SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


           Quarterly  Report  Pursuant  to  Section  13 or 15(d) 
  X        of the  Securities Exchange Act of 1934.
-----      For the quarterly period ended March 31, 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 May 12, 1999,  there were 1,517,503  shares of common stock, no par value,
outstanding.


<PAGE>


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

THIS  FORM 10-Q  CONTAINS  FORWARD-LOOKING  STATEMENTS  WHICH  INVOLVE  RISK AND
UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS MAY DIFFER  SIGNIFICANTLY  FROM THE
RESULTS  DISCUSSED IN THE  FORWARD-LOOKING  STATEMENTS AS A RESULT OF CERTAIN OF
THE FACTORS SET FORTH IN THE  COMPANY'S  ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED JUNE 30, 1998

The financial  statements herein presented for the quarter and nine months ended
March 31, 1999,  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. In June of
1998,  Vacu-dry  Company  formed a new  company,  Made In Nature  Company,  Inc.
(MINCO),  for the purpose of  acquiring  substantially  all of the  business and
assets of Made In Nature,  Inc., a natural  foods  marketer of organic  consumer
packaged goods. Accordingly,  the results of operations of MINCO are included in
the consolidated results herein.

Liquidity and Capital Resources
-------------------------------

Because the Company's operations,  except for MINCO, are seasonal, the Company's
liquid resources normally  fluctuate during the year. The Company  experiences a
normal  seasonal  decrease in  production  beginning in April.  Inventories  and
related  short-term  borrowings  are  usually at their  peak at this  time.  The
slowdown in production  normally  extends  through July and  corresponds  to the
availability  of raw  fruit on an  affordable  basis.  The  Company's  inventory
ordinarily  decreases during the period beginning in May and ending in September
which creates a corresponding increase in liquidity.  The normal operating cycle
of the Company has been significantly affected by the recent high level of sales
of food storage (canned goods) products.  Consumer  concerns over potential Year
2000  (Y2K)   computer-related   problems  have  resulted  in  demand  that  has
significantly  exceeded prior year's sales.  These increased sales have required
higher production and inventory levels during the current fiscal year. MINCO has
contracts  with  organic  growers and  packers and is normally  able to schedule
production as needed to meet demand.

The Company experienced lower cash flow during the current fiscal quarter due to
the  build-up of food  storage  inventories  and  negative  results from MINCO'S
operations.  MINCO's fiscal  year-to-date  sales and profitability  have not met
management's expectations. The Company is exploring alternate strategies such as
new  products  and  expense  reductions  in many  areas in an attempt to achieve
break-even  results from MINCO.  However,  there is no assurance that profitable
operations  can be achieved in the near term. As a result of the  acquisition of
MINCO and the  build-up of the food storage  products,  the debt to equity ratio
increased  from .90 in  fiscal  1998 to 1.60 in fiscal  1999.  Also  during  the
current fiscal year the Company  obtained a $2,100,000 five year note to finance
the MINCO acquisition. The current ratio 2.4 at March 31,1999 compares to 3.5 at
March 31,1998.  The decrease was due to higher accounts payable for the purchase
of food storage ingredients.

Operating  capital  for the  Company is  obtained  from  external  and  internal
sources. The Company's largest external source is a $8,000,000 revolving line of
credit  provided  by a bank at the bank's  prime  rate.  On April  20,1999,  the
company signed a new agreement with its existing bank which resulted in the line
of credit being increased from $5,000,000 to $8,000,000.  Under the terms of the
revolving  line of credit  agreement,  the  Company  can elect  short term LIBOR
financing or long term prime rate financing.  Since it was anticipated  that the
Company would not have any  availability  under the previous  $5,000,000 line of
credit,  a short-term  loan from its current  lender was arranged prior to March
31,1999.  This  borrowing was granted and included as part of the line of credit
increase.  At March 31,1998,  the Company had $1,900,000 of availability under a
$4,500,000  revolving  line of  credit.  The  decline  in  available  borrowings
resulted from the  Company's  utilization  of the revolving  line to fund higher
inventory  levels  particularly  for the food  storage  products and funding the
negative cash flow of MINCO.

As of March 31, 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.

Excluding computer system expenditures which are expected to be financed through
leasing arrangements, a capital expenditure budget of approximately $988,000 has
been  established  by the  Company for the 1999  fiscal  year.  These funds will
primarily be used to purchase new and recondition  existing equipment related to
the manufacturing operation as well as to make certain structural repairs needed
to maintain the value of building improvements.

