<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                            ---- ---- ---- ---- ----

                                    FORM 10-Q

(Mark One)
[ X ]            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  September 30, 1998 

                                       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   1-8176   
                       ---------

                          LITTLEFIELD, ADAMS & COMPANY
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

               New Jersey                                  #22-1469846     
--------------------------------------------------------------------------------
     (State or other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                    Identification No.)

                  6262 Executive Blvd., Huber Heights, OH 45424
--------------------------------------------------------------------------------
             (Address of principal executive offices, and Zip Code)

Registrant's telephone number, including area code     (937) 236-0660
                                                     ------------------

--------------------------------------------------------------------------------
              (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
    ---     ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

            Class                    Outstanding at November 10, 1998
            -----                    --------------------------------
      Common Stock, par value               2,790,057 share
          $1.00 per share
<PAGE>   2


                          Littlefield, Adams & Company

<TABLE>
<CAPTION>

                                                        INDEX                                         Page No.

<S>              <C>                                                                                    <C>    
Part I.           Financial Information

                  Item 1.           Condensed Financial Statements (Unaudited)

                                        Condensed Balance Sheets -
                                        September 30, 1998, and December 31, 1997                         3

                                        Condensed Statements of Operations -
                                        for the three and nine months ended
                                        September 30, 1998, and 1997                                      4

                                        Condensed Statements of Cash Flows -
                                        for the nine months ended
                                        September 30, 1998, and 1997                                      5

                                        Notes to Condensed Financial Statements                           6

                  Item 2.           Management's Discussion and Analysis of
                                    Financial Condition and Results of Operations                        12


Part II.          Other Information

                  Item 1.           Legal Proceedings                                                    20

                  Item 5.           Other Information                                                    20

                  Item 6.           Exhibits and Reports on Form 8-K                                     20

Signatures                                                                                               21
</TABLE>












Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                     Page 2
<PAGE>   3


                          LITTLEFIELD, ADAMS & COMPANY
                            CONDENSED BALANCE SHEETS

                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                     ASSETS

                                                                        September 30,                 December 31,
                                                                            1998                          1997
                                                                      ----------------             ------------------
                                                                                  (Dollars in Thousands)
<S>                                                                       <C>                          <C>
Current assets:
   Cash and cash equivalents                                              $       69                   $       57
   Accounts receivable:                                                                                
      Trade, less allowances of $198 at 9/30/98 and                                                    
         $11 at 12/31/97                                                       5,303                            5
      Due from factor, less allowances of $70 at 9/30/98                                               
         and $0 at 12/31/97                                                    1,839                          182
      Other                                                                       35                           33
                                                                                                       
   Inventories                                                                 1,992                          641
   Prepaid expenses and other                                                    275                          155
                                                                          ----------                   ----------
      Total current assets                                                     9,513                        1,073
                                                                                                       
Property, plant and equipment, net                                               495                          416
Other assets                                                                      11                            9
                                                                          ----------                   ----------
                                                                                                       
      TOTAL ASSETS                                                        $   10,019                   $    1,498
                                                                          ==========                   ==========
                                                                                                       
                                                                                                       
                                   LIABILITIES AND SHAREHOLDERS' INVESTMENT                            
Current liabilities:                                                                                   
   Notes payable                                                          $       68                    $      17
   Line of credit and factor borrowing                                         1,635                           11
   Current portion of long-term debt                                             526                          570
   Accounts payable                                                            3,468                          117
   Accrued expenses                                                            1,265                          337
                                                                          ----------                   ----------
      Total current liabilities                                                6,962                        1,052
                                                                                                           
Long-term debt, less current portion                                              18                           18
Deferred compensation                                                             42                           44
Convertible subordinated debentures                                            1,200                           --
                                                                                                       
Commitments and  contingencies                                                    --                           --
                                                                                                       
Shareholders' investment:                                                                              
   Common stock, $1.00 par; authorized 25,000,000;                                                     
     issued 2,808,221 for 1998 and 2,798,221 for 1997;                                                 
     outstanding 2,790,057 for 1998 and 2,780,057 for 1997                     2,808                        2,798
   Capital in excess of par value                                              6,320                        6,318
   Accumulated deficit                                                        (7,218)                      (8,619)
                                                                          ----------                   ----------
                                                                               1,910                          497
                                                                                                       
   Treasury  stock, at cost - shares of 18,164                                                         
        for 1998 and 1997.                                                      (113)                        (113)
                                                                          ----------                   ----------
                                                                               1,797                          384
                                                                          ----------                   ----------
                                                                                                       
      TOTAL LIABILITIES AND SHAREHOLDERS' INVESTMENT                      $   10,019                   $    1,498
                                                                          ==========                   ==========
</TABLE>                                                                  



The accompanying notes are an integral part of these condensed financial
statements.





Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q; 
                                     Page 3
<PAGE>   4


                          LITTLEFIELD, ADAMS & COMPANY
                       CONDENSED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                            For the 3 months ended September 30,         For the 9 months ended September 30,

                                                  1998                 1997                   1998                  1997
                                            ------------------------------------         -------------------------------------
                                                   (DOLLARS IN THOUSANDS,                      (DOLLARS IN THOUSANDS,
                                                   Except per share amounts)                   Except per share amounts)

<S>                                          <C>                   <C>                   <C>                  <C>        
Revenues:
  Net product sales                          $    12,274           $        61           $     15,598         $     1,820
  Other revenues                                     --                     35                    --                   35
                                             -----------           -----------           ------------         -----------

      Total revenues                              12,274                    96                 15,598               1,855
                                             -----------           -----------           ------------         -----------


Costs and expenses:
  Cost of products sold                            8,357                   407                 10,809               2,177
  Selling and administrative                       2,059                   443                  3,099               1,636
                                             -----------           -----------           ------------         -----------

      Total costs and expenses                    10,416                   850                 13,908               3,813
                                             -----------           -----------           ------------         -----------

        Income (loss) from operations              1,858                  (754)                 1,690              (1,958)

Other expense:
  Loss on sale of property and equipment             (10)                  --                     (10)                --
  Litigation settlements, net                        --                     (5)                   --                   (5)
  Interest                                          (144)                  (13)                  (202)               (104)
                                             -----------           -----------           ------------         -----------
      Total other expense                           (154)                  (18)                  (212)               (109)
                                             -----------           -----------           ------------         -----------

Income (loss) before income taxes                  1,704                  (772)                 1,478              (2,067)

Benefit (provision) for income taxes                 (77)                   29                    (77)                 29
                                             -----------           -----------           ------------         -----------

     Net income (loss)                       $     1,627           $      (743)          $      1,401         $    (2,038)
                                             ===========           ===========           ============         ===========

Weighted average common shares for:
     Basic earnings per share                  2,790,057             2,780,057              2,784,013           2,780,057

     Diluted earnings per share                4,799,183             2,780,057              3,950,936           2,780,057


Basic earnings per common share:
     Net earnings (loss) per share           $      0.58           $     (0.27)          $      0.50          $     (0.73)
                                             ===========           ===========           ===========          ===========

Diluted earnings per common share:
     Net earnings (loss) per share           $      0.34           $     (0.27)          $      0.36          $     (0.73)
                                             ===========           ===========           ===========          ===========
</TABLE>


              The accompanying notes are an integral part of these
                        condensed financial statements.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                     Page 4
<PAGE>   5


                          LITTLEFIELD, ADAMS & COMPANY
                       CONDENSED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                              For the nine months ended September 30,
                                                                             ------------------------------------------

                                                                                   1998                     1997
                                                                             -----------------       ------------------
                                                                                       (DOLLARS IN THOUSANDS)
<S>                                                                              <C>                      <C>         
Cash flows from operating activities:                                                                     
  Net income (loss)                                                               $     1,401             $    (2,038)
  Adjustments to reconcile net income (loss) to net cash                                                  
     provided by (used in) operating activities:                                                          
         Depreciation and amortization                                                     82                     161
         Impairment loss                                                                   34                      --
         Loss on sale of property and equipment                                            10                      --
         Changes in operating assets and liabilities:                                                     
            Accounts and other receivables, net                                        (6,957)                  3,147
            Inventories, net                                                           (1,351)                    625
            Prepaid expenses and other current assets                                    (120)                    (80)
            Accounts payable                                                            3,351                    (824)
            Accrued expenses                                                              928                    (483)
                                                                                  -----------             -----------
                Net cash provided by (used in) operating activities                    (2,622)                    508
                                                                                  -----------             -----------
                                                                                                          
