**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**





Washington,
      D.C. 20549





**Form
      10-K**





**ANNUAL
      REPORT**


**PURSUANT
      TO SECTIONS 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





(Mark
      One)


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


For
      the
      fiscal year ended **September 30, 2007**





OR





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


For
      the
      transition period
      from   to
      _____


Commission
      file number **1-16699**





**OVERHILL
      FARMS, INC.**


(Exact
      name of registrant as specified in its charter)


**Nevada**
              
              **75-2590292**(State
                  or other jurisdiction of
                incorporation
                  or organization)
              
              (I.R.S.
                  Employer
                Identification
                  Number)**2727
                  East Vernon Avenue**
                **Vernon,
                  California**
                (Address
                  of principal executive offices)
              
              **90058**
                (Zip
                  code)
  Registrant’s
      telephone number, including area code:  **(323)
      582-9977**





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





Title
                  of each class
              
              Name
                  of each exchange on which
                  registered**Common
                  Stock, par value
                  $0.01**
              
              **American
                  Stock
                  Exchange**




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





Indicate
      by check mark if the
      registrant is a well-known seasoned issuer, as defined in Rule 405 of the
      Securities Act. Yeso Nox





Indicate
      by check mark if the
      registrant is not required to file reports pursuant to Section 13 or Section
      15(d) of the Act. Yes o No x







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





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





Indicate
      by check mark whether the
      registrant is a large accelerated filer, an accelerated filer, or a
      non-accelerated filer. See definition of “accelerated filer and large
      accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large
      Accelerated Filer o      
   Accelerated Filer
x      
        Non-Accelerated Filer o





Indicate
      by check mark whether the
      registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
      Yes o No x





The
      aggregate market value of voting
      common equity held by non-affiliates of the registrant, based on the closing
      price of such stock on March 30, 2007, which was the last business day of the
      registrant’s second fiscal quarter ended April 1, 2007 (based on the closing
      price on such date on the American Stock Exchange) was approximately $82.1
      million.  For purposes of this computation, all executive officers,
      directors and 10% beneficial owners of the registrant are deemed to be
      affiliates.  Such determination should not be deemed an admission that
      such executive officers, directors and 10% beneficial owners are
      affiliates.  The registrant has no non-voting common
      equity.





There
      were 15,620,271 shares of common
      stock, par value $0.01, outstanding as of December 11, 2007.





Documents
      Incorporated By Reference:
**None**










**TABLE
      OF CONTENTS**





**PART
                I**Item
                1
            Business
            1Item
                1A
            Risk
                Factors
            2Item
                1B
            Unresolved
                Staff Comments
            7Item
                2
            Properties
            7Item
                3
            Legal
                Proceedings
            7Item
                4
            Submission
                of Matters to a Vote of Security Holders
            7**PART
                II**Item
                5
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            8Item
                6
            Selected
                Financial Data
            10Item
                7
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operation
            11Item
                7A
            Quantitative
                and Qualitative Disclosures About Market Risk
            21Item
                8
            Financial
                Statements and Supplementary Data
            21Item
                9
            Changes
                in and Disagreements With Accountants on Accounting and Financial
                Disclosure
            21Item
                9A
            Controls
                and Procedures
            21Item
                9A (T)
            Controls
                and Procedures
            24Item
                9B
            Other
                Information
            24**PART
                III**Item
                10
            Directors,
                Executive Officers and Corporate Governance
            25Item
                11
            Executive
                Compensation
            30Item
                12
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            37Item
                13
            Certain
                Relationships and Related Transactions, and Director
                Independence
            39Item
                14
            Principal
                Accounting Fees and Services
            40**PART
                IV**Item
                15
            Exhibits,
                Financial Statement Schedules
            41**SIGNATURES**
            44











CAUTIONARY
      STATEMENT








*All
      statements included or incorporated by reference in this Annual Report on Form
      10-K, other than statements or characterizations of historical fact, are
      forward-looking statements.  Examples of forward-looking statements
      include, but are not limited to, statements concerning projected net sales,
      costs and expenses and gross margins; our accounting estimates, assumptions
      and
      judgments; our success in pending litigation; the demand for ethanol and its
      co-products; the competitive nature of and anticipated growth in our industry;
      production capacity and goals; our ability to consummate acquisitions and
      integrate their operations successfully; and our prospective needs for
      additional capital. These forward-looking statements are based on our current
      expectations, estimates, approximations and projections about our industry
      and
      business, management’s beliefs, and certain assumptions made by us, all of which
      are subject to change. Forward-looking statements can often be identified by
      words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,”
“believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,”
“potential,” “continue,” “ongoing,” similar expressions, and variations or
      negatives of these words. These statements are not guarantees of future
      performance and are subject to risks, uncertainties and assumptions that are
      difficult to predict. Therefore, our actual results could differ materially
      and
      adversely from those expressed in any forward-looking statements as a result
      of
      various factors, some of which are listed under “Risk Factors” in Item 1A of
      this Report. These forward-looking statements speak only as of the date of
      this
      Report. We undertake no obligation to revise or update publicly any
      forward-looking statement for any reason, except as otherwise required by
      law.*





**PART
      I**





**ITEM
      1.                      Business**





**History**





Overhill
      Farms, Inc. was formed in 1995 as a Nevada corporation.  We sell our
      products nationwide, and our headquarters and manufacturing facilities are
      located in Vernon, California.





**Products
      and Services**





We
      are a
      value-added manufacturer of quality frozen food products including entrées,
      plated meals, meal components, soups, sauces, poultry, meat and fish
      specialties.  We provide custom prepared foods to a number of
      prominent, nationally recognized customers such as Panda Restaurant Group,
      Inc.,
      Jenny Craig, Inc., American Airlines, Inc., Safeway Inc. and Pinnacle Foods
      Corporation.





**Sales
      and Marketing**





We
      operate as a single business segment – the development and production of frozen
      food products. We market our products through both an internal sales force
      and
      outside food brokers.  Our customers are foodservice, retail and
      airline accounts.





A
      significant portion of our total net revenues during the last two fiscal years
      was derived from two customers.  Panda Restaurant Group, Inc.
      (“Panda”) and Jenny Craig, Inc. accounted for approximately 27% and 26%,
      respectively, of our revenues for the fiscal year ended September 30,
      2007.  For the fiscal year ended October 1, 2006, Panda and Jenny
      Craig, Inc. accounted for approximately 35% and 28%, respectively, of our
      revenues.   We continue to work to expand our retail and
      foodservice customer base with the goal of reducing our reliance on these two
      accounts.





**Manufacturing
      and Sourcing**





In
      2003,
      we consolidated our headquarters, entrée manufacturing and warehousing, product
      development, sales and quality control facilities into a single location in
      Vernon, California.  We also maintain a separate protein cooking
      facility in Vernon, California.  In fiscal year 2007, we incurred
      approximately $7.0 million in capital expenditures to expand the manufacturing
      capacity of our entrée plant in order to accommodate new business
      opportunities.





Our
      ability to cost-effectively produce large quantities of our products, while
      maintaining a high degree of quality, is partially dependent on our ability
      to
      procure raw materials on an economical cost basis.  We rely on several
      large suppliers for products, including poultry, and we purchase the remaining
      raw materials from suppliers in the open market.  We do not anticipate
      any particular difficulty in acquiring these materials in the
      future.  We store raw materials, packaging and finished goods on-site
      and in public frozen and dry food storage facilities until
      shipment.  When possible and practical, we negotiate supply contracts
      at fixed prices to protect against the risk of market fluctuations.





**Backlog**





We
      typically deliver products directly from finished goods inventory.  As
      a result, we do not maintain a large backlog of unfilled purchase
      orders.  While at any given time there may be a small backlog of
      orders, our backlog is not material in relation to our total revenues, nor
      is it
      necessarily indicative of trends in our business.





**Competition**





Our
      products compete with those produced by numerous regional and national
      firms.  Many of these companies are divisions of larger highly
      integrated companies such as Tyson Foods, Inc. and ConAgra Foods,
      Inc.  Competition is intense, with most firms producing similar
      products for the foodservice and retail industries.  Competitive
      factors include price, food safety, product quality, flexibility, product
      development, customer service and, on a retail basis, name
      recognition.  We are competitive in this market as a result of our
      ability to produce mid-sized/custom product runs within a short time frame
      on a
      cost-effective basis and our ability to provide ancillary support services
      such
      as research and development, assistance with regulatory matters, production
      planning and logistics.





1


**Product
      Development and Marketing**





We
      maintain a comprehensive, fully staffed research and development department
      that
      formulates recipes and upgrades specific products for current and prospective
      customers and establishes production and quality standards.  We
      develop products based upon customers’ specifications, conventional recipes, new
      product trends or our own product initiatives.  We are continuously
      developing recipes as customers’ tastes and client requirements
      change.  We also maintain a quality control department for inspection,
      testing, monitoring and compliance to ensure that our products are produced
      in
      accordance with our standards.





**Intellectual
      Property**





We
      have
      registered the “Overhill Farms” and “Chicago Brothers” trademarks with the
      United States Patent and Trademark Office.





**Employees**





Our
      total
      hourly and salaried workforce consisted of approximately 1,064 employees at
      September 30, 2007.  Most of our operations are labor intensive,
      generally requiring unskilled employees.  Our manufacturing employees
      are unionized with the United Food & Commercial Workers Union, Local 770,
      under a three-year contract, which began March 1, 2005 and is up for renewal
      March 1, 2008.  We believe our relations with the union are
      good.





**Regulation**





Food
      manufacturers are subject to strict government regulation, particularly in
      the
      health and environmental areas, by the United States Department of Agriculture
      (“USDA”), the Food and Drug Administration (“FDA”), as well as the Occupational
      Safety and Health Administration (“OSHA”) and the Environmental Protection
      Agency (“EPA”).  Our food processing facilities are subject to
      continuous on-site examination, inspection and regulation by the
      USDA.  Compliance with the current applicable federal, state and local
      environmental regulations has not adversely affected our financial position,
      results of operations or competitive position.  However, we cannot
      predict whether regulation by various federal, state or local governmental
      entities and agencies may adversely affect our future business and financial
      results.  To date, we have never been required to recall any of our
      products.  Since 1997, we have used a Hazard Analysis Critical Point
      Plan to ensure proper handling of all food items.





Our
      Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
      Reports on Form 8-K, and amendments to those reports filed or furnished
      pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934,
      as emended, or Exchange Act, are available free of charge on our website at
      www.overhillfarms.com as soon as reasonably practicable after being filed
      or furnished to the Securities and Exchange Commission (“Commission”). Our
      reports filed with the Commission are also made available to read and copy
      at
      the Commission’s Public Reference Room at 100 F Street, N.E.,
      Washington, D.C. 20549. You may obtain information about the Public
      Reference Room by contacting the Commission at 1-800-SEC-0330. Reports filed
      with the Commission are also made available on its website at
www.sec.gov.





**ITEM
      1A.                      Risk
      Factors**





**Our
      ability to compete effectively in the highly competitive food industry may
      affect our operational performance and financial results.**





Our
      continued success depends in part on our ability to be an efficient producer
      in
      the highly competitive food industry.  We face competition in all of
      our markets from large, national companies and smaller, regional
      operators.  Some of our competitors, including other diversified food
      companies, are larger and have greater financial resources than we
      do.  From time to time, we experience price pressure in some of our
      markets as a result of competitors’ promotional pricing practices as well as
      general market conditions.  Our failure to match or exceed our
      competitors’ cost reductions through productivity gains and other improvements
      could weaken our competitive position.  Competition is based on
      product quality, food safety, distribution effectiveness, brand loyalty, price,
      effective promotional activities, the ability to identify and satisfy emerging
      consumer preferences and the ability to provide ancillary support
      services.  We may not be able to effectively compete with these
      larger, more diversified companies.  Also, a disruption of our supply
      chain could impair our ability to manufacture or supply goods.  In
      addition, products have life cycles, and as the lives of products diminish,
      we
      may not be able to replace our existing customers.





2


**The
      loss or consolidation of any of our key customers could adversely affect our
      financial results by decreasing our existing sales opportunities and prices
      and
      increasing our marketing and promotional expenses.**





The
      largest purchasers of our products, Panda Restaurant Group, Inc. and Jenny
      Craig, Inc., accounted for approximately 27% and 26%, respectively, of our
      total
      net revenues during the fiscal year ended September 30, 2007.  Despite
      an expected decline in sales to Panda Restaurant Group, Inc. during fiscal
      year
      2007, we expect that our sales to these customers will continue to constitute
      a
      significant percentage of our net revenues.  The loss of either of
      these customers as a significant outlet for our products could adversely affect
      our competitive position and operating results if we do not obtain additional
      customers to offset any change in these accounts.





**Future
      declines in air travel and bankruptcies or other financial difficulties of
      our
      airline customers may adversely affect our revenues, costs and
      collections.**





In
      fiscal
      year 2007, sales to airline customers were approximately $19.7 million, or
      10.2%
      of total net revenues, as compared to sales of $21.6 million in fiscal year
      2006
      and $30.5 million in fiscal year 2005, representing 12.8% and 18.8% of total
      net
      revenues in fiscal years 2006 and 2005, respectively.  Additionally,
      accounts receivable from airline-related customers accounted for approximately
      9.0% and 14.5% of the total accounts receivable balance at September 30, 2007
      and October 1, 2006, respectively.  Two of our airline customers,
      Delta Airlines and Northwest Airlines, filed for Chapter 11 bankruptcy in fiscal
      year 2005.  Approximately $134,000 of our receivables from Delta
      Airlines were written-off in fiscal year 2005.  Northwest Airlines’
bankruptcy filing had no financial impact on us since our receivables relating
      to that airline are due from a financially stable independent third-party
      distributor.  Given the financial and business challenges facing the
      airline industry, we carefully monitor our receivables from all of our customers
      in this sector.  The on-going effect of these events on the airline
      industry, airline revenues, and on our business in particular, or the impact
      of
      a future occurrence of a similar event, cannot be accurately determined and
      could further adversely affect our financial position, results of operations
      or
      cash flows by, among other things, decreasing our sales to and making it more
      difficult to collect receivables from airline customers.





**We
      are a major purchaser of many commodities that we use for raw materials and
      packaging, and price changes for the commodities we depend on may adversely
      affect our profitability.**





We
      enter
      into contracts for the purchase of raw materials at fixed prices, which are
      designed to protect us against raw material price increases during their
      terms.  However, when necessary, we attempt to recover our commodity
      cost increases by increasing prices, promoting a higher-margin product mix
      and
      creating additional operating efficiencies.  Nevertheless, the raw
      materials used in our business are largely commodities that experience price
      fluctuations caused by external conditions and changes in governmental
      agricultural programs.





We
      also
      use paper products, such as corrugated cardboard, aluminum products, films
      and
      plastics to package our products.  Substantial increases in prices of
      packaging materials or higher prices of our raw materials could adversely affect
      our operating performance and financial results.





Commodity
      price changes may result in unexpected increases in raw materials and packaging
      costs, and we may be unable to increase our prices to offset these increased
      costs without suffering reduced volume, revenue and income.  Any
      substantial fluctuation in the prices of raw materials, if not offset by
      increases in our sales prices, could adversely affect our
      profitability.




**Concerns
      with the safety and quality of food products could cause customers to avoid
      our
      products.**





We
      could
      be adversely affected if our customers and the ultimate consumers of our
      products lose confidence in the safety and quality of various food
      products.  Adverse publicity about these types of concerns, like the
      publicity about genetically modified organisms and avian influenza, whether
      or
      not valid, may discourage our customers from buying our products or cause
      production and delivery disruptions.  Negative changes in customer
      perceptions about the safety and quality of our products could adversely affect
      our business and financial condition.





3


**If
      our food products become adulterated or misbranded, we would need to recall
      those items and may experience product liability claims if consumers are injured
      as a result.**





Food
      products occasionally contain contaminants due to inherent defects in those
      products or improper storage or handling.  Under adverse
      circumstances, food manufacturers may need to recall some of their products
      if
      they become adulterated or misbranded and may also be liable if the consumption
      of any of their products causes injury.





While
      we
      have never been required to recall any of our products and we maintain insurance
      that we believe is adequate to cover this type of loss, a widespread product
      recall could result in changes to one or more of our business processes, product
      shortages, a loss of customer confidence in our food or other adverse effects
      on
      our business.





If
      we are
      required to defend against a product liability claim, whether or not we are
      found liable under the claim, we could incur substantial costs, our reputation
      could suffer and our customers might substantially reduce their existing or
      future orders from us.





**Our
      business is subject to federal, state and local government regulations that
      could adversely affect our business and financial
      position.**





Food
      manufacturing operations are subject to regulation by various federal, state
      and
      local government entities and agencies.  As a producer of food
      products for human consumption, our operations are subject to stringent
      production, packaging, quality, labeling and distribution standards, including
      regulations mandated by the federal Food, Drug and Cosmetic
      Act.  Future regulation by various federal, state or local
      governmental entities or agencies may adversely affect our business and
      financial results.





In
      addition, our business operations and the past and present ownership and
      operation of our properties are subject to extensive and changing federal,
      state
      and local environmental laws and regulations pertaining to the discharge of
      materials into the environment, the handling and disposition of wastes
      (including solid and hazardous wastes) or otherwise relating to protection
      of
      the environment.  We cannot assure that environmental issues relating
      to presently known matters or identified sites or to other matters or sites
      will
      not require additional, currently unanticipated investigation, assessment or
      expenditures.





**We
      may not be able to protect our intellectual property and proprietary rights,
      which could harm our competitive position, resulting in decreased
      revenue.**





We
      believe that our trademarks and other proprietary rights, though few in number,
      are important to our success and competitive position.  Accordingly,
      we devote what we believe are adequate resources to the establishment and
      protection of our trademarks and proprietary rights.  We have taken
      actions to establish and protect our trademarks and other proprietary
      rights.  However, these actions may be inadequate to prevent imitation
      of our products by others or to prevent others from claiming violations of
      their
      trademarks and proprietary rights by us.





From
      time
      to time, we manufacture products under our customers’
trademarks.  While we generally require them to agree to indemnify us
      in connection with our use of their trademarks, it is possible that we could
      face infringement actions based upon the content provided by our
      customers.  If any of these claims are proved valid, through
      litigation or otherwise, we may be required to cease using the trademarks and/or
      pay financial damages and/or expenses for which we are not
      indemnified.





**Some
      of our significant customer and supplier contracts are
      short-term.**





Some
      of
      our customers and suppliers operate through purchase orders or short-term
      contracts.  Though we have long-term business relationships with many
      of our customers and suppliers and alternative sources of supply for key items,
      we cannot be sure that any of these customers or suppliers will continue to
      do
      business with us on the same basis.  Additionally, although we try to
      renew these contracts as they expire, there can be no assurance that these
      customers or suppliers will renew these contracts on terms that are favorable
      to
      us, if at all.  The termination of or modification to any number of
      these contracts may adversely affect our business and prospects, including
      our
      financial performance and results of operations.





4


**Our
      common stock price is subject to significant volatility, which could result
      in
      substantial losses for investors.**





During
      the 52-week period ended December 11, 2007, the high and low sales prices of
      our
      common stock on the American Stock Exchange (“AMEX”) were $7.65 per share and
      $2.66 per share, respectively.  Prices for our shares are determined
      in the marketplace and may accordingly be influenced by many factors, including,
      but not limited to:





·
            the
                depth and liquidity of the market for the
                shares;





·
            quarter-to-quarter
                variations in our operating
                results;





·
            announcements
                about our performance as well as the announcements of our competitors
                about the performance of their
                businesses;





·
            investors’
                evaluations of our future prospects and the food industry
                generally;





·
            changes
                in earnings estimates by, or failure to meet the expectations of,
                securities analysts; and





·
            general
                economic and market conditions.





In
      addition, the stock market often experiences significant price fluctuations
      that
      are unrelated to the operating performance of the specific companies whose
      stock
      is traded.  These market fluctuations could adversely affect the
      trading price of our shares.





The
      price
      at which investors purchase shares of our common stock may not be indicative
      of
      the price that will prevail in the trading market.  Investors may be
      unable to sell their shares of common stock at or above their purchase price,
      which may result in substantial losses.





**Our
      failure to attract and retain key management personnel could adversely affect
      our business.**





Our
      business requires managerial, financial and operational expertise, and our
      future success depends upon the continued service of key
      personnel.  As a value-added manufacturer of quality frozen food
      products and custom prepared foods, we operate in a specialized
      industry.  Our key personnel have experience and skills specific to
      this industry, and there are a limited number of individuals with the relevant
      experience and skills.  Though we have an employment agreement with
      Mr. Rudis, the agreement permits the voluntary resignation on the part of Mr.
      Rudis prior to the end of the term of the agreement.  If we lose any
      of our key personnel, our business operations could be adversely
      affected.





**A
      change in control could result in an event of default under our secured credit
      facility, which could adversely affect our financial condition, results of
      operations or cash flows.**





Our
      secured credit facility provides that a change in control would occur if, among
      other occurrences, Mr. Rudis ceases to be our chief executive officer other
      than due to death or disability or if a suitable replacement chief executive
      officer has not accepted appointment within 90 days after Mr. Rudis’ death or
      disability, any person or group becomes the beneficial owner of 35% or more
      of
      our voting stock, or certain changes in the composition of our board occur
      during any period of two consecutive years.  The occurrence of a
      change in control could permit the secured parties to terminate or reduce their
      loan commitments, declare all or a portion of loans then outstanding to be
      due
      and payable, and/or exercise other available rights and
      remedies.  Depending on our financial condition at the time, we may
      not be able to raise sufficient funds to repay this indebtedness upon an event
      of default.  Accordingly, the occurrence of a change in control could
      adversely affect our financial condition, results of operations or cash
      flows.





5


**If
      we violate our financial and other covenants under our secured credit facility,
      our financial condition, results of operations or cash flows may be adversely
      affected if secured parties foreclose on our assets or impose default rates
      of
      interest.**





Our
      $49.6
      million senior secured credit facility, maturing in May 2011, is secured by
      a
      first-priority lien on substantially all of our assets. The facility contains
      covenants whereby, among other things, we are required to maintain compliance
      with agreed levels of EBITDA, interest coverage, fixed charge coverage, leverage
      targets and annual capital expenditures and incremental indebtedness
      limits.  If we violate these covenants and are unable to obtain
      waivers or renegotiate the terms of the covenants, we could become subject
      to,
      among other things, interest rate increases and acceleration of maturity of
      the
      loans, which could adversely affect our financial condition, results of
      operations or cash flows.





**A
      small number of stockholders beneficially own a significant percentage of our
      outstanding common stock and therefore could significantly influence or control
      matters requiring stockholder approval.**





Assuming
      the exercise of the aggregate options issued to our executive officers and
      directors to purchase shares of our common stock, our executive officers and
      directors and stockholders who beneficially own greater than 5% of our common
      stock were beneficial owners, in the aggregate, of approximately 28% of our
      outstanding common stock as of December 11, 2007.  These stockholders,
      if acting together, could be able to significantly influence or control matters
      requiring approval by our stockholders, including the election of directors
      and
      the approval of mergers or other business combination transactions.





**Future
      sales of shares of our common stock by our stockholders could cause our stock
      price to decline***.*




We
      cannot
      predict the effect, if any, that market sales of shares of our common stock
      or
      the availability of shares of common stock for sale will have on the market
      price prevailing from time to time.  As of December 11, 2007, we had
      outstanding 15,620,271 shares of common stock.  An aggregate of
      5,283,861 of these shares were then included for resale under a registration
      statement that was declared effective on April 13, 2006.  Also, as of
      December 11, 2007, there were outstanding options to purchase up to 749,000
      shares of common stock.  All of the shares of common stock underlying
      these options are covered by an existing effective registration
      statement.  Sales of shares of our common stock in the public market
      covered by the effective registration statement, or perceptions that those
      sales
      may occur, could cause the trading price of our common stock to decrease or
      to
      be lower than it might be in the absence of those sales or
      perceptions.





**Our
      articles of incorporation, our bylaws and provisions of Nevada law could make
      it
      more difficult for a third party to acquire us, even if doing so could be
      in our stockholders’ best interest.**





Provisions
      of our articles of incorporation and bylaws could make it more difficult for
      a
      third party to acquire us, even if doing so might be in the best interest of
      our
      stockholders.  It could be difficult for a potential bidder to acquire
      us because our articles of incorporation and bylaws contain provisions that
      may
      discourage takeover attempts.  These provisions may limit
      stockholders’ ability to approve a transaction that stockholders may think is in
      their best interest.  These provisions include a requirement that
      certain procedures must be followed before matters can be proposed for
      consideration at meetings of our stockholders and also include the ability
      of
      our board of directors to fix the rights and preferences of an issue of shares
      of preferred stock without stockholder action.





Provisions
      of Nevada’s business combinations statute also restrict certain business
      combinations with interested stockholders.  We have elected not to be
      governed by these provisions in our amended and restated articles of
      incorporation.  However, this election may not be effective unless we
      meet certain conditions under the Nevada statute.





The
      provisions of our articles of incorporation, bylaws and Nevada law are intended
      to encourage potential acquirers to negotiate with us and allow the board of
      directors the opportunity to consider alternative proposals in the interest
      of
      maximizing stockholder value.  However, those provisions may also
      discourage acquisition proposals or delay or prevent a change in
      control.





6


**ITEM
      1B.                      Unresolved
      Staff Comments**





Not
      applicable.





**ITEM
      2.                      Properties**





We
      lease
      two manufacturing facilities in Vernon, California.  In January 2002,
      we entered into a ten-year lease, with an option for a five-year renewal, for
      a
      facility, Plant No. 1, that has been expanded to 170,000 square
      feet.  Most of our principal executive office, manufacturing and
      warehousing, product development and sales and quality control facilities have
      been consolidated into this single location.  We also maintain a
      55,000 square foot facility, Plant No. 2, primarily for cooking
      protein.  In addition, we lease two dry goods storage facilities on a
      month-to-month basis. These leased facilities are a 25,000 square foot facility
      in Vernon, California and a 7,620 square foot facility in Huntington Park,
      California.





