounts and other financial
information appearing in the Registration Statement
and the Prospectus, which are derived from the
general accounting records of the Company and its
subsidiaries, and have compared certain of such data
and information with the accounting records of the
Company and its subsidiaries and found them to be in
agreement.

(5) Such other matters as you may have reasonably
requested.

(e) The representations and warranties of the Company in this
Agreement shall be true and correct with the same effect as if
made on and as of the Closing Date and the Company shall have
complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the
Closing Date.

(f) The Registration Statement and the Prospectus and any
amendments or supplements thereto shall contain all statements
which are required to be stated therein in accordance with the
Act and the Rules and Regulations, and shall in all material
respects conform to the requirements thereof, and neither the
Registration Statement nor the Prospectus nor

28
<PAGE> 29
any amendment or supplement thereto shall contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading.

(g) There shall have been, since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, no material adverse change in the business,
property, condition (financial or otherwise), results of
operations, capital stock, long-term or short-term debt or
general affairs of the Company and its subsidiaries, taken as
a whole, except changes which the Registration Statement and
the Prospectus indicate might occur after the effective date
of the Registration Statement, and neither the Company nor its
subsidiaries shall have incurred any material liabilities or
entered into any agreements not in the ordinary course of
business, except as disclosed in the Registration Statement
and the Prospectus.

(h) No action, suit or proceeding, at law or in equity, shall be
pending or threatened against the Company or its subsidiaries
which would be required to be set forth in the Registration
Statement, and no proceedings shall be pending or threatened
against the Company or its subsidiaries before or by any
commission, board or administrative agency in the United
States or elsewhere, wherein an unfavorable decision, ruling
or finding would have a materially adverse affect on the
business, property, condition (financial or otherwise),
results of operations or general affairs of the Company or its
subsidiaries.

(i) The Company shall have furnished to ALWC or caused to
be furnished to ALWC at the Closing Date,
certificates of the President and chief financial
officer of the Company in form and substance
reasonably satisfactory to ALWC, as to the accuracy
of the representations and warranties of the Company
herein at and as of the Closing Date and as to the
performance by the Company of all of its obligations
hereunder to be performed at or prior to the Closing
Date and the Company shall have furnished to ALWC a
certificate of the President and chief financial
officer of the Company reasonably satisfactory to
ALWC as to the matters set forth in Sections 7(a) and
(b) above.

(j) The NASD, upon review of the terms of the public offering of
the Shares, shall have indicated that it has no objections to
the underwriting arrangements pertaining to the sale of the
Shares and the participation by ALWC in the sale of the
Shares.

(l) Prior to or on the Closing Date, the Company shall have
executed and delivered the Underwriter's Warrant to ALWC.

(m) Prior to or on the Closing Date, the Company shall have
delivered to ALWC executed copies of the Lock-up Agreements.

(n) Subsequent to the date hereof, there shall not have occurred
any change, or any development involving a prospective change,
in or affecting particularly the business or financial affairs
of the Company which, in ALWC's reasonable opinion, would
materially and adversely affect the market for the Shares.

29
<PAGE> 30
(o) Subsequent to the date hereof, no executive officer of the
Company listed as such in the Prospectus shall have died,
become physically or mentally disabled, resigned or have been
removed or discharged.

(p) The Company shall furnish ALWC with such further certificates
and documents as ALWC or its counsel shall have reasonably
requested.

All opinions, certificates, letters and other documents required by
this Section 7 to be delivered to ALWC by the Company will be in compliance
with the provisions hereof only if they are satisfactory in form and substance
to ALWC and its counsel. The Company will furnish ALWC with such conformed
copies of such opinions, certificates, letters and other documents as ALWC
shall reasonably request.

(q) Upon the exercise, in whole or in part, by ALWC of the option
to purchase the Additional Shares, referred to in Section 2
hereof, the obligations of ALWC to purchase and pay for the
Additional Shares will be subject to the continuing accuracy
of the representations and warranties of the Company contained
herein and in each certificate and document contemplated under
this Agreement to be delivered to ALWC, as of the date hereof
and as of each Optional Closing Date, to the performance by
the Company of its obligations hereunder, and the following
additional conditions:

(1) The Registration Statement shall remain effective at
the Optional Closing Date, and no Stop Order shall
have been issued by the Commission and no proceedings
for that purpose shall have been instituted or shall
be pending, or to ALWC's knowledge or the knowledge
of the Company, shall be contemplated by the
Commission, and any reasonable request on the part of
the Commission for additional information shall have
been complied with to the satisfaction of Lehman &
Eilen, counsel to ALWC.

(2) ALWC shall have received an opinion, dated the
Optional Closing Date and satisfactory in form and
substance to counsel to ALWC, from Venable, Baetjer,
Howard & Civiletti, LLP, counsel to the Company,
which opinion shall be substantially the same in
scope and substance as the opinion furnished to ALWC
on the Closing Date pursuant to Section 7(c) hereof,
except that such opinion, where appropriate, shall
cover the Additional Shares.

(3) ALWC shall have received a letter in form and
substance satisfactory to ALWC from DelSanto &
DeFreitas, independent certified public accountants
for the Company, dated the Optional Closing Date and
addressed to ALWC confirming the information in their
letter referred to in Section 7(e) hereof and stating
that nothing has come to their attention during the
period from the ending date of their review referred
to in said letter to a date not more than five (5)
days prior to the Optional Closing Date, which would
require any change in said letter if it were required
to be dated the Optional Closing Date.

(4) ALWC shall have received a certificate of the
President and chief financial officer of the Company,
dated the Optional Closing Date, in form and
substance satisfactory to ALWC, substantially the
same in scope and substance as the

30
<PAGE> 31
certificate furnished to ALWC on the Closing Date
pursuant to Section 7(j) hereof.

8. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the
Company to sell and deliver the Shares as and when specified by this Agreement
are subject to the condition that at the Closing Date or any Optional Closing
Date, as the case may be, the Registration Statement or any post-amendment
thereto shall have been declared effective and a no Stop Order suspending the
effectiveness thereof shall have been issued and remain in effect or
proceedings therefor initiated or threatened.

9. EFFECTIVE DATE OF AGREEMENT; TERMINATION.

(a) This Agreement shall become effective at 9:30 A.M., New York
City time, on the first full business day following the day on
which the Registration Statement becomes effective or at the
time of the initial public offering by ALWC of the Shares,
whichever is earlier. The time of the initial public offering
shall mean the time, after the Registration Statement becomes
effective, of the release by ALWC for publication of the first
newspaper advertisement which is subsequently published
relating to the Shares or the time, after the Registration
Statement becomes effective, when the Shares are first
released by ALWC for offering by ALWC or dealers by letter or
telegram, whichever shall first occur. ALWC or the Company
may prevent this Agreement from becoming effective without
liability of any party to any other party, except as noted
below in this Section 9, by giving the notice indicated in
Section 9(c) before the time this Agreement becomes effective.

(b) In addition to the right to terminate this Agreement pursuant
to Section 7 hereof by reason of the Company's failure,
refusal or inability to perform all obligations and satisfy
all conditions on its part to be performed or satisfied
hereunder prior to the Closing Date or Optional Closing Date,
as the case may be, ALWC shall have the right to terminate
this Agreement at any time prior to the Closing Date or any
Optional Closing Date, as the case may be, by giving notice to
the Company, if the Company shall have sustained a material
adverse loss or material adverse interference with its
business or properties from fire, flood, accident, hurricane,
earthquake, theft, sabotage, or other calamity or malicious
act, including the death or disability of Mr. Thorburn,
whether or not covered by insurance, or from any labor dispute
or any court or governmental action, order or decree, of such
a character as to have a material adverse effect with the
conduct of the business and operations of the Company; or if
there shall have been a general suspension of, or a general
limitation on prices for, trading in securities on the New
York Stock Exchange, the American Stock Exchange or in the
over-the-counter market; or if a banking moratorium has been
declared by a state or federal authority; or if there shall
have been an outbreak of major hostilities between the United
States and any foreign power, or any other insurrection, armed
conflict or national calamity, which in the judgment of a
majority-in-interest of the underwriters, makes it
impracticable or inadvisable to proceed with the offering,
sale or delivery of the Firm Shares or the Additional Shares,
as the case may be.