Cash flows from investing activities:                                                                     
  Purchase of property and equipment                                                     (205)                    (20)
  Other                                                                                    (4)                     18
                                                                                  -----------             -----------  
                Net cash used in investing activities                                    (209)                     (2)
                                                                                  -----------             -----------  
                                                                                                          
Cash flows from financing activities:                                                                     
  Proceeds from (payments to) line of credit and factor borrowings, net                 1,624                    (434)
  Proceeds from bank and other notes                                                      375                      95
  Payments of bank and other notes                                                       (368)                   (121)
  Proceeds from sale of convertible subordinated debentures                             1,200                      --
  Proceeds from sale of common stock                                                       12                      --
                                                                                  -----------             -----------  
                Net cash provided by (used in) financing activities                     2,843                    (460)
                                                                                  -----------             -----------
                                                                                                          
                  Net increase in cash and cash equivalents                                12                      46
                                                                                                          
Cash and cash equivalents at beginning of period                                           57                      54
                                                                                  -----------             -----------
                                                                                                          
Cash and cash equivalents at end of period                                        $        69             $       100
                                                                                  ===========             ===========
                                                                                                          
Supplemental disclosure of cash flows information:                                                        
  Cash paid during the period for interest                                        $       202             $       108
  Cash paid during the period for income taxes                                    $         2             $        25
</TABLE>                                                                       
                                                                               
              The accompanying notes are an integral part of these             
                         condensed financial statements.                       
                                                                               
                                                                               
Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                     Page 5
<PAGE>   6


                          LITTLEFIELD, ADAMS, & COMPANY
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOTE 1:  BASIS OF PRESENTATION

         The accompanying condensed financial statements include the accounts of
Littlefield, Adams & Company (the "Company," "Littlefield," and the
"Registrant").

         The condensed balance sheet at September 30, 1998, the condensed
statements of operations for the three and nine months ended September 30, 1998
and 1997, and the condensed statements of cash flows for the nine months ended
September 30, 1998 and 1997, have been prepared by the Company without audit. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary to fairly present the financial position, results of
operations and cash flows have been made. However, it should be understood that
accounting measurements at interim dates may be less precise than at year end.
The results of operations for the interim periods are not necessarily indicative
of the operating results for a full year or of future operations.

         Certain information normally included in financial statements prepared
in accordance with generally accepted accounting principles has been condensed
or omitted. The accompanying condensed financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.

         This report contains projections and forward-looking statements that
are based on management's beliefs as well as assumptions made by and information
currently available to management. When used in this report, the words
"anticipate," "estimate," "expect," "predict," "project," "believe," and similar
expressions are intended to identify forward looking statements. The
forward-looking statements were prepared on the basis of assumptions which
relate, among other things, to the market acceptance of the Company's products,
including the Company's licensed and proprietary products; the cost of producing
and marketing the Company's products; the prices at which the Company's products
may be sold; and the Company's market share for its products. Such assumptions
may prove not to be accurate or appropriate, and even if such assumptions do
prove to be accurate and appropriate, the actual results of the Company's
operations in the future may vary widely due to increased competition in the
industry, an increase in interest rates, general economic conditions and other
risks and uncertainties, including without limitation, risks associated with
having a very high percentage of the Company's revenues being derived from sales
related to one license. Accordingly, the actual results of the Company's
operations in the future may vary widely from the forward-looking statements
included herein.

         Certain prior period amounts have been reclassified for comparative
purposes. The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.


NOTE 2:  FUTURE OPERATIONS

         In years prior to 1997, the Company was substantially dependent on
sales of Harley-Davidson Motor Co. (Harley-Davidson) licensed products to
generate cash flow from operations and provide funds to meet the Company's
obligations as they became due. The Company's Harley-Davidson license agreement
expired on December 31, 1996 and was not renewed by Harley-Davidson.
Consequently, the Company's product sales in 1997 were dramatically reduced from
levels attained in 1996 and 1995, and the Company incurred a net loss of $1,937
for the year ended December 31, 1997.



Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                     Page 6
<PAGE>   7


                          LITTLEFIELD, ADAMS, & COMPANY
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


         The diminished revenues experienced by the Company during 1997 and the
first quarter of 1998 had a material adverse effect on its results of operations
and financial condition. With net sales of $2,908 and $12,274 in the 1998 second
and third quarters, respectively, the Company generated income from operations
of $188 and $1,858 in the respective quarters. The significant increase in
revenues during the 1998 second and third quarters, plus the $1,200 in proceeds
from the Company's private offering of 7% Convertible Subordinated Debentures
completed on April 24, 1998, are currently providing sufficient cash flows for
the Company to satisfy its obligations as they become due. Shipments of
approximately $4,200 during the month of October 1998 and cancelable bookings,
as of November 6, 1998, for future shipments of approximately $5,000 during
November and December 1998 are indications that the Company can now sustain
itself for the foreseeable future. However, the Company has limited financial
resources. As such, in the event that expected future product sales would be
materially adversely effected due to the cancellation of customers' orders or
any other unforeseen events, the Company may be unable to continue operating as
a going concern for any extended period of time. The ability of the Company to
continue as a going concern is dependent upon the ongoing support of its
stockholders, customers and creditors and its ability to generate sufficient
sales to sustain its existing operations and meet the Company's obligations as
they become due. The accompanying financial statements have been prepared
assuming the Company will continue as a going concern which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business.

         On September 16, 1998, Twentieth Century Fox granted one year
extensions to the original terms of the Company's licenses for The Simpsons and
King of the Hill. The Simpsons license now expires on December 31, 2000, while
the King of the Hill license now concludes on December 31, 2001.

         The Company manufactures and sells imprinted apparel primarily to
national and regional retail discount chains. The success of the Company's
licensed product sales with World Championship Wrestling, The Simpsons, King of
the Hill, Pepsi and Mountain Dew, Miller Brewing Company and Kawasaki Motors
Corp., U.S.A. is an integral part of that effort. The Company gained entry into
the boxer shorts segment of the apparel industry with the delivery of
approximately $160 of Simpsons' boxer shorts in May 1998.


NOTE 3:  INVENTORIES

         Inventories are stated at lower of cost (determined by the first-in,
first-out method) or market (net realizable value). Costs include direct
materials, direct labor and certain indirect manufacturing overhead expenses.


         Inventories are summarized as follows:

<TABLE>
<CAPTION>

                                                                      September 30,            December 31,
                                                                         1998                      1997  
                                                                     -------------          ---------------

              <S>                                                    <C>                       <C>      
               Raw materials                                          $  1,542                  $     700
               Finished goods                                              599                         46
               Allowance for inventory obsolescence                       (149)                      (105)
                                                                      --------                  ---------
                                                                      $  1,992                  $     641
                                                                      ========                  =========
</TABLE>



Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                     Page 7
<PAGE>   8


                          LITTLEFIELD, ADAMS, & COMPANY
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


NOTE 4:  DEBT

Long-term debt balances are as follows:

<TABLE>
<CAPTION>

                                                                     September 30,             December 31,
                                                                         1998                      1997 
                                                                     -------------            -------------
<S>                                                                   <C>                     <C>      
    Note payable to a bank, principal callable on demand, 
      interest at 9.50%, payable monthly at 0.25% 
      of the outstanding principal balance plus
      accrued interest, collateralized by 
      machinery and equipment and
      furniture and fixtures                                          $     446               $     455

    Note payable to a bank, principal callable on demand, 
    due September 1, 1999, interest at 9.50%, payable 
    monthly, collateralized by machinery and equipment
       and furniture and fixtures                                             54                      96

       Other                                                                  44                      37
                                                                       ---------               ---------
                  Total debt                                                 544                     588

       Less - current portion                                               (526)                   (570)
                                                                       ---------               ---------

                                                                       $      18               $      18
                                                                       =========               =========
</TABLE>

Short-term Loans Payable:

         In March, 1998, certain individuals, which included some officers and
shareholders of the Company, loaned an aggregate of $240 to the Company. These
loans were non-interest bearing and payable on demand. The individuals making
these loans were offered the opportunity to participate in a private offering of
7% Convertible Subordinated Debentures, described below, which was completed on
April 24, 1998. In April, 1998, all of the loans were either converted into such
Debentures or repaid.