The Company has reviewed its information  technology (IT) systems and determined
that it is not Year 2000  compliant.  The Company has  purchased  new  software,
which is  warranted  to be Year 2000  compliant.  In  addition  the  Company has
acquired  new  hardware  on which to operate the new  software.  The Company has
completed its assessment of its non-IT  systems.  All identified  non-IT systems
have been  certified  Year 2000  compliant  by the original  manufacturers.  The
Company  has  hired  a  consulting  firm to  manage  the  implementation  of the
software.  The  conversion for Vacu-dry and MINCO to this new system is expected
to be completed by June 30, 1999.  The conversion to the new software is divided
into two  Phases.  Phase I for just the  ingredient  business  was  successfully
completed on January 31,1999. The completion of the final Phase has been delayed
until May 31, 1999. MINCO was also able to successfully install the new software
on May 1,1999.  We have allocated one month at the end of the conversion to make
sure we have addressed all of the issues related to the  conversion.  A group of
ten managers have formed an "Implementation  Team" and are strongly supported by
upper  management.  Both  the  Implementation  Team  and  upper  management  are
confident that the implementation can be completed by June 30, 1999.  Management
estimates that the total cost of the system will be approximately  $900,000. The
expenditures for the new system will primarily occur in fiscal 1999. As of March
31, 1999, the Company has expended  approximately  $800,000 of the total budget.
The Company will finance these costs through a lease agreement.  The Company has
assessed its risk  relative to the Year 2000 issue and is confident  that it can
accomplish the conversion  prior to December 31, 1999. If this  conversion  does
not happen the Company would have to rely on PC based software to accomplish its
normal business activities until the conversion can be completed.

Until  recently,  the  Company  has been  successful  in leasing all of its idle
production  facility  other than a portion  occupied by the product  development
group.  The Company signed a long-term lease for  approximately  one-half of the
previously vacated portion of this facility.  The Company is working to obtain a
replacement  tenant without a loss of income but has been  unsuccessful to date.
In addition,  the Company  continues to lease a portion of its current operating
facility and has entered into a long-term lease with the primary tenant.


Results of Operations
---------------------


Quarter
-------
Net sales  increased  $6,592,000  or 106.2% in the third quarter of fiscal 1999.
This increase was  primarily  due to record food storage sales  primarily to one
customer of $6,540,000,  which  represents an increase of $5,770,000  versus the
prior year's sales of $770,00.  However, since the Quarter's end the Company has
experienced a significant  decline in food storage sales and the level of future
sales is  uncertain.  Also as a result of the decline,  inventories  of the food
storage items are high.

MINCO'S sales for the current  quarter were  $550,000,there  were no MINCO sales
for the prior  year.  Declines  in both the prices and volume for the  remaining
food ingredients business have partially offset the aforementioned higher sales.

Cost of sales for the quarter ended March 31, 1998 decreased from 80.6% to 72.2%
of net sales.  This decrease was a result of lower raw material costs and higher
margins on the food storage line.

Selling,  general and administrative expenses increased $727,000 or 69.2% in the
third quarter. Of this change,  approximately $600,000 is a result of MINCO. The
remaining  balance  of  $127,000  is a result of  staffing  increases  and their
related wages.

Interest  expense  increased  $57,000  as a  result  of  our  increased  average
borrowings  on the line of credit.  This was due to funding  needs for increased
food storage inventory and MINCO'S negative cash flow.


Year-to Date
------------
Net sales  increased  $10,032,000  or 50.4% for the nine months  ended March 31,
1999.  This  increase was primarily due to second and third quarter food storage
sales,  currently  as  noted  above.  The  portion  of the  increase  due to the
inclusion of MINCO'S sales was  $1,808,000.  Fiscal  year-to-date  sales for the
food ingredients  business have been adversely affected by competitive  pricing.
As a result of the growing concern regarding the Y2K issue, food storage product
sales have been at record  levels.  However,  as of the date of this filing,  we
have  returned  to the lower  normal  levels  for food  storage  sales with high
amounts of unsold inventory on-hand. Since the Company is uncertain as to future
revenue from the food storage line, the Company faces significant  uncertainties
in establishing inventory levels.

Cost of sales as a percent  of net sales  decreased  from  82.7% as of March 31,
1998 to 77.9% as of March 31,  1999.  The primary  reason for the  decrease  was
higher margins on food storage sales and lower raw material costs. The effect of
MINCO'S  results  in the  consolidated  costs  of  sales  for  fiscal  1999  was
approximately 5.4% or $1,622,000.

Selling,  general and  administrative  expenses  increased  $2,514,000 or 107.1%
through the nine months ended March 31, 1999. The portion of the increase due to
the inclusion of MINCO was $2,027,000 or 80.7%. The remaining balance was due to
increases in staffing and professional services

Interest expense increased $160,000 as a result of our higher average borrowings
on the line of credit.  This was due to funding needs for increased food storage
inventory and MINCO'S negative cash flow.