(c) If ALWC elects to prevent this Agreement from becoming
effective as provided in this Section 9, or to terminate this
Agreement pursuant to Section 7, or this Section 9, ALWC

31
<PAGE> 32
shall notify the Company promptly by telephone, telecopier,
telex, or telegram, confirmed by letter. If, as so provided
in this Section 9, the Company elects to prevent this
Agreement from becoming effective, the Company shall notify
ALWC promptly by telephone, telecopier, telex, or telegram,
confirmed by letter.

(d) Anything in this Agreement to the contrary notwithstanding
other than Section 9(e), if this Agreement shall not become
effective by reason of an election pursuant to this Section 9
or if this Agreement shall terminate or shall otherwise not be
carried out within the time specified herein by reason of any
failure on the part of the Company to perform any covenant or
agreement or satisfy any condition of this Agreement by it to
be performed or satisfied, the sole liability of the Company
to ALWC, in addition to the obligations the Company assumed
pursuant to Section 4(g), will be to reimburse ALWC for such
reasonable out-of-pocket expenses (including the fees and
disbursements of their counsel) as shall have been incurred by
them in connection with this Agreement or the proposed offer,
sale, and delivery of the Shares, and upon demand the Company
agrees to pay promptly the full amount thereof to ALWC.

(e) Notwithstanding any election hereunder or any termination of
this Agreement, and whether or not this Agreement is otherwise
carried out, the provisions of Sections 4(b), 4(g), 6, 10(b)
and 10(c) shall not be in any way affected by such election or
termination or failure to carry out the terms of this
Agreement or any part hereof.

10. MISCELLANEOUS.

(a) Notices required to be in writing shall be mailed or delivered
(i) to the Company at its office at 9 Law Drive, Fairfield,
New Jersey 07006, Attention: Andrew Thorburn, Chairman & CEO,
with copies to Venable, Baetjer, Howard & Civiletti, LLP, 1201
New York Avenue, N.W., Washington, D.C. 20005, Attention:
David J. Levenson, Esq. or (ii) to ALWC at its office at 63
Wall Street, New York, New York 10005, Attention: Rick Bach,
President, with copies to Lehman & Eilen, 50 Charles Lindbergh
Boulevard, Suite 505, Uniondale, New York 11553, Attention:
Hank Gracin, Esq., and shall be deemed given when received.
Any notice not required to be in writing, including but not
limited to notices under Section 7(a) or 8 hereof, may be made
by telex, telecopier or telephone and shall be deemed given at
the time the telex, or telecopied communication is received or
the telephone call is made, but if so made shall be
subsequently confirmed in writing.

(b) The representations, warranties, covenants and agreements of
the Company, and the indemnity and contribution agreements,
contained in Sections 4, 5 and 6 of this Agreement will remain
in full force and effect, regardless of any investigation made
by or on behalf of ALWC, the Company or any of its officers or
directors or any controlling persons of ALWC or the Company
and will survive acceptance of and payment for any of the
Shares and the termination of this Agreement.

(c) This Agreement has been and is made solely for the benefit of
ALWC and the Company and the controlling persons, directors
and officers referred to in Section 6 hereof and their
respective successors and assigns, and no other person shall
acquire or have any

32
<PAGE> 33
right under or by virtue of this Agreement. The term
"successors and assigns" as used in this Agreement shall not
include a purchaser, as such purchaser, of Shares from ALWC.

(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, applicable
to contracts made and to be performed entirely with such
State, without regard to conflict of laws provisions thereof.

Please confirm that the foregoing correctly sets forth the agreement among the
Company and ALWC.

Very truly yours,

ALL AMERICAN FOOD GROUP, INC.

By:
--------------------------------
Andrew Thorburn, Chairman & CEO

Confirmed, as of the date first above mentioned.

ALEXANDER, WESCOTT & CO., INC.

By:
---------------------------
Rick Bach, President

<PAGE> 1
EXHIBIT 3.3

FORM OF

SECOND RESTATED
CERTIFICATE OF INCORPORATION
OF
ALL AMERICAN FOOD GROUP, INC.

Pursuant to the provisions of Section 14A:9-5(3) of the New Jersey
Business Corporation Act, All American Food Group, Inc. hereby executes the
following Restated Certificate of Incorporation.

FIRST: The name of the corporation is All American Food Group, Inc.
(the "Corporation").

SECOND: The purpose for which the Corporation is organized is to
engage in any activity within the purposes for which corporations may be
organized under the New Jersey Business Corporation Act, as the same currently
is in effect or may be amended from time to time, or under any successor
statute thereto.

THIRD: (a) The total number of shares which the Corporation shall
have authority to issue is Twenty-Four Million (24,000,000), consisting of
Twenty Million (20,000,000) shares of Common Stock, without par value, and Four
Million (4,000,000) shares of Preferred Stock without par value.

(b) The Board of Directors of the Corporation is authorized,
subject to any limitations prescribed by law to (a) divide the authorized
Preferred Stock in series, (b) determine the designation and number of shares
constituting each series so designated (and to decrease, but to not less than
the number of shares of such series then outstanding, or to increase, subject
to the availability of sufficient authorized shares, the number of shares of
any such series), and (c) determine the relative rights, preferences and
limitations of the shares of any series. Any and all such divisions and
determinations may be accomplished by amendment of this Second Restated
Certificate of Incorporation authorized and approved solely by the Board of
Directors. The Board of Directors is authorized to change the designation and
the relative rights, preferences and limitations of shares of any series
theretofore established, no shares of which have theretofore been issued;
provided, however, that the Board of Directors shall retain no authority,
absent an affirmative vote of the requisite majority of holders of Common Stock
and holders of the requisite majority of other classes of stock of the
Corporation, if any, entitled to vote
<PAGE> 2
thereon, to redesignate the Four Million (4,000,000) shares of Preferred Stock,
or any portion thereof, as stock of an undesignated class or as a class of
Common Stock.

FOURTH: To the fullest extent permitted by the New Jersey Business
Corporation Act as the same currently is in effect or may be amended from time
to time (but, with respect to any such amendment, only to the extent that such
amendment further limits the liability of officers and directors), or by any
successor statute thereto or other applicable law presently or hereafter in
effect, no director or officer of the Corporation shall be personally liable to
the Corporation or its shareholders for damages for breach of any duty owed to
the Corporation or its shareholders; provided, however, that, to the extent
required by applicable law, this ARTICLE FOURTH shall not relieve any person
from liability for any breach of duty based upon an act or omission (a) in
breach of such person's duty of loyalty to the Corporation or its shareholders,
(b) not in good faith or involving a knowing violation of law, or (c) resulting
in receipt by such person of an improper personal benefit. No amendment to or
repeal of this ARTICLE FOURTH, and no amendment, repeal or termination of
effectiveness of any law authorizing this ARTICLE FOURTH, shall apply to or
affect adversely any right or protection of any director or officer for or with
respect to any acts or omissions of such director or officer occurring prior to
the effectiveness of any such amendment, repeal or termination of
effectiveness.