NOTE 5:  CONVERTIBLE SUBORDINATED DEBENTURES

         On April 24, 1998, Littlefield completed a private offering of $1.2
million in principal amount of 7% Convertible Subordinated Debentures (the
"Debentures"). The participants in the private offering included four officers
and directors of the Company and several accredited investors. General terms of
the Debentures include the right to convert, after a period of one year, into
shares of Littlefield common stock at a rate of one and one-third shares of
stock for each dollar of principal amount of the Debentures. Any unconverted
Debentures are payable on demand after eighteen months. Interest is payable
semi-annually on the last day of March and September. The Company, with sixty
days notice, may call the Debentures for a premium after one year. If all of the
Debentures are converted into stock, the additional 1,600,000 shares of common
stock would have represented an increase of 58% in the number of shares
outstanding on the date the Debentures were issued. During the sixty days prior
to April 24, 1998, Littlefield's common stock traded for as low as $0.21 per
share and as high as $2.00 per share as reported on the NASD's OTC Electronic
Bulletin Board.



Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                     Page 8
<PAGE>   9


                          LITTLEFIELD, ADAMS, & COMPANY
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


NOTE 6:  EARNINGS PER SHARE

         Effective October 1, 1997, the Company adopted SFAS No. 128, "Earnings
Per Share." All periods prior to October 1, 1997, have been restated to conform
with the requirements of SFAS No. 128. The adoption of SFAS No. 128 had no
effect on previously reported earnings per share presented in these condensed
financial statements.

Diluted earnings per share have been calculated as follows:

<TABLE>
<CAPTION>

                                                    For the three months                 For the nine months
                                                     ended September 30,                 ended September 30,    
                                               -----------------------------        ----------------------------   
                                                  1998              1997   (a)         1998              1997   (a)
                                               -----------      ------------        -----------      -----------   

<S>                                            <C>              <C>                 <C>              <C>         
Earnings:
  Net income (loss) applicable to
     common stock                              $     1,627      $      (743)        $     1,401      $    (2,038)
  Net effect of assumed conversion:
          Interest applicable to debentures             20              --                   35              -- 
                                               -----------      -----------         -----------      -----------
     Net income (loss) for diluted earnings
        per share                              $     1,647      $      (743)        $     1,436      $    (2,038)
                                               ===========      ===========         ===========      ===========

Shares:
  Weighted average number of shares
     of common stock outstanding                 2,790,057        2,780,057           2,784,013        2,780,057

  Weighted average impact of
     potential common shares
     applicable to:

        Stock options                              409,126              --              229,193              --

        Convertible subordinated
           debentures                            1,600,000              --              937,730              --

  Weighted average shares used for
     computation                                 4,799,183        2,780,057           3,950,936        2,780,057
                                               ===========      ===========         ===========      ===========

Diluted earnings (loss) per common share       $      0.34      $     (0.27)        $      0.36      $     (0.73)
                                               ===========      ===========         ===========      ===========
</TABLE>

 (a) The stock options have an antidilutive effect on net loss per share and
     are, therefore, excluded from the computation of diluted earnings per
     share.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                     Page 9
<PAGE>   10


                          LITTLEFIELD, ADAMS, & COMPANY
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


         Certain securities that could potentially dilute basic earnings per
share in the future that were not included in the computation of diluted
earnings per share, because to do so would have been antidilutive, were as
follows:

<TABLE>
<CAPTION>

                                                 For the three months                    For the nine months
                                                  ended September 30,                    ended September 30,    
                                            -----------------------------           ---------------------------- 
                                                1998             1997                  1998              1997   
                                            -----------       -----------           -----------      -----------

Stock options:
      Range of exercise prices
<S>      <C>                               <C>              <C>                    <C>                 <C>    
         $1.00 to $6.88                         345,978           904,000               517,863          875,861
</TABLE>

NOTE 7:  COMMON STOCK

         As of September 30, 1998, the Company had issued a total of 2,808,221
shares of its common stock. Treasury stock consisted of 18,164 shares, making a
total of 2,790,057 shares outstanding.

         Included in the weighted average common shares outstanding used to
calculate net loss per common share for the three and nine months ended
September 30, 1997, are 485,000 and 17,076 shares of common stock issued in May
1997 in connection with the class action and derivative action settlements,
respectively. Such shares were considered to be outstanding during all of 1997
for purposes of determining net loss per share (Note 6).

