SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


           Quarterly Report Pursuant to Section 13 or 15 (d) X of the Securities
   __X__   Exchange Act of 1934.
           For the quarterly period ended September 30, 1999 or


           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 01912

VACU-DRY COMPANY

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


CALIFORNIA                                                94-1069729
(State of incorporation)                                  (IRS Employer
                                                           Identification #)

100 STONY POINT ROAD, SUITE 200, SANTA ROSA, CALIFORNIA   95401
(Address of principal executive offices)                  (Zip Code)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:       707/535-4000


--------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
 Report)


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:


As of November 11, 1999,  there were  1,520,087  shares of common stock,  no par
value, outstanding.

<PAGE>


Item 2.    Management's  Discussion  and  Analysis  of  Financial  Condition and
Results of Operations

Vacu-dry Company (the "Company") is including the following cautionary statement
in this Form  10-Q to make  applicable  and take  advantage  of the safe  harbor
provisions  of the  Private  Securities  Litigation  Reform  Act of 1995 for any
forward  looking  statements  made by, or on behalf  of,  the  Company.  Forward
looking  statements  include  statements  concerning plans,  objectives,  goals,
strategies,  future events or performance and underlying assumptions,  and other
statements  which  are  other  than  statements  of  historical  facts.  Certain
statements  contained  herein are forward looking  statements and,  accordingly,
involve risks and uncertainties  which could cause actual results or outcomes to
differ  materially from those expressed in the forward  looking  statements.  In
addition to other factors and matters discussed  elsewhere  herein,  these risks
and uncertainties  include, but are not limited to, uncertainties  affecting the
food processing  industry,  risks associated with  fluctuations in the price and
availability of raw materials, management of growth, adverse publicity affecting
organic  foods or the Company's  products,  and product  recalls.  The Company's
expectations,  beliefs  and  projections  are  expressed  in good  faith and are
believed  by  the  Company  to  have  a  reasonable  basis,   including  without
limitation,  management's  examination  of  historical  operating  trends,  data
contained in the Company's  records and other data available from third parties,
but  there  can be no  assurance  that  management's  expectations,  beliefs  or
projections  will result or be achieved or accomplished.  The Company  disclaims
any  obligation to update any  forward-looking  statements to reflect  events or
circumstances after the date hereof.

The financial  statements  herein presented for the quarters ended September 30,
1999 and 1998 reflect all the adjustments  that in the opinion of management are
necessary for the fair  presentation  of the  financial  position and results of
operations  for the period  then  ended.  All  adjustments  during  the  periods
presented are of a normal recurring nature unless otherwise stated.

                                    OVERVIEW

Since the  Company  acquired  certain of the assets and  liabilities  of Made in
Nature, Inc. on June 11, 1998, Vacu-dry has operated in three business segments:
industrial dried fruit ingredients,  organic packaged foods and real estate. The
Company  commenced  a  strategic  reorientation  upon  the  announcement  of the
proposed sale of the bulk of its apple-based industrial ingredients product line
in June, 1999. In August, 1999  the decision was made to sell or discontinue all
product  lines in the  Company's  industrial  dried fruit  ingredients  business
segment. As a result of these decisions,  the ingredients business is considered
a discontinued  operation and its operating  results,  results of cash flows and
net assets are reflected outside of the Company's continuing operations.

                             DISCONTINUED OPERATIONS

In June,  1999 the  Company  announced  an  agreement,  subject  to  shareholder
approval  (received  July 26),  to sell the bulk of its  apple-based  industrial
ingredients product line to Tree Top, Inc., of Selah,  Washington.  This product
line represented 55% and 81% of the Company's sales for the years ended June 30,
1999 and 1998, respectively. At the same time, the Company also decided to close
its only apple processing plant in Sebastopol,  California. This sale, which was
recorded  in the first  quarter  of fiscal  2000,  is an  important  element  in
Vacu-dry's strategic plan to increase the return on its investments and increase
shareholder  value by  exiting  businesses  with low  returns  and high  capital
requirements.  The transactions will provide financial  resources to support the
Company's real estate and other business opportunities.