FIFTH: Each person who (a) is, was, or agrees to become a director,
officer or trustee of the Corporation or any constituent corporation absorbed
by the Corporation in a consolidation or merger, (b) is or was serving or
agrees to serve, at the request of the Corporation or any such constituent
corporation, as a director, trustee, officer, employee or agent of any other
enterprise (including, without limitation, any employee benefit plan), or (c)
is or was the legal representative of any of the foregoing persons, shall be
entitled to be indemnified and to have paid by the Corporation on his behalf,
or to be reimbursed by the Corporation for, reasonable expenses in advance of
final disposition of a proceeding, in accordance with the By-Laws of the
Corporation, to the fullest extent permitted, and subject to such conditions as
may be imposed, from time to time, by the New Jersey Business Corporation Act
as the same currently is in effect or may be amended from time to time (but,
with respect to any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than were
available prior to such amendment), or by any successor statute thereto or
other applicable law presently or hereafter in effect. The Corporation shall
have the authority, with the approval of the Board of Directors, but shall not
be required, to provide indemnification and advancement of expenses to any
other "corporate agent" of the Corporation, as that term is defined in Section
14A:3-5(1)(a) of the New Jersey Business Corporation Act, as the same currently
is in effect or may be amended from time to time,

-2-
<PAGE> 3
or by any successor statute thereto or other applicable law, in accordance with
the By-Laws of the Corporation and the requirements of applicable law. Without
limiting the generality or the effect of the foregoing, the Corporation may
enter into one or more agreements with any person which provide for
indemnification broader than or different from the indemnification provided for
in this ARTICLE FIFTH, including, without limitation, indemnification against
liabilities and expenses incurred in proceedings by or in the right of the
Corporation. No amendment or repeal of this ARTICLE FIFTH shall adversely
affect any right or protection existing hereunder immediately prior to such
amendment or repeal.

SIXTH: The address of the Corporation's current registered office is
150 Elm Street, Westfield, New Jersey 07090. The name of the registered agent
at such address is Dwyer & Canellis.

SEVENTH: (a) The Board of Directors of the Corporation shall consist
of no less than three (3) nor more than fifteen (15) members. Subject to the
foregoing and to the rights of the holders of any series of Preferred Stock to
elect directors under specified circumstances, the number of Directors of the
Corporation shall be fixed by or in the manner prescribed by the By-Laws of the
Corporation and may be increased or decreased, from time to time, in the manner
prescribed by such By-Laws.

(b) The number of directors constituting the current Board of
Directors of the Corporation is three (3). The names and addresses of all
persons who presently are serving as such directors are:

NAME ADDRESS
---- -------

John Chitvanni 910 West Lake Street, Roselle, IL 60172

Chris Decker 9 Law Drive, 2nd Floor, Fairfield, NJ 07006

Andrew Thorburn 9 Law Drive, 2nd Floor, Fairfield, NJ 07006

(c) A majority of the directors constituting the whole
Board of Directors may remove one or more of the directors for cause and may
suspend one or more of the directors pending final determination that cause for
removal exists.

-3-
<PAGE> 4
(d) One or more of the directors of the Corporation may
be removed, but only for cause, by the shareholders by the affirmative vote of
a majority of the votes cast by the holders of shares entitled to vote for the
election of directors.

EIGHTH: Pursuant to Section 14A:9-5(6) of the New Jersey Business
Corporation Act, this Second Restated Certificate of Incorporation Shall become
effective on the date of filing thereof in the office of the Secretary of State
of the State of New Jersey.

IN WITNESS WHEREOF, this Second Restated Certificate of Incorporation
has been executed by Andrew Thorburn, the President of the Corporation, this
____ day of ____________, 1996.

All American Food Group, Inc.

By:
-------------------------------
Andrew Thorburn, President

-4-

<PAGE> 1
EXHIBIT 3.5

FORM OF

SECOND AMENDED AND RESTATED BY-LAWS OF
ALL AMERICAN FOOD GROUP, INC.
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.1. Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Regularly Scheduled Annual Meeting. . . . . . . . . . . . . . . . . . . . . . 1
B. Delayed Annual Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.2. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.3. Place of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.4. Notice of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 1.5. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 1.6. Organization of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 1.7. Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Section 1.8. Shareholder List. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Section 1.9. Inspectors of Elections. . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE II - BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 2.1. General Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 2.2. Number; Tenure and Qualifications. . . . . . . . . . . . . . . . . . . . . 4

Section 2.3. Regular Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 2.4. Special Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 2.5. Place of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Section 2.6. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Section 2.7. Quorum; Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Section 2.8. Participation by Conference Telephone. . . . . . . . . . . . . . . . . . 5

Section 2.9. Adjournments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>

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<PAGE> 3
<TABLE>
<S> <C>
Section 2.10. Action Without a Meeting. . . . . . . . . . . . . . . . . . . . . . . . 5

Section 2.11. Committees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Section 2.12. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Section 2.13. Resignation; Removal; Suspension. . . . . . . . . . . . . . . . . . . . . 6

Section 2.14. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE III - OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Section 3.1. Enumeration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Section 3.2. Election; Tenure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Section 3.3. Powers and Duties of Chairman. . . . . . . . . . . . . . . . . . . . . . . 7

Section 3.4. Powers and Duties of President. . . . . . . . . . . . . . . . . . . . . . 7

Section 3.5. Powers and Duties of Vice-Presidents. . . . . . . . . . . . . . . . . . . 8

Section 3.6. Powers and Duties of Secretary. . . . . . . . . . . . . . . . . . . . . . 8

Section 3.7. Powers and Duties of Treasurer. . . . . . . . . . . . . . . . . . . . . . 8

Section 3.8. Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 3.9. Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 3.10. Resignation; Removal. . . . . . . . . . . . . . . . . . . . . . . . . . 9

Section 3.11. Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE IV - INDEMNIFICATION; INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 4.1 Action by Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Section 4.2. Actions by or in the Right of the Corporation. . . . . . . . . . . . . . 10

Section 4.3. Successful Defense. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 4.4. Specific Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . 11

Section 4.5. Advancement of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>

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<PAGE> 4
<TABLE>
<S> <C>
Section 4.6. Right of Indemnity not Exclusive. . . . . . . . . . . . . . . . . . . . . 12

Section 4.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 4.8. Invalidity of any Provision of this Article. . . . . . . . . . . . . . . 12

ARTICLE V - CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 5.1. Share Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 5.2. Shareholder Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 5.3. Transfer of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 5.4. Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 5.5. Record Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Section 5.6. Lost Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE VI - OFFICES AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 6.1. Registered Office and Agent. . . . . . . . . . . . . . . . . . . . . . . 14

Section 6.2. Principal Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 6.3. Additional Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Section 6.4. Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE VII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Section 7.1. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Section 7.2. Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Section 7.3. Corporate Seal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Section 7.4. Execution of Written Instruments. . . . . . . . . . . . . . . . . . . . . 15

Section 7.5. Signing of Checks, Notes, Etc. . . . . . . . . . . . . . . . . . . . . . 15

Section 7.6. Voting Upon Stocks Held by the Corporation. . . . . . . . . . . . . . . . 16

Section 7.7. Loans to Directors, Officers and Employees. . . . . . . . . . . . . . . . 16
</TABLE>

- iii -
<PAGE> 5
<TABLE>
<S> <C>
Section 7.8. Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Section 7.9. Force and Effect of By-Laws. . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VIII - AMENDMENT OF BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE IX - EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>

- iv -
<PAGE> 6

FORM OF

SECOND AMENDED AND RESTATED BY-LAWS OF
ALL AMERICAN FOOD GROUP, INC.

ARTICLE I
SHAREHOLDERS

SECTION 1.1. ANNUAL MEETING.

A. REGULARLY SCHEDULED ANNUAL MEETING. The annual meeting of
the shareholders of the Corporation shall be held each year on such date and at
such time as may be designated by resolution of the Board of Directors or, in
the absence of such designation, at ten o'clock in the morning on the third
Tuesday of May of each year, if not a legal holiday, and if a legal holiday
then on the next succeeding day not a legal holiday.

B. DELAYED ANNUAL MEETING. If, for any reason, the annual
meeting of the shareholders of the Corporation shall not be held on the day
designated pursuant to Paragraph A of this Section 1.1, or on any subsequent
day to which it shall have been duly adjourned, such meeting shall be called
and held as a special meeting, and the same proceedings may be had and the same
business may be transacted at such special meeting as may be had and transacted
at any annual meeting.

SECTION 1.2. SPECIAL MEETINGS. Except as otherwise provided by
applicable law, special meetings of the shareholders of the Corporation may be
called only by resolution of the Board of Directors or by the President.

