U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                   FORM 10-QSB

(Mark One)
[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998.

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________

Commission file number  0-27132


                            Terrace Holdings, Inc.
               ------------------------------------------------
             (Exact name of Small Business Issuer in its Charter)


                Delaware                                    65-0594270
------------------------------------------          ---------------------------
     (State or Other Jusisdiction of                     (I.R.S. Employer
      Incorporation or Organization)                    Identification No.)


1351 N.W. 22nd Street, Pompano Beach, Florida                  33069
---------------------------------------------       ---------------------------
(Address of Principal Executive Office)                     (Zip Code)


                                (954) 917-7272
               ------------------------------------------------
               (Issuer's Telephone Number, Including Area Code)



             ----------------------------------------------------
             (Former name, former address and former fiscal year,
                         if changed since last report)


Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 past 90 days.   Yes   X       No
                                                           -------     -------

Applicable  only to  issuers  involved  in  bankruptcy  proceedings  during  the
preceding five years:

Check whether the  registrant  filed all  documents  and reports  required to be
filed by  Section  12 or 15(d) of the  Exchange  Act after the  distribution  of
securities under a plan confirmed by a court.   Yes         No
                                                   -------    -------


Applicable only to corporate issuers:

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable  date. As of the date of this report,  the
issuer had 5,270,348 shares of its common stock issued and outstanding.


Transitional Small Business Disclosure Format:

Check one:  Yes          No
               --------    --------


               This is page 1 of ___ sequentially numbered pages.
<PAGE>


TERRACE HOLDINGS, INC. AND SUBSIDIARIES
--------------------------------------------------------------------------------

FORM 10-QSB
QUARTERLY REPORT
For the Three Months Ended June 30, 1998
--------------------------------------------------------------------------------

INDEX
--------------------------------------------------------------------------------



                                                                      Page
                                                                      ----
Part I.  FINANCIAL INFORMATION

Item 1: Financial Statements

     Consolidated Balance Sheet as at June 30, 1998 (Unaudited).......  1

     Statements of Operations for the three and six month 
     periods ended June 30, 1998 and 1997 (Unaudited).................  2

     Statements of Cash Flow for the six months ended
     June 30, 1998 and 1997 (Unaudited)...............................  3 & 4

     Notes to Financial Statements....................................  5  -  7

Item 2:       Management's Discussion and Analysis....................  8 & 9

Part II.  OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K..............................  10

     Signatures.......................................................  11








                          . . . . . . . . . . . . . .
<PAGE>
Item 1.
TERRACE HOLDINGS, INC.
--------------------------------------------------------------------------------
TERRACE HOLDINGS, INC
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1998
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

Assets:
<S>                                                                       <C>         
Current Assets:
   Cash and Cash Equivalents                                              $    793,159
   Accounts Receivable (Less Reserve for Doubtful Accounts of $118,000)      2,136,865
   Inventory                                                                   556,625
   Restricted Cash                                                              94,497
   Current Portion of Note Due from Officer                                     53,000
   Other Current Assets                                                        463,459
                                                                          ------------

   Total Current Assets                                                      4,097,605

Equipment, Furniture and Fixtures - At Cost (Net of
   Accumulated Depreciation of $176,711)                                     1,270,353

Intangible Assets (Net of Accumulated Amortization of $206,167)              4,537,811

Note Due from Officer                                                          106,000

Other Assets                                                                   180,000
                                                                          ------------

   Total Assets                                                           $ 10,191,769
                                                                          ============

Liabilities and Stockholders' Equity:
Current Liabilities:
   Accounts Payable                                                       $  1,818,596
   Accrued Expenses                                                            634,900
   Current Portion of Long Term Debt                                           182,321
   Line of Credit                                                            1,064,729
   Term Loan                                                                    50,000
   Other Current Liabilities                                                    87,499
                                                                          ------------

   Total Current Liabilities                                                 3,838,045

Long-Term Debt                                                                 209,745
Convertible Subordinated Notes                                               2,625,000

Commitments and Contingencies                                                      --
                                                                          ------------

   Total Liabilities                                                         6,672,790

Stockholders' Equity:
   Convertible Preferred Stock $.001 Par Value, 10,000,000
     Shares Authorized, 1,523,825 Shares Issued and Outstanding                  1,524 
   Common Stock - $.001 Par Value, 25,000,000 Shares
     Authorized, 5,270,348 Issued and Outstanding                                5,270

   Additional Paid-in Capital                                                9,501,330
   Retained Earnings (Deficit)                                              (5,989,145)
                                                                          ------------ 

   Total Stockholders' Equity                                                3,518,979
                                                                          ------------

   Total Liabilities and Stockholders' Equity                             $ 10,191,769
                                                                          ============
</TABLE>

See Notes to Financial Statements.