The terms of the sale  included the payment of $12 million cash to Vacu-dry upon
closing  the  transaction  on July 30,  1999.  Tree Top also  purchased  related
product line  inventories  of $1.9 million in September  and October  1999.  The
after-tax  gain on the  sale was $3.2  million.  The net gain is based  upon the
disposal  value of assets not  acquired by Tree Top,  severance  and  relocation
costs,  wind-down costs,  transaction costs and identified  liabilities directly
related to the decision to discontinue the business segment.  These costs may be
adjusted in the future  depending upon the final wind-down of the business which
is expected to run through June 30, 2000.

Following  completion of the sale, the Company  determined in August, 1999  that
the remaining product lines in the Company's vacuum  ingredients  segment of its
business would be  discontinued  and held for sale.  These product lines include
the Company's vacuum dried ingredients,  Perma-Pak  long-term food storage,  and
drink mix businesses. As a result of these decisions, the Company has classified
this business segment as a discontinued business.  Accordingly,  the Company has
segregated  the net assets of the  discontinued  operations in the  Consolidated
Balance Sheets at September 30 and June 30, 1999,  the operating  results of the
discontinued  operations in the Consolidated  Statements of Operations for three
months ended  September  30,1999 and 1998, and the cash flows from  discontinued
operations  in the  Consolidated  Statements  of Cash Flows for the three months
ended September 30, 1999 and 1998.
<PAGE>


In  addition,  as  part  of the  transaction,  the  Company  sold  the  Vacu-dry
trademark.  Thus,  the Company  will be seeking  shareholder  approval  prior to
December 31, 1999 to change its name.

In the first quarter of fiscal 2000,  the Company  recorded  after-tax  earnings
from discontinued  operations of $431,000.  The after-tax earnings resulted from
ingredients business sales of $7.7 million in fiscal 2000 versus $7.2 million in
fiscal 1999.  The rise in sales was due to increased  buying by customers due to
the  liquidation  of the  apple  ingredients  business  and sales to Tree Top of
$519,000.  The  ingredients  business  generated  $718,000 of pre-tax  income in
fiscal 2000 versus  $607,000 in fiscal 1999.  The Company is actively  marketing
all of its discontinued  product lines and has presented offering information to
interested parties.  There can be no assurances that there will be a sale of all
or any of the remaining product lines.

RESULTS OF CONTINUING OPERATIONS

The Company's continuing lines of business consist of the sales and marketing of
organic  packaged foods and beverages  through the Company's  subsidiary Made in
Nature  Company,  Inc. and the leasing and  development  of the  Company's  real
estate.  The  Company  has  been  focusing  on its  Made  In  Nature  operations
throughout  fiscal 1999 and the first quarter of fiscal 2000 and has reduced the
selling,  general and administrative staff from fourteen at July 1, 1998 to five
at September 30, 1999.  Sales were $619,000 for the three months ended September
30, 1999,  resulting in a gross margin of $143,000 (23% of sales).This  compares
to sales of $791,000 for the three months ended September 30,1998 resulting in a
gross  margin of  $142,000(18%  of sales)  Unlike its  discontinued  ingredients
business,  the  Company  does  no  processing  of  Made In  Nature  products.  A
significant  portion  of the  Company's  future  revenues  will  come  from  the
Company's second business segment,  real estate.  The Company intends to develop
its real estate largely for industrial rental.

RESULTS OF OPERATIONS

Net Sales, which relate entirely to Made In Nature products,  decreased $172,000
or 21.2% from  $791,000  in the first  quarter of fiscal 1999 to $619,000 in the
first quarter of fiscal 2000. The decrease in sales was due to decreases in both
beverage and packaged dried fruit product line sales.

Rental Revenue  represents the Company's  leasing of warehouse  space in several
buildings and a yard as well as excess space in its production  facility.  There
are  leases  with  twelve   tenants  that  have  varying   terms   ranging  from
month-to-month  to  eight  years  with  options  to  extend.  Substantially  all
available  space at  September  30,  1999 was under  lease.  Fiscal  2000 rental
revenues in the first quarter  increased  28% or $44,000 over fiscal 1999.  This
increase was a result of higher  market  rental  rates,  CPI  increases  and the
leasing of some previously vacant space.