SECTION 1.3. PLACE OF MEETINGS. Meetings of the shareholders of the
Corporation shall be held at the principal offices of the Corporation or at
such other place or places, either within or without the State of New Jersey,
as may be designated by resolution of the Board of Directors from time to time.

SECTION 1.4. NOTICE OF MEETINGS. Written or printed notice, stating
the place, day, hour and, in general terms, the purpose or purposes for which
the meeting is called, shall be prepared and delivered not less than ten (10)
nor more than sixty (60) days prior to the date of each meeting of the
shareholders of the Corporation, either personally or by mail to each
shareholder of record entitled to vote at such meeting and to each other
person, if any, entitled to notice thereof. If mailed, notice shall be deemed
to be delivered

<PAGE> 7
when deposited in the United States mail with postage thereon prepaid,
addressed to the shareholder at his or her address as it appears on the stock
transfer books of the Corporation or at such other address as shall be
furnished in writing by a shareholder to the Corporation for such purpose.

Any meeting of the shareholders (whether annual or special) may be
held without notice if all shareholders entitled to vote thereat are present in
person or by proxy and no shareholder protests the lack of notice prior to the
conclusion of the meeting, or if all such shareholders waive notice of such
meeting, either in person or by proxy, in writing, either before or after the
meeting.

SECTION 1.5. QUORUM. Except as otherwise provided by applicable law
or the Certificate of Incorporation of the Corporation as the same may be in
effect from time to time (the "Charter"), the presence, in person or by proxy,
of the holders of shares entitled to cast a majority of the votes at any
meeting of the shareholders of the Corporation shall constitute a quorum at
such meeting. If there shall not be represented, in person or by proxy, the
holders of sufficient shares to constitute a quorum in accordance with the
preceding sentence, the holders of a majority of the shares so present may
adjourn the meeting, from time to time, without notice other than by
announcement at the meeting, until holders of the number of shares necessary to
constitute a quorum shall be present. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally called.

SECTION 1.6. ORGANIZATION OF MEETINGS. Each meeting of the
shareholders shall be presided over by the President, or in the absence of the
President, by an acting chairman designated in advance by the Board of
Directors or, in the absence of such designation, by a chairman to be chosen at
such meeting. The Secretary of the Corporation, or in his or her absence, an
Assistant Secretary, if there be one, or in the absence of an Assistant
Secretary, an acting secretary chosen at the meeting, shall act as secretary
for such meeting.

SECTION 1.7. VOTING. Except as otherwise provided by applicable law
or the Charter, at each meeting of the shareholders, every holder of record of
shares of stock entitled to vote thereat shall be entitled to one (1) vote for
each share of such stock standing in his or her name on the records of the
Corporation on each matter submitted to a vote of the shareholders at such
meeting. Except as otherwise provided by applicable law or the Charter,
elections of directors shall be determined by a plurality of the votes cast and
all other actions shall be determined by a majority of the votes cast. At any
meeting of shareholders, a shareholder entitled to vote may do so in person or
by proxy. Each proxy shall either be in writing and executed by the
shareholder granting such proxy or by such shareholder's duly authorized
attorney-in-fact, or given by telegram, facsimile, cable or other means of
electronic communication which results in a writing, and delivered to the
Inspectors of Elections at the meeting.

- 2 -
<PAGE> 8
SECTION 1.8. SHAREHOLDER LIST. In advance of each meeting of the
shareholders of the Corporation, the officer or agent having charge of the
Corporation's stock transfer books shall prepare a full, true and complete
list, in alphabetical order (which may be within each class, series or group of
shareholders maintained by the Corporation for ease of reference), of all
shareholders entitled to vote at each meeting, with the address of each such
shareholder and the number of shares registered in his or her name; which list
shall be produced or available by means of a visual display at the place and
during the whole time of the meeting and may be inspected for reasonable
periods by any shareholder who is present at such meeting.

SECTION 1.9. INSPECTORS OF ELECTIONS. In advance of any meeting of
the shareholders, the Board of Directors may appoint one or more Inspectors of
Elections to act at the meeting or any adjournment thereof. In the event that
any person appointed to act as an Inspector of Elections shall fail to appear
or to act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the meeting or at the meeting by the chairman of the
meeting. If Inspectors of Elections are not so appointed by the Board of
Directors or shall fail to qualify, the chairman of the meeting may, and on the
request of any shareholder shall, appoint one or more Inspectors of Elections.
Each Inspector of Elections, before entering upon the discharge of his or her
duties, shall take and sign an oath to faithfully execute the duties of
Inspector of Elections with strict impartiality and according to the best of
his or her abilities. If appointed, Inspectors of Elections shall determine
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum and the validity and
effect of proxies, and shall receive votes or consents, hear and determine all
challenges and questions arising in connection with the right to vote, count
and tabulate all votes or consents, determine the result, and do such acts as
are proper to conduct the election or vote with fairness to all shareholders.
On request of the chairman of the meeting or any shareholder entitled to vote
thereat, the Inspectors of Elections shall make a report, in writing, of any
challenge, question or matter determined by them, which report shall be prima
facie evidence of the facts therein stated and shall be filed with the minutes
of the meeting to which it related. If there are three or more Inspectors of
Elections, the act of a majority shall govern.

ARTICLE II
BOARD OF DIRECTORS

SECTION 2.1. GENERAL POWERS. The business and the property of the
Corporation shall be managed by, or under the direction of, the Board of
Directors. In addition to the powers and authority expressly conferred by
these By-Laws, the Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and

- 3 -
<PAGE> 9
things as are not by applicable law, the Charter or these By-Laws required to
be exercised or done by the shareholders.

SECTION 2.2. NUMBER; TENURE AND QUALIFICATIONS. The number of
directors constituting the Board of Directors shall be fixed from time to time
pursuant to a resolution of the Board of Directors, but shall be no fewer than
three (3) nor more than fifteen (15). Each director shall be elected annually
at the annual meeting of the shareholders and shall hold office until the next
succeeding annual meeting of the shareholders, and until his or her successor
shall have been elected and qualified, or until his or her earlier death,
resignation or removal. Directors need not been citizens of the United States,
residents of the State of New Jersey or shareholders of the Corporation.

SECTION 2.3. REGULAR MEETINGS. A regular meeting of the Board of
Directors to elect officers and consider such other business as may properly
come before such meeting shall be held without notice other than this Section
2.3 immediately following, and at the same place as, the annual meeting of the
shareholders. The Board of Directors, by resolution, may provide for
additional regular meetings, which may be held without notice other than such
resolution.

SECTION 2.4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the President or at the request
of a majority of the directors then in office. Notice of each such special
meeting shall be given to each director at his business or residence in writing
or by telegram, facsimile or telephonic communication. If mailed, such notice
shall be deemed adequately delivered if deposited in the United States mail so
addressed, with postage thereon prepaid, at least five (5) calendar days in
advance of the date of such meeting. If by telegram, such notice shall be
deemed adequately delivered if the telegram is delivered to the telegraph
company at least two (2) calendar days in advance of the date of such meeting.
If by telephone or facsimile, such notice shall be deemed adequately delivered
if given at least twenty-four (24) hours in advance of the time of such
meeting.

SECTION 2.5. PLACE OF MEETINGS. Meetings of the Board of Directors
shall be held at such place, either within or without the State of New Jersey,
as may be designated by resolution of the Board of Directors from time to time,
or as may be specified in the notice or waiver of notice thereof. In the
absence of such designation or specification, meetings of the Board of
Directors shall be held at the principal offices of the Corporation.

SECTION 2.6. NOTICE. Neither the business to be transacted at, nor
the purpose of, any meeting of the Board of Directors need be specified in the
notice or waiver of notice thereof. Any meeting may be held without notice if
all directors are present and no director protests the lack of notice prior to
the conclusion of the meeting, or if all

- 4 -
<PAGE> 10
directors waive notice of such meeting, either in person or by proxy, in
writing, either before or after the meeting.