We
      believe that our Plant No. 1, currently operating at approximately 75% capacity,
      is adequate to meet our requirements for the near future.  In fiscal
      year 2007, items that were processed at Plant No. 1 (some of which included
      components that were processed at Plant No. 2) accounted for sales of
      approximately $133.3 million.  Items that were processed in Plant No.
      2 that did not require further processing in Plant No. 1 accounted for the
      balance of sales in fiscal year 2007 of approximately $58.5
      million.  As our sales of cooked protein grow, it may become necessary
      to augment the cooking capacity that we now have at Plant No. 2.  We
      are in the process of evaluating our cooking capacity.  If we deem
      additional cooking capacity to be necessary, estimated capital expenditures
      for
      that capacity could range from $5 million to $10 million during fiscal years
      2008 and 2009, depending on the amount of additional cooking capacity added,
      if
      any.  We anticipate that cash generated from operating activities and
      borrowing availability under our existing credit facilities will be sufficient
      to fund our anticipated capital expenditures.





**ITEM
      3.                      Legal
      Proceedings**





From
      time
      to time, we are involved in various lawsuits, claims and proceedings related
      to
      the conduct of our business.  Management does not believe that the
      disposition of any pending claims is likely to materially and adversely affect
      our financial condition, results of operations or cash flows.





**ITEM
      4.                      Submission
      of Matters to a Vote of Security Holders**





We
      held
      our 2007 annual meeting of stockholders on June 12, 2007.  There were
      15,370,271 shares of our common stock outstanding and entitled to vote at the
      meeting.  Each holder of record of our common stock on the record date
      was entitled to cast one vote per share on each proposal.





Seven
      nominees were presented for election and elected to our board of directors
      at
      the meeting.  The results of the vote for the election of directors
      were as follows:





Nominee
            
            For
            
            
            WithheldJames
                Rudis
            
            
            10,861,032
            
            
            
            1,790,826John
                L. Steinbrun
            
            
            10,647,632
            
            
            
            2,004,226Harold
                Estes
            
            
            10,533,028
            
            
            
            2,118,830Geoffrey
                A. Gerard
            
            
            12,148,316
            
            
            
            503,542Alexander
                Auerbach
            
            
            10,860,552
            
            
            
            1,791,306Louis
                J. Giraudo
            
            
            12,353,492
            
            
            
            298,366Alexander
                Rodetis, Jr.
            
            
            12,146,172
            
            
            
            505,686





7


**PART
      II**





**ITEM
                5.**
            **Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchasesof Equity
                Securities**





**Market
      Information and Record Holders**





Our
      common stock has traded on AMEX under the symbol “OFI” since November 1,
      2002.  At December 11, 2007, we had approximately160 stockholders of
      record.  These holders of record include depositories that hold shares
      of stock for brokerage firms which, in turn, hold shares of stock for numerous
      beneficial owners.  On December 11, 2007, the closing sale price of
      our common stock on AMEX was $2.99.  The following table sets forth
      the range of high and low sales prices for our common stock on AMEX for the
      periods indicated:




Fiscal
                2006
            
            High
            
            LowFirst
                Quarter from October 3, 2005
              to
                January 1, 2006
            
            $4.24
            
            $3.03Second
                Quarter from January 2, 2006
              to
                April 2, 2006
            
            $3.73
            
            $2.79Third
                Quarter from April 3, 2006
              to
                July 2, 2006
            
            $3.60
            
            $2.98Fourth
                Quarter from July 3, 2006
              to
                October 1, 2006
            
            $3.90
            
            $2.50Fiscal
                2007
            
            High
            
            LowFirst
                Quarter from October 2, 2006
              to
                December 31, 2006
            
            $3.70
            
            $2.66Second
                Quarter from January 1, 2007
              to
                April 1, 2007
            
            $7.47
            
            $2.80Third
                Quarter from April 2, 2007
              to
                July 1, 2007
            
            $7.65
            
            $5.45Fourth
                Quarter from July 2, 2007
              to
                September 30, 2007
            
            $6.10
            
            $3.42









8


**Performance
      Graph**





The
      following is a line graph comparing the yearly percentage change in the
      cumulative total return of the Company’s common stock to the cumulative total
      return of the Standard & Poor’s 500 Index and a peer group for the period
      commencing September 29, 2002 and ending September 30, 2007.  The peer
      group is comprised of Tyson Foods, Inc; Monterey Gourmet Foods, Inc.; Cuisine
      Solutions, Inc.; ConAgra Foods, Inc.; Armanino Foods of Distinction, Inc.;
      Smithfield Foods, Inc.; Bridgford Foods Corp.; and Overhill Farms,
      Inc.




The
      graph assumes that $100 was
      invested in the Company’s common stock, the Standard & Poor’s 500 Index and
      the peer group on September 29, 2002 and that all the dividends were reinvested
      on a quarterly basis.  Returns for the companies included in the peer
      group have been weighted on the basis of the market capitalization for each
      company.











(1)
      Based
      upon an initial investment of $100 on September 29, 2002 with dividends
      reinvested





Year-ended2002
            
            
            2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007Overhill
                Farms, Inc. (OFI)
            
            $
            100.00
            
            
            $
            30.00
            
            
            $
            64.14
            
            
            $
            177.32
            
            
            $
            177.88
            
            
            $
            194.77Standard
                & Poor's 500 Index
            
            $
            100.00
            
            
            $
            120.48
            
            
            $
            134.17
            
            
            $
            148.52
            
            
            $
            161.46
            
            
            $
            184.53Peer
                Group
            
            $
            100.00
            
            
            $
            99.49
            
            
            $
            130.53
            
            
            $
            146.93
            
            
            $
            148.35
            
            
            $
            167.49





**Dividends**





We
      have
      never paid cash dividends on our common stock.  We currently
      anticipate that no cash dividends will be paid on our common stock in the
      foreseeable future in order to conserve cash for use in our
      business.  Our current financing arrangements prohibit us from paying
      cash dividends.





**Recent
      Sales of Unregistered Securities**





None.


9




**ITEM
                6.**
            **Selected
                Financial Data**





The
      following table sets forth selected historical financial data of Overhill Farms,
      Inc.  The selected financial data as of and for each of the last five
      fiscal years are derived from the financial statements of Overhill Farms, Inc.,
      which have been audited by Ernst & Young LLP, independent registered public
      accounting firm.





The
      data
      may not necessarily be indicative of our future results of operations or
      financial position.  The historical data should be read in conjunction
      with “Management's Discussion and Analysis of Financial Condition and Results of
      Operation” and the financial statements and the related notes included elsewhere
      in this Form 10-K.





Fiscal
                Year EndedStatements
                of Income Data
              (in
                thousands, except per share data):
            
            September
                30,
              2007
            
            
            October
                1,
              2006
            
            
            October
                2,
              2005
            
            
            September
                26,
              2004
            
            
            September
                28,
              2003*(52
                weeks)*
            
            
            *(52
                weeks)*
            
            
            *(53
                weeks)*
            
            
            *(52
                weeks)*
            
            
            *(52
                weeks)*Net
                revenues
            
            $
            192,642
            
            
            $
            168,310
            
            
            $
            162,566
            
            
            $
            133,957
            
            
            $
            136,950Operating
                income
            
            
            11,900
            
            
            
            14,288
            
            
            
            11,903
            
            
            
            6,245
            
            
            
            1,842Income
                (loss) beforeextraordinary
                items
            
            
            4,562
            
            
            
            5,102
            
            
            
            3,696
            
            
            
            (2,142
            )
            
            
            (6,422
            )Net
                income (loss)
            
            
            4,562
            
            
            
            5,102
            
            
            
            3,696
            
            
            
            (2,142
            )
            
            
            (6,422
            )Net
                income (loss) per share – Basic
            
            $
            0.30
            
            
            $
            0.34
            
            
            $
            0.25
            
            
            $
            (0.14
            )
            
            $
            (0.53
            )Net
                income (loss) per share – Diluted
            
            $
            0.29
            
            
            $
            0.32
            
            
            $
            0.24
            
            
            $
            (0.14
            )
            
            $
            (0.53
            )








As
                of Fiscal Year EndedBalance
                Sheet Data
              (in
                thousands)
            
            September
                30,
              2007
            
            
            October
                1,
              2006
            
            
            October
                2,
              2005
            
            
            September
                26,
              2004
            
            
            September
                28,
              2003*(52
                weeks)*
            
            
            *(52
                weeks)*
            
            
            *(53
                weeks)*
            
            
            *(52
                weeks)*
            
            
            *(52
                weeks)*Total
                assets
            
            $
            76,150
            
            
            $
            58,128
            
            
            $
            56,221
            
            
            $
            59,550
            
            
            $
            56,182Long-term
                debt
            
            
            41,383
            
            
            
            37,219
            
            
            
            45,058
            
            
            
            47,775
            
            
            
            44,950Total
                liabilities
            
            
            63,731
            
            
            
            51,191
            
            
            
            54,844
            
            
            
            62,031
            
            
            
            56,521Retained
                earnings (deficit)
            
            
            1,157
            
            
            
            (3,405
            )
            
            
            (8,507
            )
            
            
            (12,203
            )
            
            
            (10,061
            )Stockholders’
                equity (deficit)
            
            
            12,419
            
            
            
            6,937
            
            
            
            1,378
            
            
            
            (2,481
            )
            
            
            (339
            )





No
      cash dividends on our common stock were declared during any of the periods
      presented above.




10






**ITEM
      7.****Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation**





The
      following discussion and analysis should be read in conjunction with our
      consolidated financial statements and notes to consolidated financial statements
      included elsewhere in this report. This report and our consolidated financial
      statements and notes to consolidated financial statements contain
      forward-looking statements, which generally include the plans and objectives
      of
      management for future operations, including plans and objectives relating to
      our
      future economic performance and our current beliefs regarding revenues we might
      generate and profits we might earn if we are successful in implementing our
      business and growth strategies. The forward-looking statements and associated
      risks may include, relate to or be qualified by other important factors,
      including, without limitation:





·
            the
                impact of competitive products and
                pricing;





·
            market
                conditions that may affect the costs of raw materials as well as
                the
                market for our products;





·
            changes
                in our business environment, including actions of competitors and
                changes
                in customer


preferences,
      as well as disruptions to our customers’ businesses;





·
            natural
                disasters that can impact, among other things, costs of fuel and
                raw
                materials;





·
            the
                occurrence of acts of terrorism, such as the events of September
                11, 2001,
                or acts of war;





·
            changes
                in governmental laws and regulations, including income taxes;
                and





·
            other
                factors discussed in this report.





We
      do not
      undertake to update, revise or correct any forward-looking statements.





Any
      of the factors described above or in the “Risk Factors” section above could
      cause our financial results, including our net income or loss or growth in
      net
      income or loss to differ materially from prior results, which in turn could,
      among other things, cause the price of our common stock to fluctuate
      substantially.





**Overview**





We
      are a
      leading value-added manufacturer of high quality, prepared frozen food products
      for branded retail, private label, food service and airline
      customers.  Our product line includes entrées, plated meals,
      bulk-packed meal components, pastas, soups, sauces, poultry, meat and fish
      specialties, as well as organic and vegetarian offerings.  Our
      extensive research and development efforts, combined with proprietary recipes
      and flexible manufacturing capabilities, provide customers with a one-stop
      solution for new product ideas, formulations and product manufacturing, as
      well
      as precise replication of existing recipes.  Our capabilities allow
      customers to outsource product development, product manufacturing and packaging
      thereby avoiding significant fixed-cost and variable investments in resources
      and equipment.  Our customers include prominent nationally recognized
      names such as Panda Restaurant Group, Inc., Jenny Craig, Inc., American
      Airlines, Inc., Safeway Inc. and Pinnacle Foods Corporation.





Our
      goal
      is to be a leading developer and manufacturer of value-added food products
      and
      provider of custom prepared frozen foods.  We intend to create
      superior value for our stockholders by continuing to execute our growth and
      operating strategies, including:





·
            diversifying
                and expanding our customer base by focusing on sectors we believe
                have
                attractive growth characteristics, such as foodservice and
                retail;





·
            investing
                in and operating efficient production
                facilities;





·
            providing
                value-added ancillary support services to
                customers;





·
            offering
                a broad range of products to customers in multiple channels of
                distribution; and





·
            continuing
                to pursue growth through strategic acquisitions and
                investments.





11


During
      fiscal year 2007, our net revenues increased dramatically year-on-year due
      to
      the addition of two new retail customer lines and larger than expected
      foodservice sales.  During the same time period, however, the prices
      for virtually all food-related commodities, especially poultry, dairy and
      cheese, eggs, wheat, corn products and oils rose dramatically, some to historic
      levels.  Wherever reasonably possible, we have locked in annual raw
      materials purchase prices by contracting volume to cover anticipated sales.
      Larger than expected sales to several customers during fiscal year 2007, along
      with higher than anticipated spot commodities pricing, required us to purchase
      raw materials at higher prices, negatively affecting overall material costs
      and
      gross margins.





We
      are
      now in the process of negotiating several annual vendor and customer contracts,
      and we believe margins will improve through reduced purchase prices of raw
      materials, increased sales prices to customers and a change in mix of customers
      between retail, foodservice and airlines.  This is in line with our
      strategy to continue to reduce our reliance on a small number of key accounts
      and to improve margins.





Following
      the completion of Plant No. 1, we strategically filled available capacity with
      business that carried gross margins lower than our historical average. With
      our
      recent growth, we expect to move away from some accounts that do not meet our
      profit objectives towards higher margin business now available to
      us.





Fiscal
      years 2007 and 2006 were 52-week periods, and fiscal year 2005 was a 53-week
      period.  Net revenues of $192.6 million increased 14.5% for the fiscal
      year ended September 30, 2007 as compared to the fiscal year ended October
      1,
      2006.  During fiscal year 2007, increased sales in the retail category
      offset the decline in airline sales and an expected decline in foodservice
      sales
      resulting from a customer’s decision to diversify its source of suppliers (as
      described further herein).  We expect fiscal 2008 sales growth to be
      driven primarily by our retail category.  We experienced a 3.5%
      increase in net revenues for the fiscal year ended October 1, 2006, to $168.3
      million as compared to the fiscal year ended October 2, 2005.  The
      increase in net revenues during fiscal year 2006 was due to growth in our retail
      and foodservice categories.





Gross
      profit of $19.9 million declined as a percentage of net revenues during fiscal
      year 2007 to 10.4% versus 12.8% in fiscal year 2006 and 12.2% in fiscal year
      2005.  The decline in the profit margin was due to increases in raw
      materials and commodity costs as well as start-up costs related to launching
      two
      new product lines.  Operating income as a percentage of net revenues
      for the fiscal year ended September 30, 2007, decreased to 6.2% from 8.5% in
      fiscal year 2006 and 7.3% in fiscal year 2005, due primarily to lower gross
      profit.  SG&A expenses as a percentage of net revenues improved to
      4.2% in fiscal year 2007 from 4.3% in fiscal year 2006 and 4.8% in fiscal year
      2005 as a result of the 14.5% increase in sales during fiscal year
      2007.  Net income of $4.6 million decreased as a percentage of net
      revenue to 2.4% in fiscal year 2007 versus 3.0% in fiscal year 2006 due to
      lower
      gross profit, partially offset by reduced interest expense as a result of
      refinanced debt and lower taxes.





As
      described under “Liquidity and Capital Resources” below, during fiscal year 2006
      we refinanced our existing debt of $44.5 million. The new credit facility with
      Guggenheim Corporate Funding, LLC (“GCF”) was a $47.5 million senior secured
      credit facility with a five-year maturity and is secured by a first priority
      lien on substantially all of our assets.  On March 9, 2007, we
      executed a second amendment to the senior credit agreement allowing for $7.0
      million of additional financing for capital expenditures.  The
      facility is now a $49.6 million senior secured credit facility and is structured
      as a $7.5 million non-amortizing revolving loan, a $26.5 million amortizing
      Tranche A Term Loan and a $15.6 million non-amortizing Tranche B Term
      Loan.





12




**Results
        of Operations**
 
 The
        tables presented below, which compare our results of operations from one
        period
        to another, present the results for each period, the change in those results
        from one period to another in both dollars and percentage change and the
        results
        for each period as a percentage of net revenues.  The columns present
        the following:
  ·
              First
                  four data columns in each table show the absolute results for each
                  period
                  presented and results for each period as a percentage of net
                  revenues.
  ·
              Last
                  two columns entitled “Dollar Variance” and “% Variance” shows the change
                  in results, both in dollars and percentages for fiscal year 2007
                  versus
                  fiscal year 2006. These two columns show favorable changes as positives
                  and unfavorable changes as negatives. For example, when our net
                  revenues
                  increase from one period to the next, that change is shown as a
                  positive
                  number in both columns. Conversely, when expenses increase from
                  one period
                  to the next, that change is shown as a negative in both
                  columns.


**Fiscal
      Year Ended September 30, 2007 Compared to Fiscal Year Ended October 1,
      2006**




Fiscal
                  Year Ended
              
              
              Change
                  2007 vs 2006­September
                  30, 2007
              
              
              October
                  1, 2006
              
              
              Dollar
                  Variance
              
              
              %
                  VarianceDollars
              
              
              %
                  of Net Revenues
              
              
              Dollars
              
              
              %
                  of Net Revenues
              
              
              Favorable
                  (Unfavorable)
              
              
              Favorable
                  (Unfavorable)(Dollars
                  in thousands)Net
                  revenues
              
              $
              192,642
              
              
              
              100.0
              %
              
              $
              168,310
              
              
              
              100.0
              %
              
              $
              24,332
              
              
              
              14.5
              %Cost
                  of sales
              
              
              172,694
              
              
              
              89.6
              
              
              
              146,825
              
              
              
              87.2
              
              
              
              (25,869
              )
              
              
              (17.6
              )Gross
                  profit
              
              
              19,948
              
              
              
              10.4
              
              
              
              21,485
              
              
              
              12.8
              
              
              
              (1,537
              )
              
              
              (7.2
              )Selling,
                  general andadministrative
                  expenses
              
              
              8,047
              
              
              
              4.2
              
              
              
              7,196
              
              
              
              4.3
              
              
              
              (851
              )
              
              
              (11.8
              )Operating
                  income
              
              
              11,900
              
              
              
              6.2
              
              
              
              14,288
              
              
              
              8.5
              
              
              
              (2,388
              )
              
              
              (16.7
              )Other
                  expenses
              
              
              4,389
              
              
              
              2.3
              
              
              
              5,731
              
              
              
              3.4
              
              
              
              1,342
              
              
              
              23.4Income
                  before incometaxes
              
              
              7,511
              
              
              
              3.9
              
              
              
              8,558
              
              
              
              5.1
              
              
              
              (1,047
              )
              
              
              (12.2
              )Income
                  tax provision
              
              
              2,949
              
              
              
              1.5
              
              
              
              3,456
              
              
              
              2.1
              
              
              
              507
              
              
              
              14.7Net
                  income
              
              $
              4,562
              
              
              
              2.4
              %
              
              $
              5,102
              
              
              
              3.0
              %
              
              $
              (540
              )
              
              
              (10.6
              )%





*Net
      Revenues.*Net revenues for the fiscal year ended September 30,
      2007 increased $24.3 million (or 14.5%) to $192.6 million from $168.3 million
      for the fiscal year ended October 1, 2006, driven predominately by increases
      in
      sales to retail customers, as noted below.





Retail
      net revenues increased $33.4 million (or 41.2%) to $114.4 million for the fiscal
      year ended September 30, 2007 from $81.0 million for the fiscal year ended
      October 1, 2006.  The increase in retail net revenues was due in part
      to the launch of 24 new private-label items in February 2007 for Safeway
      Inc.   In addition, the Company entered into a new agreement with
      a major national brand which was announced in January, 2007.  Under
      the terms of the contract, we anticipated sales of approximately $42.0 million
      in calendar 2007.  Revenues to this customer did not meet the contract
      volume requirements and we expect calendar 2007 sales to be approximately $25.0
      million, $17.0 million less than expected.  We are continuing
      negotiations with this customer and expect calendar year 2008 sales to be at
      or
      near the original contracted level.






13





Foodservice
      net revenues decreased $7.3 million (or 11.1%) to $58.5 million for the fiscal
      year ended September 30, 2007 from $65.8 million for the fiscal year ended
      October 1, 2006.  In January, 2007 Panda Restaurant Group, Inc.
      (“Panda”) communicated their intentions to transfer $20.0 million in annual
      foodservice production volume from us to another vendor.   The
      decline in sales was less than expected, as Panda’s strategy to diversify its
      sources of supply did not proceed as they had anticipated.  As this
      transfer was delayed, the decrease in sales to this customer during fiscal
      year
      2007 was less than $7.0 million rather than $20.0 million as previously
      announced.  While sales growth was positively affected, our overall
      gross profit margins on this incremental Panda business were
      reduced.  (See *Gross Profit* below.) We expect Panda will
      continue with its plan to diversify its suppliers.  We are currently
      in negotiations with Panda for their calendar year 2008
      requirements.  We have proposed a price increase to reflect material
      cost increases (primarily chicken) over the last year.  Our
      competitors are major chicken producers.   At this time there is
      no certainty as to the outcome of the negotiations and what effect they will
      have on our calendar 2008 business with Panda.  We believe retail
      sales increases will offset any potential foodservice sales losses.





Airline
      net revenues decreased $1.9 million (or 8.8%) to $19.7 million for the fiscal
      year ended September 30, 2007 from $21.6 million for the fiscal year ended
      October 1, 2006.  The decline in airline revenues was primarily
      attributable to the loss of sales to Delta Airlines subsequent to its bankruptcy
      filing.  We believe airline meals will continue to be a profitable
      part of our overall business despite the financial and business challenges
      facing the airline industry.




*Gross
      Profit.*  Gross profit for the fiscal year ended September 30,
      2007 decreased $1.5 million to $19.9 million, or 10.4% of net revenues, from
      $21.5 million, or 12.8% of net revenues, for the fiscal year ended October
      1,
      2006.  The decrease in margins was attributable to:  higher
      raw materials and commodity costs; start-up costs relating to simultaneously
      launching two new product lines; inefficiencies related to production during
      our
      facility expansion; and lower profit margins on Panda’s products.  As
      noted above, Panda did not transition all of the $20.0 million of business
      to
      alternate suppliers as planned.  Panda asked us to increase our
      production volume after chicken contracts were in place for the fiscal
      year.  As we were required to purchase non-contracted chicken at
      higher spot market costs, our margins were negatively affected.





We
      are
      now in the process of negotiating several annual vendor and customer contracts,
      and we believe margins will improve through a combination of reduced purchase
      prices of raw material and/or increased sales prices to customers.





*Selling,
      General and Administrative Expenses*.  SG&A expenses increased
      $851,000 (or 11.8%) to $8.0 million, or 4.2% of net revenues, for the fiscal
      year ended September 30, 2007 from $7.2 million, or 4.3% of net revenues for
      the
      fiscal year ended October 1, 2006.  SG&A expenses were driven by
      higher professional fees of $874,000 due to Sarbanes-Oxley requirements,
      $314,000 of increased brokerage due to higher retail sales, offset partially
      by
      reductions in sales promotional activities and in legal services.  We
      expect professional fees related to Sarbanes-Oxley implementation to be lower
      by
      approximately $600,000 in fiscal 2008.





*Operating
      Income.*Operating income decreased $2.4 million (16.7%) to $11.9
      million for the fiscal year ended September 30, 2007 from $14.3 million for
      the
      fiscal year ended October 1, 2006.  The decrease in operating income
      was the result of increases in cost of sales and SG&A expenses as noted
      above.





*Other
      Expenses.******* Other expenses decreased $1.3
      million (23.4%) for the fiscal year ended September 30, 2007 to $4.4 million
      from $5.7 million for the fiscal year ended October 1, 2006. Other expenses
      for
      fiscal year 2006 included a pretax debt extinguishment charge of approximately
      $176,000 in connection with the termination of our previous financing
      arrangements.  Interest expense declined $1.1 million from $5.1
      million to $4.0 million due to lower interest rates as a result of the
      refinancing in fiscal year 2006 and from the capitalization of interest of
      $186,000 on borrowings used in the construction of new plant capacity and line
      efficiency projects that occurred in fiscal year 2007.





*Income
      Tax Provision.*  Income tax expense was $2.9 million for the
      fiscal year ended September 30, 2007 as compared to $3.5 million for the fiscal
      year ended October 1, 2006.  The difference was a result of income
      before taxes decreasing $1.0 million from $8.6 million for the fiscal year
      ended
      October 1, 2006 to $7.5 million during the year ended September 30,
      2007.  The effective tax rates were 39.3% and 40.4% for fiscal years
      2007 and 2006, respectively.  The effective tax rate for the fiscal
      year ended September 30, 2007 did not materially differ from the statutory
      rate.


14




*Net
        Income.*Net income for the fiscal year ended September 30, 2007 was $4.6
        million, or $0.30 per basic share and $0.29 per diluted share as compared
        to net
        income of $5.1 million, or $0.34 per basic share and $0.32 per diluted share
        for
        the fiscal year ended October 1, 2006.
 
 We
        currently expect to continue profitable operations primarily through (a)
        growing
        revenues from profitable product lines, increasing our customer base and
        replacing lower margin accounts; (b) improving gross margins by increasing
        prices to customers where appropriate, streamlining additional costs and
        continuing to leverage our manufacturing and storage facilities to improve
        manufacturing efficiency; and (c) reducing future interest costs on outstanding
        debt through permitted pre-payments on our debt.  However, no
        assurance can be given that we will be successful in any of these
        initiatives.  As discussed in “Risk Factors” contained in Item 1A of
        this report, we may be unable to improve our operating results if we suffer
        a
        decline in our manufacturing efficiency, the loss of major customers, declines
        in air travel, adverse changes in our operating costs or raw materials costs
        or
        other adverse changes to our business.
  **Fiscal
      Year Ended October 1, 2006 Compared to Fiscal Year Ended October 2,
      2005**





Fiscal
                  Year Ended
              
              
              Change
                  2006 vs 2005October
                  1, 2006
              
              
              October
                  2, 2005
              
              
              Dollar
                  Variance
              
              
              %
                  VarianceDollars
              
              
              %
                  of Net Revenues
              
              
              Dollars
              
              
              %
                  of Net Revenues
              
              
              Favorable
                  (Unfavorable)
              
              
              Favorable
                  (Unfavorable)(Dollars
                  in thousands)Net
                  revenues
              
              $
              168,310
              
              
              
              100.0
              %
              
              $
              162,566
              
              
              
              100.0
              %
              
              $
              5,744
              
              
              
              3.5
              %Cost
                  of sales
              
              
              146,825
              
              
              
              87.2
              
              
              
              142,813
              
              
              
              87.8
              
              
              
              (4,012
              )
              
              
              (2.8
              )Gross
                  profit
              
              
              21,485
              
              
              
              12.8
              
              
              
              19,752
              
              
              
              12.2
              
              
              
              1,732
              
              
              
              8.8Selling,
                  general andadministrative
                  expenses
              
              
              7,196
              
              
              
              4.3
              
              
              
              7,850
              
              
              
              4.8
              
              
              
              654
              
              
              
              8.3Operating
                  income
              
              
              14,288
              
              
              
              8.5
              
              
              
              11,903
              
              
              
              7.3
              
              
              
              2,386
              
              
              
              20.0Other
                  expenses
              
              
              5,731
              
              
              
              3.4
              
              
              
              6,371
              
              
              
              3.9
              
              
              
              640
              
              
              
              10.0Income
                  beforeincome
                  taxes
              
              
              8,558
              
              
              
              5.1
              
              
              
              5,532
              
              
              
              3.4
              
              
              
              3,026
              
              
              
              54.7Income
                  taxprovision
              
              
              3,456
              
              
              
              2.1
              
              
              
              1,835
              
              
              
              1.1
              
              
              
              (1,621
              )
              
              
              (88.3
              )Net
                  income
              
              $
              5,102
              
              
              
              3.0
              %
              
              $
              3,696
              
              
              
              2.3
              %
              
              $
              1,405
              
              
              
              38.0
              %





*Net
      Revenues.*Net revenues for the fiscal year ended October 1, 2006
      increased $5.7 million (3.5%) to $168.3 million from $162.6 million for the
      fiscal year ended October 2, 2005.