Other revenue primarily  represents royalty income, which was higher than normal
quarterly  rates due to an  additional  payment,  which is  calculated on annual
revenues of the licensee.

All Cost of Goods Sold are related to the sales of Made in Nature products.  The
Company realized gross margins of $143,000 or 23% of sales in Fiscal 2000 versus
$142,000 or 18% of sales in fiscal 1999. The increase in gross margin was due to
lower  distribution  costs.

Selling,  general and administrative  expenses include only direct costs related
to continuing  operations and all general corporate  overhead costs. Only direct
selling,  general and administrative  costs related to the ingredients  business
were  allocated to  discontinued  operations in the  Consolidated  Statements of
Operations. In fiscal 2000, selling, general and administrative expenses related
to  continuing  operations  decreased  $569,000 or 48% from the prior year.  The
change was primarily due to significant  efforts to reduce  expenses for Made In
Nature and reduced corporate costs due to the downsizing of the operation.

Interest expense for both fiscal 2000 and fiscal 1999 includes interest on three
loans to repurchase  Company  shares and the portion of interest  expense on the
Company's revolving line of credit internally charged to Made In Nature based on
intercompany borrowings.  Interest expense in fiscal 2000 also included interest
on mortgage debt. Interest costs of $54,000 in fiscal 2000 and $60,000 in fiscal
1999  related  to the  Company's  revolving  line  of  credit  are  included  in
discontinued  operations.

In fiscal  2000 net  interest  expense  from  continuing  operations  of $49,000
increased  $11,000  from the prior year due to the  mortgage  debt which was not
outstanding in fiscal 1999.
<PAGE>

The effective  tax rate for the first  quarter ended  September 30, 1999 was 40%
compared to an effective  tax rate of 47% for the quarter  ended  September  30,
1998.

LIQUIDITY AND CAPITAL RESOURCES

Cash used in  operating  activities  of  continuing  operations  was $122,000 in
fiscal 2000 compared to $1,774,000 in fiscal 1999 primarily due to a significant
reduction in accounts payable in fiscal 1999.

The Company utilized the $12 million proceeds from the sale of its apple product
lines to  reduce  borrowings  under  the bank  line of  credit  and to  retire a
significant portion of its long-term debt. The proceeds will also be utilized to
fund severance  ,income tax payments and future  wind-down costs. The Company is
anticipating  additional  cash flow from the  liquidation of its receivables and
the sale of the  remaining  plant  equipment.  The cash balance  increased  $3.9
million from $548,000 at June 30, 1999 to $4,482,000 at September 30, 1999.

Historically,   the  Company's  operating  capital  has  been  obtained  from  a
combination of internal and external  sources.  The largest  external source has
been a  revolving  line  of  credit  provided  by a bank  at its  prime  rate of
interest,  which is secured by the Company's  assets.  As of September 30, 1999,
the  Company  had no  outstanding  balance  on a  maximum  available  line of $2
million.  This credit  facility was  initially  scheduled to expire in November,
2000. However, as a result of the sale of the discontinued operations,  the bank
amended the  agreement in August , 1999,  reducing the maximum line of credit to
$2 million with an  expiration  date of December 31, 1999.  As of September  30,
1998,  the Company had $4 million of debt  outstanding on a maximum bank line of
$4.5 million.

As of  September  30,  1999,  the  Company  was in  compliance  with  all of the
covenants and restrictions  related to its outstanding  debt. The Company's loan
agreement with its bank includes a negative  covenant  prohibiting the declaring
or paying of a dividend in cash,  stock or any other property  without the prior
approval by the bank.

In fiscal 1998, the Company had performed a review of its information technology
(IT) systems and determined that they were not year 2000 compliant. As a result,
a new computer system with related  hardware was installed during fiscal 1999 at
a cost of $1.1 million.  The related IT  expenditures  were  partially  financed
through capital lease  arrangements of $840,000.  These leases were divided into
two  components:  one for hardware  for  $246,000,  and the other for  software,
including  installation by an outside consulting firm, for $594,000.  The leases
are  payable  over three and four  years,  respectively,  and  include a buy-out
option.  Management  feels that upon the sale and closedown of the  discontinued
operations,  the new system may far exceed the  Company's  future  requirements.
Consequently,  the  existing  system has been  written off in the quarter  ended
September  30,  1999,  and is  included  in the  net  gain  on the  sale  of the
discontinued  business.  The Company is at present  exploring  the purchase of a
much simpler and less expensive system that is also year 2000 compliant.