SECTION 2.7. QUORUM; VOTING. A majority of the members of the Board
of Directors then holding office shall constitute a quorum for the transaction
of business; provided, however that a quorum shall at no time be constituted by
less than one-third (1/3) of the number of directors constituting the whole
Board of Directors. If there shall not be present a sufficient number of
directors to constitute a quorum in accordance with the preceding sentence, a
majority of the directors present may adjourn the meeting, from time to time,
until a quorum shall be present. Except as otherwise provided by applicable law
or the Charter, each director shall have one (1) vote at meetings of the Board
of Directors and of any committee thereof of which he or she is a member.
Except as otherwise provided by applicable law or the Charter, any action
approved by a majority of the directors present at a meeting of the Board of
Directors or a committee thereof at which a quorum is present shall be the act
of the Board or such committee.

SECTION 2.8. PARTICIPATION BY CONFERENCE TELEPHONE. Where
appropriate communication facilities are reasonably available, any or all
directors shall have the right to participate in all or any part of any meeting
of the Board of Directors by means of conference telephone or any other means
of communication by which all persons participating in the meeting are able to
hear each other and participating in a meeting pursuant to this Section 2.8
shall constitute presence in person at such meeting.

SECTION 2.9. ADJOURNMENTS. Any meeting of the Board of Directors or
any committee thereof may be adjourned prior to the completion of business
thereat. Notice of an adjourned meeting need not be given if the time and place
are fixed at the meeting adjourning and if the period of adjournment does not
exceed ten (10) calendar days in any one adjournment. If a quorum is present
at such subsequent meeting, any business may be transacted thereat that could
have been transacted at the meeting which was adjourned.

SECTION 2.10. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of the Board of Directors or any committee
thereof may be taken without a meeting if, prior to or subsequent to such
action, each member of the Board of Directors or the committee, as the case may
be, shall consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board of Directors or
the committee, as the case may be.

SECTION 2.11. COMMITTEES. The Board of Directors, in its discretion,
by resolution passed by a majority of the directors constituting the whole
Board, may designate from among its members an executive committee and one or
more other committees, each of which shall have one or more members. The Board
of Directors may designate one or more directors as alternate members of any
such committee, who may replace any absent or disqualified member at any
meeting thereof. To the extent provided

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in the designating resolution, each committee shall have and may exercise all
of the authority of the Board of Directors. Unless the Board of Directors
shall otherwise provide, the presence of a majority of the members of any
committee shall constitute a quorum for the purpose of transacting business
thereat, the act of a majority of the members of such committee present shall
be the act of the committee, and such majority may fix the time and place of
the meetings of the committee. Actions taken at any meeting of a committee of
the Board of Directors shall be reported to the Board of Directors at its next
succeeding meeting, except that if such Board meeting is held within two (2)
calendar days following the meeting of a committee, such report may be made at
the second meeting of the Board of Directors succeeding such committee meeting.

SECTION 2.12. COMPENSATION. The Board of Directors may determine,
from time to time, the amount of compensation which shall be paid to its
members. The Board of Directors also may allow a fixed sum and expenses for
attendance at each regular or special meeting of the Board or Directors or any
committee thereof and may provide for and pay to directors rendering services
to the Corporation not ordinarily rendered by directors, such special
compensation as the Board shall determine to be appropriate to the value of
such services.

SECTION 2.13. RESIGNATION; REMOVAL; SUSPENSION. Any director may
resign at any time by giving written notice to the Board of Directors or the
Secretary of the Corporation. Such resignation shall be effective upon receipt
thereof by the Board of Directors or the Secretary or at such subsequent time
as shall be specified in the notice of resignation. Any one or more of the
directors of the Corporation may be removed, but only for cause, at any time by
the affirmative vote of the majority of the votes cast by holders of shares
entitled to vote for the election directors, or by a majority of the directors
constituting the whole Board of Directors. A majority of the directors
constituting the whole Board of Directors may remove or more of the directors
for cause and may suspend one or more of the directors pending a final
determination that cause for removal exists.

SECTION 2.14. VACANCIES. If any vacancy shall occur in the Board of
Directors, by reason of death, resignation, increase in the authorized number
of directors or otherwise, such vacancy shall be filled by a majority of the
directors then in office, though less than a quorum (except as otherwise
provided by applicable law), and the successor director so chosen shall hold
office for the unexpired term in respect of which such vacancy occurred, and
his or her successor is elected and qualified, or until his or her earlier
death, resignation or removal.

ARTICLE III
OFFICERS

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<PAGE> 12
SECTION 3.1. ENUMERATION. The officers of the Corporation shall be a
President, one or more Vice-Presidents, a Secretary and a Treasurer. The Board
of Directors, from time to time, may elect a Chairman of the Board, additional
Vice-Presidents, Assistant Secretaries, Assistant Treasurers and such other
officers and agents as it shall deem appropriate and may define the powers and
duties of any such officers. Any number of offices may be held by the same
person; provided, however, that no officer shall execute, acknowledge, or
verify any instrument in more than one capacity of such instrument is required
by law or by these By-Laws to be executed, acknowledged or verified by two or
more officers. Each officer chosen in the manner prescribed hereby shall have
such powers and duties as generally pertain to his or her office or offices,
subject to the specific provisions of this Article III. Each such officer also
shall have such powers and duties as the Board of Directors may, from time to
time, confer.

SECTION 3.2. ELECTION; TENURE. The officers of the Corporation shall
be elected annually by the Board of Directors at the first meeting thereof
after the annual election of directors by the shareholders of the Corporation.
If the election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as is convenient. Each officer shall hold
office until his or her successor shall have been elected and qualified, or
until his or her earlier death, resignation or removal.

SECTION 3.3. POWERS AND DUTIES OF CHAIRMAN. The Chairman of the
Board, if there be one, shall have such duties, power and authority as may be
assigned thereto by resolution of the Board of Directors.

SECTION 3.4. POWERS AND DUTIES OF PRESIDENT. The President shall be
the chief executive officer of the Corporation. The President shall preside at
all meetings of the shareholders and of the Board of Directors. The President
shall exercise the powers and perform the duties usual to a chief executive
officer and, subject to the control of the Board of Directors, shall have
general management and control of the affairs and business of the Corporation.
The President may appoint and discharge employees and agents of the Corporation
(other than those elected by the Board of Directors) and fix their compensation
and he shall see that all orders and resolutions of the Board of Directors are
carried into effect. He shall have the authority to sign and execute bonds,
mortgages and other contracts, agreements, obligations and instruments of the
Corporation in the name thereof and, with the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer, may sign all certificates of the
shares of the stock of the Corporation. The President shall from time to time
make such reports of the affairs of the Corporation as the Board of Directors
may require. The President shall do and perform such other duties as from time
to time may be assigned by the Board of Directors.

SECTION 3.5. POWERS AND DUTIES OF VICE-PRESIDENTS. Each
Vice-President, if there be more than one in the order of their seniority,
shall, in the absence or disability of the President, possess and exercise all
of the powers and may perform all of the duties of

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<PAGE> 13
the President. Vice-Presidents shall have the authority to sign and execute
bonds, mortgages and other contracts, agreements, obligations and instruments
of the Corporation in the name thereof and, with the Treasurer, the Secretary
or an Assistant Treasurer or an Assistant Secretary may sign all certificates
of the shares of the stock of the Corporation. Vice-Presidents shall do and
perform such other duties as from time to time may be assigned by the Board of
Directors or the President.

SECTION 3.6. POWERS AND DUTIES OF SECRETARY. The Secretary shall
attend all meetings of the Board of Directors and the shareholders and shall
record all notes and minutes of the proceedings thereat in a book belonging to
the Corporation kept for that purpose. The Secretary shall give or cause to be
given all notices of the Corporation including, without limitation, all
required notices of meetings of the shareholders and the Board of Directors.
The Secretary may sign, with the President, in the name of the Corporation all
instruments authorized by the Board of Directors, and when so ordered by the
Board of Directors shall affix the seal of the Corporation and, shall attest
thereto by his or her signature. The Secretary shall have charge of the stock
records and all other books, records and papers of the Corporation (other than
financial books, records and papers) and shall see that all books, reports,
statements, certificates and other documents and records required by law are
properly kept and filed. The Secretary in general shall perform all of the
duties and possess such other powers as are incident to that office, subject to
the control of the Board of Directors, and shall do and perform such other
duties as from time to time may be assigned by the Board of Directors or the
President.