         As of September 8, 1997, the Company's Common Stock trades on the
NASD's OTC Electronic Bulletin Board under the symbol "FUNW." The symbol
reflects FUNWEAR, a registered trademark used by the Company. Prior to September
8, 1997, the Company's Common Stock was traded on the American Stock Exchange
under the symbol "LFA."


NOTE 8:  COMPREHENSIVE INCOME

         In July 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS 130"). SFAS 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of financial statements.
The objective of SFAS 130 is to report a measure of all changes in the equity of
an enterprise that result from transactions and other economic events of the
period other than transactions with shareholders. Comprehensive income is the
total of net income and all other non-shareholder changes in equity. Effective
January 1, 1998, the Company adopted SFAS 130. The Company has no items of other
comprehensive income in any period presented in these condensed financial
statements.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 10
<PAGE>   11


                          LITTLEFIELD, ADAMS, & COMPANY
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


NOTE 9:  IMPAIRMENT LOSS

         During the 1998 third quarter, the Company removed from day-to-day
operations certain equipment used in its manufacturing process. For the most
part, this equipment was replaced with newly acquired equipment of a type more
suited to the Company's current manufacturing needs. Management has decided to
sell all the equipment removed from operations. The Company has assessed, under
the guidelines set forth in SFAS No. 121, the carrying value of its assets held
for sale. The Company has determined that the recognition of an impairment loss
was required as of September 30, 1998. Such assessment required the Company to
make certain estimates of amounts to be recovered from the future sale of these
assets. Based on this analysis, the Company has recognized an impairment loss as
of September 30, 1998, in the amount of $34. The impairment loss is reported as
part of the amount shown as "Selling and Administrative Expenses", and is
included in the calculation of "Income from Operations" for the three and nine
months ended September 30, 1998.



Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 11
<PAGE>   12


                          LITTLEFIELD, ADAMS, & COMPANY
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


         The following discussion provides information which management believes
is relevant to assessing and understanding the Registrant's results of
operations and financial condition. This discussion should be read in
conjunction with the condensed financial statements included in this Quarterly
Report on Form 10-Q and their accompanying notes, and also in conjunction with
the Registrant's 1997 Annual Report on Form 10-K.

RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, certain
items related to the Company's results of operations as a percentage of net
product sales.

<TABLE>
<CAPTION>

                                             For the three months                    For the nine months
                                              ended September 30,                    ended September 30,    
                                        -----------------------------           ----------------------------
                                           1998              1997                  1998              1997   
                                        -----------       -----------           ----------       -----------

<S>                                     <C>               <C>                   <C>              <C>        
Net product sales (in thousands)        $   12,274        $        61           $   15,598       $     1,820
                                             100.0%            100.0%                100.0%            100.0%

  Add:  Other revenues                       --                 57.4%                --                  1.9%

  Less:  Cost of products sold                68.1%            667.2%                 69.3%            119.6%
         Selling and administrative
           expenses                           16.8%            726.2%                 19.9%             89.9%
                                        ----------        ----------            ----------       -----------

        Income (loss) from operations         15.1%         (1,236.0)%                10.8%           (107.6)%
                                        ==========        ==========            ==========       ===========
</TABLE>

         In years prior to 1997, the Company was substantially dependent on
sales of Harley-Davidson Motor Co. (Harley-Davidson) licensed products to
generate cash flow from operations and provide funds to meet the Company's
obligations as they became due. The Company's Harley-Davidson license agreement
expired on December 31, 1996 and was not renewed by Harley-Davidson.
Consequently, the Company's product sales in 1997 were dramatically reduced from
levels attained in 1996 and 1995, and the Company incurred a net loss of
$1,937,000 for the year ended December 31, 1997.