Until  recently,  the  Company's  real estate  activities  had  consisted of the
leasing of an idle production facility and rental of a small portion of space in
its operating facility.  Most of the previously available space has been rented.
With the  closure  of the plant as a result of the sale of the  processed  apple
product lines,  the Company  intends to convert all of its former plant space to
industrial  rentals by outside  parties.  The new space  available  for  leasing
includes  a  mix  of  offices,   production   buildings  and   warehouses   plus
approximately  55,000  square  feet of cold  storage.  The  Company is  actively
seeking to attract wineries and food processors to occupy the space.

<PAGE>


                                VACU-DRY COMPANY
                  CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                Three Months      Three Months
                                                                                   Ended              Ended
                                                                                  9/30/99            9/30/98
                                                                                ------------      ------------
<S>                                                                                <C>                <C>
REVENUES:
      Net Sales                                                                    $619,000           $791,000
      Rental                                                                        201,000            157,000
      Other                                                                          55,000                  -
                                                                                     ------           --------
      Total revenue                                                                $875,000           $948,000
                                                                                   --------           --------

Costs & Expenses
      Cost of sales                                                                 476,000            649,000
      Selling, general & administrative                                             609,000          1,178,000
      Interest, net                                                                  49,000             38,000
                                                                                     ------             ------
      Total costs and expenses                                                    1,134,000          1,865,000
                                                                                  ---------          ---------
      Loss from continuing operations before minority
           interest and provision for taxes                                       (259,000)          (917,000)

MINORITY INTEREST                                                                         -             73,000
                                                                                 ----------         ----------
Loss from continuing operations before benefit for income taxes                   (259,000)          (844,000)

PROVISION (BENEFIT) FOR INCOME TAXES                                              (104,000)          (393,000)
                                                                                  ---------          ---------
Net loss from continuing operations                                               (155,000)          (451,000)
                                                                                  ---------          ---------

DISCONTINUED OPERATIONS:
      Earnings from discontinued operations, net of income taxes                    431,000            322,000
      Gain on sale of discontinued business, net of income taxes                  3,249,000                  -
                                                                                  ---------            -------
NET INCOME FROM DISCONTINUED OPERATIONS                                           3,680,000            322,000
                                                                                  ---------            -------

NET EARNINGS (LOSS)                                                              $3,525,000         $(129,000)
                                                                                 ==========         ==========

WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS:
      Basic                                                                       1,519,447          1,511,014
                                                                                  =========          =========
      Diluted                                                                     1,565,095          1,542,529
                                                                                  =========          =========

EARNINGS (LOSS) PER COMMON SHARE
      Continuing operations
      Basic                                                                         $(0.10)           $ (0.30)
                                                                                    ======            =======
      Diluted                                                                       $(0.10)           $ (0.30)
                                                                                    ======            =======

      Discontinued operations:
      Basic                                                                          $ 2.42            $  0.22
                                                                                     ======            =======
      Diluted                                                                        $ 2.35            $  0.22
                                                                                     ======            =======

      Net earnings (loss):
      Basic                                                                          $ 2.32            $(0.08)
                                                                                     ======            =======
      Diluted                                                                        $ 2.25            $(0.08)
                                                                                     ======            =======
</TABLE>

                    See Notes to Interim Financial Statements

<PAGE>


VACU-DRY COMPANY
CONSOLIDATED BALANCE SHEETS
 (Unaudited)
[Restubbed Table]
                                                      9/30/99         6/30/99
                                                      -------         -------
CURRENT ASSETS:

Cash                                                 $ 4,482,000     $   548,000

Accounts receivable, net                                 320,000         327,000



Prepaid income taxes                                     316,000         566,000

Inventories, net                                       1,320,000       1,513,000

Prepaid expenses                                          84,000         165,000

Current deferred taxes, net                            1,183,000       2,032,000

Net current assets of discontinued operations          1,140,000       5,431,000
                                                     -----------     -----------