Retail
      net revenues increased $9.7 million  (13.6%) to $81.0 million for the
      fiscal year ended October 1, 2006 from $71.3 million for the fiscal year ended
      October 2, 2005.  The increase in retail sales was largely due to a
      53.0% increase in sales to Jenny Craig, Inc. and to sales generated by two
      new
      customers added in the fiscal year ended October 1, 2006.  These sales
      increases more than offset lost revenues from discontinued product lines and
      lower sales to some retail customers.





Foodservice
      net revenues increased $5.0 million (8.2%) to $65.8 million for the fiscal
      year
      ended October 1, 2006 from $60.8 million for the fiscal year ended October
      2,
      2005 due to increased sales to an existing customer, which were partially offset
      by decreased revenue from the loss of a product for an existing foodservice
      customer.





Airline
      net revenues decreased $8.9 million (29.3%) to $21.6 million for the fiscal
      year
      ended October 1, 2006 from $30.5 million for the fiscal year ended October
      2,
      2005.  The decline in airline sales was primarily attributable to the
      decision by American Airlines in February 2005 to remove meals from the coach
      cabins of all of its domestic flights and partly attributable to significantly
      reduced sales to Delta Airlines subsequent to their bankruptcy
      filing.  Year-over-year comparisons will reflect the loss of sales to
      Delta Airlines through the first quarter of fiscal year 2007.





15


*Gross
        Profit.*  Gross profit for the fiscal year ended October 1, 2006
        increased $1.7 million (8.8%) to $21.5 million from $19.8 million for the
        fiscal
        year ended October 2, 2005.  The majority of this increase is
        attributable to net revenues increasing $5.7 million.  The balance of
        the increase was the result of improvement in gross profit as a percentage
        of
        net revenues to 12.8% for the fiscal year ended October 1, 2006 from 12.2%
        for
        the fiscal year ended October 2, 2005.  Margin improvement was
        attributable to better operating leverage resulting from higher sales volume
        and
        better pricing of raw materials.
 
 We
        modified our estimate for recording inventory reserves during the first quarter
        of fiscal year 2005 to apply estimated reserve percentages to aging
        categories.  The impact of the change in this estimate resulted in a
        one-time increase to cost of sales and decrease in gross profit of approximately
        $650,000, or a 0.4% decline in gross profit as a percentage of net revenues
        during fiscal year 2005.




*Selling,
      General and Administrative Expenses*.  SG&A expenses decreased
      $654,000 (8.3%) to $7.2 million, or 4.3% of net revenues, for the fiscal year
      ended October 1, 2006 from $7.9 million, or 4.8% of net revenues, for the fiscal
      year ended October 2, 2005.  The decrease in SG&A expenses
      resulted from a $417,000 reduction in professional, legal and consulting fees,
      a
      $152,000 decline in brokerage and royalty expenses due to reduced club store
      sales and a reduction of $59,000 in corporate expenses.  In addition,
      bad debt expense was reduced in the current year as no additional allowances
      were added to the reserve for doubtful accounts as compared to the addition
      of
      $170,000 in the prior year.  These reductions were partially offset by
      increases of $116,000 in sales promotional activities and increases of $80,000
      and $45,000 in payroll and insurance costs, respectively.  The fact
      that fiscal year 2006 was one week shorter than fiscal year 2005 also
      contributed to the decline in SG&A expenses.  As a result of the
      refinancing described under “Liquidity and Capital Resources” below, we began to
      experience savings of $180,000 in annual consulting fees that we had been paying
      to an affiliate of our previous lender.





*Operating
      Income.*Operating income increased $2.4 million (20.0%) to $14.3
      million for the fiscal year ended October 1, 2006 from $11.9 million for the
      fiscal year ended October 2, 2005.  The increase in operating income
      was the result of improvements in sales, gross margins and SG&A expenses as
      noted above.





*Other
      Expenses.******* Other expenses decreased $640,000
      (10.0%) for the fiscal year ended October 1, 2006 to $5.7 million from $6.4
      million for fiscal year ended October 2, 2005. Other expenses for fiscal year
      2005 included $245,000 of loss on disposal of fixed assets.  Interest
      expense declined by 13.0% from $5.9 million to $5.1 million due to the reduction
      of $4.1 million in the face amount of debt in the past twelve months through
      voluntary principal payments and lower interest rates as a result of the
      refinancing.  A total reduction in annual interest expense of
      approximately $1.0 million is anticipated during the first twelve months of
      our
      new credit agreement.  These anticipated savings may not be fully
      realized if there are future increases in market interest rates or if we fail
      to
      meet our financial and other covenants under our secured credit
      facility.  The fiscal year ended October 1, 2006 included a pretax
      debt extinguishment charge of approximately $176,000 in connection with the
      termination of our previous financing arrangements.





*Income
      Tax Provision.*  Income tax expense was $3.5 million for the
      fiscal year ended October 1, 2006 as compared to $1.8 million for the fiscal
      year ended October 2, 2005.  The difference was a result of income
      before taxes increasing $3.0 million from $5.5 million for the fiscal year
      ended
      October 2, 2005 to $8.6 million during the year ended October 1,
      2006.  The effective tax rates were 40.4% and 33.2% for fiscal years
      2006 and 2005, respectively.  The effective tax rate for the fiscal
      year ended October 1, 2006 did not materially differ from the statutory
      rate.  The difference between the effective tax rate and the statutory
      tax rate for the fiscal year ended October 2, 2005 was the result of the
      reversal of the valuation reserve of $425,000 that was established in fiscal
      year 2004.





During
      the fiscal year ended October 2, 2005, as a result of improved operating
      results, we concluded that it was more likely than not that our deferred tax
      assets would be realized.  Accordingly, we reversed $337,000 of the
      previously recorded valuation allowance against a portion of our deferred tax
      assets.


16




*Net
      Income.*Net income for the fiscal year ended October 1, 2006 was $5.1
      million, or $0.34 per basic share and $0.32 per diluted share, as compared
      to
      net income of $3.7 million, or $0.25 per basic share and $0.24 per diluted
      share, for the fiscal year ended October 2, 2005.





**Liquidity
      and Capital Resources**





Cash
      decreased $785,000 to $1.3 million at September 30, 2007 from $2.1 million
      at
      October 1, 2006.  Our principal sources of liquidity are cash
      generated from our operating activities and availability under our credit
      facility described below.  During the fiscal year ended September 30,
      2007, our operating activities provided cash of $3.6 million as compared to
      cash
      provided of $7.2 million during the fiscal year ended October 1,
      2006.  This was primarily due to a decrease in net income of $540,000,
      a decrease in deferred income taxes of $2.1 million as a result of the use
      of
      our prior years’ net operating losses and an increase in cash used for working
      capital needs of $1.5 million as a result of increased sales.  These
      were offset by an increase in depreciation and amortization of $669,000 due
      to
      the increase in capital expenditures.


During
      the fiscal year ended September 30, 2007, our investing activities, comprised
      of
      additions to capital expenditures, proceeds from the sale of property, plant
      and
      equipment and marketable securities, resulted in a net use of cash of
      approximately $8.0 million, as compared to a net use of cash of approximately
      $2.2 million during the fiscal year ended October 1, 2006.  The use of
      cash for additions to property and equipment of $8.1 million includes routine
      capital expenditures and expenditures to expand the manufacturing capacity
      of
      our entrée plant to accommodate additional opportunities for new business. The
      expansion, anticipated to cost approximately $7.0 million, includes installation
      of new machinery and systems to meet anticipated growth and improve operating
      efficiency.  We anticipate the expansion will be completed during the
      first quarter of fiscal year 2008. We are using borrowing availability under
      our
      credit facility described below to fund the capital expenditures.





During
      the fiscal year ended September 30, 2007, our financing activities provided
      cash
      of $3.7 million as compared to a use of cash of $5.6 million during the fiscal
      year ended October 1, 2006.  Cash provided by borrowings under our
      credit facility and equipment loans were $13.0 million and $693,000,
      respectively. We also received $931,000 from the exercise of stock options,
      including the related tax benefit. These sources of cash were offset by cash
      used to make principal payments of $10.4 million on our financing arrangements,
      $281,000 on our capital lease obligation and $156,000 on equipment
      loans.





We
      executed a senior secured credit agreement with GCF on April 17, 2006. Under
      the
      credit agreement, GCF acts as collateral agent, administrative agent, arranger
      and syndication agent in connection with loans made by various lenders,
      including affiliates of GCF.  The facility was originally structured
      as a $7.5 million non-amortizing revolving loan, a $25.0 million amortizing
      Tranche A Term Loan and a $15.0 million non-amortizing Tranche B Term
      Loan.





On
      March
      9, 2007, we executed a second amendment to the senior secured credit agreement
      allowing for $7.0 million of additional capital expenditures to facilitate
      new
      business by increasing plant capacity and improving line efficiency, to be
      funded by increases of $3.5 million in each of the Tranche A and Tranche B
      Term
      Loans.





As
      of
      September 30, 2007, the facility with GCF, reflecting principal payments and
      the
      March 9, 2007 amendment, was a $49.6 million senior secured credit facility
      maturing in May 2011, secured by a first priority lien on substantially all
      of
      our assets. As of September 30, 2007, the facility was structured as a $7.5
      million non-amortizing revolving loan, a $26.5 million amortizing Tranche A
      Term
      Loan and a $15.6 million non-amortizing Tranche B Term Loan. The facility bears
      interest, adjustable quarterly, at the London Inter Bank Offered Rate (“LIBOR”)
      plus the Applicable Margin (listed below) for LIBOR loans or, at our option
      in
      the case of the revolving loans, an alternate base rate equal to the greater
      of
      the prime rate and the federal funds effective rate plus 0.50%, plus an
      applicable margin, as follows:






17





Applicable
                  Margin for Alternate Base Rate Loans
            
            
            Applicable
                  Margin for
              LIBOR
                  LoansTotal
                  Debt to EBITDA Ratio for Last Twelve Months
            
            Revolving
                  Loan
            
            
            Revolving
                  Loan
            
            
            Tranche
                  A
              Term
                  Loan
            
            
            Tranche
                  B
              Term
                  LoanGreater
                than
            3.00:1.00
            
            
            2.50%
            
            
            
            3.50%
            
            
            
            3.75%
            
            
            
            6.25%Greater
                than or equal to
              but
                less than or equal to
            2.00:1.00
              3.00:1.00
            
            
            2.25%
            
            
            
            3.25%
            
            
            
            3.50%
            
            
            
            6.00%Less
                than
            2.00:1.00
            
            
            2.00%
            
            
            
            3.00%
            
            
            
            3.25%
            
            
            
            5.75%





As
      of
      September 30, 2007, our principal balances on the loans totaled $43.6 million,
      consisting of $25.5 million in Tranche A Term Loans, $15.6 million in Tranche
      B
      Term Loans and $2.5 million in LIBOR revolving loans.  At September
      30, 2007, interest rates on the Tranche A Term Loans, Tranche B Term Loans
      and
      LIBOR revolving loans were 9.1%, 11.6% and 8.8%, respectively.  For
      the fiscal year ended September 30, 2007, we had incurred $4.0 million in
      interest expense net of $186,000 in capitalized interest.  For the
      fiscal year ended October 1, 2006, we incurred $5.1 million in interest
      expense.  At September 30, 2007, the facility had been reduced by
      mandatory principal payments on the Tranche A Term Loan of $3.0 million and
      voluntary principal payments on the Tranche B Term Loan of $2.9
      million.  As of September 30, 2007, the Company had $5.0 million
      available to use on the revolving loan.





Initial
      proceeds from the GCF facility, received May 16, 2006, were used to repay
      approximately $44.5 million in existing debt and related fees and expenses
      in
      connection with the termination of our former financing arrangements and to
      pay
      approximately $1.6 million in fees and expenses relating to the new
      financing.  Of these fees, $1.3 million is recorded as debt discount,
      net of accumulated amortization, on the accompanying balance sheet as of
      September 30, 2007.  We recorded a pretax charge of approximately
      $176,000 in connection with the termination of the former financing arrangements
      in the third quarter of fiscal year 2006.  We paid GCF
      an
      additional $132,000 in fees and expenses on March 9, 2007 related to the second
      amendment, which was recorded as a debt discount.





The GCF facility contains covenants whereby, among other things, we are required
      to maintain compliance with agreed levels of earnings before interest, taxes,
      depreciation and amortization, interest coverage, fixed charge coverage,
      leverage targets, annual capital expenditures and incremental indebtedness
      limits.  Mandatory prepayments under the facility are required based
      on excess cash flow, as defined in the agreement, and upon receipt of proceeds
      from a disposition or payment from a casualty or condemnation of the
      collateralized assets, and voluntary prepayments under the facility are
      generally permitted as provided in the agreement.  The facility also
      contains customary restrictions on incurring indebtedness and liens, making
      investments, paying dividends and making loans or advances.





We entered into the following amortizing loans with Key Bank to finance the
      purchase of machinery used for manufacturing processes: a 5-year loan in the
      principal amount of $324,000 at a fixed interest rate of 7.5% on September
      21,
      2006, a 5-year loan in the principal amount of $216,617 at a fixed interest
      rate
      of 7.5% on November 27, 2006 and a 4-year loan in the principal amount of
      $476,043 at a fixed interest rate of 7.5% on January 9, 2007.





We
      amended our existing operating lease agreements with General Electric Capital
      Corporation on October 2, 2006. The amended lease resulted in a three-year
      capital lease in the principal amount of $842,168 at a fixed interest rate
      of
      8.15%, with a $1 bargain purchase option at the expiration of the lease. The
      assets acquired under this capital lease have an acquisition cost of
      $911,647.





We
      believe that funds available to us from operations and existing capital
      resources will be adequate for our capital requirements for at least the next
      twelve months.








18




**Contractual
      Obligations and Other Commitments**





We
      are
      obligated to make future payments under various contracts such as debt
      agreements, lease obligations and other purchase obligations.


Following
      is a summary of our contractual obligations at September 30, 2007:





Payments
                Due By PeriodContractual
                Obligations
            
            Total
            
            
            Within
              1
                Year
            
            
            2-3
                Years
            
            
            4-5
                Years
            
            
            More
                than
              5
                YearsDebt
                maturities
            
            $
            44,500,338
            
            
            $
            2,210,695
            
            
            $
            5,471,730
            
            
            $
            36,817,913
            
            
            *$*
            *-*Interest
                expense(1)
            
            
            16,422,183
            
            
            
            4,792,749
            
            
            
            8,907,894
            
            
            
            2,721,540
            
            
            
            -Capital
                lease obligation
            
            
            561,430
            
            
            
            282,008
            
            
            
            279,422
            
            
            
            -
            
            
            
            -Operating
                leaseobligations
                (2)
            
            
            11,540,234
            
            
            
            1,957,847
            
            
            
            3,498,513
            
            
            
            2,115,626
            
            
            
            3,968,248Other
                contractualobligations
            
            
            91,292
            
            
            
            91,292
            
            
            
            -
            
            
            
            -
            
            
            
            -Open
                purchase orders
            
            
            12,446,595
            
            
            
            12,446,595
            
            
            
            -
            
            
            
            -
            
            
            
            -Total
                contractualobligations
            
            $
            85,562,072
            
            
            $
            21,781,186
            
            
            $
            18,157,559
            
            
            $
            41,655,079
            
            
            $
            3,968,248


____________


(1)
              Assumes
                  only mandatory principal pay-downs and the use of the LIBOR rate
                  as of
                  September 30, 2007 on the GCF debt and fixed-rate interest payments
                  on
                  equipment loans and capital lease
                  obligation.
 (2)
              Includes
                  real estate leases.


The
      above
      table outlines our obligations as of September 30, 2007 and does not reflect
      the
      changes in our obligations that occurred after that date.





**Recent
      Accounting Pronouncements**





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”), which defines
      fair value, establishes a framework for measuring fair value and requires
      enhanced disclosures about fair value measurements. SFAS 157 requires companies
      to disclose the fair value of their financial instruments according to a fair
      value hierarchy (i.e., levels 1, 2, and 3, as defined). Additionally, companies
      are required to provide enhanced disclosure regarding instruments in the level
      3
      category, including a reconciliation of the beginning and ending balances
      separately for each major category of assets and liabilities. SFAS 157 will
      be
      effective for fiscal years beginning after November 15, 2007 and interim
      periods within those fiscal years. We are currently evaluating the impact
      adoption may have on our financial condition or results of
      operations.


19




In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109”
(“FIN 48”), which prescribes accounting for and disclosure of uncertainty in tax
      positions. This interpretation defines the criteria that must be met for the
      benefits of a tax position to be recognized in the financial statements and
      the
      measurement of tax benefits recognized. The provisions of FIN 48 will be
      required to be adopted in the first quarter of our 2008 fiscal year, with the
      cumulative effect of the change in accounting principle recorded as an
      adjustment to opening retained earnings. We are currently evaluating the impact
      that adoption of FIN 48 may have on our financial condition, results of
      operations or cash flows.


**Critical
      Accounting Policies**





Management’s
      discussion and analysis of our financial condition and results of operations
      is
      based upon our financial statements, which have been prepared in accordance
      with
      accounting principles generally accepted in the United States.  The
      preparation of these financial statements requires management to make estimates
      and assumptions that affect the amounts reported in the financial statements
      and
      accompanying notes.  Actual results could differ from those
      estimates.  See Note 2 to the financial statements contained elsewhere
      in this report for a summary of our significant accounting
      policies.  Management believes the following critical accounting
      policies are related to our more significant estimates and assumptions used
      in
      the preparation of our financial statements.





*Concentrations
      of Credit Risk.*Our financial instruments that are exposed to
      concentrations of credit risk consist primarily of trade
      receivables.  We perform on-going credit evaluations of each
      customer’s financial condition and generally require no collateral from our
      customers.  A bankruptcy or other significant financial deterioration
      of any customer could impact its future ability to satisfy its receivables
      with
      us.  Our allowance for doubtful accounts is calculated based primarily
      upon historical bad debt experience and current market
      conditions.  Until fiscal 2003, bad debt expense and accounts
      receivable write-offs, net of recoveries, were immaterial as we generally
      transact the substantial portion of our business with large, established food
      or
      service related businesses.  For the fiscal years ended September 30,
      2007, October 1, 2006 and October 2, 2005, our write-offs, net of recoveries,
      to
      the allowance for doubtful accounts were approximately $9,000, $181,000 and
      $99,000, respectively.





A
      significant portion of our total net revenues during the last two fiscal years
      was derived from two customers.  Panda Restaurant Group, Inc. and
      Jenny Craig, Inc. accounted for approximately 27% and 26%, respectively, of
      our
      revenues for the fiscal year ended September 30, 2007 and approximately 35%
      and
      28% respectively, of our revenues for the fiscal year ended October 1,
      2006.  Receivables related to Jenny Craig, Inc., Panda Restaurant
      Group, Inc. (through its distributors), H.J. Heinz Company and Safeway Inc.,
      accounted for approximately 27%, 26%, 17% and 10%, respectively, of the
      Company’s total accounts receivable balance at September 30, 2007 and
      approximately 38%, 34%, 0% and 1%, respectively, of the Company’s total accounts
      receivable balance at October 1, 2006.





*Inventories.*  Inventories,
      which include material, labor and manufacturing overhead, are stated at the
      lower of cost, which approximates the first-in, first-out (FIFO) method, or
      market.  We use a standard costing system to estimate our FIFO cost of
      inventory at the end of each reporting period.  Historically, standard
      costs have been materially consistent with actual costs.  We
      periodically review our inventory for excess items, and we establish a valuation
      reserve based upon the age of specific items in inventory and the expected
      recovery from the disposition of the items.





A
      reserve
      is established for the estimated aged surplus, spoiled or damaged products,
      and
      discontinued inventory items and components.  The amount of the
      reserve is determined by analyzing inventory composition, expected usage,
      historical and projected sales information, and other
      factors.  Changes in sales volume due to unexpected economic or
      competitive conditions are among the factors that could result in material
      increases or decreases to the reserve.





*Property
      and Equipment.*The cost of property and equipment is depreciated over the
      estimated useful lives of the related assets, which range from three to ten
      years.  Leasehold improvements to our Plant No. 1 in Vernon,
      California are amortized over the lesser of the initial lease term plus one
      lease extension period, initially totaling 15 years, or the estimated useful
      life of the assets.  Other leasehold improvements are amortized over
      the lesser of the term of the related lease or the estimated useful lives of
      the
      assets.  Depreciation is generally computed using the straight-line
      method.


20




Expenditures
        for maintenance and repairs are charged to expense as incurred.  The
        cost of materials purchased and labor expended in betterments and major renewals
        are capitalized.  Costs and related accumulated depreciation of
        properties sold or otherwise retired are eliminated from the accounts, and
        gains
        or losses on disposals are included in other income
        (expense).




*Excess
      of Cost Over Fair Value of Net Assets Acquired.*We evaluate the
      excess of cost over fair value of net assets acquired (goodwill) at least
      annually for impairment in accordance with SFAS No. 142.  We have one
      reporting unit and estimate fair value based on a variety of market factors,
      including discounted cash flow analysis, market capitalization, and other
      market-based data.  At September 30, 2007, we had goodwill of $12.2
      million.  A deterioration of our operating results and the related
      cash flow effect could decrease the estimated fair value of our business and,
      thus, cause our goodwill to become impaired and cause us to record a charge
      against operations in an amount representing the impairment.





*Income
      Taxes.*We evaluate the need for a valuation allowance on our
      deferred tax assets based on whether we believe that it is more likely than
      not
      that all deferred tax assets will be realized.  We consider future
      taxable income and on-going prudent and feasible tax planning strategies in
      assessing the need for valuation allowances.  In the event we were to
      determine that we would not be able to realize all or part of our deferred
      tax
      assets, we would record an adjustment to the deferred tax asset and a charge
      to
      income at that time.





**ITEM
      7A.                      Quantitative
      and Qualitative Disclosures About Market Risk**





*Interest
      Rate Risk – Obligations.*We are subject to interest rate risk on
      variable interest rate obligations.  A hypothetical 10% increase in
      average market interest rates would increase by approximately $442,000 the
      annual interest expense on our debt outstanding as of September 30,
      2007.  We are also subject to interest rate risk on our fixed interest
      rate obligations.  Based upon outstanding amounts of fixed rate
      obligations as of September 30, 2007, a hypothetical 10% decrease in average
      market interest rates would increase the fair value of outstanding fixed rate
      debt by approximately $7,000.





**ITEM
      8.                      Financial
      Statements and Supplementary Data**





See
      the
      index to financial statements included in Part IV, Item 15.  The
      supplementary financial information required by Item 302 of Regulation S-K
      is
      contained in Note 14 of the notes to financial statements included in this
      report.





**ITEM
      9.                      Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure**





None.





**ITEM
      9A.                      Controls
      and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**





Our
      Chief
      Executive Officer and Interim Chief Financial Officer (our principal executive
      officer and principal financial officer, respectively) have concluded, based
      on
      their evaluation as of September 30, 2007, that the design and operation of
      our
“disclosure controls and procedures” (as defined in 13a-15(e) and 15d-15(e)
      under the Exchange Act) are effective at a reasonable assurance level to ensure
      that information required to be disclosed by us in the reports filed or
      submitted by us under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Commission’s rules and forms,
      including to ensure that information required to be disclosed by us in the
      reports we file or submit under the Exchange Act is accumulated and communicated
      to our management, including our Chief Executive Officer and Interim Chief
      Financial Officer, as appropriate to allow timely decisions regarding required
      disclosure.


21


**Management’s
      Report on Internal Control Over Financial Reporting**





Management
        is responsible for establishing and maintaining adequate “internal control over
        financial reporting”****as defined in Rules 13a-15(f) and
        15d-15(f) under the Exchange Act. Internal control over financial reporting
        refers to the process designed by, or under the supervision of, our Chief
        Executive Officer and Chief Financial Officer, and effected by our Board
        of
        Directors, management and other personnel, to provide reasonable assurance
        regarding the reliability of financial reporting and the preparation of
        financial statements for external purposes in accordance with generally accepted
        accounting principles, and includes those policies and procedures that:


(i)
        pertain to the maintenance of records that, in reasonable detail, accurately
        and
        fairly reflect the transactions and dispositions of our assets;





(ii)
        provide reasonable assurance that transactions are recorded as necessary
        to
        permit preparation of financial statements in accordance with generally accepted
        accounting principles, and that receipts and expenditures are being made
        only in
        accordance with authorizations of our management and directors; and





(iii)
        provide reasonable assurance regarding prevention or timely detection of
        unauthorized acquisition, use or disposition of our assets that could have
        a
        material effect on our financial statements.





Because
        of its inherent limitations, internal control over financial reporting may
        not
        prevent or detect misstatements. Also, projections of any evaluation of
        effectiveness to future periods are subject to the risk that controls may
        become
        inadequate because of changes in conditions, or that the degree of compliance
        with the policies or procedures may deteriorate.