         The diminished revenues experienced by the Company during 1997 and the
first quarter of 1998 had a material adverse effect on its results of operations
and financial condition. With net sales of $2,908,000 and $12,274,000 in the
1998 second and third quarters, respectively, the Company generated income from
operations of $188,000 and $1,858,000 in the respective quarters. The
significant increase in revenues during the 1998 second and third quarters, plus
the $1,200,000 in proceeds from the Company's private offering of 7% Convertible
Subordinated Debentures completed on April 24, 1998, are currently providing
sufficient cash flows for the Company to satisfy its obligations as they become
due. Shipments of approximately $4,200,000 during the month of October 1998 and
cancelable bookings, as of November 6, 1998, for future shipments of
approximately $5,000,000 during November and December 1998 are indications that
the Company can now sustain itself for the foreseeable future. However, the
Company has limited financial resources. As such, in the event that expected
future product sales would be materially adversely effected due to the
cancellation of customers' orders or any other unforeseen events, the Company
may be unable to continue operating as a going concern for any extended period
of time. The ability of the Company to continue as a going concern is dependent
upon the ongoing support of its stockholders, customers and creditors and its
ability to generate sufficient sales to sustain its existing operations and meet
the Company's obligations as they become due. The accompanying financial
statements have been prepared assuming the Company will continue as a going
concern which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 12
<PAGE>   13
                          LITTLEFIELD, ADAMS & COMPANY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, --  1998 COMPARED TO 1997


   Net Product Sales

         Third quarter net product sales for 1998 were $12,274,000, an increase
of $12,213,000 (or 20,021%) compared to the 1997 third quarter. The significant
increase was primarily due to the enthusiastic demand for World Championship
Wrestling (WCW) licensed products. During April 1998, the Company and World
Championship Wrestling, Inc., a Time Warner Company, finalized a license
agreement for the names, likenesses, characters, trademarks and/or copyrights of
World Championship Wrestling ("WCW") and New World Order ("nWo"). The license
agreement runs through March 15, 2001. Sales of WCW products, which originally
commenced in late April 1998, accounted for approximately 99% of third quarter
sales. Shipments of licensed products relating to the two licensing agreements
the Company has with Twentieth Century Fox ("The Simpsons" and "King of the
Hill") made up the remaining 1% of sales for the three months ended September
30, 1998. The Company's average selling price for goods sold in the 1998 third
quarter was 26% higher than the average selling price in the third quarter of
1997.

         Sales during the month of October 1998 were approximately $4,200,000.
As of November 6, 1998, the Company had bookings for shipments to be made during
November and December 1998 which totaled approximately $5,000,000. Not all
"bookings" constitute contractual commitments, and may therefore be subject to
cancellation or modification by customers.

         The Company has participated in special promotions with WCW, including
live appearances by professional wrestlers. Additional promotions involving live
appearances by professional wrestlers are anticipated during the 1998 fourth
quarter.


   Cost of Products Sold

         Gross profit margin, as a percentage of net sales, was 31.9% in the
third quarter of 1998 as compared to (567.2)% in the third quarter of 1997. With
the considerably lower sales volume in the 1997 third quarter, the cost of
products sold exceeded net product sales due to the unabsorbed overhead. Certain
expenses required to be included in the cost of products sold are more fixed in
nature, and do not necessarily increase or decrease proportionately with changes
in sales volume.


   Selling and Administrative Expenses

         In the 1998 third quarter, selling and administrative expenses were
$1,616,000 greater than during the 1997 third quarter. Royalty expenses were up
$1,397,000 due to the increase in the sales of licensed products. Decreases in
various overhead accounts moderated the net increase in selling and
administrative expenses, which increased by only $219,000 excluding royalties.
Included in the 1998 third quarter selling and administrative expenses is an
impairment loss in the amount of $34,000 relating to assets held for sale (see
Note 9 of the Notes to the Condensed Financial Statements). As a percentage of
net sales, selling and administrative expenses were 17% in the 1998 third
quarter as compared to 726% in the 1997 third quarter. Lack of sales leverage in
the 1997 third quarter caused the percentage reported to be abnormally high.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 13
<PAGE>   14
                          LITTLEFIELD, ADAMS & COMPANY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


   Interest Expense

         Third quarter interest expense on short-term debt increased by $110,000
in 1998 compared to 1997 due to increased borrowings to support the substantial
increase in revenues. Additionally, interest expense of $21,000 on the 7%
Convertible Subordinated Debentures which were issued on April 24, 1998, was
recorded. Interest rates on short-term debt experienced by the Company in the
third quarters of 1998 and 1997 did not vary significantly. The interest rate of
7% on the Debentures is considerably lower than the interest rates experienced
by the Company on short-term debt.