Total current assets                                   8,845,000      10,582,000


Property, plant, equipment, net                        2,957,000       3,135,000



Net assets of discontinued operations                  3,613,000       4,449,000



Deferred income taxes, net                               326,000         326,000





Total Assets                                         $15,741,000     $18,492,000
                                                     ===========     ===========


                                                      9/30/99         6/30/99
                                                      -------         -------
CURRENT LIABILITIES:

Borrowings under line of credit                      $        --     $ 5,745,000

Current maturities of long term debt                      50,000       1,416,000

Current portion of capital lease obligation              214,000         209,000

Accounts payable                                         211,000         542,000

Income taxes payable                                   1,500,000            --

Accrued payroll and related liabilities                  184,000         437,000

Other accrued expenses                                   177,000         183,000
                                                     -----------     -----------

Total current liabilities                              2,336,000       8,532,000
                                                     -----------     -----------

Long term capital lease obligation                       516,000         590,000
                                                     -----------     -----------

Long term debt-net of
      current maturities                               2,849,000       2,860,000
                                                     -----------     -----------

SHAREHOLDERS' EQUITY:
Capital stock                                          2,894,000       2,890,000
Warrants for common stock                                456,000         456,000
Retained earnings                                      6,690,000       3,164,000
                                                     -----------     -----------
Total shareholders' equity                            10,040,000       6,510,000

Total liabilities and shareholders' equity           $15,741,000     $18,492,000
                                                     ===========     ===========



                    See Notes to Interim Financial Statements

<PAGE>

                                VACU-DRY COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:                                                1999                  1998
                                                                                     ----                  ----
<S>                                                                              <C>                    <C>
Net earnings (loss)                                                           $ 3,525,000            $(129,000)

Adjustments to reconcile net earnings (loss)
   to net cash used for operating
   activities:
   Earnings from discontinued operations, net                                   (431,000)             (322,000)
   Gain on sale of discontinued business, net                                 (3,249,000)                     -
   Depreciation and amortization expense                                           92,000               107,000
    Minority interest                                                                   -              (73,000)

   Changes in assets & liabilities:
   Accounts receivable, net                                                         7,000              (78,000)
   Income tax receivable                                                          250,000             (109,000)
   Inventories, net                                                               193,000               (1,000)
   Prepaid assets                                                                  81,000               179,000
   Accounts payable                                                             (331,000)           (1,304,000)
   Accrued payroll & related liabilities                                        (253,000)                51,000
   Other accrued expenses                                                         (6,000)              (95,000)
                                                                                 --------              --------
Net cash provided by
   (used in) operating activities                                               (122,000)           (1,774,000)
   Net cash provided by discontinued operations                                11,250,000               568,000
                                                                               ----------           -----------
   Net cash provided by (used) in operating activities                         11,128,000           (1,206,000)
                                                                               ----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures                                                           (6,000)             (301,000)
   Investing activities of discontinued operations                                      -             (203,000)
                                                                                   ------             ---------
   Net cash provided by (used for) investing activities                           (6,000)             (504,000)
                                                                                   ------             ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Borrowings under the line of credit                                          3,727,000             4,945,000
   Payments on the line of credit                                             (9,472,000)           (3,276,000)
   Principal payments of debt                                                 (1,377,000)             (191,000)
   Payments on capital lease                                                     (69,000)                     -
   Issuance of common stock                                                         3,000                13,000
                                                                              -----------             ---------
   Net cash provided by (used for) financing activities                       (7,188,000)             1,491,000
                                                                              -----------             ---------

NET INCREASE (DECREASE) IN CASH                                                 3,934,000             (219,000)

CASH AT THE BEGINNING OF THE YEAR                                                 548,000               385,000
                                                                                  -------               -------

TOTAL CASH AT THE END OF THE PERIOD                                            $4,482,000              $166,000
                                                                               ==========              ========
</TABLE>