Management
      has used the framework set forth in the report entitled “Internal
      Control—Integrated Framework” published by the Committee of Sponsoring
      Organizations of the Treadway Commission to evaluate the effectiveness of our
      internal control over financial reporting. Management has concluded that our
      internal control over financial reporting was effective at a reasonable
      assurance level as of the end of the most recent fiscal year.




**Inherent
      Limitations on the Effectiveness of Controls**




Management
      does not expect that our disclosure controls and procedures or our internal
      control over financial reporting will prevent or detect all errors and all
      fraud. A control system, no matter how well conceived and operated, can provide
      only reasonable, not absolute, assurance that the objectives of the control
      systems are met. Further, the design of a control system must reflect the fact
      that there are resource constraints, and the benefits of controls must be
      considered relative to their costs. Because of the inherent limitations in
      a
      cost-effective control system, no evaluation of internal control over financial
      reporting can provide absolute assurance that misstatements due to error or
      fraud will not occur or that all control issues and instances of fraud, if
      any,
      have been or will be detected.




These
      inherent limitations include the realities that judgments in decision-making
      can
      be faulty and that breakdowns can occur because of a simple error or mistake.
      Controls can also be circumvented by the individual acts of some persons, by
      collusion of two or more people, or by management override of the controls.
      The
      design of any system of controls is based in part on certain assumptions about
      the likelihood of future events, and there can be no assurance that any design
      will succeed in achieving its stated goals under all potential future
      conditions. Projections of any evaluation of controls’ effectiveness to future
      periods are subject to risks. Over time, controls may become inadequate because
      of changes in conditions or deterioration in the degree of compliance with
      policies or procedures.





**Changes
      in Internal Control Over Financial Reporting**





During
      the quarter ended September 30, 2007, there were no changes in our “internal
      control over financial reporting” (as defined in Rule 13a-15(f) under the
      Exchange Act) that have materially affected, or are reasonably likely to
      materially affect, our internal control over financial
      reporting.


22


**Report
      of Independent Registered Public Accounting Firm**


**on
      Internal Control Over Financial Reporting**




The
      Board
      of Directors and Shareholders of Overhill Farms, Inc.




We
      have
      audited Overhill Farms, Inc.’s internal control over financial reporting as of
      September 30, 2007, based on criteria established in Internal
      Control—Integrated Framework issued by the Committee of Sponsoring Organizations
      of the Treadway Commission (the COSO criteria). Overhill Farms, Inc.’s
      management is responsible for maintaining effective internal control over
      financial reporting, and for its assessment of the effectiveness of internal
      control over financial reporting included in the accompanying Management’s
      Report on Internal Control Over Financial Reporting. Our responsibility is
      to
      express an opinion on the company’s internal control over financial reporting
      based on our audit.




We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether effective
      internal control over financial reporting was maintained in all material
      respects. Our audit included obtaining an understanding of internal control
      over
      financial reporting, assessing the risk that a material weakness exists, testing
      and evaluating the design and operating effectiveness of internal control based
      on the assessed risk, and performing such other procedures as we considered
      necessary in the circumstances. We believe that our audit provides a reasonable
      basis for our opinion.




A
      company’s internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. A company’s internal control over
      financial reporting includes those policies and procedures that (1) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company;
      (2) provide reasonable assurance that transactions are recorded as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles, and that receipts and expenditures
      of
      the company are being made only in accordance with authorizations of management
      and directors of the company; and (3) provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use,
      or
      disposition of the company’s assets that could have a material effect on the
      financial statements.




Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.




In
      our
      opinion, Overhill Farms, Inc. maintained, in all material respects, effective
      internal control over financial reporting as of September 30, 2007, based
      on the COSO criteria.





We
      also
      have audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States), the consolidated balance sheets of Overhill
      Farms, Inc. as of September 30, 2007 and October 1, 2006, and the related
      consolidated statements of income, shareholders’ equity, and cash flows for each
      of the three years in the period ended September 30, 2007 of Overhill
      Farms, Inc. and our report dated December 10, 2007, expressed an unqualified
      opinion thereon.




/s/
      ERNST &
YOUNG LLP




Los
      Angeles, California


December
      10, 2007




23




**ITEM
      9A(T).**                **Controls
      and Procedures**





Not
      applicable.





**ITEM
      9B.                      Other
      Information**





As
      described under the subheading “Employment Contracts and Termination of
      Employment and Change-in-Control Arrangements – Executive Bonus Program”
contained in Item 11 of Part III of this report, as of September 30, 2007,
      upon
      recommendation of the compensation committee, our board of directors approved
      bonus programs for fiscal year 2007 for our named executive
      officers.  The bonuses will be paid in fiscal year 2008.








24


**PART
      III**





**ITEM
      10.                      Directors,
      Executive Officers and Corporate Governance**





The
      following table sets forth certain information regarding our directors and
      executive officers as of December 11, 2007.





Name
            
            Age
            Positions
                  Held
            
            Director
                SinceJames
                Rudis
            
            58
            Chairman
                of the Board, President, Chief Executive Officer and
                Director
            
            1995Tracy
                E. Quinn
            
            53
            Interim
                Chief Financial Officer
            
            -Richard
                A. Horvath
            
            61
            Senior
                Vice President and Secretary
            
            -Harold
                Estes
            
            67
            Director
            
            2002Geoffrey
                A. Gerard(1)(2)(3)
            
            62
            Director
            
            2002Alexander
                Auerbach(2)(3)
            
            63
            Director
            
            2004Louis
                J. Giraudo(1)(2)
            
            61
            Director
            
            2004Alexander
                Rodetis, Jr.(1)
            
            65
            Director
            
            2004


____________




(1)
            Member
                of audit committee.


(2)
            Member
                of compensation committee.


(3)
            Member
                of nominating and governance
                committee.





The
      following information regarding the principal occupations and other employment
      of our directors and executive officers during the past five years and their
      directorships in certain companies is as reported to us by each of
      them.





**James
      Rudis** was elected to our board of directors in April 1995 and has
      served as President since June 1997. He also served as a director of TreeCon
      Resources from December 1992 to December 2003, and until December 2003 had
      served as President of TreeCon Resources (formerly Polyphase Corp.) since July
      1997 and Chairman and Chief Executive Officer of TreeCon Resources since
      February 1998.  He served as Executive Vice President of TreeCon
      Resources from March 1994 until July 1997.  Prior to his employment
      with us and with TreeCon Resources, Mr. Rudis was President of Quorum
      Corporation, a private consulting firm involved in acquisitions and market
      development.  From 1970 until 1984, he held various executive
      positions in CIT Financial Corporation, including Vice President and Regional
      Manager of that company’s Commercial Finance Division.





**Tracy
      E. Quinn** has served as our Interim Chief Financial Officer since
      September 2007.  Ms. Quinn filled various senior-level finance and
      operating positions for the H.J. Heinz Company, prior to taking early retirement
      in 2005 after 21 years with the company. At Heinz she served as Corporate
      Controller and Chief Accounting Officer; Vice President-Finance with one of
      its
      U.S. Frozen Foods divisions; Vice President-Strategy Development at the
      corporate level; Managing Director of its U.S. infant foods business unit;
      and
      Chief Financial Officer or Chief Executive Officer of various Heinz
      international operations.





**Richard
      A. Horvath** has served as our Senior Vice President and Secretary since
      November 1997.  Mr. Horvath also served as our Chief Financial
      Officer from November 1997 through March 2003 and as a member of our board
      of
      directors from November 1999 to September 2004.  Mr. Horvath has been
      in the food industry for 30 years.  Prior to his employment at
      Overhill Farms, Mr. Horvath served as the Chief Financial Officer of Martino’s.
      During the period of 1973 to 1996, he held various positions with the Carnation
      Company, Star Kist Foods and Mission Foods.





25


**Harold
      Estes** was appointed to our board of directors in October
      2002.  Mr. Estes is the President of Texas Timberjack, Inc. (“TTI”), a
      wholly-owned subsidiary of TreeCon Resources.  He was elected as a
      director of TreeCon Resources in February 1996 and resigned from the TreeCon
      Resources board of directors in April 1997. TTI is a distributor of industrial
      and commercial timber and logging equipment and is also engaged in certain
      related timber and sawmill operations.  Mr. Estes has been President
      of TTI since 1984, when he acquired TTI from Eaton Corporation.  Mr.
      Estes previously served as a director of Newton Bancshares, Inc., the parent
      of
      First National Bank of Newton (Texas), for approximately ten years until the
      sale of the bank in October 2001.





**Geoffrey
      A. Gerard** was elected to our board of directors in February
      2002.  Mr. Gerard served as Secretary and General Counsel of Equivest,
      Inc. from 1975 to 1977.  Mr. Gerard then served as Secretary and
      General Counsel for two privately held oil and gas exploration companies until
      1978.  Mr. Gerard has been in the private practice of law in
      Dallas County, Texas since 1978, specializing in business
      transactions.  Mr. Gerard received a B.S. in Business-Finance and a
      J.D. from Indiana University.





**Alexander
      Auerbach** was appointed to our board of directors in September
      2004.  Mr. Auerbach is President of Alexander Auerbach & Co.,
      Inc., a public relations and marketing services firm that he founded in
      1986.  Prior to establishing Alexander Auerbach & Co., Inc., Mr.
      Auerbach served as Chief Operating Officer of two magazine publishing
      companies.  Earlier in his career, Mr. Auerbach was a senior member of
      the business and financial news staff of The Los Angeles Times and a financial
      writer for The Boston Globe.  Mr. Auerbach holds a B.A. from Columbia
      University and an M.B.A. from the University of California at Los
      Angeles.





**Louis
      J. Giraudo** was appointed to our board of directors in September
      2004.  Mr. Giraudo is a Co-Founder and Principal of GESD Capital
      Partners, a private equity firm.  Prior to co-founding GESD Capital
      Partners in January 1999, Mr. Giraudo was Chief Executive Officer of Preferred
      Capital Markets from January 1999 to December 2002, where he co-directed the
      development of Preferred Trade, Inc., an online brokerage
      business.  Mr. Giraudo served as Chairman and Chief Executive Officer
      of the Pacific Coast Baking Company from 1986 to 1993 and as Chairman of
      Mother’s Cake & Cookie Company from 1990 to 1993.  Mr. Giraudo has
      practiced corporate, business and labor law since 1974 and has been a partner
      at
      the law firm of Coblentz, Patch, Duffy & Bass, LLP since 1983.  In
      addition, Mr. Giraudo has held several appointed public service positions
      throughout his career, including Chairman of the Board of Trustees of the
      University of San Francisco, President of the San Francisco Police Commission,
      President of the San Francisco Public Utilities Commission and President of
      the
      San Francisco Board of Permit Appeals.  Mr. Giraudo currently serves
      on the boards of directors of Andre-Boudin Bakeries, Inc., Golden County Foods,
      Inc., SoCal Bakeries, Inc., Pabst Brewing Company and Suburban House Furniture
      Company.  Mr. Giraudo holds a B.A. in Political Science, a J.D. from
      the University of San Francisco and a Doctorate of Humane Letters in Education
      (Honoris Causa) from the University of San Francisco.  Mr. Giraudo was
      awarded the title of Papal Knight of the Order of St. Gregory the Great by
      Pope
      John Paul II in September 2000.





**Alexander
      Rodetis, Jr.** was appointed to our board of directors in September
      2004.  Mr. Rodetis is currently President and co-founder of Fairway
      Financial Services LLC, organized to provide financial and due diligence
      guidance to bank and non-bank lending institutions as well as companies seeking
      solutions to their corporate finance requirements.    In
      addition, Mr. Rodetis is President of Pegasus Financial Services, LLC currently
      engaged on a project basis, to perform loan reviews and credit assessments
      for
      the loan portfolio of a community bank located on the east coast.  Mr.
      Rodetis has been in the financial services community for over thirty
      years.  Mr. Rodetis had been the Marketing and Strategic Planning
      Coordinator of The Daley-Hodkin Group, a business valuation, asset disposition
      and consulting organization and previously held the position of Inventory
      Appraisal Business Head for the Group.  He served as Senior Vice
      President of General Motors Acceptance Corporation’s Commercial Finance Division
      from 2002 to 2003, where he co-founded the Special Assets Group.  From
      1998 to 2002, Mr. Rodetis served as Executive Vice President of The Merchants
      Bank of New York where he co-founded the asset-based lending corporation for
      that bank.  Prior to that, he served as Vice President of Fremont
      Financial Corp. and of National Westminster Bancorp and held various credit
      and
      marketing positions at other banking institutions, including The Chase Manhattan
      Bank and Citibank North America, Inc.  Mr. Rodetis earned a B.S. in
      Accounting, a B.A. in Business Administration and an M.B.A. in finance from
      Fairleigh Dickinson University.  He has also completed financial
      analysis and corporate finance courses at The Harvard School of
      Business.





26




**Term
      of Office and Family Relationships**





Our
      directors are elected at each annual stockholders’ meeting or at such other
      times as reasonably determined by our board of directors.  Each of our
      directors is to hold office until his successor is elected and qualified or
      until his earlier death, resignation or removal.  Each of our
      executive officers serves at the discretion of our board of
      directors.  There are no family relationships among our executive
      officers or directors.





**Corporate
      Governance**





Our
      board
      of directors believes that good corporate governance is paramount to ensure
      that
      Overhill Farms, Inc. is managed for the long-term benefit of our
      stockholders.  Our board of directors has adopted corporate governance
      guidelines that guide its actions with respect to, among other things, the
      composition of our board of directors and its decision making processes, board
      meetings and involvement of management, the board’s standing committees and
      procedures for appointing members of the committees, and its performance
      evaluation for our Chief Executive Officer.





Our
      board
      of directors has adopted a code of ethics that applies to all of our directors,
      officers and employees.  The code of ethics constitutes our “code of
      ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and
      is our “code of conduct” within the meaning of the listing standards of
      AMEX.  We will provide a copy of our code of ethics to any person
      without charge, upon written request to Overhill Farms, Inc.,
      Attention:  Investor Relations, 2727 East Vernon Avenue, Vernon,
      California 90058.




**Director
      Independence**





Our
      corporate governance guidelines provide that a majority of our board of
      directors and all members of the audit, compensation and nominating and
      governance committees of our board of directors will be
      independent.  On an annual basis, each director and executive officer
      is obligated to complete a Director and Officer Questionnaire that requires
      disclosure of any transactions with Overhill Farms Inc., in which a director
      or
      executive officer, or any member of his or her immediate family, have a direct
      or indirect material interest.  Following completion of these
      questionnaires, the board of directors, with the assistance of the nominating
      and governance committee, makes an annual determination as to the independence
      of each director using the current standards for “independence” established by
      the Commission and AMEX, additional criteria set forth in our corporate
      governance guidelines and consideration of any other material relationship
      a
      director may have with Overhill Farms, Inc.




**Stockholder
      Communications with Our Board of Directors**





Our
      board
      of directors has established a process to receive communications from
      stockholders.  Stockholders and other interested parties may contact
      any member (or all members) of our board of directors, or the independent
      directors as a group, any committee of our board of directors or any chair
      of
      any such committee, by mail or electronically.  To communicate with
      our board of directors, any individual director or any group or committee of
      directors, correspondence should be addressed to our board of directors or
      any
      such individual director or group or committee of directors by either name
      or
      title.  All such correspondence should be sent “c/o Secretary” at
      2727 East Vernon Avenue, Vernon, California 90058.  To
      communicate with any of our directors electronically, security holders should
      send an e-mail “c/o Secretary,” to info@overhillfarms.com.





All
      communications received as set forth in the preceding paragraph will be opened
      by our Secretary for the sole purpose of determining whether the contents
      represent a message to our directors.  Any contents that are not in
      the nature of advertising, promotions of a product or service, patently
      offensive material or matters deemed inappropriate for our board of directors
      will be forwarded promptly to the addressee.  In the case of
      communications to our board of directors or any group or committee of directors,
      our Secretary will make sufficient copies (or forward such information in the
      case of e-mail) of the contents to send to each director who is a member of
      the
      group or committee to which the envelope or e-mail is addressed.





27




**Board
      Committees and Meetings**




Our
      business, property and affairs are managed under the direction of our board
      of
      directors.  Our directors are kept informed of our business through
      discussions with our executive officers, by reviewing materials provided to
      them
      and by participating in meetings of our board of directors and its
      committees.  During the fiscal year ended September 30, 2007, our
      board of directors held three meetings.  During fiscal year 2007, no
      incumbent director attended fewer than 75% of the aggregate of the total number
      of meetings of the board of directors****and the total number
      of meetings held by all committees of the
      board****of****directors on which he
      served, except that Mr. Giraudo attended fewer than 75% of our audit committee
      meetings during fiscal year 2007.




Members
      of our board of directors and its committees also consulted informally with
      management from time to time and acted at various times by written consent
      without a meeting during fiscal year 2007.  Additionally, the
      independent members of the board of directors met in executive session regularly
      without the presence of management.




Our
      board
      of directors has established****standing audit, compensation
      and nominating and
      governance****committees.****Each
      committee has a written charter that is reviewed annually and revised as
      appropriate. The charters of our audit, compensation and nominating and
      governance committees are available on our Internet website located at
      http://www.overhillfarms.com.  Information on our Internet website is
      not, and shall not be deemed to be, a part of this report or incorporated into
      any other filings we make with the Commission.




*Audit
      Committee*




Our
      audit
      committee’s principal functions are to monitor our financial reporting process
      and internal control system, review and appraise the audit efforts of our
      independent auditors and provide an open avenue of communication among our
      independent accountants, financial and senior management and our board of
      directors.  During fiscal year 2007, the audit committee was composed
      of Messrs. Rodetis, Gerard and Giraudo, with Mr. Rodetis serving as the
      committee chairman.  Our board of directors****has
      determined that Mr.  Rodetis is an “audit committee financial expert”
and that each of Messrs. Rodetis, Gerard and Giraudo is “independent” as defined
      in Sections 121(A) and 803 of the AMEX listing standards.  Our audit
      committee operates pursuant to a charter approved by our board of directors
      and
      audit committee, according to the rules and regulations of the Commission and
      AMEX.  A copy of the charter of our audit committee was attached as
      Appendix A to our proxy statement for our 2004 annual stockholders’
meeting.  Four audit committee meetings were held during fiscal year
      2007.




*Compensation
      Committee*




Our
      compensation committee’s primary functions are to administer our stock option
      and stock plans, approve grants of securities under those plans, review forms
      of
      compensation to be provided to our officers and employees, and review and make
      recommendations to our board of directors regarding all forms of compensation
      to
      be provided to our directors.  Our entire board of directors also may
      perform these functions with respect to our stock option and stock
      plans.  During fiscal year 2007, the compensation committee was
      composed of Messrs. Auerbach,
      Gerard****and****Giraudo, with Mr.
      Auerbach serving as the committee chairman.  Our board of directors
      has determined****that****each of Messrs.
      Auerbach, Gerard and Giraudo is “independent” under Section 121(A) of the AMEX
      listing****standards.  Our compensation committee
      operates pursuant to a charter approved by our board of directors and
      compensation committee.  A copy of the charter of our compensation
      committee was attached as Appendix B to our****proxy
      statement for our 2004 annual stockholders’ meeting. One compensation committee
      meeting was held during fiscal year 2007.




Additional
      information concerning the compensation policies and objectives established
      by
      our compensation committee is included under the heading “Executive Compensation
— Compensation Discussion and Analysis” below.  The Compensation
      Committee Report for fiscal year 2007 can be found on page 31 of this
      report.


28




*Nominating
      and Governance Committee*




Our
      nominating and governance committee selects nominees for our board of
      directors.  AMEX rules require that director nominations must be
      either selected, or recommended for the board’s selection, by either a
      nominating committee comprised solely of independent directors or by a majority
      of our independent directors.  During fiscal year 2007, the committee
      was composed of Messrs. Gerard and Auerbach, with Mr. Gerard serving as
      committee chairman.****Our board of directors has determined
      that each of Messrs. Gerard and Auerbach is “independent” under Section 121(A)
      of the AMEX listing standards.




The
      nominating and governance committee assists our board of directors with its
      nominating function and with reviewing and evaluating our compliance with
      corporate governance requirements as described in the committee’s charter
      referenced below.  The committee utilizes a variety of methods for
      identifying and evaluating nominees for director, including candidates that
      may
      be referred by our stockholders.  Stockholders who desire to recommend
      candidates for the board for evaluation may do so by contacting us in writing,
      identifying the potential candidate and providing background
      information.  Candidates may also come to the attention of the
      committee through current board members, professional search firms and other
      persons.  In evaluating potential candidates, the committee will take
      into account a number of factors, including among others, the
      following:




·
              independence
                  from management;
 
 ·
              whether
                  the candidate has relevant business
                  experience;
 
 ·
              judgment,
                  skill, integrity and reputation;
 
 ·
              existing
                  commitments to other businesses;
 
 ·
              corporate
                  governance background;
  ·
              financial
                  and accounting background, to enable the nominating committee to
                  determine
                  whether the candidate would be suitable for audit committee membership;
                  and
 
 ·
              the
                  size and composition of our board.


Our
      nominating and governance committee operates pursuant to a charter approved
      by
      our board of directors and nominating and governance committee.  A
      copy of the charter of our nominating and governance committee was attached
      as
      Appendix C to our proxy statement for our 2004 annual stockholders’
meeting.****Our nominating and governance committee
      selected****by written consent all of the director nominees
      for re-election to our board of directors at our 2007 annual meeting of
      stockholders.  No nominating and governance committee meetings were
      held during fiscal year 2007.




**Policy
      With Regard to Board Members’ Attendance at Annual
      Meetings**





It
      is our
      policy that our directors are invited and encouraged to attend all of our annual
      meetings.  At the time of our 2007 annual meeting of stockholders, we
      had seven directors, all of whom were in attendance at the meeting.




**Section
      16(a) Beneficial Ownership Reporting Compliance**





Section
      16(a) of the Exchange Act, requires our executive officers and directors, and
      persons who beneficially own more than 10% of a registered class of our common
      stock, to file initial reports of ownership and reports of changes in ownership
      with the Commission.  These officers, directors and stockholders are
      required by Commission regulations to furnish us with copies of all reports
      that
      they file.





29


Based
      solely upon a review of copies of the reports furnished to us during the fiscal
      year ended September 30, 2007 and thereafter, or any written representations
      received by us from directors, officers and beneficial owners of more than
      10%
      of our common stock (“reporting persons”) that no other reports were required,
      we believe that, during fiscal year 2007, except as set forth below, all Section
      16(a) filing requirements applicable to our reporting persons were
      met.





The
      following individuals did not timely file the following numbers of Forms 4
      to
      report the following transactions:  Harold Estes – two reports,
      nineteen transactions; and Geoffrey A. Gerard – one report, three
      transactions.  We believe that each of the foregoing individuals has
      prepared and filed all required Forms 4 to report their respective
      transactions.





Tracy
      E.
      Quinn did not timely file a Form 3 upon becoming an executive officer of
      Overhill Farms, Inc.  Ms. Quinn is in the process of preparing and
      filing a Form 3.







**ITEM
      11. Executive
      Compensation**




**Compensation
      Discussion and Analysis**





*Compensation
      Governance*





Our
      compensation committee is responsible for reviewing and making recommendations
      to our board of directors regarding compensation policy for our executive
      officers and also has the authority to approve grants under our option and
      stock
      plans.





*Compensation
      Philosophy and Objectives*





Our
      compensation programs for our executive officers are intended to reflect our
      performance and the value created for our stockholders.  We are
      engaged in a very competitive industry, and our success depends upon our ability
      to attract and retain qualified executives through the competitive compensation
      packages we offer to these individuals.  Our current compensation
      philosophy is based on three central objectives:





·
            To
                provide an executive compensation structure and system that is both
                competitive in the marketplace and also internally equitable based
                upon
                the weight and level of  responsibilities of each
                executive;





·
            To
                attract, retain and motivate qualified executives within this structure,
                and reward them for outstanding performance-to-objectives and business
                results; and





·
            To
                structure our compensation policy so that the compensation of executive
                officers is dependent in part on the achievement of our current year
                business plan objectives and dependent in part on the long-term increase
                in our net worth and the resultant improvement in shareholder value,
                and
                to maintain an appropriate balance between short and long-term performance
                objectives





The
      compensation committee evaluates both performance and compensation to ensure
      that the total compensation paid to our executive officers is fair, reasonable
      and competitive.  The principal components of compensation for our
      executives consist of base salary, discretionary bonuses and perquisites and
      other personal benefits.





We
      also
      offer alternative sources of compensation, such as stock options, to our
      executive officers. Options provide executive officers with the opportunity
      to
      buy and maintain an equity interest in our company and to share in the
      appreciation of the value of our common stock. In addition, if a participant
      were to leave prior to the exercise of the participant’s options, the
      unexercised options would be forfeited after the expiration of the period
      specified in the options. This makes it more difficult for competitors to
      recruit key employees away from us. We believe that option grants afford a
      desirable long-term compensation method because they closely align the interests
      of our management and other employees with stockholder value and motivate
      officers to improve our long-term stock performance.  No stock options
      were granted in fiscal 2007.





30


Section
      162(m) of the Internal Revenue Code places a limit on the amount of compensation
      that may be deducted in any year with respect to each of our named executive
      officers. It is our policy that, to the extent possible, compensation will
      be
      structured so that the federal income tax deduction limitations will not be
      exceeded.




*Executive
      Compensation for Fiscal Year 2007*





We
      consider individual experience, responsibilities and tenure when determining
      base salaries. In addition, we analyze qualitative and quantitative factors
      when
      awarding incentive compensation, such as our achievements and financial
      performance compared to pre-established performance goals.





In
      fiscal
      year 2007, our compensation for named executives consisted of base salary,
      discretionary bonuses and perquisites.  No stock options or other
      equity incentives****were granted.  As of September
      30, 2007, our board of directors, upon recommendation of the compensation
      committee, approved bonus criteria for each eligible executive officer for
      fiscal year 2007. The primary criteria related to our overall performance,
      progress on strategic objectives and each individual’s contribution to that
      performance. Detailed information regarding the executive compensation program
      for fiscal year 2007 is contained below under the heading “Executive Bonus
      Program.”





During
      fiscal year 2007, we improved our financial performance compared to fiscal
      year
      2006, with year-over-year increases in revenues of 14.5% and although this
      did
      not equate to bottom line growth in fiscal year 2007, we expect the addition
      of
      new key accounts to add to profitability.  We also strengthened our
      balance sheet and improved our capital and liquidity positions. As a result,
      under the bonus program Mr. Rudis received a total bonus of $56,700 and Mr.
      Horvath received a total bonus of $19,851.