SECTION 3.7. POWERS AND DUTIES OF TREASURER. The Treasurer shall
have custody of the funds and securities of the Corporation and shall keep or
cause to be kept full and accurate accounts of receipts and disbursements in
books belonging to the Corporation. The Treasurer shall deposit all monies and
other valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, whenever requested, an account of all
of his or her transactions as Treasurer and of the financial condition of the
Corporation. The Treasurer in general shall perform such other duties and
possess such other powers as are incident to that office, subject to the
control of the Board of Directors, and shall do and perform such other duties
as from time to time may be assigned by the Board of Directors or the
President.

SECTION 3.8. DELEGATION OF DUTIES. In case of the absence or
disability of any officer of the Corporation, or for any other reason that the
Board of Directors may deem sufficient, the Board may delegate all or any
portion of the powers or duties of any such officer to any other officer or to
any director.

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<PAGE> 14
SECTION 3.9. COMPENSATION. The Board of Directors shall fix the
salary of the President and the Chairman of the Board, if there be one, or may
delegate the authority to do so to a committee of the Board of Directors. The
salaries of other officers, agents and employees of the Corporation may be
fixed by the Board of Directors, by a committee of the Board, or by an officer
or officers to whom such authority has been delegated by the Board of Directors
or a committee thereof.

SECTION 3.10. RESIGNATION; REMOVAL. Any officer may resign at any
time by giving written notice to the Board of Directors or the Secretary of the
Corporation. Such resignation shall be effective upon receipt thereof by the
Board of Directors or the Secretary or at such subsequent time as shall be
specified in the notice of resignation. Any officer may be removed, with or
without cause, at any time, by the Board of Directors. Election as an officer
shall not of itself create any contract rights and the removal of an officer
shall be without prejudice to his or her contract rights, if any.

SECTION 3.11. VACANCIES. If the office of any officer or agent
becomes vacant by reason of death, resignation, removal from office, or
otherwise, the Board of Directors may choose a successor, who shall hold office
for the unexpired term in respect of which such vacancy occurred. The Board of
Directors may leave unfilled for such period as it may fix by resolution any
office except those of President, Treasurer and Secretary.

ARTICLE IV
INDEMNIFICATION; INSURANCE

SECTION 4.1 ACTION BY OTHERS. The Corporation (1) shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he or she is, was or
agrees to become a director, officer or trustee of the Corporation or of any
constituent corporation absorbed by the Corporation in a consolidation or
merger or is or was serving or has agreed to serve as a director, officer,
trustee employee or agent of any other enterprise (including, without
limitation, any employee benefit plan), serving as such at the request of the
Corporation or such constituent corporation or the legal representative of any
of the foregoing person and (2) except as otherwise required by Section 4.3
hereof, may indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation) by reason of the fact
that he or she is, was or has agreed to become an employee or agent of the
Corporation or of any such constituent corporation or the legal representative
of any of the foregoing persons, against expenses, costs, disbursements
(including attorneys' fees), judgments, fines and amounts actually and
reasonably incurred by him or her in good

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<PAGE> 15
faith and in connection with such action, suit or proceeding if he or she acted
in a manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, he or she had no reasonable cause to believe that his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person
seeking indemnification did not meet the applicable standard of conduct.

SECTION 4.2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation (1) shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that he or she is, was or has agreed to
become a director, officer or trustee of the Corporation or of any constituent
corporation absorbed by the Corporation in a consolidation or merger or is or
was serving or has agreed to serve as a director, officer, employee or agent of
any other enterprise (including, without limitation, any employee benefit
plan), serving as such at the request of the Corporation or such constituent
corporation or the legal representative of any of the foregoing and (2) except
as otherwise required by Section 4.3 hereof, may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he or she was or has agreed to become an employee or
agent of the Corporation or of any such constituent corporation or the legal
representative of any of the foregoing, against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which the person seeking
indemnification shall have been adjudged to be liable to the Corporation in the
performance of his or her duty to the Corporation unless, and only to the
extent that, the New Jersey Superior Court or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the New Jersey Superior Court or such other court shall deem proper.

SECTION 4.3. SUCCESSFUL DEFENSE. To the extent that a person who may
or must be indemnified by the Corporation pursuant to Section 4.1 and Section
4.2 hereof has been successful on the merits or otherwise in defense of any
action, suit proceeding referred to in such Section 4.1 or Section 4.2, or in
defense of any claim, issue, or matter therein, he or she shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith.

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<PAGE> 16
SECTION 4.4. SPECIFIC AUTHORIZATION. Any indemnification under
Section 4.1 or Section 4.2 hereof (unless ordered by a court) shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, trustee, employee, agent, or the
legal representative thereof, is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in such Sections 4.1 and
4.2. Such determination shall be made (1) by the Board of Directors or a
committee thereof, acting by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or even if such a quorum of disinterested
directors is obtainable, if such quorum or committee by majority vote so
directs, by independent legal counsel in a written opinion, with such counsel
to be designated by the Board of Directors, or (3) by the shareholders.
Notwithstanding the foregoing, following any "change in control" of the
Corporation of the type required to be reported pursuant to Item 1 of Form 8-K
under the Securities Exchange Act of 1934, as amended, or any successor
provision thereto, any determination required hereby shall be made by
independent legal counsel selected by the person seeking indemnification and
reasonably acceptable to the Board of Directors, which legal counsel shall be
retained at the expense of the Corporation for the purpose of making such
determination.

SECTION 4.5. ADVANCEMENT OF EXPENSES. Expenses incurred by any
person whom the Corporation is required to indemnify pursuant to this Article
shall, and by any person whom the Corporation is permitted to indemnify
pursuant to this Article may, be paid by the Corporation in advance of the
final disposition of the action, suit or proceeding as to which indemnification
is sought, as authorized in the specific case, in the same manner as a
determination that indemnification is proper under Section 4.4 hereof, upon
receipt of an undertaking by or on behalf of the person seeking advancement of
expenses, or the legal representative thereof, to repay such amount unless it
shall ultimately be determined that he or she is entitled to be indemnified by
the Corporation pursuant to this Article.

SECTION 4.6. RIGHT OF INDEMNITY NOT EXCLUSIVE. The right to
indemnification and advancement of expenses provided by this Article shall not
exclude any other rights which any person seeking indemnification may have or
may hereafter acquire pursuant to any statute, any provision of the Charter, or
any by-law, agreement, vote of shareholders or otherwise, and shall continue as
to a person who has ceased to be a director, officer, trustee, employee, agent
or other person, or the legal representative of any such person, whom the
Corporation is required or permitted to indemnify pursuant to this Article, and
shall inure to the benefit of the heirs, executors, and administrators of such
a person.

SECTION 4.7. INSURANCE. The Corporation may purchase and maintain
insurance, at its expense and on its behalf and on behalf of any person whom
the Corporation is required or permitted to indemnify pursuant to this Article
against any expenses incurred in any proceeding and any liabilities asserted
against him or her by reason of his or her

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<PAGE> 17
having a status or serving, having serviced, or having agreed to serve in a
capacity giving rise to such expenses or liability, whether or not the
Corporation would have the power to indemnify him or her against such expenses
and liabilities under the provisions of this Article, applicable law, or
otherwise.

SECTION 4.8. INVALIDITY OF ANY PROVISION OF THIS ARTICLE. The
invalidity or unenforceability of any provision of this Article IV shall not
affect the validity or enforceability of the remaining provisions of this
Article.