The  effective  tax rate for the nine  months  ended  March  31,  1999 of 38% is
comparable to the 37% incurred for the fiscal year ended June 30, 1998.

<PAGE>
<TABLE>
<CAPTION>

                              
                                                    VACU-DRY COMPANY
                                        CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                                                          (UNAUDITED)
                                                     (Dollars in thousands)

<S>                                     <C>                 <C>                 <C>               <C>    
                                        Nine Months         Nine Months         Three Months      Three Months 
                                        Ended               Ended               Ended             Ended 
                                        3/31/99             3/31/98             3/31/99           3/31/98
                                        -----------         -----------         ------------      -------------


REVENUES:

     Net Sales                            $29,929          $19,897              $12,800             $6,208
     Other                                    523              417                  175                142
                                         --------          --------             --------          --------
          Total revenue                   $30,452          $20,314              $12,975             $6,350
                                         --------          -------               -------           --------

Costs & Expenses

     Cost of sales                         23,315            16,465                9,241             5,007
     Selling, general & administrative      4,859             2,345                1,778             1,051
     Interest                                 375               215                  147                90
                                         --------           --------             --------           ------
          Total cost & expenses           $28,549           $19,025              $11,166            $6,148
                                          -------           -------               -------           ------

EARNINGS BEFORE INCOME TAXES
       AND MINORITY                         1,903             1,289                1,809               202
MINORITY INTEREST                             180                 0                   46                 0
                                         --------          --------             --------          --------
EARNINGS BEFORE INCOME TAXES                2,083             1,289                1,855               202

PROVISION FOR INCOME TAXES                    723               438                  688                68
                                          -------          ---------            --------          --------
NET EARNINGS                               $1,360              $851               $1,167              $134
                                         ========          ========             ========          ========

WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS:
       Basic                            1,513,411         1,604,779            1,515,742         1,525,274
                                        =========         =========             =========        =========
       Diluted                          1,547,902                --            1,564,067                --
                                        =========         =========

EARNINGS PER COMMON SHARE
       Basic                               $0.90             $0.53                 $0.77             $0.09
                                           =====             =====                 =====             =====
       Diluted                             $0.88                --                  0.75                --
                                           =====                                   ====

                    See Notes to Interim Financial Statements
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

                                                           VACU-DRY COMPANY
                                                      CONSOLIDATED BALANCE SHEETS
                                                              (Unaudited)
                                                        (Dollars in thousands)

<S>                        <C>         <C>       <C>             <C>                                <C>         <C>       <C>
  

                           3/31/99     3/31/98   6/30/98                                               3/31/99    3/31/98   6/30/98
                           -------     ------    -------                                               -------    -------   -------
                      

CURRENT ASSETS:                                                  CURRENT LIABILITIES:

Cash                         $172        $194      $385         Current maturities of long-term debt    $ 438       $595      $438

Accounts receivable         3,478       2,570     2,298         Accounts payable                        5,938      1,369     3,789

Other receivables             816          16         0

Income tax receivable           0           0       163         Accrued payroll & related liabilities   1,021        761       936

Inventories                14,892       7,853     7,926         Accrued expenses                          395        318       353

Prepaid expenses               74          17       298         Income taxes payable                      452         30         0

Current deferred taxes        360         240       360                                                ______       ______   ______
                           -------     -------    ------

Total current assets       $19,792     $10,890   $11,430         Total current liabilities             $8,244       $3,073   $5,516
                                                                                                       ------        ------  ------
                                                                 Borrowings under line of credit        5,000        2,600    2,297
                                                                                
                                                                                                       ------        ------  ------

                                                                                                                                   
Property, plant &                                                 Long term debt-net of
  equipment, net             6,663       6,665     6,784            current maturities                  3,914        2,185    2,203
                                                                                                        -----        -----    -----



                                                                 DEFERRED INCOME TAXES                    865          826      865
                                                                                                          ---          ---      ---

                                                                 MINORITY INTEREST                        329            0      509
                                                                                                          ---           --      ---

                                                                 SHAREHOLDERS' EQUITY:

Goodwill, net of amortization 2,682           0    2,562
                                                                 Capital stock                           2,876       2,826    2,837
                                                                 Warrants for common stock                 456           0      456
                                                                 Retained earnings                       7,453       6,045    6,093
                                                                                                        ------      ------   ------
                                                                 Total shareholders' equity             10,785       8,871    9,386