*Conclusion*





Our
      policy is not to disclose target levels with respect to specific quantitative
      or
      qualitative performance-related factors or factors considered to involve
      confidential business information, because their disclosure would have an
      adverse effect on us. Attracting and retaining talented and motivated management
      and employees is essential to create long-term stockholder value. Offering
      a
      competitive, performance-based compensation program with an equity component
      helps to achieve this objective by aligning the interests of executive officers
      and other key employees with those of stockholders. We believe that our fiscal
      year 2007 compensation program met these objectives.




*The
      following Compensation Committee Report is not deemed filed with the
      Commission.  Notwithstanding anything to the contrary set forth in any
      of our previous filings made under the Securities Act or under the Exchange
      Act
      that might incorporate future filings made by us under those statutes, the
      Compensation Committee Report will not be incorporated by reference into any
      such prior filings or into any future filings made by us under those
      statutes.*




**Compensation
      Committee Report**




The
      Compensation Committee has reviewed and discussed the foregoing Compensation
      Discussion and Analysis with management, and based on that review and
      discussion, the Compensation Committee recommended to the board of directors
      that the Compensation Discussion and Analysis be included in the Annual Report
      on Form 10-K for the fiscal year ended September 30, 2007.




Respectfully
      submitted,


Compensation
      Committee


Alexander
      Auerbach, Chairman


Geoffrey
      A. Gerard


Louis
      J.
      Giraudo








31


**Summary
      Compensation Table**





The
      following table sets forth for fiscal years 2007 and 2006 compensation awarded
      or paid to Mr. James Rudis, our Chairman, Chief Executive Officer and President,
      Mr. John L. Steinbrun, our former Senior Vice President, Chief Financial Officer
      and Chief Operating Officer, Ms. Tracy E. Quinn, our Interim Chief Financial
      Officer and Mr. Richard A. Horvath, our Senior Vice President and
      Secretary, for services rendered to us.  Messrs. Rudis, Steinbrun,
      Horvath and Ms. Quinn are also referred to in this section as “named executive
      officers.”  Other than as indicated in the table below, none of our
      executive officers received salary plus bonus in excess of $100,000 for fiscal
      year 2007.





Name
                  and
                Principal
                  Positions
            
            Year
            
            Salary
                ($)
            
            
            Bonus
                ($)
            
            
            All
                Other
              Compensation
                ($) (5)
            
            
            Total
                ($)James
                Rudis,
            
            2007
            
            $
            306,006
            
            
            $
            56,700
            
            
            $
            188,573
            (1)
            
            $
            551,279Chief
                Executive Officer
              and
                President
            
            2006
            
            $
            303,446
            
            
            $
            131,720
            
            
            $
            196,109
            (2)
            
            $
            631,275John
                L. Steinbrun,
            
            2007
            
            $
            242,177
            (3)
            
            
            —
            
            
            
            —
            
            
            $
            242,177Senior
                Vice President,
            
            2006
            
            $
            257,200
            
            
            $
            101,600
            
            
            
            —
            
            
            $
            358,800Chief
                Financial Officerand
                Chief OperatingOfficerTracy
                E. Quinn,
            
            2007
            
            $
            22,500
            (4)
            
            
            —
            
            
            
            —
            
            
            $
            22,500Interim
                Chief Financial OfficerRichard
                A. Horvath,
            
            2007
            
            $
            147,191
            
            
            $
            19,851
            
            
            
            —
            
            
            $
            167,042Senior
                Vice President,
            
            2006
            
            $
            147,191
            
            
            $
            25,346
            
            
            
            —
            
            
            $
            172,537and
                Secretary


____________


(1)
            
            Mr.
                Rudis received certain perquisites and other personal benefits which
                consist of the following:


a.
            Premium
                paid of $13,206 for term life insurance for the benefit of Mr. Rudis’
                spouse; and,


b.
            Mr.
                Rudis maintains an office in both Vernon, California and New
                York.  $175,367 represents perquisites or other benefits
                relating to payment of or reimbursement for commuting expenses between
                New
                York and California, including $140,733 for airfare, $25,215 for
                lodging
                and $9,419 for transportation, meals and other miscellaneous
                expenses.





(2)
            The
                amount represents perquisites or other benefits relating to payment
                or
                reimbursement of commuting expenses between New York and California,
                payout of unused vacation accrual from prior years and term life
                insurance
                premiums for the benefit of Mr. Rudis’
spouse.





(3)
            Mr.
                Steinbrun voluntarily resigned from all of his positions effective
                September 6, 2007.





(4)
            Ms.
                Quinn was appointed Interim Chief Financial Officer effective September
                6,
                2007.





(5)
            The
                value of perquisites and other personal benefits was less than $10,000
                in
                the aggregate for each executive other than Mr.
                Rudis.





**Executive
      Employment Agreements**





*James
      Rudis*





Mr. Rudis’
      employment agreement, as amended, initially ran through October 31,
      2007.  Pursuant to a termination option extension agreement we entered
      into with Mr. Rudis on November 30, 2006, we and Mr. Rudis chose not to
      terminate the employment agreement. On December 10, 2007, our board of directors
      approved a modification and extension for Mr. Rudis’ employment
      agreement.  Both the board and Mr. Rudis have agreed in principal to
      the terms of the modification and extensions.  The agreement is
      subject to execution of a final agreement expected no later than December 20,
      2007.  The new agreement is to be effective retroactive to December 1,
      2007 and will expire on November 30, 2009.  The employment agreement
      will automatically renew thereafter from year-to-year unless terminated by
      Mr.
      Rudis or us upon giving to Mr. Rudis minimum notice of at least 90 days prior
      to
      the expiration of the initial term or the anniversary or renewal date of the
      beginning of the next annual extension period.





32


Mr.
      Rudis’ base salary, as of September 30, 2007, is $297,654 per year. Mr. Rudis’
amended base salary, based on the new agreement will be $348,000 and we will
      review his compensation annually and increase it in a percentage not less than
      that of the annual increase in the cost of living.  The employment
      agreement contains a modified covenant by Mr. Rudis not to compete with us
      during the term of his employment and for a period of one year
      thereafter.  We have agreed to provide at our expense a $1.0 million
      life insurance policy on Mr. Rudis’ life, payable to a beneficiary of his
      choice, and to pay to him up to $800 per month for an automobile lease and
      to
      reimburse him for all operating expenses relating to the leased
      automobile.  In addition, we agreed to provide health insurance
      similar to his current Blue Cross insurance plan through the term of the
      employment agreement and any extensions.  We have also increased Mr.
      Rudis’ vacation time to 4 weeks annually and at his option, Mr. Rudis can accrue
      vacation time beyond each year or be paid in cash for all or part of any unused
      vacation days.  We will also provide Mr. Rudis with office facilities
      in New York subject to the board’s review of an office lease.  Mr.
      Rudis will also be entitled to receive a minimum payment of $300,000, upon
      the
      completion of any board approved change of control, merger or sale of a majority
      of our stock or assets.  On execution of the agreement, Mr. Rudis will
      receive a signing bonus of $75,000.





The
      employment agreement also provides that if Mr. Rudis is terminated by reason
      of
      his death or disability, he or his estate is entitled to receive:




·
              his
                  base salary, bonuses earned and reimbursement for business expenses,
                  in
                  each case through the date of
                  termination;
 
 ·
              all
                  rights to which he or his estate is entitled under his life insurance
                  policy; and
 
 ·
              all
                  amounts to which he is entitled under any profit sharing
                  plan.




If
      Mr.
      Rudis voluntarily resigns prior to the end of the term, he will not be entitled
      to receive any bonus payments.  If he is terminated other than for
      cause, he will be entitled to receive his salary for the remainder of the term
      of the agreement, monthly payments for one year equal to the monthly premium
      required to maintain his life and health insurance benefits pursuant to COBRA
      under our group health insurance plan, to have all indebtedness by him to us
      forgiven and to use the car provided to him in his employment agreement for
      one
      year following the date of termination.




*Tracy
      E. Quinn*





Ms.
      Quinn’s employment arrangement commenced on September 10, 2007.  The
      initial term of Ms. Quinn’s employment will be for 90 days, but is reviewable by
      us every 30 days, and terminable at will by either party.   Ms.
      Quinn receives a monthly base salary of $30,000.




*Richard
      A. Horvath*





Mr. Horvath
      receives an annual base salary of $139,991 and an automobile allowance of $600
      per month.  Our board of directors determines Mr. Horvath’s
      discretionary bonus based on performance and his contributions to our
      success.





*Executive
      Bonus Program*





Upon
      recommendation of the compensation committee, our board of directors approved
      bonus programs for fiscal year 2007 for certain of the named executive
      officers.  The bonuses will be paid in fiscal year 2008.





The
      bonus
      program approved for James Rudis would permit a bonus of $6,700 in the form
      of a
      401(k) contribution and a performance bonus payable in cash equal to
      approximately 17%****of Mr. Rudis’ base salary based upon Mr.
      Rudis’ contribution to our success during fiscal year 2007.  Under the
      2007 bonus plan, Mr. Rudis received a total bonus of $56,700, consisting of
      $50,000 in cash and a $6,700 401(k) contribution.


33




The
        bonus program approved for Richard
        A. Horvath would permit a discretionary bonus equal to 3% of Mr. Horvath's
        gross
        W-2 earnings payable in the form of a 401(k) contribution and a discretionary
        performance bonus payable in cash equal to approximately 11% of Mr. Horvath’s
        base salary based upon Mr. Horvath’s contribution to our success during fiscal
        year 2007. Under the 2007 bonus plan, Mr. Horvath is expected to receive
        a total
        bonus of $19,851, consisting of $15,000 in cash and a $4,851 401(k)
        contribution.
  **Outstanding
      Equity Awards at Fiscal Year-End**





The
      following table provides information regarding the number of shares of common
      stock underlying options held by the named executive officers at September
      30,
      2007.





Option
                AwardsName
            
            Number
                of Securities Underlying Unexercised Options (#)
                Exercisable
            
            Number
                of Securities Underlying Unexercised Options (#)
                Unexercisable
            
            
            Option
                Exercise Price ($)
            
            Option
                Expiration DateJames
                Rudis
            
            
            300,000
            
            
            
            -
            
            
            
            $  
                1.60
            
            
            
            (1)69,136
            
            
            
            -
            
            
            
            1.47
            
            
            
            (2)10,288
            
            
            
            -
            
            
            
            1.50
            
            
            
            (2)10,288
            
            
            
            -
            
            
            
            2.00
            
            
            
            (2)10,288
            
            
            
            -
            
            
            
            2.50
            
            
            
            (2)John
                L. Steinbrun
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Tracy
                E. Quinn
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Richard
                A. Horvath
            
            
            20,000
            
            
            
            -
            
            
            
            $  
                1.60
            
            
            
            (1)7,000
            
            
            
            -
            
            
            
            1.47
            
            
            
            (2)


___________


(1)
            Option
                expiration date is September 30,
                2012.





(2)
            Option
                expiration date is
                February 1, 2015.





**Option
      Exercises**





The
      following table summarizes the option exercises for each of our named executive
      officers for the year ended September 30, 2007:





Option
                AwardsName
            
            Shares Acquired on
                Exercise (#)
            
            
            Value
                Realized on Exercise ($) (1)James
                Rudis
            
            
            -
            
            
            $
            -John
                L. Steinbrun
            
            
            250,000
            
            
            
            662,284Tracy
                E. Quinn
            
            
            -
            
            
            
            -Richard
                A. Horvath
            
            
            -
            
            
            
            -


____________





(1)
                Based on the difference between the market price of a share of our
                common
                stock on the dates of exercise and the exercise price per share so
                exercised.








34




**Potential
        Payments upon Termination or Change in Control**
  *Executive
        Employment
        Agreements*.  We have entered into agreements with our named
        executive officers that provide certain benefits upon the termination of
        their
        employment under certain prescribed circumstances.  Those agreements
        are described above under “ Executive Employment
        Agreements.”
  **Calculation
      of Potential Payments upon Termination or Change of
      Control**





In
      accordance with the rules of the
      Commission, the following table presents our estimate of the benefits payable
      to
      the named executive officers under their employment agreements assuming that
      (A)
      a change in control occurred on September 28, 2007, the last business day of
      fiscal 2007, (B) a qualifying termination occurred on September 28, 2007, which
      is a termination by the executive for “good reason” or by us without “cause,” or
      (C) a non-qualifying termination occurred on September 28, 2007, which is a
      voluntary termination by the executive for other than “good reason,” by us for
“cause,” by us prior to renewal as provided in the executive employment
      agreements or by us upon the executive’s death or disability.





Name
            
            Trigger
            
            Salary
                and Bonus
            
            Continuation
                of Benefits
            
            
            Total
                Value (5)James
                Rudis
            
            Change
                in Control
            
            $
            -
            (1)
            
            $
            -
            
            
            $
            -Qualifying
                Termination
            
            
            158,630
            (2)
            
            
            41,994
                (3)
            
            
            
            200,624Non-Qualifying
                Termination
            
            
            130,010
            
            
            
            13,206
                (4)
            
            
            
            143,216John
                L. Steinbrun
            
            Change
                in Control
            
            
            -
            
            
            
            -
            
            
            
            -Qualifying
                Termination
            
            
            -
            
            
            
            -
            
            
            
            -Non-Qualifying
                Termination
            
            
            -
            
            
            
            -
            
            
            
            -Tracy
                E. Quinn
            
            Change
                in Control
            
            
            -
            
            
            
            -
            
            
            
            -Qualifying
                Termination
            
            
            -
            
            
            
            -
            
            
            
            -Non-Qualifying
                Termination
            
            
            -
            
            
            
            -
            
            
            
            -Richard
                A. Horvath
            
            Change
                in Control
            
            
            -
            
            
            
            -
            
            
            
            -Qualifying
                Termination
            
            
            -
            
            
            
            -
            
            
            
            -Non-Qualifying
                Termination
            
            
            -
            
            
            
            -
            
            
            
            -


____________




(1)
            Pursuant
                to Mr. Rudis’ modified agreement, as of December 1, 2007, Mr. Rudis is
                entitled to a $300,000 change in control
                payment.




(2)
            Includes
                base salary for the remainder of the term of employment, any bonus
                earned
                through the date of termination, accrued but unused vacation and
                sick
                pay.




(3)
            Includes
                use of the car for one year, monthly premiums required to maintain
                his
                health insurance and term life insurance premiums for the benefit
                of Mr.
                Rudis’ wife.




(4)
            Includes
                for one year, monthly premiums required to maintain term life insurance
                for the benefit of Mr. Rudis’ wife.




(5)
            Excludes
                the value to the
                executive of the continuing right to indemnification and continuing
                coverage under our directors’ and officers’ liability insurance, if
                applicable.


35




**Compensation
      Committee Interlocks and Insider Participation**





No
      director who was a member of the compensation committee during fiscal year
      2007
      was an officer or employee of Overhill Farms, Inc. during fiscal year 2007,
      was
      formerly an officer of Overhill Farms, Inc., or had any relationship requiring
      disclosure pursuant to Item 404 of Regulation S-K under the Securities Act
      of
      1933, as amended, except that as disclosed in Item 13 of this report, Mr.
      Auerbach is a stockholder, director and officer of a company that provided
      us
      with public relations and marketing services in exchange for fees that
      constituted more than 5% of that company’s gross revenues for its fiscal year
      ended January 31, 2007.  None of our executive officers serves as a
      member of a compensation committee of another corporation (or other board
      committee of such company performing similar functions or, in the absence of
      any
      such committee, the entire board of directors of such corporation), one of
      whose
      executive officers serves on our compensation committee.  None of our
      executive officers serves as a director of another corporation, one of whose
      executive officers served on our compensation committee.





**Director
      Compensation**





Non-employee
      directors are entitled to cash payments of $2,500 per month in consideration
      for
      their service on our board of directors.  We may also periodically
      award options to our directors under our existing option and stock plans or
      otherwise.





Mr.
      Rudis
      was compensated as a full-time employee and officer and received no additional
      compensation for service as a board member during 2007.  Information
      regarding the compensation awarded to Mr. Rudis is included in the “Summary
      Compensation Table” above.




**Director
      Compensation Table**




The
      following table summarizes the compensation of our directors for the year ended
      September 30, 2007:




Name
            
            Fees
                  Earned
                or
                  Paid
                in
                  Cash
                ($)(1)
            
            
            Option
                Awards
                ($)(2)
            
            
            Total
                ($)Geoffrey
                A. Gerard
            
            $
            30,000
            
            
            $
            —
            
            
            $
            30,000Alexander
                Auerbach (3)
            
            
            30,000
            
            
            
            —
            
            
            
            30,000Louis
                J. Giraudo
            
            
            30,000
            
            
            
            —
            
            
            
            30,000Alexander
                Rodetis, Jr
            
            
            30,000
            
            
            
            —
            
            
            
            30,000Harold
                Estes
            
            
            30,000
            
            
            
            —
            
            
            
            30,000


__________





(1)
            For
                a description of annual director fees, see the disclosure above under
                “Director Compensation.” The value of perquisites and other personal
                benefits was less than $10,000 in aggregate for each
                director.





(2)
            There
                were no stock options awarded during fiscal 2007.  Outstanding
                options held by each director as of September 30, 2007 are as
                follows:


·
            Geoffrey
                A. Gerard – 53,000 options which are fully
                vested.


·
            Alexander
                Auerbach – 25,000 options which are fully
                vested


·
            Louis
                J. Giraudo - 25,000 options which are fully
                vested


·
            Alexander
                Rodetis, Jr - 25,000 options which are fully
                vested


·
            Harold
                Estes -75,000 options which are fully
                vested





(3)
            Mr.
                Auerbach’s firm, Alexander
                Auerbach & Co., also provides us with public relations and marketing
                services which amounted to $36,000 during fiscal year
                2007.  See “Certain Relationships and Related
                Transactions, and Director Independence”
below.





36


**ITEM
                12.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters**





As
      of
      December 11, 2007, a total of 15,620,271 shares of our common stock were
      outstanding.  The following table sets forth certain information as of
      that date regarding the beneficial ownership of our common stock
      by:





·
              each
                  of our directors;
 
 ·
              each
                  of our current executive officers;
 
 ·
              all
                  of our directors and executive officers as a group;
                  and
 
 ·
              each
                  person known by us to beneficially own more than 5% of the outstanding
                  shares of our common stock.




Beneficial
      ownership is determined in accordance with Rule 13d-3 promulgated by the
      Commission and generally includes voting or investment power with respect to
      securities.  Except as indicated below, we believe each holder
      possesses sole voting and investment power with respect to all of the shares
      of
      common stock owned by that holder, subject to community property laws where
      applicable.  In computing the number of shares beneficially owned by a
      holder and the percentage ownership of that holder, shares of common stock
      subject to options held by that holder that are currently exercisable or are
      exercisable within 60 days after the date of the table are deemed
      outstanding.  Those shares, however, are not deemed outstanding for
      the purpose of computing the percentage ownership of any other person or
      group.





The
      inclusion of shares in this table as beneficially owned is not an admission
      of
      beneficial ownership.  Except as indicated below, the address for each
      named beneficial owner is the same as ours.





Name
                  and Address of Beneficial Owner
            
            Amount
                  and Nature of Beneficial Ownership
            
            Percent
                of
                  ClassWilliam
                Blair & Company, L.L.C.
            
            
            1,684,600
            (1)
            
            
            10.8
            %Harold
                Estes
            
            
            1,128,265
            (2)
            
            
            7.2
            %Coliseum
                Capital Management, LLC
            
            
            942,062
            (3)
            
            
            6.0
            %James
                Rudis
            
            
            605,550
            (4)
            
            
            3.8
            %Geoffrey
                A. Gerard
            
            
            68,000
            (6)
            
            
            *Richard
                A. Horvath
            
            
            27,000
            (5)
            
            
            *Alexander
                Auerbach
            
            
            30,000
            (7)
            
            
            *Louis
                J. Giraudo
            
            
            25,000
            (5)
            
            
            *Alexander
                Rodetis, Jr.
            
            
            25,000
            (5)
            
            
            *Tracy
                E. Quinn
            
            
            -
            
            
            
            -All
                directors and executive officers as a group(8
                persons)
            
            
            1,908,815
            (8)
            
            
            11.8
            %






*
            Less
                than 1.0%.




(1)
            Based
                on ownership information provided to us by William Blair & Company,
                L.L.C. as of November 21, 2007. Includes shares owned of record by
                William
                Blair Small Cap Growth Fund, over which power to vote or dispose
                of the
                shares is held by Colin Williams, portfolio manager to the Fund,
                and Karl
                Brewer, portfolio manager to the Fund and principal of William Blair
&
                Company, L.L.C. The address for William Blair & Company, L.L.C. is 222
                W. Adams Street, Chicago, Illinois
                60606.




37






(2)
            Mr.
                Estes’ address is 6004 South US Highway 59, Lufkin, Texas 75901. Includes
                75,000 shares of common stock underlying
                options




(3)
            To
                our knowledge based upon information provided to us by the holder
                as of
                August 9, 2007. Power to vote or dispose of the shares is held by
                Adam
                Gray and Christopher Shackelton, portfolio managers of Coliseum Capital,
                LLC and Coliseum Capital Management, LLC. The address for this holder
                is
                825 Third Avenue, 36th
                Floor, New
                York, New York 10022.




(4)
            Includes
                400,000 shares of common stock underlying
                options.




(5)
            Represents
                shares of common stock underlying
                options.




(6)
            Includes
                53,000 shares of common stock underlying
                options.




(7)
            Includes
                25,000 shares of common stock underlying
                options.




(8)
            Includes
                555,000 shares of common stock underlying
                options.





**Equity
      Compensation Plan Information**





The
      following table gives information about our common stock that may be issued
      upon
      the exercise of options, warrants and rights under all of our existing equity
      compensation plans as of September 30, 2007.





Plan
                category
            
            Number
                of securities to be issued upon exercise of outstanding
              options,
                warrants
              or
                stock rights
            
            Weighted-average
                exercise price
              of
                outstanding options, warrants
              or
                stock rights
            
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected
              in
                column (a))(a)
            
            (b)
            
            (c)Equity
                compensation plans approved by security holders
            
            
            749,000
            (1)
            
            $
            1.56
            
            
            
            139,000
            (2)Equity
                compensation plans not approved by security holders
            
            
            -
            
            
            
            -
            
            
            
            -Total
            
            
            749,000
            
            
            $
            1.56
            
            
            
            139,000






(1)
            Represents
                shares of common stock underlying options granted under our 2002
                Employee
                Stock Option Plan and 2005 Stock
                Plan.




(2)
            Represents
                shares of common stock authorized for issuance under our 2002 Employee
                Stock Option Plan, which plan was adopted by our board of directors
                and
                then majority stockholder on September 25, 2002, to be effective
                as of
                October 29, 2002; the plan was further approved by our stockholders
                at our
                2003 annual meeting.  Also represents shares of common stock
                authorized for issuance under our 2005 Stock Plan, which was adopted
                by
                our board of directors on February 1, 2005, approved by then majority
                stockholder on February 24, 2005 and approved by our stockholders
                at our
                2005 annual meeting.  Our 2002 Employee Stock Option Plan and
                2005 Stock Plan each provide that if, at any time while that plan
                is in
                effect or unexercised options granted under that plan are outstanding,
                there is an increase or decrease in the number of issued and outstanding
                shares of common stock of Overhill Farms, Inc. through the declaration
                of
                a stock dividend or through a recapitalization that results in a
                stock
                split, combination or exchange of shares, then appropriate adjustment
                shall be made in the maximum number of shares authorized for issuance
                under that plan so that the same proportion of our issued and outstanding
                shares of common stock will continue to be subject to being optioned
                under
                the plan and appropriate adjustment will be made in the number of
                shares
                and the exercise price per share then subject to outstanding options
                so
                that the same proportion of our issued and outstanding shares will
                remain
                subject to purchase at the same aggregate exercise
                price.








38


**ITEM
      13.                      Certain
      Relationships and Related Transactions, and Director
      Independence**





**Policies
      and Procedures for Approval of Related Party Transactions**





Our
      board of directors has the
      responsibility to review and discuss with management and approve material
      transactions with related parties.  These transactions are governed by
      the policies and procedures contained in our Related-Party Transaction Policy
      and our Code of Conduct Policy.  During the review process, the
      material facts as to the related party’s interest in a transaction are disclosed
      to all board members.  Under the policies and procedures, the board is
      to review each interested transaction with a related party that requires
      approval and either approve or disapprove of the entry into the related party
      transaction.  A related party transaction is any transaction in which
      we are a participant and any related party has or will have a direct or indirect
      interest.  Transactions that are in the ordinary course of business
      and would not require either disclosure pursuant to Item 404(a) of Regulation
      S-K or approval of the board would not be deemed a related party
      transaction.  No director may participate in any discussion or
      approval of a related party transaction with respect to which he or she is
      a
      related party.  Our board intends to approve only those related party
      transactions that are in our best interests.





Other
      than as described below, there
      were no transactions or series of transactions to which we were or are a party
      involving an amount in excess of $120,000 and in which any director, executive
      officer, holder of more than 5% of our voting stock, or members of the immediate
      family of any foregoing persons, had or will have a direct or indirect material
      interest.  All of the transactions listed below were approved by our
      board of directors.





On
      December 23, 2005, Levine Leichtman Capital Partners II, L.P. (“LLCP”), a
      principal stockholder and secured creditor of ours at the time, resold to 15
      institutional investors in a private transaction all of the 5,771,661 shares
      of
      our common stock that LLCP owned of record as of that date, including shares
      of
      common stock that LLCP received upon exercise of warrants and conversion of
      shares of Series A Convertible Preferred Stock in connection with the resale
      transaction (collectively, “Transferred Shares”). To facilitate LLCP’s sale of
      the Transferred Shares, we made various representations and warranties as a
      party to a stock purchase agreement with LLCP and the investors.  In
      addition, we entered into a registration rights agreement with the investors
      that required us to register for resale the Transferred Shares and to maintain
      the effectiveness of the registration statement for a maximum of 24 months
      following the closing date. The registration statement was declared effective
      by
      the Commission on April 13, 2006. If we are unable to meet our obligations
      under
      the registration rights agreement to maintain the effectiveness of the
      registration statement, we will be required to pay to each investor liquidated
      damages equal to 1% of the amount paid by the investor for the Transferred
      Shares still owned by the investor on the date of the default and 1% of the
      amount paid by the investor for the Transferred Shares still owned by the
      investor on each monthly anniversary of the date of the default that occurs
      prior to the cure of the default.  There were no material
      relationships between us and any of the investors who purchased the Transferred
      Shares from LLCP. However, William Blair Small Cap Growth Fund, became a
      beneficial owner of more than 5% of our outstanding common stock at the closing
      of the transaction with LLCP.  The registration statement has been
      effective for 19 months, 21 months have elapsed since the closing date and
      approximately 2,200,000 Transferred Shares are still owned by the
      investors.  At this time, the Company is unaware of the existence of
      any circumstances that would cause the registration statement to no longer
      be
      effective.