                                       1
<PAGE>


TERRACE HOLDINGS,INC.
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                               Three months ended              Six months ended
                                                    June 30,                       June 30,
                                                    --------                       --------
                                               1998           1997            1998             1997
                                          ------------    ------------    ------------    ------------

<S>                                       <C>             <C>             <C>             <C>               
Revenue                                   $  6,176,446            --      $ 13,429,518            --
Cost of Sales                                4,541,595            --         9,725,178            --
                                          ------------                    ------------                  

   Gross Profit                              1,634,851            --         3,704,340            --
                                          ------------                    ------------                 
Operating Expenses:
   Selling, General & Administrative         1,700,386    $    247,182       3,563,713    $    411,651
   Provisions for Doubtful Accounts            103,108            --           105,608            --
                                          ------------    ------------    ------------    ------------
   Total Operating Expenses                  1,803,494         247,182       3,669,321         411,651
                                          ------------    ------------    ------------    ------------
   Income (Loss) from Operations              (168,643)       (247,182)         35,019        (411,651)
                                          ------------    ------------    ------------    ------------
Other Income (Expense)
   Royalty Income                               26,000            --            26,000            --   
   Interest Income                               3,180          10,171           3,180          21,712
   Interest Expense                            (82,743)           --          (159,925)           --
                                          ------------    ------------    ------------    ------------
   Other Income (Expense), Net                 (53,563)         10,171        (130,745)         21,712
                                          ------------    ------------    ------------    ------------
Income (Loss) from
   Continuing Operations                      (222,206)       (237,011)        (95,726)       (389,939)
                                           ------------    ------------    ------------    ------------
Income (Loss) from
   Discontinued Operations                      (7,465)        438,044              29         189,568
                                          ------------    ------------    ------------    ------------
 Net Income (Loss)                        $   (229,671)   $    201,033    $    (95,697)   $   (200,371)
                                          ============    ============    ============    ============

Income (Loss) Per Share of Common Stock
   (Loss) from Continuing Operations      $       (.04)   $       (.05)   $       (.02)   $       (.09)
   Income from Discontinued Operations
     (Net of Income Tax of $0.)           $       --      $        .10    $       --      $        .04
                                          ------------    ------------    ------------    ------------
  Basic Net Income (Loss)
    Per Share of Common Stock             $       (.04)   $        .05    $       (.02)   $       (.05)
                                          ============    ============    ============    ============


  Diluted Net Income (Loss)
    Per Share of Common  Stock            $       (.04)   $        .05    $       (.02)   $       (.05)
                                          ============    ============    ============    ============


Weighted Average Shares of Common Stock      5,262,106       4,306,400       5,187,161       4,306,400
                                          ============    ============    ============    ============
</TABLE>



See Notes to Financial Statements.







                                       2
<PAGE>


TERRACE HOLDINGS, INC.
--------------------------------------------------------------------------------
STATEMENTS OF CASH FLOW
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                            Six months ended
                                                                                 June 30,
                                                                     -----------------------------
                                                                         1998              1997
                                                                     -----------        ----------

Operating Activities:
<S>                                                                  <C>                <C>        
   Loss from Operations                                              $   (95,726)       $ (389,939)
                                                                     -----------        ----------
   Adjustments to Reconcile Loss from Operations
     Net Cash Provided by Operating Activities:
     Depreciation and Amortization                                       225,265
     Increase in Reserve for Doubtful Accounts                            58,000

   Changes in Assets and Liabilities:
     (Increase) Decrease in:
       Accounts Receivable                                              (325,667)
       Inventory                                                        (276,167)
       Other Current Assets                                             (355,636)
       Due from Related Party                                            122,752
       Due from Officer                                                 (159,000)
       Due on Sale of Discontinued Operations                             90,000
       Other Assets                                                     (165,754)