ARTICLE V
CAPITAL STOCK

SECTION 5.1. SHARE CERTIFICATES. Each holder of shares of the
capital stock of the Corporation shall be entitled to a certificate or
certificates, in a form (which may include cards punched, magnetically coded or
otherwise treated so as to facilitate machine or automatic processing) approved
by the Board of Directors, which shall represent and certify the number, class
and series of shares owned by him or her in the Corporation. Certificates
shall be consecutively numbered. Each certificate shall be signed by the
Chairman of the Board of Directors, if there be one, the President or a
Vice-President, and also by the Secretary or Treasurer or any Assistant
Secretary or Assistant Treasurer (any of which signature may be facsimile) and
may be sealed with the seal of the Corporation or a facsimile thereof. No
certificate shall be valid unless it is signed in the manner prescribed by the
preceding sentence. In case any officer, transfer agent or registrar who has
signed, or whose facsimile signature has been placed on, a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.

SECTION 5.2. SHAREHOLDER RECORDS. The name of the person owning the
shares represented by each stock certificate issued by the Corporation,
together with the number, class and series of shares represented thereby and
the date of issue, shall be entered on the Corporation's books. The
Corporation shall be entitled to treat the holder of record of shares on its
books as the holder in fact and shall not be required to recognize any
equitable or other claim to or interest in the shares.

SECTION 5.3. TRANSFER OF SHARES. Shares of the capital stock of the
Corporation shall be transferred only on the books of the Corporation by the
holder thereof in person, or by such holder's attorney, upon surrender of
certificates for a like number of shares, duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer and such
proof of the authenticity of the signature thereon as the Corporation or its
agents may reasonably require. Upon presentation of adequate evidence of the
validity of the transfer pursuant to this Section 5.3, the surrendered
certificates shall be

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canceled, new certificates shall be issued to the person entitled thereto, and
the transaction recorded on the books of the Corporation. The Board of
Directors shall have power and authority to make all such rules and regulations
as it may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the Corporation.

SECTION 5.4. TRANSFER AGENT. The Board of Directors may appoint a
transfer agent and a registrar of transfers, and may require that all stock
certificates bear the signature (which may be a facsimile) of such transfer
agent and such registrar of transfers.

SECTION 5.5. RECORD DATES. The Board of Directors may fix, in
advance, a date as the record date for determining the Corporation's
shareholders entitled to notice of and to vote at a meeting of the
shareholders, or to receive the payment of any dividend or the distribution or
allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of capital stock, or in order to make a determination of
shareholders for any other proper purpose. The record date may not be more than
sixty (60) days and, in the case of a meeting of the shareholders, not less
than ten (10) days, prior to the date on which the event or action requiring
the determination of shareholders is to occur or be taken.

SECTION 5.6. LOST CERTIFICATES. In the event that any certificate
representing shares of capital stock of the Corporation is lost, stolen,
destroyed or mutilated, the Board of Directors may authorize the issuance of a
new certificate of like tenor for the same number of shares in replacement
thereof. The Board, in its discretion, may, as a condition precedent to
issuance of such a new certificate, require the owner of the certificate being
replaced, or the legal representative thereof, to make an affidavit or
affirmation setting forth such facts as to the events necessitating the
issuance of a new certificate as the Board deems necessary and to give the
Corporation a bond in such reasonable amount as the Board may determine to
indemnify the Corporation against any claim against the Corporation on the
certificate being replaced.

ARTICLE VI
OFFICES AND RECORDS

SECTION 6.1. REGISTERED OFFICE AND AGENT. At the time of adoption of
these By-Laws, the address of the Corporation's registered office in the State
of New Jersey is 150 Elm Street, Westfield, New Jersey 07090 and the name of
the registered agent at such address is Dwyer & Canellis. The Corporation may
change its registered office or its registered agent or both from time to time
by resolution of the Board of Directors.

SECTION 6.2. PRINCIPAL OFFICE. At the time of adoption of these
By-Laws, the address of the principal office of the Corporation is 9 Law Drive,
Fairfield, New Jersey

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<PAGE> 19
07006. The Corporation may change its principal office from time to time by
resolution of the Board of Directors.

SECTION 6.3. ADDITIONAL OFFICES. The Corporation may have such other
offices, either within or without the State of New Jersey, as the Board of
Directors may from time to time designate or as the business of the Corporation
may from time to time require.

SECTION 6.4. BOOKS AND RECORDS. The books and records of the
Corporation may be kept outside of the State of New Jersey at such place or
places as the Board of Directors may from time to time designate; provided,
however, that the Corporation shall keep at its principal office, its
registered office or the office of its transfer agent, a record or records
containing the names and addresses of all shareholders, the number, class and
series of shares held by each and the date when they respectively became the
owners of record thereof.

ARTICLE VII
MISCELLANEOUS

SECTION 7.1. FISCAL YEAR. Unless otherwise determined by resolution
of the Board of Directors, the Corporation's fiscal year shall commence on the
first (1st) day of November of each calendar year and end on the thirty-first
(31st) day of October of each next succeeding calendar year.

SECTION 7.2. DIVIDENDS. The Board of Directors may, from time to
time, declare, and the Corporation may pay, dividends on the outstanding shares
of the Corporation's capital stock entitled to receive such dividends in
accordance with the terms thereof, in the manner and upon the terms and
conditions determined by the Board of Directors.

SECTION 7.3. CORPORATE SEAL. The seal of the Corporation shall have
inscribed thereon the name of the Corporation and the year and state of its
incorporation and may be altered from time to time at the direction of the
Board of Directors. The seal may be used by causing it, or a facsimile
thereof, to be impressed, affixed or otherwise reproduced.

SECTION 7.4. EXECUTION OF WRITTEN INSTRUMENTS. Contracts, deeds,
documents and other written instruments shall be executed by the Chairman of
the Board, if there be one, the President or any Vice-President and
countersigned or attested by the Secretary or the Treasurer or any Assistant
Secretary or Assistant Treasurer, unless the Board of Directors, in a
particular situation, shall designate another procedure for their execution.

SECTION 7.5. SIGNING OF CHECKS, NOTES, ETC. Checks, drafts, notes
and demands for money shall be signed, subject to any conditions or limitations
imposed by the Board

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<PAGE> 20
of Directors, and bills receivable, drafts and other evidences of indebtedness
to the Corporation shall be endorsed for the purpose of discount or collection,
by the Chairman of the Board if there be one, the President, any
Vice-President, the Secretary, the Treasurer or any Assistant Secretary or
Assistant Treasurer, or by such other person as the Board of Directors may from
time to time designate.

SECTION 7.6. VOTING UPON STOCKS HELD BY THE CORPORATION. Unless
otherwise specifically ordered by the Board of Directors, the President shall
have full power and authority, on behalf of the Corporation, to attend, to act
and to vote at any meeting of the security holders of any other corporation,
partnership or other enterprise the securities of which are owned or controlled
by this Corporation and, at any such meeting, such officer shall possess and
may exercise any and all the rights and powers incident to the ownership of
such securities, and which the Corporation might possess and exercise if
present. The Board of Directors by resolution, from time to time may confer
like powers upon any other person or persons.

SECTION 7.7. LOANS TO DIRECTORS, OFFICERS AND EMPLOYEES. The
Corporation may lend money to, or guarantee any obligation of, or otherwise
assist, any director, officer or employee of the Corporation or any subsidiary
thereof whenever, in the judgment of the Board of Directors, such loan,
guarantee or assistance reasonably may be expected to benefit the Corporation.
Any such loan, guarantee or assistance may be made with or without interest,
and may be unsecured or secured in such manner as the Board of Directors shall
approve, including, without limitation, a pledge of shares of the Corporation,
and may be made upon such other terms and subject to such other conditions as
the Board of Directors may determine.

SECTION 7.8. RELIANCE. Each director, in the performance of his or
her duties as a member of the Board of Directors or any committee thereof,
shall not be liable with regard to any act or failure to act in reliance in
good faith upon (i) the opinion of counsel for the Corporation; (ii) written
reports setting forth financial data concerning the Corporation and prepared by
an independent public accountant or certified public accountant or a firm of
such accountants; (iii) the financial statements, books of account or reports
of the Corporation represented to him or her to be correct by the President,
the officer of the Corporation having charge of its books of account, or the
person presiding at a meeting of the Board of Directors; or (iv) written
reports of committees of the Board of Directors.