On
      December 23, 2005, we, LLCP and James Rudis entered into a Third Amendment
      to
      the Amended and Restated Investor Rights Agreement. The primary purposes of
      the
      amendment were to remove James Rudis as a party to that agreement and to
      eliminate LLCP’s board member designation rights, co-sale rights, right of first
      refusal, anti-dilution protection provisions and stock option related approval
      rights and limitations. Also, the amendment deleted from the February 24,
      2005 letter agreement between LLCP and us, as previously described in our Forms
      8-K for February 24, 2005 and May 18, 2005, the provision restricting the price
      of future awards that may be made under our 2005 Stock Plan.  The
      Amended and Restated Investor Rights Agreement terminated in connection with
      the
      refinancing of our indebtedness to LLCP and PSI in May 2006.





The
      stock
      purchase agreement described above provides that the Amended and Restated
      Registration Rights Agreement, dated as of October 29, 2002, between LLCP and
      us
      was terminated on December 23, 2005.


39




In
        February 2004, we engaged Alexander Auerbach & Co., Inc. (“AAPR”) to provide
        us with public relations and marketing services.  AAPR provides public
        relations, media relations and communications marketing services to support
        our
        sales activities.  Alexander Auerbach, who is one of our directors, is
        a stockholder, director and officer of AAPR.  We paid to AAPR $36,000
        for services rendered under this engagement during fiscal year
        2007.  These fees totaled more than 5% of AAPR’s gross revenues for
        its fiscal year ended January 31, 2007.




We
      are or
      have been a party to employment and compensation arrangements with related
      parties, as more particularly described above under the heading “Executive
      Compensation” and “Director Compensation.”





The
      interest of the particular director, executive officer or security holder in
      each matter described above was disclosed to our board of directors before
      our
      board of directors approved the matter.




**ITEM
      14.                      Principal
      Accounting Fees and Services**




**Audit
      and Non-Audit Fees**




The
      following table presents fees for professional audit services rendered by Ernst
      & Young LLP for the audit of our annual financial statements for fiscal
      years 2007 and 2006.  Certain audit services were rendered to us by
      Ernst & Young LLP during fiscal year 2007 which consisted of procedures
      associated with Sarbanes-Oxley requirements:





2007
            
            
            2006Audit
                Fees
            
            $
            592,000
            
            
            $
            383,000Audit-Related
                Fees
            
            
            --
            
            
            
            --Tax
                Fees
            
            
            --
            
            
            
            --All
                Other Fees
            
            
            --
            
            
            
            --





*Audit
      Fees*.  Audit fees consist of amounts billed for professional
      services rendered for the audit of our annual consolidated financial statements
      included in our Annual Reports on Form 10-K, and reviews of our interim
      consolidated financial statements included in our Quarterly Reports on Form
      10-Q
      and our Registration Statement on Form S-3, including amendments thereto, and
      the review of our internal accounting and reporting controls as required under
      Section 404 of the Sarbanes-Oxley Act of 2002.





*Audit-Related
      Fees*.  Audit-Related Fees consist of fees billed for professional
      services that are reasonably related to the performance of the audit or review
      of our consolidated financial statements but are not reported under “Audit
      Fees.”





*Tax
      Fees.*Tax Fees consist of fees for professional services for tax
      compliance activities, including the preparation of federal and state tax
      returns and related compliance matters.





*All
      Other Fees*.  Consists of amounts billed for services other than
      those noted above.





Our
      Audit
      Committee has determined that all non-audit services provided by Ernst &
Young LLP are compatible with maintaining Ernst & Young LLP’s audit
      independence.****





**Pre-Approval
      Policy**





Our
      audit
      committee’s policy is to pre-approve all auditing services and permitted
      non-audit services to be performed for us by our independent auditors, subject
      to the de minimis exceptions for non-audit services described in Section
      10A(i)(1)(B) of the Exchange Act that are approved by the audit committee prior
      to the completion of the audit.  During fiscal year 2007, all services
      performed by Ernst & Young LLP were pre-approved by our audit committee in
      accordance with these policies and applicable Commission
      regulations.


40


**PART
      IV**





**ITEM
      15.                      Exhibits,
      Financial Statement Schedules**





(a)           The
      following financial statements are filed as part of this report:





Report
      of Independent Registered Public
      Accounting Firm





Balance
      Sheets — September 30, 2007 and
      October 1, 2006





Statements
      of Income — Years Ended September 30, 2007, October 1, 2006 and October 2,
      2005





Statements
      of Shareholders’ Equity — Years Ended September 30, 2007, October 1, 2006 and
      October 2, 2005





Statements
      of Cash Flows — Years Ended September 30, 2007, October 1, 2006 and October 2,
      2005





Notes
      to
      Financial Statements





(b)           The
      following exhibits are attached to or incorporated by reference
      herein:





**Exhibit**
              **Number**
            **Exhibit
                Title**3.1
                (1)
            Form
                of Amended and Restated Articles of Incorporation of Overhill Farms,
                Inc.
                (Exhibit 3.1)3.2
                (1)
            Form
                of Amended and Restated Bylaws of Overhill Farms, Inc. (Exhibit
                3.2)3.3
                (2)
            Action
                with Respect to Bylaws of Overhill Farms, Inc., certified by the
                Secretary
                of Overhill Farms, Inc. as of June 13, 2003 (Exhibit
                3.1)3.4
                (3)
            Certificate
                of Amendment to Articles of Incorporation of Overhill Farms, Inc.
                filed
                August 12, 2003 with the Nevada Secretary of State (Exhibit
                3.4)4.1
                (1)
            Form
                of the specimen common stock certificate of Overhill Farms, Inc.
                (Exhibit
                4.1)10.1
                (1) #
            2002
                Employee Stock Option Plan for Overhill Farms, Inc. (Exhibit
                10.1)10.2
                (3)
            Letter
                agreement dated June 24, 2002 between U.S. Growers Cold Storage,
                Inc. and
                Overhill Farms, Inc. and Lease dated December 2, 1983 between Eastcase
                Company and Overhill Foods Corp. regarding premises located at 3055
                E.
                44th
                Street, Vernon, California (Exhibit 10.2)10.3
                (3)
            Master
                Lease Agreement dated as of August 1, 2002 between General Electric
                Capital Corporation and Overhill Farms, Inc. and related documentation
                regarding freezers and various other equipment (Exhibit
                10.35)10.4
                (3)
            Industrial
                Real Estate Lease (Single-Tenant Facility) dated April 22, 1994 between
                Vernon Associates and Ernest Paper Products, Inc. and related addendum
                regarding premises located at 2727 E. Vernon Avenue, Vernon, California
                (Exhibit 10.86)10.5
                (3)
            Sublease
                dated as of January 1, 2002 by and between Ernest Paper Products,
                Inc. and
                Overhill Farms, Inc. and related documents regarding premises located
                at
                2727 E. Vernon Avenue, Vernon, California (Exhibit
                10.87)10.6
                (3)
            Standard
                Industrial/Commercial Single-Tenant Lease – Net dated January 1, 2002 by
                and between Vernon Associates, LLC and Overhill Farms, Inc. regarding
                premises located at 2727 E. Vernon Avenue, Vernon, California (Exhibit
                10.88)


41





**Exhibit**
              **Number**
            **Exhibit
                Title**10.7
                (3)
            Addendum
                to Standard Industrial/Commercial Single-Tenant Lease – Net regarding
                premises located at
              2727
                E. Vernon Avenue, Vernon, California (Exhibit 10.89)10.8
                (4) #
            Employment
                Agreement, entered into as of November 1, 1999 between Polyphase
                Corporation and Overhill Farms, Inc., jointly and severally, and
                James
                Rudis (Exhibit 10.36)10.9
                (5) #
            Amendment
                to Employment Agreement dated October 30, 2003 between Overhill Farms,
                Inc. and James Rudis (Exhibit 10.1)10.10
                (6)
            Consulting
                Agreement dated February 18, 2004 between Overhill Farms, Inc. and
                Alexander Auerbach & Co., Inc. (Exhibit 10.1)10.11
                (2)
            Promissory
                Note dated September 25, 2001 in the principal amount of $207,375
                made by
                James Rudis in favor of Overhill Corporation (Exhibit
                10.27)10.12
                (2)
            Promissory
                Note dated September 25, 2001 in the principal amount of $184,875
                made by
                William Shatley in favor of Overhill Corporation (Exhibit
                10.28)10.13
                (2)
            Security
                Agreement dated September 25, 2001 between James Rudis and Overhill
                Corporation (Exhibit 10.29)10.14
                (2)
            Security
                Agreement dated September 25, 2001 between William Shatley and Overhill
                Corporation (Exhibit 10.30)10.15
                (2) #
            2005
                Stock Plan of Overhill Farms, Inc. (Exhibit 10.1)10.16
                (7) #
            Form
                of Restricted Stock Purchase Agreement Under 2005 Stock Plan (Exhibit
                10.3)10.17
                (8) #
            Form
                of Stock Option Agreement Under 2005 Stock Plan (Exhibit
                10.2)10.18
                (9) #
            Form
                of Stock Option Agreement under 2002 Employee Stock (Exhibit
                4.7)10.19
                (10)
            Senior
                Secured Credit Facility, dated April 17, 2006 by and among Overhill
                Farms,
                Inc., the Lenders party thereto from time to time and Guggenheim
                Corporate
                Funding, LLC (Exhibit 10.1)10.20
                (10)
            First
                Amendment to Senior Secured Credit Facility, dated May 16, 2006,
                by and
                among Overhill Farms, Inc., Midland National Life Insurance Company,
                North
                American Company for Life and Health Insurance and Orpheus Holdings
                LLC
                and Guggenheim Corporate Funding, LLC (Exhibit 10.2)10.21
                (10)
            Pledge
                and Security Agreement, dated as of May 17, 2006 by and among Overhill
                Farms, Inc., as Grantor and Guggenheim Corporate Funding, LLC as
                Collateral Agent (Exhibit 10.3)10.22
                (11)
            Summary
                of Director Compensation (Exhibit 10.22)10.23
                (11)
            Description
                of Bonus Programs for Named Executive Officers for Fiscal Year 2006
                (Exhibit 10.23)10.24
                (11)
            Description
                of Employment Arrangement between Overhill Farms, Inc. and Richard
                A.
                Horvath (Exhibit 10.25)10.25
                (11)
            Termination
                Option Extension dated November 30, 2006 between Overhill Farms,
                Inc. and
                James Rudis (Exhibit 10.26)10.26
                (12)
            Second
                Amendment to Senior Secured Credit Facility, dated as of March 9,
                2007 by
                and among Overhill Farms, Inc. the Lenders party thereto and Guggenheim
                Corporate Funding, LLC (Exhibit 10)10.27
                #**
            Description
                of Employment Arrangement between Overhill Farms, Inc. and Tracy
                E.
                Quinn


42





**Exhibit**
              **Number**
            **Exhibit
                Title**23**
            Consent
                of Independent Registered Public Accounting Firm31.1**
            Certification
                of Principal Executive Officer Required by Rule 13a-14(a) of the
                Securities Exchange Act of 1934, as amended, as Adopted Pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002 (2)31.2**
            Certification
                of Principal Financial Officer Required by Rule 13a-14(a) of the
                Securities Exchange Act of 1934, as amended, as Adopted Pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002 (2)32**
            Certification
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                18
                U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002





**                 Filed
      herewith





**#**      Management
      contract or compensatory plan or arrangement


(1)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Registration Statement on Form 10 (File No.
                1-16699)


(2)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Current Report on Form 8-K for August 7, 2003 regarding the
                amendment of the Registrant’s bylaws and various agreements entered into
                by the Registrant.


(3)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Annual Report on Form 10-K for the fiscal year ended
                September 28, 2003


(4)
            Incorporated
                by reference to the exhibit shown in parentheses included in Overhill
                Corporation’s Annual Report on Form 10-K for the fiscal year ended
                September 30, 2001, filed by Overhill Corporation (subsequently known
                as
                TreeCon Resources, Inc.) with the Securities and Exchange Commission
                (File
                No. 1-9083)


(5)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Current Report on Form 8-K for October 31, 2003 relating to
                the refinancing of its senior term loans and senior subordinated
                debt


(6)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Current Report on Form 8-K for September 17,
                2004


(7)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Current Report on Form 8-K for February 1,
                2005


(8)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Current Report on Form 8-K for February 24,
                2005


(9)
            Filed
                as an exhibit to Levine Leichtman Capital Partners II, L.P. Schedule
                13D/A
                No. 10 and incorporated herein by
                reference.


(10)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Current Report on Form 8-K for May 17,
                2006


(11)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Annual Report on Form 10-K for the fiscal year ended October
                1, 2006.


(12)
            Incorporated
                by reference to the exhibit shown in parentheses included in the
                Registrant’s Quarterly Report on Form 10-Q for April 1,
                2007.





(c)           The
      following schedule is included herein:





Schedule
      II – Valuation and Qualifying Accounts and Reserves





Schedules
      for which provision is made in the applicable rules and regulations of the
      Commission and are not required under the related instructions or are
      inapplicable have been omitted.





43


**SIGNATURES**









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







By:
            /s/
              James RudisName:
                James RudisTitle:
              President and Chief Executive OfficerDate:
              December 11, 2007




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









Signature
            
            Title
            
            Date/s/
                James Rudis
            
            President,
                Chief Executive Officer (principal executive
            
            December
                11, 2007James
                Rudis
            
            officer)
                and Chairman of the Board of Directors/s/
                Tracy E. Quinn
            
            Interim
                Chief Financial Officer  (principal financial and accounting
                officer)
            
            December
                11, 2007Tracy
                E. Quinn/s/
                Alexander Auerbach
            
            Director
            
            December
                11, 2007Alexander
                Auerbach/s/
                Harold Estes
            
            Director
            
            December
                11, 2007Harold
                Estes/s/
                Geoffrey A. Gerard
            
            Director
            
            December
                11, 2007Geoffrey
                A. Gerard/s/
                Louis J. Giraudo
            
            Director
            
            December
                11, 2007Louis
                J. Giraudo/s/
                Alexander Rodetis, Jr.
            
            Director
            
            December
                11, 2007Alexander
                Rodetis, Jr.





44


**OVERHILL
      FARMS, INC.**





**INDEX
      TO FINANCIAL STATEMENTS**







Audited
                  Financial Statements:
              Page:Report
                  of Independent Registered Public Accounting Firm
              F-2Balance
                  Sheets as of September 30, 2007 and October 1, 2006
              F-3Statements
                  of Income for the Years Ended September 30, 2007, October 1, 2006
                  and
                  October 2, 2005
              F-5Statements
                  of Shareholders’ Equity for the Years Ended September 30, 2007, October 1,
                  2006 and October 2, 2005
              F-6Statements
                  of Cash Flows for the Years Ended September 30, 2007, October 1,
                  2006 and
                  October 2, 2005
              F-7Notes
                  to Financial Statements
              F-10Schedule
                  II – Valuation and Qualifying Accounts and Reserves
              F-24





F-1




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




The
      Board
      of Directors and Shareholders of Overhill Farms, Inc.




We
      have
      audited the accompanying consolidated balance sheets of Overhill Farms, Inc.
      as
      of September 30, 2007 and October 1, 2006, and the related consolidated
      statements of income, shareholders’ equity, and cash flows for each of the three
      years in the period ended September 30, 2007. Our audits also included the
      financial statement schedule listed in the Index at Item 15 (c). These
      financial statements and schedule are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these financial
      statements and schedule based on our audits.




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




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of Overhill Farms, Inc.
      at September 30, 2007 and October 1, 2006, and the consolidated results of
      its operations and its cash flows for each of the three years in the period
      ended September 30, 2007, in conformity with U.S. generally accepted
      accounting principles. Also, in our opinion, the related financial statement
      schedule, when considered in relation to the basic financial statements taken
      as
      a whole, presents fairly in all material respects the information set forth
      therein.




We
      also
      have audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States), the effectiveness of Overhill Farms, Inc.’s
      internal control over financial reporting as of September 30, 2007, based on
      criteria established in Internal Control-Integrated Framework issued by the
      Committee of Sponsoring Organizations of the Treadway Commission and our report
      dated December 10, 2007 expressed an unqualified opinion thereon.




/s/
      ERNST &
YOUNG LLP




Los
      Angeles, California


December
      10, 2007






F-2


**OVERHILL
        FARMS, INC.**
 
 **BALANCE
        SHEETS**
  **Assets**





September
                30,
              2007
            
            
            October
                1,
              2006Current
                assets:Cash
            
            $
            1,325,868
            
            
            $
            2,111,251Accounts
                receivable, net of allowance for doubtful accounts of $18,000 and
                $15,000
                in 2007 and 2006, respectively
            
            
            21,073,735
            
            
            
            14,901,680Inventories
            
            
            18,097,043
            
            
            
            10,968,346Prepaid
                expenses and other
            
            
            1,170,053
            
            
            
            1,486,811Deferred
                income taxes
            
            
            960,764
            
            
            
            1,014,749Total
                current assets
            
            
            42,627,463
            
            
            
            30,482,837Property
                and equipment, at cost:****Fixtures
                and equipment
            
            
            22,997,549
            
            
            
            14,546,122Leasehold
                improvements
            
            
            10,254,496
            
            
            
            10,018,384Automotive
                equipment
            
            
            50,854
            
            
            
            50,85433,302,899
            
            
            
            24,615,360Less
                accumulated depreciation and amortization
            
            
            (13,685,015
            )
            
            
            (11,547,747
            )Total
                property and
                equipment
            
            
            19,617,884
            
            
            
            13,067,613Other
                non-current assets:Excess
                of cost over value of net assets acquired
            
            
            12,188,435
            
            
            
            12,188,435Deferred
                financing costs, net of accumulated amortization of $258,000 and
                $178,000
                in 2007 and 2006, respectively
            
            
            327,633
            
            
            
            406,482Other
            
            
            1,389,006
            
            
            
            1,982,848Total
                other non-current
                assets
            
            
            13,905,074
            
            
            
            14,577,765Total
                assets
            
            $
            76,150,421
            
            
            $
            58,128,215





The
            accompanying notes are an integral
 part
            of
            these financial statements.
 F-3




**OVERHILL
        FARMS, INC.**
 
 **BALANCE
        SHEETS (continued)**


**Liabilities
        and Shareholders’ Equity**







September
                30,
              2007
            
            
            October
                1,
              2006Current
                liabilities:Accounts
                payable
            
            $
            15,005,394
            
            
            $
            7,463,263Accrued
                liabilities
            
            
            2,981,658
            
            
            
            2,607,013Current
                maturities of long-term debt
            
            
            2,492,702
            
            
            
            2,739,167Total
                current liabilities
            
            
            20,479,754
            
            
            
            12,809,443Long-term
                accrued liabilities
            
            
            353,515
            
            
            
            307,580Deferred
                tax liabilities
            
            
            1,515,294
            
            
            
            854,692Long-term
                debt, less current maturities, net of unamortized debt discount of
                $1,186,000 and $1,365,000 in 2007 and 2006, respectively
            
            
            41,382,832
            
            
            
            37,219,265Total
                liabilities
            
            
            63,731,395
            
            
            
            51,190,980Commitments
                and contingencies (Note 10)Shareholders’
                equity:Preferred
                stock, $0.01 par value, authorized 50,000,000 shares, 4.43 designated
                as
                Series A Convertible Preferred Stock, 0 shares issued and
                outstanding
            
            
            -
            
            
            
            -Common
                stock, $0.01 par value, authorized 100,000,000 shares, issued and
                outstanding 15,620,271 and 15,267,271 shares in 2007 and 2006,
                respectively
            
            
            156,203
            
            
            
            152,673Additional
                paid-in capital
            
            
            11,116,989
            
            
            
            10,189,545Retained
                earnings (accumulated deficit)
            
            
            1,157,478
            
            
            
            (3,404,983
            )Accumulated
                other comprehensive loss
            
            
            (11,644
            )
            
            
            -Total
                shareholders’ equity
            
            
            12,419,026
            
            
            
            6,937,235Total
                liabilities and shareholders’ equity
            
            $
            76,150,421
            
            
            $
            58,128,215











The
            accompanying notes are an integral
 part
            of
            these financial statements.
 F-4


**OVERHILL
        FARMS, INC.**
 
 **STATEMENTS
        OF INCOME**







For
                the Years EndedSeptember
                30,
              2007
              (*52
                weeks)*
            
            
            October
                1,
              2006
              *(52
                weeks)*
            
            
            October
                2,
              2005
              *(53
                weeks)*Net
                revenues
            
            $
            192,641,574
            
            
            $
            168,309,591
            
            
            $
            162,565,512Cost
                of sales
            
            
            172,693,668
            
            
            
            146,824,919
            
            
            
            142,813,053Gross
                profit
            
            
            19,947,906
            
            
            
            21,484,672
            
            
            
            19,752,459Selling,
                general and administrative expenses
            
            
            8,047,433
            
            
            
            7,196,309
            
            
            
            7,849,537Operating
                income
            
            
            11,900,473
            
            
            
            14,288,363
            
            
            
            11,902,922Interest
                expense:Interest
                expense
            
            
            (3,974,481
            )
            
            
            (5,144,474
            )
            
            
            (5,911,525
            )Amortization
                of debt discount and deferred financing costs
            
            
            (391,930
            )
            
            
            (275,391
            )
            
            
            (222,480
            )Debt
                extinguishment expenses
            
            
            -
            
            
            
            (175,766
            )
            
            
            -Other
                expense
            
            
            (22,841
            )
            
            
            (135,047
            )
            
            
            (237,321
            )Total
                interest expense
            
            
            (4,389,252
            )
            
            
            (5,730,678
            )
            
            
            (6,371,326
            )Income
                before income taxes
            
            
            7,511,221
            
            
            
            8,557,685
            
            
            
            5,531,596Income
                taxes
            
            
            2,948,760
            
            
            
            3,455,700
            
            
            
            1,835,431Net
                income
            
            $
            4,562,461
            
            
            $
            5,101,985
            
            
            $
            3,696,165Net
                income per share – basic
            
            $
            0.30
            
            
            $
            0.34
            
            
            $
            0.25Weighted-average
                shares outstanding – basic
            
            
            15,338,038
            
            
            
            15,204,424
            
            
            
            14,863,716Net
                income per share – diluted
            
            $
            0.29
            
            
            $
            0.32
            
            
            $
            0.24Weighted-average
                shares outstanding – diluted
            
            
            15,803,109
            
            
            
            15,880,507
            
            
            
            15,575,459








The
            accompanying notes are an integral
 part
            of
            these financial statements.
 F-5




**OVERHILL
        FARMS, INC.**
 
 **STATEMENTS
        OF SHAREHOLDERS’ EQUITY**
 Preferred
                    Stock
                
                
                Common
                    Stock
                
                
                Additional
                  Paid-In
                
                
                Treasury
                    Stock
                
                
                Warrants
                  To
                    Purchase
                
                
                Retained
                    Earnings
                  (Accumulated
                
                
                Accumulated
                    Other
                  ComprehensiveShares
                
                
                Amount
                
                
                Shares
                
                
                Amount
                
                
                Capital
                
                
                Shares
                
                
                Amount
                
                
                Common
                    Stock
                
                
                Deficit)
                
                
                Loss
                
                
                TotalBalance,
                    September 26, 2004
                
                
                24
                
                
                $
                -
                
                
                
                14,805,556
                
                
                $
                148,056
                
                
                $
                9,573,562
                
                
                
                -
                
                
                $
                -
                
                
                $
                400
                
                
                $
                (12,203,133
                )
                
                $
                -
                
                
                $
                (2,481,115
                )Issuance
                    of dilution protection shares
                
                
                -
                
                
                
                -
                
                
                
                83,641
                
                
                
                836
                
                
                
                122,116
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                122,952Exercise
                    of stock options
                
                
                -
                
                
                
                -
                
                
                
                27,000
                
                
                
                270
                
                
                
                39,420
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                39,690Net
                    income (comprehensive income)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                3,696,165
                
                
                
                -
                
                
                
                3,696,165Balance,
                    October 2, 2005
                
                
                24
                
                
                
                -
                
                
                
                14,916,197
                
                
                
                149,162
                
                
                
                9,735,098
                
                
                
                -
                
                
                
                -
                
                
                
                400
                
                
                
                (8,506,968
                )
                
                
                -
                
                
                
                1,377,692Share
                    repurchase
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                14,200
                
                
                
                (53,250
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (53,250
                )Cancellation
                    of shares
                
                
                -
                
                
                
                -
                
                
                
                (14,200
                )
                
                
                (142
                )
                
                
                (53,108
                )
                
                
                (14,200
                )
                
                
                53,250
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Exercise
                    of stock options
                
                
                -
                
                
                
                -
                
                
                
                82,000
                
                
                
                820
                
                
                
                74,309
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                75,129Warrant
                    exercise
                
                
                -
                
                
                
                -
                
                
                
                198
                
                
                
                2
                
                
                
                398
                
                
                
                -
                
                
                
                -
                
                
                
                (400
                )
                
                
                -
                
                
                
                -
                
                
                
                -Preferred
                    stock conversion
                
                
                (24
                )
                
                
                -
                
                
                
                283,076
                
                
                
                2,831
                
                
                
                (2,831
                )
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Tax
                    deduction from option exercises
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                112,980
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                112,980Receipts
                    of marketable securities fornotes
                    written-off at spin-off
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                322,699
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                322,699Net
                    income (comprehensive income)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,101,985
                
                
                
                -
                
                
                
                5,101,985Balance,
                    October 1, 2006
                
                
                -
                
                
                
                -
                
                
                
                15,267,271
                
                
                
                152,673
                
                
                
                10,189,545
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (3,404,983
                )
                
                
                -
                
                
                
                6,937,235Exercise
                    of stock options
                
                
                -
                
                
                
                -
                
                
                
                353,000
                
                
                
                3,530
                
                
                
                442,405
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                445,935Tax
                    deduction from option exercises
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                485,039
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                485,039Comprehensive
                    income:Net
                    income
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                4,562,461
                
                
                
                -
                
                
                
                4,562,461Unrealized
                    loss on marketable securities
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (11,644
                )
                
                
                (11,644
                )Total
                    Comprehensive Income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                4,550,817Balance,
                    September 30, 2007
                
                
                -
                
                
                $
                -
                
                
                
                15,620,271
                
                
                $
                156,203
                
                
                $
                11,116,989
                
                
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                1,157,478
                
                
                $
                (11,644
                )
                
                $
                12,419,026




The
            accompanying notes are an integral
 part
            of
            these financial statements.
 F-6


**OVERHILL
      FARMS, INC.**





**STATEMENTS
      OF CASH FLOWS**





For
                the Years EndedSeptember
                30,
              2007
              *(52
                weeks)*
            
            
            October
                1,
              2006
              *(52
                weeks)*
            
            
            October
                2,
              2005
              (53
                weeks)Operating
                Activities:Net
                income
            
            $
            4,562,461
            
            
            $
            5,101,985
            
            
            $
            3,696,165Adjustments
                to reconcile net income to netcash
                provided by operating activities:Depreciation
                and amortization
            
            
            2,415,229
            
            
            
            1,746,469
            
            
            
            1,585,649Amortization
                of debt discount and deferredfinancing
                costs
            
            
            391,930
            
            
            
            275,390
            
            
            
            222,480Loss
                on asset disposals
            
            
            35,837
            
            
            
            2,424
            
            
            
            272,213Provision
                for (recovery of) doubtful accounts
            
            
            (59,103
            )
            
            
            -
            
            
            
            169,498Noncash
                debt extinguishment expenses
            
            
            -
            
            
            
            175,766
            
            
            
            -Noncash
                interest expenses
            
            
            -
            
            
            
            -
            
            
            
            122,952Deferred
                income tax provision
            
            
            711,270
            
            
            
            2,789,719
            
            
            
            1,675,846Loss
                on sale of marketable securities
            
            
            -
            
            
            
            38,886
            
            
            
            -Impairment
                of marketable securities
            
            
            8,329
            
            
            
            90,284
            
            
            
            -Changes
                in:Accounts
                receivable
            
            
            (6,112,952
            )
            
            
            (2,267,032
            )
            
            
            (198,024
            )Inventories
            
            
            (7,128,697
            )
            
            
            (1,534,768
            )
            
            
            1,794,970Prepaid
                expenses and other
            
            
            828,384
            
            
            
            (86,653
            )
            
            
            533,738Accounts
                payable
            
            
            7,542,131
            
            
            
            1,015,720
            
            
            
            (1,545,657
            )Accrued
                liabilities
            
            
            374,645
            
            
            
            (118,738
            )
            
            
            (10,220
            )Net
                cash provided by operating activities
            
            
            3,569,464
            
            
            
            7,229,452
            
            
            
            8,319,610Investing
                Activities:**Additions
                to property and equipment
            
            
            (8,123,471
            )
            
            
            (2,337,440
            )
            
            
            (1,643,909
            )Proceeds
                from sale of property and equipment
            
            
            10,238
            
            
            
            -
            
            
            
            -**Sale
                of marketable securities
            
            
            65,557
            
            
            
            140,967
            
            
            
            -Net
                cash used in investing activities
            
            
            (8,047,676
            )
            
            
            (2,196,473
            )
            
            
            (1,643,909
            )





The
      accompanying notes are an integral


part
      of
      these financial statements.