     Increase (Decrease) in:
       Accounts Payable                                                  925,854
       Accrued Expenses and other Current Liabilities                   (153,491)
                                                                     -----------        ----------
     Total Adjustments                                                   (13,844)
                                                                     -----------        ----------
   Net Cash - Operating Activities                                      (109,570)         (389,939)
                                                                     -----------        ----------
Investing Activities:
   Acquisition of Equipment, Furniture & Fixtures                       (712,316)
   Purchase of Business Net of Cash Acquired                            (745,948)
                                                                     -----------        
   Net Cash - Investing Activities                                    (1,458,264)
                                                                     -----------

Financing Activities:
   Restricted Cash                                                        43,204
   Proceeds from Subordinated Convertible Notes                        2,625,000
   Cash Overdrafts                                                      (372,451)
   Line of Credits                                                      (289,355)
   Current Portion of Long Term Debt                                      19,951
   Proceeds from Warrants Exercised                                      156,250
   Net Long-term Debt Borrowing                                          178,365
                                                                     -----------
   Net Cash-Financing Activities                                       2,360,964
                                                                     ----------- 

   Net (Decrease) Increase in Cash and Cash Equivalents                  793,130          (389,939)
                                                                     -----------        ----------
</TABLE>






                                       3
<PAGE>



TERRACE HOLDINGS, INC.
--------------------------------------------------------------------------------
STATEMENTS OF CASH FLOW
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                            Six months ended
                                                                                 June 30,
                                                                     -----------------------------
                                                                         1998              1997
                                                                     -----------        ----------

Discontinued Operations:
<S>                                                                  <C>              <C>    
   Income from Discontinued Operations                                        29           189,568
   Adjustments to Reconcile Income to Net Cash
   Provided by Discontinued Operations:
      Depreciation & Amortization                                            --            186,283

   Changes In Net Assets & Liabilities:
     Current Assets                                                          --         (1,403,236)
     Current Liabilities                                                     --            252,533
                                                                                       -----------

  Investing Activities:
     Acquisition of Assets                                                   --            (19,699)
     Purchase of Business Net of Cash Acquired                               --            (40,138)
                                                                                      ------------

 Financing Activities:
     Payment of Demand Notes Payable                                         --            (39,283)
                                                                                      ------------

Net Cash- Discontinued Operations                                             29           873,972

Cash and Cash Equivalent - Beginning of Period                               --          1,570,907
                                                                     -----------      ------------

Cash and Cash Equivalent - End of Period                             $   793,159      $    306,996
                                                                     ===========      ============
Supplemental Disclosures of Cash Flow Information:
   Cash paid during the periods for:
     Interest                                                        $   165,689      $     71,100
     Taxes                                                                   --       $     32,205


Supplemental Disclosures of Non-Cash Investing and Financing Activities:
During the six months ended June 30, 1998,  the Company issued 138,948 shares of
common stock in connection with the acquisition of Fresh Inc. 

</TABLE>

See Notes to Financial Statements.





                                       4
<PAGE>


TERRACE HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
--------------------------------------------------------------------------------



(1) Basis of Reporting

The accompanying  unaudited  consolidated and combined financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim financial  information and with the instructions to Form 10-QSB and Item
310(b)  of  Regulation  S-B.  Accordingly,  they  do  not  include  all  of  the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements.

In  the  opinion  of  management,   such  statements   include  all  adjustments
(consisting only of normal  recurring  items) which are considered  necessary in
order to make the financial statements not misleading. The results of operations
for the periods  presented are not  necessarily  indicative of the results to be
expected for the full year.

The  accompanying   unaudited  consolidated  financial  statements  include  the
accounts  of  Terrace   Holdings,   Inc.  and   subsidiaries.   All  significant
intercompany balances and transactions have been eliminated in consolidation.

It is suggested that these financial  statements be read in conjunction with the
financial  statements  and notes for the period ended December 31, 1997 included
in the Terrace Holdings, Inc. 10-KSB.