                    See notes to Interim Financial Statement
<PAGE>



                      NOTES TO INTERIM FINANCIAL STATEMENTS
                      THREE MONTHS ENDED SEPTEMBER 30, 1999

Note 1-

The  accompanying  fiscal 1999 and 1998 unaudited  interim  statements have been
prepared  pursuant  to the  rules of the  Securities  and  Exchange  Commission.
Certain  information  and  disclosures  normally  included  in annual  financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to such rules and regulations,  although
the Company believes these  disclosures are adequate to make the information not
misleading.  In the opinion of management,  all adjustments necessary for a fair
presentation  for the periods  presented have been reflected and are of a normal
recurring nature except as discussed below.  These interim financial  statements
should be read in  conjunction  with the financial  statements and notes thereto
for each of the three years in the period  ended June 30,  1999.  The results of
operations  for  the  three  month  period  ended  September  30,  1999  are not
indicative  of the results that will be achieved for the entire year ending June
30, 2000.

Reclassification - Certain 1998 amounts were reclassified to conform to the 1999
presentation with respect to discontinued operations.

Note 2-

In July 1999, the Company  consummated an asset purchase agreement (the Purchase
Agreement)  with Tree Top, Inc. The Purchase  Agreement  governs the sale of all
intangible  assets  (primarily  trademarks,  know how and  customer  lists)  and
certain of the equipment  relating to the  Company's  processed  apple  products
line.  Although the Purchase  Agreement  excludes other product lines within the
Company's  ingredient  segment,  the Company is actively  seeking buyers for the
remaining  product  lines of the  ingredients  segment and plans to  discontinue
production of all ingredients  segment products by June 30, 2000.  Consequently,
the  ingredients  segment has been presented as a discontinued  operation in the
accompanying consolidated financial statements.  The purchase price for the sale
of the  processed  apple  product  line of  $12,000,000  was paid in cash at the
closing  date  of the  sale  on July  30,  1999.  In  addition,  apple  products
inventories at a net book of $ 1.7 million were purchased by Tree Top, Inc. at a
price of $1.9 million through  October, 1999  ($519,000 of which was recorded as
of September  30,  1999).  Tree Top,  Inc. is not assuming any of the  Company's
liabilities.  In connection with the Purchase Agreement, the Company and certain
shareholders, directors, and management will agree not to compete with Tree Top,
Inc. in processed  apple  product  lines for a period of three to ten years.  In
addition,  as part of the transaction,  the Company sold the Vacu-dry trademark.
Thus,  the Company will be seeking  shareholder  approval  prior to December 31,
1999 of a new name.

During the first  quarter of fiscal 2000,  the Company  recorded a net after-tax
gain of $3.2 million from the sale of the  processed  apple product line and the
disposal of the remaining  product  lines of the  ingredients  segment.  The net
after-tax  gain included  $12,000,000 of proceeds from the sale offset by a) the
write-down of assets related to the  ingredients  segment to their estimated net
realizable  value (assets which were impaired as a direct result of the decision
to  discontinue  the segment and sell the apple product  lines),  b) costs to be
incurred in closing the discontinued segment (consisting  primarily of severance
costs,  professional  fees,  relocation costs and lease buy-outs),  c) estimated
operating  losses to be incurred  during the  wind-down  period and d) estimated
loss on sale of equipment at auction,  e) transaction  costs, and f) the cost of
equipment sold to TreeTop as a part of the sale of the Apple Products Line.

Summarized historical information of the discontinued operations is as follows:
<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED SEPTEMBER 30,
                                                                                        --------------------------------
                                                                                              1999            1998
                                                                                              ----            ----
<S>                                                                                       <C>               <C>
Income statement data:
      Revenues                                                                             $7,726,000        $7,230,000
      Costs and expenses                                                                  (7,008,000)       (6,623,000)
                                                                                          ----------        -----------
      Operating income                                                                        718,000           607,000
      Income tax expense                                                                    (287,000)         (285,000)
                                                                                            ---------         ---------
      Income from discontinued operations, net of income taxes                              $ 431,000          $322,000
                                                                                            =========          ========
</TABLE>