F-7


**OVERHILL
      FARMS, INC.**





**STATEMENTS
      OF CASH FLOWS (continued)**





For
                the Years EndedSeptember
                30,
              2007
              *(52
                weeks)*
            
            
            October
                1,
              2006
              *(52
                weeks)*
            
            
            October
                2,
              2005
              *(53
                weeks)*Financing
                Activities:Principal
                payments on financing arrangements
            
            
            -
            
            
            
            (45,358,000
            )
            
            
            (5,665,843
            )Borrowings
                under financing arrangements
            
            
            -
            
            
            
            44,500,000
            
            
            
            -Borrowings
                under credit facility
            
            
            13,000,000
            
            
            
            -
            
            
            
            -Borrowings
                under equipment loans
            
            
            692,660
            
            
            
            323,902
            
            
            
            -Principal
                payments on equipment loans
            
            
            (155,986
            )
            
            
            -
            
            
            
            -Principal
                payments on other debt
            
            
            -
            
            
            
            (44,828
            )
            
            
            -Principal
                payments on borrowings
            
            
            (10,360,238
            )
            
            
            (3,500,000
            )
            
            
            -Principal
                payments on capital lease obligation
            
            
            (280,737
            )
            
            
            -
            
            
            
            -Cash
                paid in association with amendments to financing
                arrangements
            
            
            -
            
            
            
            -
            
            
            
            (4,402
            )Cash
                paid in association with financing arrangements
            
            
            -
            
            
            
            (1,632,223
            )
            
            
            -Debt
                discount
            
            
            (132,344
            )
            
            
            -
            
            
            
            -Deferred
                financing costs
            
            
            (1,500
            )
            
            
            -
            
            
            
            -Exercise
                of stock options, including tax benefit
            
            
            930,974
            
            
            
            134,858
            
            
            
            -Issuance
                of common stock
            
            
            -
            
            
            
            -
            
            
            
            39,690Net
                cash provided by (used in) financing activities
            
            
            3,692,829
            
            
            
            (5,576,291
            )
            
            
            (5,630,555
            )Net
                (decrease) increase in cash
            
            
            (785,383
            )
            
            
            (543,312
            )
            
            
            1,045,146Cash
                at beginning of year
            
            
            2,111,251
            
            
            
            2,654,563
            
            
            
            1,609,417Cash
                at end of year
            
            $
            1,325,868
            
            
            $
            2,111,251
            
            
            $
            2,654,563Supplemental
                Schedule of Cash Flow Information:Cash
                paid during the year for:Interest
            
            $
            3,974,659
            
            
            $
            5,150,961
            
            
            $
            6,369,677Income
                taxes
            
            $
            2,056,000
            
            
            $
            726,000
            
            
            $
            -








The
      accompanying notes are an integral


part
      of
      these financial statements.


F-8


**OVERHILL
      FARMS, INC.**





**STATEMENTS
      OF CASH FLOWS (continued)**











**Supplemental
      Schedule of Noncash Investing and Financing Activities:**





On
      December 23, 2005, Levine Leichtman Capital Partners II, L.P. (“LLCP”) received
      283,076 shares of the Company’s common stock upon surrender and conversion in
      full of the 23.57 shares of Series A Convertible Preferred Stock it then held.
      In addition, LLCP received 198 shares of the Company’s common stock upon
      cashless exercise in full of the two warrants it held to purchase an aggregate
      of 200 shares of the Company’s common stock at an exercise price of $0.0000008
      per share, for a rounded aggregate exercise price of $0.01.





During
      fiscal year 2006, the Company received a total of 523,000 shares of TreeCon
      Resources common stock, which served as collateral for two notes receivable
      and
      were tendered by Mr. Rudis, the Company’s President, Chief Executive Officer and
      Chairman of the Board and Mr. Shatley, who served as an officer of the former
      parent company and formerly served as an officer and director of the
      Company.  Such notes were made on September 25, 2001 and were
      allocated to Overhill Farms, Inc. in the spin-off transaction on October 29,
      2002.





The
      Company amended its existing operating lease agreements with General Electric
      Capital Corporation on October 2, 2006. The amended lease resulted in a
      three-year capital lease in the principal amount of $842,168 at a fixed interest
      rate of 8.15%, with a $1 bargain purchase option at the expiration of the lease.
      The assets acquired under this capital lease have an acquisition cost of
      $911,647, which is less than fair market value, and are classified under
      fixtures and equipment on the accompanying balance sheets. Accumulated
      amortization of the assets under the capital lease is included in accumulated
      depreciation and amortization on the accompanying balance sheets.











The
      accompanying notes are an integral


part
      of
      these financial statements.


F-9


**OVERHILL
                FARMS, INC.**





**NOTES
                TO FINANCIAL STATEMENTS**





**September
                30, 2007**











**1.**
            **COMPANY
                AND ORGANIZATIONAL MATTERS**





**Nature
      of Business and Basis of Presentation**





Overhill
      Farms, Inc. (the “Company” or “Overhill Farms”) is a value-added manufacturer of
      quality frozen food products including entrées, plated meals, meal components,
      soups, sauces, and poultry, meat and fish specialties.





**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING
                POLICIES**





**Fiscal
      Year**





The
      Company utilizes a 52- to 53- week accounting period, which ends on the last
      Sunday of September in each fiscal year if September 30 does not fall on a
      Saturday, or October 1 if September 30 falls on a Saturday.  The
      fiscal years ended September 30, 2007 and October 1, 2006 were 52-week periods
      and the fiscal year ended October 2, 2005 was a 53-week period.





**Deferred
      Financing Costs and Debt Discount**





Debt
      financing costs are deferred and amortized as additional interest expense over
      the term of the related debt.  Amortization of these costs totaled
      $392,000, $451,000 and $222,000 for the fiscal years ended September 30, 2007,
      October 1, 2006 and October 2, 2005, respectively.





**Write-Offs**





For
      the
      fiscal years ended September 30, 2007, October 1, 2006 and October 2, 2005,
      the
      Company’s write-offs, net of recoveries, to the allowance for doubtful accounts
      were approximately $9,000, $181,000 and $99,000, respectively.





**Financial
      Instruments**





The
      fair
      value of financial instruments is determined by reference to market data and
      by
      other valuation techniques as appropriate.  The Company believes the
      carrying value of the debt approximates fair value at September 30, 2007 as
      the
      debt bears interest at variable rates based on prevailing market
      conditions.  The debt at October 1, 2006 also approximated fair value
      as the debt bore interest at variable rates based on prevailing market
      conditions.  Unless otherwise disclosed, the fair values of financial
      instruments approximate their recorded values due to their short-term
      nature.





**Inventories**





Inventories,
      which include material, labor, and manufacturing overhead, are stated at the
      lower of cost, which approximates the first-in, first-out (“FIFO”) method, or
      market.  The Company uses a standard costing system to





F-10


**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES
                (continued)**





estimate
      its FIFO cost of inventory at the end of each reporting
      period.  Historically, standard costs have been materially consistent
      with actual costs.  The Company periodically reviews its inventory for
      excess items, and it establishes
      a valuation reserve based upon the age of specific items in inventory and the
      expected recovery from the disposition of the items.





A
      reserve
      is established for the estimated aged surplus, spoiled or damaged products,
      and
      discontinued inventory items and components.  The amount of the
      reserve is determined by analyzing inventory composition, expected usage,
      historical and projected sales information, and other
      factors.  Changes in sales volume due to unexpected economic or
      competitive conditions are among the factors that could result in material
      increases or decreases to the reserve.





Inventory
      write-offs were $553,000, $602,000 and $204,000 for the years ended September
      30, 2007, October 1, 2006 and October 2, 2005, respectively.





**Property
      and Equipment**





The
      cost
      of property and equipment is depreciated over the estimated useful lives of
      the
      related assets, which range from three to ten years.  Leasehold
      improvements to the Company’s Plant No.1 in Vernon, California are amortized
      over the lesser of the initial lease term plus one lease extension period,
      initially totaling 15 years, or the estimated useful life of the
      assets.  Other leasehold improvements are amortized over the lesser of
      the term of the related lease or the estimated useful lives of the
      assets.  Depreciation is generally computed using the straight-line
      method.  Depreciation expense was $2.4 million, $1.7 million and $1.6
      million for the fiscal years ended September 30, 2007, October 1, 2006 and
      October 2, 2005, respectively.





Expenditures
      for maintenance and repairs are charged to expense as incurred.  The
      cost of materials purchased and labor expended in betterments and major renewals
      are capitalized.  The fixtures and equipment balances included $2.7
      million and $1.9 million of construction in process at September 30, 2007 and
      October 1, 2006, respectively.  Costs and related accumulated
      depreciation of properties sold or otherwise retired are eliminated from the
      accounts, and gains or losses on disposals are included in other income
      (expense).





**Excess
      of Cost Over Fair Value of Net Assets Acquired**





The
      excess of cost over fair value of net assets acquired (goodwill) is evaluated
      at
      least annually for impairment in accordance with Statement of Financial
      Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible
      Assets.”  The Company has one reporting unit and estimates fair value
      based upon a variety of factors, including discounted cash flow analysis, market
      capitalization and other market-based information.  The Company
      performed its evaluation of goodwill for impairment as of September 30, 2007,
      which indicated that no impairment charge was necessary.





**Stock
      Options**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based
      Payment” (“SFAS 123R”), which requires the Company to measure the cost of all
      employee stock-based compensation awards based on the grant date fair value
      of
      those awards and to record that cost as compensation expense over the period
      during which the employee is required to perform service in exchange for the
      award (generally over the vesting period of the award).  Accordingly,
      with the adoption of SFAS 123R, any future option awards will have an impact
      on
      the Company’s results of operations, although awards will have no impact on the
      Company’s overall financial position.  The Company adopted SFAS 123R
      on October 3, 2005 utilizing the modified prospective method.  The
      Company’s adoption of SFAS 123R did not impact the Company’s income before
      income tax expense, net income and basic and diluted earnings per share since
      no
      options were granted during the fiscal years ended September 30, 2007 and
      October 1, 2006 and all of the Company’s outstanding options were fully vested
      at the date of adoption of this standard.  Accordingly, no stock
      compensation expense related to the adoption of this standard was
      recorded.


F-11


**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES
                (continued)**





Prior
      to
      fiscal year 2006, the Company determined stock-based compensation expense using
      the intrinsic value method of APB 25, “Accounting for Stock Issued to
      Employees,” and the Company provided the disclosure required by SFAS No. 123,
“Accounting for Stock-Based Compensation,” as amended by SFAS No. 148,
“Accounting for Stock-Based Compensation – Transition and Disclosure.” The
      following table provides the pro forma effects on the Company’s net income and
      earnings per share for the fiscal year ended October 2, 2005 as if the fair
      value recognition provisions of SFAS 123R had been applied:





For
                the Fiscal Year EndedOctober
                2,2005Net
                income:As
                reported
            
            $
            3,696,165Add:
                Stock-based compensationexpense
                included in reportednet
                income, net of relatedtax
                effects
            
            
            -Deduct:  Total
                stock-basedcompensation
                expensedetermined
                under fair valuemethod
                for all awards, netof
                related tax effects
            
            
            (279,657
            )Pro
                forma
            
            $
            3,416,508Basic
                earnings per share:As
                reported
            
            $
            0.25Pro
                forma
            
            $
            0.23Diluted
                earnings per share:As
                reported
            
            $
            0.24Pro
                forma
            
            $
            0.22





**Revenue
      Recognition**





The
      Company’s revenues arise from one business segment – the development and
      manufacture of frozen food products.  Revenues are recognized when
      title and risk of loss of product pass to the customer, which is either at
      point
      of shipping or at destination, depending on customer terms.  The
      Company provides for estimated returns and allowances, which have historically
      been immaterial, at the time of sale.  Shipping and handling revenues
      are included as a component of net revenue.





The
      Company classifies customer rebate costs as a reduction in net
      revenues.  Customer rebate costs were $31,000, $5,000 and $17,000 for
      the fiscal years ended September 30, 2007, October 1, 2006 and October 2, 2005,
      respectively.





**Income
      Taxes**





Deferred
      income taxes are recorded using the liability method reflect the net tax effects
      of temporary differences between the carrying amounts of assets and liabilities
      for financial reporting purposes and the amounts used for income tax
      purposes.





F-12


**2.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES
                (continued)**





**Asset
      Retirement Obligations**





The
      Company records liabilities related to asset retirement obligations in the
      period in which they are incurred and measures them at the net present value
      of
      the future estimated cost.  The offset to the liability is capitalized
      as part of the carrying amount of the related long-lived
      asset.  Changes in the liability due to the passage of time are
      recognized over the operating term in the income statement as accretion
      expense.





**Recent
      Accounting Pronouncements**





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements” (“SFAS 157”), which defines fair value, establishes a framework
      for measuring fair value and requires enhanced disclosures about fair value
      measurements. SFAS 157 requires companies to disclose the fair value of their
      financial instruments according to a fair value hierarchy (i.e., levels 1,
      2,
      and 3, as defined). Additionally, companies are required to provide enhanced
      disclosure regarding instruments in the level 3 category, including a
      reconciliation of the beginning and ending balances separately for each major
      category of assets and liabilities. SFAS 157 will be effective for fiscal years
      beginning after November 15, 2007 and interim periods within those fiscal
      years. The Company is currently evaluating the impact adoption may have on
      its
      financial condition or results of operations.





In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109”
(“FIN 48”), which prescribes accounting for and disclosure of uncertainty in tax
      positions. This interpretation defines the criteria that must be met for the
      benefits of a tax position to be recognized in the financial statements and
      the
      measurement of tax benefits recognized. The provisions of FIN 48 will be
      effective as of the beginning of the Company’s 2008 fiscal year, with the
      cumulative effect of the change in
      accounting principle recorded as an adjustment to opening retained earnings.
      The
      Company is currently evaluating the impact adoption  may have on its
      financial condition or results of operations.





**Reclassifications**





Certain
      prior year amounts have been reclassified to conform to the current period
      presentation.





**Use
      of Estimates**





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





**3.**
            **RELATED
                PARTY TRANSACTIONS**





In
      connection with the spin-off from the Company’s former parent, Overhill
      Corporation (now TreeCon Resources, Inc. (“TreeCon”)), the Company received from
      Overhill Corporation a non-recourse promissory note in the principal amount
      of
      $207,375 made on September 25, 2001 by Mr. Rudis, the Company’s President, Chief
      Executive Officer and Chairman of the Board and a similar note in the principal
      amount of $184,875 by Mr. Shatley, who served as an officer of the former parent
      company and later served as an officer and director of the
      Company.  These notes became due and payable on September 24,
      2003.  Mr. Rudis’ note was collateralized solely by 276,500 shares of
      common stock of TreeCon.  Mr. Shatley’s note was collateralized solely
      by 246,500 shares of common stock of TreeCon.  Based on the Company’s
      assessment of the collectibility of these notes, including the value of the
      subject collateral, the Company assigned no value to the notes upon their
      receipt.  During the quarter ended April 2, 2006, Mr. Rudis tendered
      to the Company the 276,500 shares of TreeCon common stock that had served as
      collateral for the note receivable.  Mr. Shatley tendered to the
      Company the 246,500 shares of TreeCon common stock that had served as collateral
      for the note receivable during the quarter ended July 2, 2006.








F-13


**3.**
            **RELATED
                PARTY TRANSACTIONS
                (continued)**





During
      fiscal year 2006, Levine
      Leichtman Capital Partners II, L.P. (“LLCP”) was a principal stockholder and
      secured creditor of the Company.  As described in Note 5, the Company
      repaid approximately $44.5 million in existing debt and related fees expenses
      of
      LLCP and its affiliate, Pleasant Street Investors, LLC (“PSI”) in connection
      with the termination of Company’s financing arrangements with them. In addition,
      as described in Note 10, on December 23, 2005, LLCP resold to 15 institutional
      investors in a private transaction all of the 5,771,661 shares of the Company’s
      common stock that it owned of record as of that date and the Company made
      various representations and warranties as a party to a stock purchase agreement
      with LLCP and the investors. Also, on December 23, 2005, the Company, LLCP
      and
      James Rudis entered into a Third Amendment to the Amended and Restated Investor
      Rights Agreement. This agreement was terminated in connection with the
      refinancing of the Company’s indebtedness to LLCP and PSI in May
      2006.





In
      February 2004, the Company engaged Alexander Auerbach & Co., Inc. (“AAPR”)
      to provide the Company with public relations and marketing
      services.  AAPR provides public relations, media relations and
      communications marketing services to support the Company’s sales
      activities.  Alexander Auerbach, who is a director and shareholder of
      the Company, is a stockholder, director and officer of AAPR.  The
      Company paid to AAPR $36,000 and $29,000 for services rendered under this
      engagement during fiscal year 2007 and 2006, respectively.  These fees
      totaled more than 5% of AAPR’s gross revenues for its fiscal year ended January
      31, 2007.





**4.**
            **INVENTORIES**





Inventories
      are summarized as follows:





September
                30,
              2007
            
            
            October
                1,
              2006Raw
                ingredients
            
            $
            7,394,169
            
            
            $
            4,031,162Finished
                product
            
            
            8,316,681
            
            
            
            5,429,298Packaging
            
            
            2,386,193
            
            
            
            1,507,886$
            18,097,043
            
            
            $
            10,968,346





**5.**
            **LONG-TERM
                DEBT**





Long-term
      debt of the Company as of September 30, 2007 and October 1, 2006 is summarized
      as follows:





September
                30, 2007
            
            
            October
                1,
              2006Tranche
                A Term Loans payable to GCF
            
            $
            25,489,762
            
            
            $
            24,000,000Tranche B
                Term Loans payable to GCF
            
            
            15,650,000
            
            
            
            15,000,000LIBOR
                revolving loans payable to GCF
            
            
            2,500,000
            
            
            
            2,000,000Equipment
                loans
            
            
            860,576
            
            
            
            323,902Capital
                lease
            
            
            561,430
            
            
            
            -45,061,768
            
            
            
            41,323,902Less
                current maturities
            
            
            (2,492,702
            )
            
            
            (2,739,167
            )Less
                debt discount
            
            
            (1,186,234
            )
            
            
            (1,365,470
            )$
            41,382,832
            
            
            $
            37,219,265





The
      Company executed a senior secured credit agreement with Guggenheim Corporate
      Funding, LLC (“GCF”) on April 17, 2006. Under the credit agreement, GCF acts as
      collateral agent, administrative agent, arranger and syndication agent in
      connection with loans made by various lenders, including affiliates of
      GCF.  The facility was originally structured as a $7.5 million
      non-amortizing revolving loan, a $25.0 million amortizing Tranche A Term Loan
      and a $15.0 million non-amortizing Tranche B Term Loan.





F-14


**5.**
            **LONG-TERM
                DEBT (continued)**





On
      March
      9, 2007, the Company executed a second amendment to the senior secured credit
      agreement allowing for $7.0 million of additional capital expenditures to
      facilitate new business by increasing plant capacity and improving line
      efficiency, to be funded by increases of $3.5 million in each of the Tranche
      A
      and Tranche B Term Loans.





As
      of
      September 30, 2007, the facility with GCF, reflecting principal payments and
      the
      March 9, 2007 amendment, was a $49.6 million senior secured credit facility
      maturing in May 2011, secured by a first priority lien on substantially all
      of
      the Company’s assets. As of September 30, 2007, the facility was structured as a
      $7.5 million non-amortizing revolving loan, a $26.5 million amortizing Tranche
      A
      Term Loan and a $15.6 million non-amortizing Tranche B Term Loan. The facility
      bears interest, adjustable quarterly, at the London Inter Bank Offered Rate
      (“LIBOR”) plus the Applicable Margin for LIBOR loans or, at the Company’s option
      in the case of the revolving loans, an alternate base rate equal to the greater
      of the prime rate and the federal funds effective rate plus 0.50%, plus the
      Applicable Margin for Alternate Base Rate Loans, as follows:








Applicable
                  Margin for Alternate Base Rate Loans
            
            
            Applicable
                  Margin for
              LIBOR
                  LoansTotal
                  Debt to EBITDA Ratio for Last Twelve Months
            
            Revolving
                  Loan
            
            
            Revolving
                  Loan
            
            
            Tranche
                  A
              Term
                  Loan
            
            
            Tranche
                  B
              Term
                  LoanGreater
                than
            3.00:1.00
            
            
            2.50%
            
            
            
            3.50%
            
            
            
            3.75%
            
            
            
            6.25%Greater
                than or equal to but less than or equal to
            2.00:1.00
              3.00:1.00
            
            
            2.25%
            
            
            
            3.25%
            
            
            
            3.50%
            
            
            
            6.00%Less
                than
            2.00:1.00
            
            
            2.00%
            
            
            
            3.00%
            
            
            
            3.25%
            
            
            
            5.75%





As
      of
      September 30, 2007, the Company’s principal balances on the loans totaled $43.6
      million, consisting of $25.5 million in Tranche A Term Loans, $15.6 million
      in
      Tranche B Term Loans and $2.5 million in LIBOR revolving loans.  At
      September 30, 2007, interest rates on the Tranche A Term Loans, Tranche B Term
      Loans and LIBOR revolving loans were 9.1%, 11.6% and 8.8%,
      respectively.  For the fiscal year ended September 30, 2007, the
      Company incurred $4.0 million in interest expense net of $186,000 in capitalized
      interest.  For the fiscal year ended October 1, 2006, the Company
      incurred $5.1 million in interest expense.  At September 30, 2007, the
      facility had been reduced by mandatory principal payments on the Tranche A
      Term
      Loan of $3.0 million and voluntary principal payments on the Tranche B Term
      Loan
      of $2.9 million.  As of September 30, 2007, the Company had $5.0
      million available to use on the revolving loan.





Initial
      proceeds from the GCF facility, received May 16, 2006, were used to repay
      approximately $44.5 million in existing debt and related fees and expenses
      in
      connection with the termination of the Company’s former financing arrangements
      and to pay approximately $1.6 million in fees and expenses relating to the
      new
      financing.  Of these fees, $1.3 million is recorded as debt discount,
      net of accumulated amortization, on the accompanying balance sheet as of
      September 30, 2007.  The Company recorded a pretax charge of
      approximately $176,000 in connection with the termination of the former
      financing arrangements in the third quarter of fiscal year 2006.  The
      Company paid GCF
      an
      additional $132,000 in fees and expenses on March 9, 2007 related to the second
      amendment, which was recorded as a debt discount.





The
      GCF
      facility contains covenants whereby, among other things, the Company is required
      to maintain compliance with agreed levels of earnings before interest, taxes,
      depreciation and amortization, interest coverage, fixed charge coverage,
      leverage targets, annual capital expenditures and incremental indebtedness
      limits.