                              _______     ______    _______      Total liabilities and                  _______      _____   ______
Total Assets                 $29,137      17,555    $20,776      shareholders' equity                   $29,137    $17,555  $20,776
                              =======     ======    =======                                             =======    =======  =======

                                                 See notes to interim financial statements

</TABLE>

<PAGE>


<TABLE>
<CAPTION>



                                VACU-DRY COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND 1998





<S>                                                                <C>                   <C>    

CASH FLOWS FROM OPERATING ACTIVITIES:                              1999                  1998
                                                                   ----                  ----

Net earnings                                                       $1,360                $851

Adjustments to reconcile net earnings to net cash used
for operating activities:
     Depreciation and amortization expense                            952                 821
     Deferred income tax provision                                    -0-                  (1)
     Minority interest                                               (180)                 -0-

 Changes in assets & liabilities:
     Accounts receivable, net                                      (1,226)                (949)
     Other receivables                                               (816)                  -0-
    Income tax receivable                                             163                   -0-
     Inventories, net                                              (7,001)              (2,798)
     Prepaid assets                                                   224                  114
     Accounts payable                                               1,999                  879
     Accrued payroll & related liabilities                             85                  222
     Accrued expenses                                                  42                  145
     Income taxes payable                                             452                   30
                                                                   -------              ------
       Net adjustments                                             (5,306)              (1,537)
                                                                   -------               ------
       Net cash used for operating activities                      (3,946)                (686)
                                                                   -------              -------
CASH FLOWS FROM INVESTING ACTIVITIES
 Capital expenditures                                                (722)                (255)
                                                                    -------             -------
       Net cash used for investing activities                        (722)                (255)
                                                                    -------             -------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Borrowings under the line of credit                                20,540                8,385
 Payments on line of credit                                        (17,837)              (7,139)
 Principal payments of long-term debt                                 (388)                (420)
 Proceeds from MINCO financing                                       2,100                   -0-
 Issuance of common stock                                               40                   26
                                                                    -------              -------
       Net cash provided by financing activities                     4,455                  852
                                                                    -------              -------
NET DECREASE IN CASH                                                  (213)                 (89)

CASH AT THE BEGINNING OF THE YEAR                                      385                  283

                                                                      ----                 ----
TOTAL CASH AT THE END OF THE PERIOD                                   $172                 $194
                                                                      ====                 ====



                    See notes to Interim Financial Statement
</TABLE>



<PAGE>


                                VACU-DRY COMPANY
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                        NINE MONTHS ENDED MARCH 31, 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.  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, 1998.  The results of  operations  for the nine month period ended
          March 31, 1999 are not  indicative of the results that may be achieved
          for the entire year ending June 30, 1999.

          Due  to the seasonal  nature of the Company's business, the prior year
          interim  balance  sheet is  presented  in the  accompanying  unaudited
          financial statement.

          During the  third  quarter  approximately  50% of sales  were for food
          storage items to primarily one customer.

          Reclassification - Certain 1998 amounts were  reclassified  to conform
          to the 1999 presentation.

Note 2  - Inventories  -
          --------------
          Inventories  are  stated  at LIFO  cost for Vacu-dry;  FIFO cost for 
          MINCO.  The excess of current cost of the inventory  over LIFO cost 
          was $657,000  at March  31,  1999 and  $1,115,000 at June 30, 1998.

          Inventories  at March 31, 1999 and June 30, 1998, consisted of the 
          following:

                                            3/31/99             6/30/98
                                            -------             -------
          Vacu-dry LIFO
          -------------

          Finished goods                    $9,027,000        $4,695,000
          Work in progress                     982,000           470,000
          Raw materials, &
          containers                         2,871,000           442,000
                                             ---------         ----------
                                            12,880,000         $5,607,000

          MINCO FIFO
          ----------

          Finished goods                     2,012,000          2,319,000
                                             ---------          ---------

          Total Inventories                $14,892,000          $7,926,000
                                            ===========         ==========

Note 3  - Statement of Cash Flows  -
          --------------------------
          Interest  and income tax payments and stock
          repurchase  reflected  in the  Consolidated
          Statement of Cash Flows were as follows:

                                      1999              1998
                                      ----              ----

          Interest paid              $338,000         $210,000
          Income taxes paid          $108,000         $409,000
          Repurchase of stock
            through issuance of
            notes payable             -0-             $835,000


<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.

                  No matters were submitted to a vote of security holders during
                  the period covered by this report.



Item 6.           Exhibits & Reports on Form 8-K

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

                  b.     Reports on Form 8-K - None

<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:  May 13, 1999                   /s/ Gary L. Hess
                                     -----------------------
                                     Gary L. Hess, President