SECTION 7.9. FORCE AND EFFECT OF BY-LAWS. These By-Laws are subject
to the provisions of the New Jersey Business Corporation Act (the "Act") and
the Charter, as each of them may be amended from time to time. If any
provision of these By-Laws is inconsistent with any provision of Act or the
Charter as in effect from time to time, the provision of the Act or the Charter
shall govern, to the extent of such inconsistency.

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ARTICLE VIII
AMENDMENT OF BY-LAWS

These By-Laws may be amended, added to, rescinded or repealed, in
whole or in part, at any meeting of the Board of Directors or of the
shareholders, provided that notice of the proposed action in respect of these
By-Laws shall be stated in the notice of such meeting of the Board of Directors
or the shareholders, as the case may be, or the waiver of notice thereof,
unless all of the directors or the holders of record of all of the shares of
stock of the Corporation issued and outstanding and entitled to vote are
present at such meeting of the Board of Directors or the shareholders, as the
case may be.

ARTICLE IX
EFFECTIVE DATE

These By-Laws shall take effect as of the date of effectiveness of the
Second Restated Certificate of Incorporation of the Corporation, (the
"Effective Date"), the date of approval hereof by the Board of Directors. As
of the Effective Date, these By-Laws shall replace and supersede for all
purposes, all existing and prior by-laws of the Corporation, which shall be
repealed as of the Effective Date.

- 16 -

<PAGE> 1

EXHIBIT 11

ALL AMERICAN FOOD GROUP, INC. (FORMERLY JUTLAND FOOD GROUP, INC.) AND
SUBSIDIARIES SCHEDULE OF COMPUTATION OF NET LOSS PER SHARE

<TABLE>
<CAPTION>
Six Months Ended April 30, Year Ended
------------------------------- January 31,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
PRIMARY
-------

Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . ($524,154) ($856,656) ($1,152,574)

Less- increase in carrying amount of redeemable
preferred stock . . . . . . . . . . . . . . . . . . . . . . (707,540) -- --
--------------------------------------------------------
($1,231,694) ($856,656) ($1,152,574)
========================================================

Weighted average number of common shares outstanding . . . . . 1,886,905 2,305,201 1,886,300

Add - common shares (determined using the "treasury
stock" (method) representing additional shares(1)
as if those shares were outstanding for all periods) . . . . 1,891,070 1,891,070 1,891,070

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

Weighted average number of shares used in calculation of primary
loss per share . . . . . . . . . . . . . . . . . . . . . . . . 3,777,975 4,196,271 3,777,370
========================================================

Primary net loss per common share . . . . . . . . . . . . . . . ($0.33) ($0.20) ($0.31)
========================================================

FULLY DILUTED
-------------

Net loss for primary loss per common share
and for fully diluted per share amounts . . . . . . . . . . . . ($1,231,694) ($856,656) ($1,152,574)

========================================================

Weighted average number of shares used in calculating
primary loss per share . . . . . . . . . . . . . . . . . . . . 3,777,975 4,196,271 3,777,370
Add incremental shares representing:
Shares issuable upon conversion of convertible
preferred stock . . . . . . . . . . . . . . . . . . . . . . 1,165,732 1,192,976 1,217,055

Shares issuable upon exercise of stock options . . . . . . . . 27,500 13,522 27,500
--------------------------------------------------------

Weighted average number of shares used in calculation
of fully diluted loss per share . . . . . . . . . . . . . . . . 4,971,207 5,402,769 5,021,925
========================================================

Fully diluted net loss per common share . . . . . . . . . . . . ($0.25) ($0.16) ($0.23)
========================================================
</TABLE>

<TABLE>
<CAPTION>
September 27,
Nine Months 1993
Ended Year Ended (Inception) to
October 31, January 31, January 31,
1995 1995 1994
---- ---- ----
<S> <C> <C> <C>
PRIMARY
-------

Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . ($999,369) ($1,062,621) ($60,025)

Less- increase in carrying amount of redeemable
preferred stock . . . . . . . . . . . . . . . . . . . . . . -- -- --
---------------------------------------------------------
($999,369) ($1,062,621) ($60,025)
=========================================================

Weighted average number of common shares outstanding . . . . . 1,886,300 1,966,167 1,250,000
Add - common shares (determined using the "treasury
stock" (method) representing additional shares(1)
as if those shares were outstanding for all periods) . . . . 1,891,070 1,891,070 1,891,070

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

Weighted average number of shares used in calculation of primary
loss per share . . . . . . . . . . . . . . . . . . . . . . . . 3,777,370 3,857,237 3,141,070
=========================================================

Primary net loss per common share . . . . . . . . . . . . . . . ($0.26) ($0.28) ($0.02)
=========================================================

FULLY DILUTED
-------------

Net loss for primary loss per common share
and for fully diluted per share amounts . . . . . . . . . . . . ($999,369) ($1,062,621) ($60,025)

=========================================================

Weighted average number of shares used in calculating
primary loss per share . . . . . . . . . . . . . . . . . . . . 3,777,370 3,857,237 3,141,070
Add incremental shares representing:
Shares issuable upon conversion of convertible
preferred stock . . . . . . . . . . . . . . . . . . . . . . 1,214,377 100,000 --

Shares issuable upon exercise of stock options . . . . . . . . 27,500 -- --
---------------------------------------------------------

Weighted average number of shares used in calculation
of fully diluted loss per share . . . . . . . . . . . . . . . . 5,019,247 3,957,237 3,141,070
=========================================================

Fully diluted net loss per common share . . . . . . . . . . . . ($0.20) ($0.27) ($0.02)
=========================================================
</TABLE>

(1) Additional shares represent the number of shares and options
issued within the twelve months prior to the Company filing a
registration statement on May 3, 1996 for an initial public offering
(IPO) that were issued for consideration per share or at an exercise
price per share less than the anticipated IPO price of $6.00 per
share.

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from All
American Food Group, Inc. unaudited financial statements as of April 30,
1996 and for the 6-month interim period then ended and is qualified in its
entirety by reference to such financial statements and the notes thereto. This
schedule also contains summary financial information extracted from All
American Food Group, Inc. audited financial statements as of October 31, 1995
and for the 9-month fiscal period then ended and is qualified in its entirety
by reference to such financial statements and the notes thereto.
</LEGEND>

<S> <C> <C>
<PERIOD-TYPE> 6-MOS 9-MOS
<FISCAL-YEAR-END> OCT-31-1995 OCT-31-1995
<PERIOD-START> NOV-01-1995 FEB-01-1995
<PERIOD-END> APR-30-1996 OCT-31-1995
<CASH> 896,132 53,703
<SECURITIES> 0 0
<RECEIVABLES> 389,555 204,817
<ALLOWANCES> 15,000 15,000
<INVENTORY> 97,485 123,649
<CURRENT-ASSETS> 1,479,672 392,420
<PP&E> 1,106,602 663,491
<DEPRECIATION> 197,426 145,589
<TOTAL-ASSETS> 2,752,069 1,348,100
<CURRENT-LIABILITIES> 917,414 1,142,964
<BONDS> 0 0
707,540 0
393,043 1,022,580
<COMMON> 3,360,136 876,150
<OTHER-SE> (2,683,881) (1,794,727)
<TOTAL-LIABILITY-AND-EQUITY> 2,752,069 1,348,100
<SALES> 928,316 2,220,844
<TOTAL-REVENUES> 1,362,755 2,522,444
<CGS> 735,268 1,739,147
<TOTAL-COSTS> 735,268 1,952,555
<OTHER-EXPENSES> 1,128,590 1,548,180
<LOSS-PROVISION> 0 (35,000)
<INTEREST-EXPENSE> 23,051 21,078
<INCOME-PRETAX> (524,154) (999,369)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (524,154) (999,369)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (524,154) (999,369)
<EPS-PRIMARY> (0.33) (0.26)
<EPS-DILUTED> (0.25) (0.20)

</TABLE>