(2) Income Per Share

Income per share of common stock is based on weighted  average  number of common
shares  outstanding for each period  presented.  There were no potential  common
shares included as they were all considered to be anti-dilutive. Securities that
could  potentially  dilute earnings per share in the future include  convertible
preferred stock,  common stock purchase  warrants and options to purchase common
stock  representing  approximately  10,805,800  common  shares.  The Company has
5,270,348  (5,187,161 on a weighted average basis) shares outstanding as well as
1,523,825 shares of Preferred Stock  (convertible  into two shares of common for
each share of  preferred)  totaling  8,234,811  shares of Diluted  Common Shares
outstanding.  The Preferred Stock converts to the Company's Common Stock in July
1998.


(3) Common Stock

At June 30, 1998, 5,270,348 shares of the Company's Common Stock were issued and
outstanding.


(4) Inventories

Inventories  consist of produce,  grocery dry goods and dairy  products  for its
foodservice  distribution and its vegetable precut  businesses and are stated at
the lower of cost (determined by the first-in, first-out method) or market.





                                       5
<PAGE>


TERRACE HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #2
(UNAUDITED)


(5) Convertible Subordinated Notes

As of June 25,  1998,  the  Company  issued  to a  private  investor  $2,625,000
principal amount of 12% Convertible Subordinated Notes ("Notes") and warrants to
purchase  400,000  shares  of  Common  Stock  of  the  Company.  The  Notes  are
convertible at the rate of one share for each $1.25 of principal and accrued but
unpaid interest. The warrants are exercisable at a price of $1.25 per share. The
Notes and warrants are convertible and  exercisable,  respectively,  at any time
subsequent  to the  expiration  of a 60-day  "Temporary  Exercise  Period" being
offered to holders of the Company's  publicly traded warrants to purchase Common
Stock.  During the  Temporary  Exercise  Period,  such  holders  are offered the
opportunity to exercise their warrants at $1.25 per share, rather than the $4.00
per share exercise price contained in those warrants.  The proceeds of the Notes
have been added to the working capital of the Company.

The Notes will be repaid from the first net  proceeds,  if any,  received by the
Company from the exercise of its $4.00 warrants at the temporary $1.25 per share
exercise price.  To the extent the Notes are not so repaid,  the Company has the
right to convert the Notes into a series of Convertible 8% Cumulative  Preferred
Stock ("Preferred Stock"). The Notes, warrants and Preferred Stock issued to the
private investor are subject to anti-dilution adjustments,  registration rights,
interest and dividend adjustments and payment by the Company of certain fees and
expenses in connection with the loan transaction.


(6) Commitments

In connection with the  acquisition of A-One-A  Produce & Provisions,  Inc., the
Company entered into 5-year employment  agreements with two officers,  effective
July 1, 1997,  and ending July 30,  2002.  The  employment  agreements  call for
aggregate annual compensation of $240,000.

In connection with the Bay Purveyors acquisition,  A-One-A entered into a 5-year
employment agreement effective September 1, 1997 with an upper level manager for
a base salary of $65,000 per year.

The Company has an employment  agreement with Jonathan S. Lasko,  through August
31, 2000,  for a base salary of $125,000 per year.  Additionally,  the agreement
was amended to provide  that  certain  other  benefits be made  available to the
executive.


(7) Incorporation of New Subsidiary

On June 4, 1997 the Company  incorporated  Terrace  Fresh Inc. as a wholly owned
subsidiary to operate the business of A-One-A's affiliate, Fresh. The Registrant
consummated  its  purchase of Fresh,  Inc. on February 2, 1998,  effective as of
January 1, 1998. In consideration for the purchase, the company paid $105,000 in
cash and issued 138,948 shares of common stock valued at $270,000.

The acquisition of Fresh Inc. was accounted for as a purchase, effective January
1, 1998. The  operations of Fresh Inc. are included in the Company's  results of
operations from that date.

The cost in excess of net assets acquired  recorded for the acquisition is to be
amortized over 20 years using the straight-line method.


(8) No Comparable Results for 1997 Periods

In November 1997, the Company's  management decided to dispose of certain of its
subsidiaries:  including its Restaurant,  Catering and Hospitalilty  businesses.
These operations which represented all of the Company's  operations in 1997 were
discontinued  as of year-end and therefore  there are no comparable  results for
1997 periods.