<PAGE>


<TABLE>
<CAPTION>
                                                                                   SEPTEMBER 30,1999       JUNE 30,1999
<S>                                                                                        <C>               <C>
Balance sheet data:

Accounts receivable, net of reserves of $172,000                                           $4,084,000        $2,287,000
Inventories, net of reserves of $3,487,000 and $3,968,000                                   2,801,000         7,202,000
Prepaid expense                                                                                85,000           323,000
                                                                                               ------           -------
      Total current assets of discontinued operations                                       6,970,000         9,812,000
Property, plant and equipment, net                                                          3,614,000         4,448,000
                                                                                            ---------         ---------
      Total assets of discontinued operations                                              10,584,000        14,260,000

Accounts payable                                                                              504,000         3,388,000
Accrued payroll and related liabilities                                                       233,000           812,000
Other accrued expenses                                                                        142,000           180,000
Provision for severance ,transaction costs, wind-down costs and other
      liabilities related to the  decision to discontinue the ingredients segment           4,952,000                --
                                                                                            ---------           -------
      Total liabilities of discontinued operations                                          5,831,000         4,380,000

      Net assets of discontinued operations                                                $4,753,000        $9,880,000
                                                                                           ==========        ==========
</TABLE>

The inventories included above have been adjusted to net realizable value.

Note 3 -

INVENTORIES - Inventories are stated at FIFO cost.

Inventories at September 30, 1999 and June 30, 1999, consisted of the following:
<TABLE>
<CAPTION>
                                                                                              9/30/99          6/30/99
                                                                                              -------          -------
                                                  <S>                                         <C>              <C>
                                                  Finished goods                             $248,000          $195,000
                                                  Raw materials, & supplies                 1,434,000         1,696,000
                                                  Reserve for obsolete inventory            (362,000)         (378,000)
                                                                                            ---------         ---------
                                                                                           $1,320,000        $1,513,000
</TABLE>

Note 4 -

STATEMENT  OF CASH FLOWS - Interest  and income tax  payments  reflected  in the
Consolidated Statement of Cash Flows were as follows:
<TABLE>
<CAPTION>
                                                                                                1999            1998
                                                                                                ----            ----
                                                    <S>                                      <C>               <C>
                                                    Interest paid                            $160,000          $ 90,000
                                                    Income taxes paid                        $      -          $      -
</TABLE>

Note 5-

CONTINGENCIES

The  Company is  continuing  to bargain in good faith with  Teamsters  Local 624
regarding the effects on union employees of the  discontinuance of the Company's
apple-based  ingredients  product lines. Such bargaining is expected to continue
until either a mutually  agreed upon settlement is reached or until the point of
impasse.  Management  believes that it has adequately provided for any potential
settlement,  however, there can be no assurances that the actual settlement will
not exceed the amount provided.

<PAGE>

PART II
OTHER INFORMATION

Item 1.    Legal Proceedings

There are no legal proceedings pending.

Item 2.    Changes in Securities

The Company's  revolving line of credit  agreement with its Bank dated April 20,
1999,  includes a  convenant  which  prohibits  the  declaring  or paying of any
dividend or  distribution  in either  cash,  stock or any other  property on the
Company's stock now or hereafter outstanding,  nor redeem, retire, repurchase or
otherwise  acquire  shares of any class of the Company's  stock now or hereafter
outstanding, without the prior approval by the Bank.

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

On July 26, 1999 holders of a majority of the Company's outstanding common stock
approved  by written  consent the sale of certain of the  intangible  assets and
some of the  equipment  related to the Company's  processed  apple product line.
Shareholders  holding 929,304 shares voted for the transaction and  shareholders
holding 16,856 shares voted against the transaction.


Item 6.    Exhibits & Reports on Form 8-K

a.    Exhibits
      (27) Financial Data Schedule (by electronic filing only)

Reports on Form 8-K -

On August 5, 1999 the Company  filed a Form 8-K  relating to the approval of the
transaction described in Item 4 above.










<PAGE>







SIGNATURES

Pursuant  to the  requirements  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.


Date: November 11, 1999


/s/ Gary L. Hess
------------------------------------
Gary L. Hess,
Chief Executive Officer, President and Chief Financial Officer