F-15


**5.   LONG-TERM
                DEBT (continued)**





Mandatory
      prepayments under the facility are required based on excess cash flow, as
      defined in the agreement, and upon receipt of proceeds from a disposition or
      payment from a casualty or condemnation of the collateralized assets, and
      voluntary prepayments under the facility are generally permitted as provided
      in
      the agreement.  The facility also contains customary restrictions on
      incurring indebtedness and liens, making investments, paying dividends and
      making loans or advances.





The
      Company entered into the following amortizing loans with Key Bank to finance
      the
      purchase of machinery used for manufacturing processes: a 5-year loan in the
      principal amount of $324,000 at a fixed interest rate of 7.5% on September
      21,
      2006, a 5-year loan in the principal amount of $216,617 at a fixed interest
      rate
      of 7.5% on November 27, 2006 and a 4-year loan in the principal amount of
      $476,043 at a fixed interest rate of 7.5% on January 9, 2007.





The
      Company amended its existing operating lease agreements with General Electric
      Capital Corporation on October 2, 2006. The amended lease resulted in a
      three-year capital lease in the principal amount of $842,168 at a fixed interest
      rate of 8.15%, with a $1 bargain purchase option at the expiration of the lease.
      The assets acquired under this capital lease have an acquisition cost of
      $911,647.





As
      of
      September 30, 2007, the Company was in compliance with the covenant requirements
      of the agreement with GCF.  The Company believes it is probable that
      it will remain in compliance with all of those covenant requirements for the
      foreseeable future.  However, if the Company fails to achieve certain
      revenue, expense and profitability levels, a violation of the financial
      covenants under its financing arrangements could result and interest rate
      increases and acceleration of maturity of the loans could occur, which could
      adversely affect its financial condition, results of operations and cash
      flows.





Mandatory
      payments on the Company’s long-term debt as of September 30, 2007 were as
      follows:





2008
            
            $
            2,492,7022009
            
            
            2,756,4732010
            
            
            2,994,6782011
            
            
            36,809,3152012
            
            
            8,600Total
                payments (1)
            
            $
            45,061,768





(1)
      Includes General Electric capital lease of $842,168 as amended commencing on
      October 2, 2006.





**6.**
            **SHAREHOLDERS'
                EQUITY**





On
      December 23, 2005, LLCP received 283,076 shares of the Company’s common stock
      upon surrender and conversion in full of the 23.57 shares of Series A
      Convertible Preferred Stock it then held.





In
      addition, LLCP received 198 shares of the Company’s common stock upon cashless
      exercise in full of the two warrants it held to purchase an aggregate of 200
      shares of the Company’s common stock at an exercise price of $0.0000008 per
      share, for a rounded aggregate exercise price of $0.01.





**Stock
      Options**





The
      Company adopted stock option plans in October 2002 and May 2005.  The
      Company reserved 800,000 and 550,000 shares of common stock under the plans
      adopted in October 2002 and May 2005, respectively, for the issuance to eligible
      directors and employees of, and consultants to, the Company under the
      plans.  The plans provide for the grant of both incentive stock
      options (at exercise prices no less than fair value at the date of grant) and
      non-qualified stock options (at exercise prices as determined by the Company’s
      Compensation Committee).  Such options may be exercisable as
      determined by such Committee.  The plans expire ten years following
      their adoption.


F-16


**6.**
            **SHAREHOLDERS'
                EQUITY (continued)**





Pro
      forma
      information regarding net income and earnings per share is required by SFAS
      No.
      123R, and has been determined as if the Company had accounted for its employee
      stock options under the fair value method of SFAS 123R.  No options
      were granted in fiscal years 2007 and 2006. The fair value for the options
      granted in fiscal year 2005 was estimated at the date of grant using the
      Black-Scholes option pricing model with the following assumptions:
      weighted-average risk-free interest rate of 3.38%; dividend yield of 0%;
      weighted-average volatility factor of the expected market price of the Company's
      common stock of 0.955; and a weighted-average expected life of the options
      of 3
      years.  The weighted-average fair value of options granted during
      fiscal year 2005 was $0.88.





A
      summary
      of the Company’s stock option activity and related information
      follows:





For
                the Fiscal Years EndedSeptember
                30,
            
            
            October
                1,
            
            
            October
                2,2007
            
            
            2006
            
            
            2005Weighted-
            
            
            
            
            
            Weighted-
            
            
            
            
            
            Weighted-Average
            
            
            
            
            
            Average
            
            
            
            
            
            AverageExercise
            
            
            
            
            
            Exercise
            
            
            
            
            
            ExerciseOptions
            
            
            Price
            
            
            Options
            
            
            Price
            
            
            Options
            
            
            PriceOutstanding
                at beginningof
                year
            
            
            1,102,000
            
            
            $
            1.47
            
            
            
            1,184,000
            
            
            $
            1.43
            
            
            
            672,000
            
            
            $
            1.28Granted
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            539,000
            
            
            $
            1.61Exercised
            
            
            353,000
            
            
            $
            1.26
            
            
            
            82,000
            
            
            $
            0.92
            
            
            
            27,000
            
            
            $
            1.47Canceled
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -
            
            
            
            -
            
            
            $
            -Outstanding
                at end of year
            
            
            749,000
            
            
            $
            1.56
            
            
            
            1,102,000
            
            
            $
            1.47
            
            
            
            1,184,000
            
            
            $
            1.43Exercisable
                at end of year
            
            
            749,000
            
            
            $
            1.56
            
            
            
            1,102,000
            
            
            $
            1.47
            
            
            
            1,184,000
            
            
            $
            1.43





Exercise
      prices for the 749,000 options outstanding as of September 30, 2007 ranged
      from
      $0.48 to $2.50.  The weighted-average contractual life of those
      options is 5.6 years.  The following table summarizes information
      about stock options outstanding as of September 30, 2007:





Options
                Outstanding
            
            
            Options
                ExercisableWeighted-Average
                Remaining
            
            
            Weighted
                -Average
            
            
            Aggregate
            
            
            
            
            
            Weighted-
                Average
            
            
            AggregateNumber
            
            
            Contractual
            
            
            Exercise
            
            
            Intrinsic
            
            
            Number
            
            
            Exercise
            
            
            IntrinsicOutstanding
            
            
            Life
            
            
            Price
            
            
            Value(1)
            
            
            Exercisable
            
            
            Price
            
            
            Value(1)$
            2.50
            
            
            
            23,148
            
            
            
            7
            
            
            $
            2.50
            
            
            $
            22,222
            
            
            
            23,148
            
            
            $
            2.50
            
            
            $
            22,222$
            2.00
            
            
            
            23,148
            
            
            
            7
            
            
            $
            2.00
            
            
            $
            33,796
            
            
            
            23,148
            
            
            $
            2.00
            
            
            $
            33,796$
            1.60
            
            
            
            472,000
            
            
            
            5
            
            
            $
            1.60
            
            
            $
            877,920
            
            
            
            472,000
            
            
            $
            1.60
            
            
            $
            877,920$
            1.50
            
            
            
            23,148
            
            
            
            7
            
            
            $
            1.50
            
            
            $
            45,370
            
            
            
            23,148
            
            
            $
            1.50
            
            
            $
            45,370$
            1.47
            
            
            
            179,556
            
            
            
            7
            
            
            $
            1.47
            
            
            $
            357,316
            
            
            
            179,556
            
            
            $
            1.47
            
            
            $
            357,316$
            0.48
            
            
            
            28,000
            
            
            
            1
            
            
            $
            0.48
            
            
            $
            83,440
            
            
            
            28,000
            
            
            $
            0.48
            
            
            $
            83,440$
            0.48
                - $2.50
            
            
            
            749,000
            
            
            
            5.6
            
            
            $
            1.56
            
            
            $
            1,420,064
            
            
            
            749,000
            
            
            $
            1.56
            
            
            $
            1,420,064


___________________





(1)
            Based
                on the last reported sale price of the Company’s common stock of $3.46 on
                September 28, 2007 (the last trading day during fiscal year
                2007).





The
      total
      intrinsic value of options exercised during the fiscal year ended September
      30,
      2007 was $1,206,855 at the time of exercise.





F-17


**7.**
            **NET
                INCOME PER SHARE**





The
      following table sets forth the calculation of income per share for the periods
      presented:





For
                the Fiscal Years EndedSeptember
                30,
              2007
            
            
            October
                1,
              2006
            
            
            October
                2,
              2005Basic
                EPS Computation:Numerator:Net
                income
            
            $
            4,562,461
            
            
            $
            5,101,985
            
            
            $
            3,696,165Denominator:Weighted-average
                common shares outstanding
            
            
            15,338,038
            
            
            
            15,204,424
            
            
            
            14,863,716Total
                shares
            
            
            15,338,038
            
            
            
            15,204,424
            
            
            
            14,863,716Basic
                EPS
            
            $
            0.30
            
            
            $
            0.34
            
            
            $
            0.25Diluted
                EPS Computation:Numerator:Net
                income
            
            $
            4,562,461
            
            
            $
            5,101,985
            
            
            $
            3,696,165Denominator:Weighted-average
                common shares outstanding
            
            
            15,338,038
            
            
            
            15,204,424
            
            
            
            14,863,716Incremental
                shares from assumed conversionof
                preferred stock and exercise of stockoption
                and warrants
            
            
            465,071
            
            
            
            676,083
            
            
            
            711,743Total
                shares
            
            
            15,803,109
            
            
            
            15,880,507
            
            
            
            15,575,459Diluted
                EPS
            
            $
            0.29
            
            
            $
            0.32
            
            
            $
            0.24





**8.**
            **ACCRUED
                LIABILITIES**





Accrued
      liabilities consisted of the following:





September
                30,
            
            
            October
                1,2007
            
            
            2006Compensation
            
            $
            2,119,833
            
            
            $
            1,905,144Taxes
                other than income taxes
            
            
            28,155
            
            
            
            93,514Interest
            
            
            22,962
            
            
            
            23,140Other
            
            
            1,164,223
            
            
            
            892,795$
            3,335,173
            
            
            $
            2,914,593








F-18


**9.**
            **INCOME
                TAXES**





Income
      tax provision consisted of the following:





For
                the Fiscal Years EndedSeptember
                30,
              2007
            
            
            October
                1,
              2006
            
            
            October
                2,
              2005Current:Federal
            
            $
            1,611,133
            
            
            $
            233,823
            
            
            $
            120,362State
            
            
            626,357
            
            
            
            432,158
            
            
            
            39,223Total
                current
            
            
            2,237,490
            
            
            
            665,981
            
            
            
            159,585Deferred:Federal
            
            
            672,684
            
            
            
            2,454,692
            
            
            
            1,384,900State
            
            
            38,586
            
            
            
            335,027
            
            
            
            290,946Total
                deferred
            
            
            711,270
            
            
            
            2,789,719
            
            
            
            1,675,846Total
                income tax provision
            
            $
            2,948,760
            
            
            $
            3,455,700
            
            
            $
            1,835,431





In
      fiscal
      years 2007 and 2006, the Company recorded a $17,000 valuation allowance against
      a capital loss carryforward that the Company does not anticipate
      utilizing.





The
      total
      income tax provision was 39.3%, 40.4% and 33.2% of pretax income for the fiscal
      years ended September 30, 2007, October 1, 2006 and October 2, 2005,
      respectively.  A reconciliation of income taxes with the amounts
      computed at the statutory federal rate follows:





For
                the Fiscal Years EndedSeptember
                30,
              2007
            
            
            October
                1,
              2006
            
            
            October
                2,
              2005Computed
                tax provision at federal statutory rate (34%)
            
            $
            2,553,815
            
            
            $
            2,930,873
            
            
            $
            1,880,743State
                income tax provision,net
                of federal benefit
            
            
            438,863
            
            
            
            503,824
            
            
            
            281,953Permanent
                items
            
            
            (26,760
            )
            
            
            34,669
            
            
            
            28,257Valuation
                allowance change
            
            
            –
            
            
            
            17,195
            
            
            
            (337,000
            )Other
            
            
            (17,158
            )
            
            
            (30,861
            )
            
            
            (18,522
            )$
            2,948,760
            
            
            $
            3,455,700
            
            
            $
            1,835,431








F-19


**9.**
            **INCOME
                TAXES (continued)**





The
      deferred tax assets and deferred tax liabilities recorded on the balance sheet
      are as follows:





September
                30, 2007
            
            
            October
                1, 2006Deferred
              Tax
              Assets
            
            
            Deferred
              Tax
              Liabilities
            
            
            Deferred
              Tax
              Assets
            
            
            Deferred
              Tax
              LiabilitiesCurrent:Inventory,
                accounts receivable
            
            $
            154,786
            
            
            $
            –
            
            
            $
            391,394
            
            
            $
            –Accrued
                liabilities
            
            
            992,315
            
            
            
            –
            
            
            
            827,631
            
            
            
            –Prepaid
                expenses
            
            
            –
            
            
            
            (184,632
            )
            
            
            –
            
            
            
            (207,263
            )Other
            
            
            –
            
            
            
            (1,705
            )
            
            
            2,987
            
            
            
            –1,147,101
            
            
            
            (186,337
            )
            
            
            1,222,012
            
            
            
            (207,263
            )Noncurrent:Net
                operating loss carry forwards & AMT credit
            
            $
            –
            
            
            $
            –
            
            
            $
            534,547
            
            
            $
            –Deposits
                and deferrals
            
            
            91,465
            
            
            
            –
            
            
            
            84,164
            
            
            
            –Depreciation
            
            
            251,222
            
            
            
            –
            
            
            
            88,756
            
            
            
            –Goodwill
            
            
            –
            
            
            
            (1,837,468
            )
            
            
            –
            
            
            
            (1,544,964
            )Valuation
                Allowance
            
            
            (17,195
            )
            
            
            –
            
            
            
            (17,195
            )
            
            
            –Other
            
            
            –
            
            
            
            (3,318
            )325,492
            
            
            
            (1,840,786
            )
            
            
            690,272
            
            
            
            (1,544,964
            )Total
                deferred taxes net of valuation allowance
            
            $
            1,472,593
            
            
            $
            (2,027,123
            )
            
            $
            1,912,284
            
            
            $
            (1,752,227
            )





Failure
      by the Company to successfully maintain improved margins, grow revenues and/or
      maintain anticipated savings on future interest costs, and maintain profitable
      operating results in the near term, could adversely affect the Company’s
      expected realization of some or all of its deferred tax assets and could require
      the Company to record a valuation allowance against some or all of such assets,
      which could adversely affect the Company’s financial position and results of
      operations.





As
      of
      September 30, 2007, the Company had no net operating losses or alternative
      minimum tax credits available for carryforward for federal tax
      purposes.





**10.**
            **COMMITMENTS
                AND CONTINGENCIES**





**Commitments**





The
      Company enters into monthly and long-term leases.  Future minimum
      lease payments for all long-term operating leases, including facilities and
      equipment, at September 30, 2007 were as follows:





2008
            
            $
            1,957,8472009
            
            
            1,841,8622010
            
            
            1,656,6512011
            
            
            1,087,9682012
            
            
            1,027,6582013
                and thereafter
            
            
            3,968,248$
            11,540,234





F-20


**10.** **COMMITMENTS
      AND CONTINGENCIES (continued)**





The
      Company leases its facilities under operating leases expiring through September
      2011, with an option for a five-year extension on the Plant No. 1 operating
      facility in Vernon.  Certain of the other leases provide for renewal
      options at substantially the same terms as the current leases.





The
      Company’s lease of its primary operating facility requires the premises to be
      restored to its original condition upon the termination of the
      lease.  Accordingly, the Company has recorded a liability of $354,000
      representing the present value of the estimated restoration costs at September
      30, 2007.  The corresponding asset is being depreciated over 13 years,
      and the present value of the liability is being accreted over the term in order
      to establish a reserve at the end of the lease equal to the refurbishment
      costs.





Certain
      of the Company’s equipment leases provide for declining annual rental
      amounts.  Rent expense is recorded on a straight-line basis over the
      term of the lease.  Accordingly, deferred rent is recorded in the
      accompanying balance sheets in other assets as the difference between rent
      expense and amounts paid under the terms of the lease agreements.





Rent
      expense, including monthly equipment rentals, was approximately $2.3 million,
      $2.7 million and $2.5 million, for the fiscal years ended September 30, 2007,
      October 1, 2006 and October 2, 2005, respectively.





The
      Company maintains an employment agreement with its Chief Executive Officer,
      James Rudis.  Mr. Rudis’ employment agreement, as amended, initially
      ran through October 31, 2007.  Pursuant to a termination option
      extension agreement the Company entered into with Mr. Rudis on November 30,
      2006, the Company and Mr. Rudis chose not to terminate the employment
      agreement.  On December 10, 2007, our board of directors approved a
      modification and extension for Mr. Rudis’ employment agreement.  The
      new agreement will be effective December 1, 2007 and expire on November 30,
      2009.  The employment agreement will automatically renew thereafter
      from year-to-year unless terminated by Mr. Rudis or the Company upon giving
      to
      Mr. Rudis minimum notice of at least 90 days prior to the beginning of the
      next
      annual extension period.  The value of the remaining obligations under
      Mr. Rudis’ employment agreement as of September 30, 2007 was
      $91,000.  Subsequent to signing the new agreement, the Company will be
      obligated to pay Mr. Rudis $423,000 and $348,000 during the years ending
      September 28, 2008 and September 27, 2009, respectively.





The
      Company’s open purchase orders for raw materials and contractual obligations to
      purchase raw protein within the next year totals $12.4 million.





**Contingencies**





The
      Company is involved in certain legal actions and claims arising in the ordinary
      course of business.  Management believes (based, in part, on advice of
      legal counsel) that such contingencies will be resolved without materially
      and
      adversely affecting the Company’s financial position, results of operations or
      cash flows.





**Concentrations
      of Credit Risk**





The
      Company’s financial instruments that are exposed to concentrations of credit
      risk consist primarily of trade receivables.  The Company performs
      on-going credit evaluations of each customer’s financial condition and generally
      requires no collateral from its customers.  The Company charges off
      uncollectible accounts at the point in time when no recovery is
      expected.





Receivables
      related to Jenny Craig, Inc., Panda Restaurant Group, Inc. (through their
      distributors), H.J. Heinz Company, Inc. and Safeway Inc. accounted for
      approximately 27%, 26%, 17% and 10%, respectively, of the Company’s total
      accounts receivable balance at September 30, 2007 and approximately 38%, 34%,
      0%
      and 1%, respectively, of the Company’s total accounts receivable balance at
      October 1, 2006.





F-21


**10.  COMMITMENTS
      AND CONTINGENCIES (continued)**





**Significant
      Customers**





Significant
      customers accounted for the following percentages of the Company’s
      revenues:





For
                the Fiscal Years EndedSeptember
                30,
            
            
            October
                1,
            
            
            October
                2,2007
            
            
            2006
            
            
            2005Panda
                Restaurant Group, Inc.
            
            
            27%
            
            
            
            35%
            
            
            
            31%Jenny
                Craig, Inc.
            
            
            26%
            
            
            
            28%
            
            
            
            19%





No
      other
      customer accounted for revenues of 10% or more in the periods
      presented.





**Concentration
      of Sources of Labor**





The
      Company’s total hourly and salaried workforce consisted of approximately 1,064
      employees at September 30, 2007.  Approximately 84% of the Company’s
      workforce is covered by a three-year collective bargaining agreement renewed
      effective March 1, 2005.





**Liquidated
      Damages**




On
        December 23, 2005, LLCP resold to 15 institutional investors in a private
        transaction all of the 5,771,661 shares of the Company’s common stock that LLCP
        owned of record as of that date (“Transferred Shares”). To facilitate LLCP's
        sale of the Transferred Shares, the Company made various representations
        and
        warranties as a party to a stock purchase agreement with LLCP and the
        investors.  In addition, the Company entered into a registration
        rights agreement with the investors that required the Company to register
        for
        resale the Transferred Shares and to maintain the effectiveness of the
        registration statement for a maximum of 24 months following the closing date.
        The registration statement was declared effective by the Securities and Exchange
        Commission on April 13, 2006. If the Company is unable to meet its obligations
        under the registration rights agreement to maintain the effectiveness of
        the
        registration statement, the Company will be required to pay to each investor
        liquidated damages equal to 1% of the amount paid by the investor for the
        Transferred Shares still owned by the investor on the date of the default
        and 1%
        of the amount paid by the investor for the Transferred Shares still owned
        by the
        investor on each monthly anniversary of the date of the default that occurs
        prior to the cure of the default.  The registration statement has been
        effective for 19 months, 21 months have elapsed since the closing date and
        approximately 2,200,000 Transferred Shares are still owned by the
        investors.  At this time, the Company is unaware of the existence of
        any circumstances that would cause the registration statement to no longer
        be
        effective.





**11.** **EMPLOYEE
      BENEFIT PLANS**





In
      April
      1997, Overhill Farms introduced a retirement savings plan under Section 401(k)
      of the Internal Revenue Code.  The plan covers substantially all
      non-union employees meeting minimum service requirements.





Effective
      March 1, 2005, Overhill Farms executed a new three-year contract with the UFCW
      Union, Local 770, that eliminated the need for a previous provision in its
      401(k) plan established in January 2002 for its union employees that required
      an
      annual contribution to be made by the Company in the event that revenues
      exceeded specific thresholds.





Employees
      voluntarily make contributions under both plans.  The Company does not
      provide for a match to the employees’ contributions, and its expenses related to
      the plans have not been significant.  The Company’s 2006 bonus program
      permitted a discretionary bonus equal to 2% of non-union employees’ gross W-2
      earnings in the form of a 401(k) contribution. The total contribution under
      the
      2006 bonus program of $254,000 was made during fiscal year 2007.  The
      Company’s 2007 bonus program permits a discretionary bonus equal to 3% of
      non-union employees’ gross W-2 earnings in the form of a 401(k) contribution to
      be made during fiscal year 2008.





F-22


**12.** **QUARTERLY
      FINANCIAL DATA (unaudited)**





For
                the Fiscal Year Ended September 30, 2007December
                31, 2006
              *(13
                weeks)*
            
            
            April
                1,
              2007
              *(13
                weeks)*
            
            
            July
                1,
              2007
              *(13
                weeks)*
            
            
            September
                30,
              2007
              *(13
                weeks)*Net
                revenues
            
            $
            40,538,492
            
            
            $
            46,028,425
            
            
            $
            53,079,823
            
            
            $
            52,994,834Gross
                profit
            
            
            5,506,502
            
            
            
            4,210,388
            
            
            
            5,326,133
            
            
            
            4,904,883Operating
                income
            
            
            3,729,285
            
            
            
            2,533,333
            
            
            
            3,004,555
            
            
            
            2,633,300Net
                income
            
            
            1,555,759
            
            
            
            875,043
            
            
            
            1,100,645
            
            
            
            1,031,014Net
                income per share – basic
            
            $
            0.10
            
            
            $
            0.06
            
            
            $
            0.07
            
            
            $
            0.07Net
                income per share – diluted
            
            $
            0.10
            
            
            $
            0.06
            
            
            $
            0.07
            
            
            $
            0.06





For
                the Fiscal Year Ended October 1, 2006January
                1,
              2006
              *(13
                weeks)*
            
            
            April
                2,
              2006
              *(13
                weeks)*
            
            
            July
                2,
              2006
              *(13
                weeks)*
            
            
            October
                1,
              2006
              *(13
                weeks)*Net
                revenues
            
            $
            39,588,808
            
            
            $
            43,693,519
            
            
            $
            43,957,858
            
            
            $
            41,069,406Gross
                profit
            
            
            4,393,397
            
            
            
            5,202,825
            
            
            
            6,244,478
            
            
            
            5,643,972Operating
                income
            
            
            2,544,179
            
            
            
            3,460,619
            
            
            
            4,450,415
            
            
            
            3,833,150Net
                income
            
            
            607,149
            
            
            
            1,212,764
            
            
            
            1,718,981
            
            
            
            1,563,091Net
                income per share – basic
            
            $
            0.04
            
            
            $
            0.08
            
            
            $
            0.11
            
            
            $
            0.10Net
                income per share – diluted
            
            $
            0.04
            
            
            $
            0.08
            
            
            $
            0.11
            
            
            $
            0.10


F-23





Schedule
        II


**OVERHILL
      FARMS, INC.**





**VALUATION
      AND QUALIFYING ACCOUNTS AND RESERVES**








Description
            
            Balance
                at Beginning
              of
                Year
            
            
            Additions
            
            
            Deductions(1)
            
            
            Balance
                at
              End
                of year**Allowance
                for Doubtful Accounts**2007
            
            $
            (15,000
            )
            
            $
            (12,000
            )
            
            $
            9,000
            
            
            $
            (18,000
            )2006
            
            
            (196,000
            )
            
            
            -
            
            
            
            181,000
            
            
            
            (15,000
            )2005
            
            
            (125,000
            )
            
            
            (170,000
            )
            
            
            99,000
            
            
            
            (196,000
            )**Inventory
                Excess and Obsolete Reserve**2007
            
            $
            (820,000
            )
            
            $
            (313,000
            )
            
            $
            553,000
            
            
            $
            (580,000
            )2006
            
            
            (814,000
            )
            
            
            (608,000
            )
            
            
            602,000
            
            
            
            (820,000
            )2005
            
            
            (216,000
            )
            
            
            (802,000
            )
            
            
            204,000
            
            
            
            (814,000
            )**Income
                Tax Valuation Allowance**2007
            
            $
            (17,000
            )
            
            $
            -
            
            
            $
            -
            
            
            $
            (17,000
            )2006
            
            
            -
            
            
            
            (17,000
            )
            
            
            -
            
            
            
            (17,000
            )2005
            
            
            (425,000
            )
            
            
            -
            
            
            
            425,000
            
            
            
            -


______________




(1)Deductions
                to the allowance for doubtful accounts consist of write-offs, net
                of
                recoveries.





F-24





**Exhibit**
              **Number**
            **Index
                of Exhibits Attached to this Report**10.27
            Description
              of Employment Arrangement between Overhill Farms, Inc. and Tracy E.
              Quinn23
            Consent
                of Independent Registered Public Accounting Firm31.1
            Certification
                of Principal Executive Officer Required by Rule 13a-14(a) of the
                Securities Exchange Act of 1934, as amended, as Adopted Pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200231.2
            Certification
                of Principal Financial Officer Required by Rule 13a-14(a) of the
                Securities Exchange Act of 1934, as amended, as Adopted Pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 200232
            Certification
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                18
                U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002