                                       6
<PAGE>


TERRACE HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #3
(UNAUDITED)



 (9) Subsequent Events

Acquisition of Banner Beef and Seafood Co., Inc. - On July 15, 1998, the Company
acquired all of the operating  assets and liabilities of Banner Beef and Seafood
Company, Inc. ("Banner"). As consideration for the acquisition, the Company paid
Banner  $1,800,000 in cash. The acquisition  will be accounted for as a purchase
effective July 17, 1998. The operations of the Banner  business will be included
in the Company's  results of operations  from that date.  The excess of purchase
price  over the book  value of the net  assets  acquired  will be  allocated  to
property and equipment based upon an independent appraisal.

Financing Arrangement - In July 1998, the Company and its subsidiaries secured a
financing  agreement  with a bank  under  which  the bank  agreed  to  provide a
revolving loan subject to available  collateral to a maximum of $4,000,000.  The
loan is  collateralized  by  virtually  all assets of the  Company  and  accrues
interest at .5% over the bank's prime lending rate.

The Company and its subsidiaries also obtained a term note from the same bank in
the principal  amount of $2,000,000.  The note is payable in thirty-six  monthly
installments  of $23,810 plus annual  interest of 1% above the bank's prime rate
through  July  2001,   with  the  remaining   balance  then  due.  The  loan  is
collateralized by virtually all assets of the Company.









                              . . . . . . . . . .


























                                       7


<PAGE>


Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------

The Company  operates in the  distribution  and  processing of fresh produce and
dairy segments of the food industry.  All of the companies  non-core  businesses
have been  divested as of the end of the second  quarter of 1998.  The Company's
continuing  operations comprise two subsidiaries.  A-One-A Produce & Provisions,
Inc.  distributes  fresh produce and dairy products to  foodservice,  and export
customers  throughout  South Florida.  Fresh,  Inc. is the  value-added  produce
processing  subsidiary of the Company.  Fresh,  Inc.  cleans,  cuts and prepares
ready to use  produce  and  sells  its  products  through  A-One-A's  sales  and
distribution  facility.  The Company  intends to  continue  its growth plan as a
distributor and added value processor in the food industry as illustrated by its
recent  acquisition of Banner Beef and Seafood Co., Inc. in Miami. The Company's
revenues for the six months ended June 30, 1998 were  approximately  $13,429,000
with a net  loss  from  continuing  operations  of  approximately  $95,700.  The
Company's  net loss for the six  months  resulted  from  several  aspects of its
growth within the continuing operations:

Computer  System Upgrade - During the second  quarter the Company  implemented a
new computer system for its warehouse,  distribution and processing  operations.
In addition to the capital  investment in the  technology  upgrade,  substantial
training and initial  operational  start-up expense was incurred.  This computer
implementation has been completed and management believes  efficiencies from the
computer system will be realized.

Warehouse upgrade and logistics software - During the second quarter of 1998 the
Company took measures to realize  greater  efficiencies  in the  warehousing and
distribution  of its  products.  The 57,000  square foot facility was slotted by
pallet location to properly receive,  store and ship merchandise for its produce
operation.  This locating  system is intended to reduce mispulls and misrotation
of product  which  should in turn  reduce the cost of  redistribution  caused by
warehousing errors. In addition the Company purchased logistics software,  which
is specifically  formatted to route the distribution  fleet in a financially and
customer  service  efficient  manner.  As the Company  continues  to refine this
software  use  to  its  specifications,  further  expense  reduction  should  be
realized.

Dairy  Division and Fleet  Upgrade - In the first  quarter of 1998,  the Company
began the rollout of the foodservice and export dairy division.  Management with
the knowledge and expertise in this specific segment of the industry, was hired.
Sales for this new  division  were  approximately  $1,000,000  for the first six
months of 1998.  In order to  continue  to  properly  maintain  the  appropriate
distribution  temperature  for both  dairy and  produce,  the  Company is in the
process of upgrading its fleet of  distribution  vehicles.  The upgrade  process
should be complete by the end of 1998.  This fleet upgrade  should  position the
Company for continued growth in the perishable commodity distribution arena.














                                       8
<PAGE>




Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS, Sheet #2
--------------------------------------------------------------------------------


Provisions  For Doubtful  Accounts - The Company  increased  its  provision  for
doubtful accounts during the second quarter of 1998 by approximately $100,000 in
order to provide for a number of dry grocery accounts.  Management believes that
this  provision is  sufficient  to cover these  accounts and going  forward this
account  will be reduced to lower  historical  rates as greater  credit  control
standards are put into place.

Each of the  improvement  programs  discussed above play an integral part in the
Company's  plan for rapid  growth in both  sales  and  profitability.  The costs
associated with the implementation of these programs had a significant impact on
the  Company's  performance  during  the first six  months of 1998.  The  recent
upgrades to the Company's  information  systems and warehousing  operations will
provide a basis for expense reduction,  increased  operational  efficiencies and
improved  profitability.  The recent  acquistion of Banner Beef and Seafood Co.,
Inc. has furthered the Company's  expansion plan in the "value added" processing
of food products business.  In accordance with this plan, the Company's non-core
subsidiaries  have been divested as of the end of this six month period.  All of
the  Company's  resources  are now focused on the  continued  expansion  through
internal sales growth and possible acquisitions. Management expects to realize a
positive contribution to earnings from continued sales growth.


Discontinued Operations

Lasko Family Kosher Tours & A & E Management Corp.

Effective  January  1,  1998 the  Company  sold  its  Hospitality  and  catering
operations to Dr. Samuel Lasko, the Company's President. Dr. Lasko has agreed to
resign his position as President and as a member of the Board of Directors  upon
shareholder  approval of the  transaction.  In connection with the sale of these
subsidiaries Dr. Lasko has surrendered his employment agreement gave the Company
a three-year note for $159,000. This consideration equalled the independent fair
market value of these the businesses.  Management decided in November of 1997 to
dispose  of  these   businesses  and  concentrate  on  its  core  businesses  of
distribution  and processing of fresh produce and other goods.  The  hospitality
and catering  operations were  discontinued as of year end of 1997 and therefore
there are no comparable results for the first six months of 1998.


The Lasko Companies, Inc. (Terrace Oceanside Restaurant)

On May 29, 1998,  the Company sold the Terrace  Oceanside  Restaurant,  the last
non-core  subsidiary  to an  unaffiliated  third party.  All of the  contractual
liabilities of this company were assumed by the Purchaser.  Minimal future costs
are expected as a result of the divestiture of this business.















                                       9
<PAGE>


Part II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

         (3)(i) Articles of Incorporation *
         ----------------------------------

         (3)(ii) By-laws *
         -----------------

         (4) Instruments defining the rights of holders *
         ------------------------------------------------

         (10) Material Contracts **
         --------------------------

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

*        Incorporated  by  this  reference  to  the  Registrant's   registration
         statements # 33-96892-A and 333-45195

**       All  material  contracts  presently  in full force and effect have been
         heretofore  filed with the Commission are hereby  incorporated  by this
         reference to Registrant's  registration statement  #33-96892-A,  and to
         its Form 10-KSB, which was filed with the Commission April 15,1996.



(b)  Reports on Form 8-K

         The Registrant  filed a Report on Form 8-K dated July 30, 1998, for the
purpose of reporting its purchase of all of the operating assets and liabilities
of Banner Beef and Seafood Co.,  Inc. The  Registrant  also filed two reports on
Form 8-K/A both dated April 28,  1998,  for the purpose of  reporting  pro forma
financial  information as it related to the 1997  acquisition of A-One-A Produce
and the sale of the Deering Ice Cream business in December 1997, respectively.



























                                       10
<PAGE>
 SIGNATURES




In accordance with the  requirements of the Exchange Act, the Registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                             TERRACE HOLDINGS, INC.
                             (Registrant)



Dated:  August 18, 1998                By: /s/Jonathan S. Lasko 
                                          ----------------------------
                                              Jonathan S. Lasko,
                                           Executive Vice President &
                                            Chief Operating Officer



Dated:  August 18, 1998                By: /s/William P. Rodrigues, Jr.   
                                           -----------------------------
                                              William P. Rodrigues, Jr.,
                                             Principal Financial Officer











   


















                                    11