FOR THE NINE MONTHS ENDED SEPTEMBER 30, --  1998 COMPARED TO 1997


   Net Product Sales

         Net product sales for the nine months ended September 30 were
$15,598,000 in 1998 compared to $1,820,000 in 1997, an increase of 757%. The
significant increase in sales volume related to the Company's new WCW license.
Sales of WCW products realized in the second and third quarters of 1998 were the
primary reason for the increase. Sales of WCW licensed products represented
approximately 91% of total sales during the first three quarters of 1998. The
Simpsons and King of the Hill licensed products accounted for approximately 8%
of sales for the first three quarters of 1998, while sales of generic goods
represented another 1%. Through September 30, 1998, the Company's average
selling price for goods sold was 8% higher than in the same period in 1997. The
sales of lower-priced generic goods in the 1998 first quarter contributed to the
diminished increase in year-to-date average selling price as of September 30,
1998.


   Cost of Products Sold

         For the nine months ended September 30, gross profit margin, as a
percentage of net sales, was 30.7% in 1998 versus (19.6)% in 1997. The cost of
goods sold during the nine months ended September 30, 1997 exceeded net product
sales due to the unabsorbed overhead. Certain expenses required to be included
in the cost of products sold are more fixed in nature, and do not necessarily
increase or decrease proportionately with changes in sales volume. The
year-to-date gross profit margin in 1998 was significantly affected by the very
large increase in sales volume that occurred during the 1998 second and third
quarters.


   Selling and Administrative Expenses

         Selling and administrative expenses were $1,463,000 higher for the
first nine months of 1998 as compared to the first nine months of 1997.
Royalties were up $1,647,000 due to the substantial increase in sales of
licensed products. Reductions in overhead during 1998, particularly during the
first and second quarters, helped to offset the increase in selling and
administrative expenses caused by the increase in operating activities.
Excluding royalty expense, selling and administrative expenses decreased by
$184,000 during the first nine months of 1998 as compared to the same period in
1997. Included in the 1998 year-to-date selling and administrative expenses is
an impairment loss in the amount of $34,000 relating to assets held for sale
(see Note 9 of the Notes to the Condensed Financial Statements). As a percentage
of net sales, selling and administrative expenses were 20% for the nine months
ended September 30, 1998 as compared to 90% for the nine months ended September
30, 1997. The diminished revenues experienced in 1997 caused the percentage
reported to be abnormally high.



Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 14
<PAGE>   15
                          LITTLEFIELD, ADAMS & COMPANY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

   Interest Expense

         For the nine-month periods ended September 30, interest expense
increased by $98,000 from 1997 to 1998, with the year-to-date increase occurring
entirely in the 1998 third quarter. This reflects the reduced borrowing of
short-term debt during the first two quarters of 1998 due to reduced overhead
and the $1.2 million raised in the private offering of 7% Convertible
Subordinated Debentures completed on April 24, 1998. Increased borrowings during
the 1998 third quarter in order to support the substantial increase in revenues
was responsible for the increase in short-term interest during 1998. Interest
expense related to the Debentures amounted to $37,000 for the nine months ended
September 30, 1998. The Company incurs interest on the Debentures at a rate of
7%, which is considerably lower than the interest rates experienced by the
Company on short-term debt.


   Benefit (Provision) for Income Taxes

         The Company recorded a provision for estimated income taxes of $77,000
during the third quarter of 1998. This estimate takes into account the
utilization of the Company's Federal and State net operating loss carryforwards,
for which valuation allowances had been previously recorded, as well as
estimates of alternative minimum taxes, when applicable. The tax benefit of
$29,000 recorded in the 1997 third quarter was to adjust certain estimates of
income taxes recorded as of December 31, 1996.


   Inventories

         Purchases of new inventories required to support the significant
increases in sales volume during 1998 caused an increase in the level of
inventories. The balance of net inventories increased $1,351,000 from December
31, 1997 to September 30, 1998, with all of the increase being attributable to
the increased activities during the second and third quarters. The annualized
inventory turnover rate for the nine months ended September 30, 1998 was up to
7.2 turns per year compared to an annualized rate of 3.0 turns per year for the
nine months ended September 30, 1997. The 757% increase in year-to-date net
product sales volume was primarily responsible for the increase in annualized
inventory turns.


   Accounts Receivable

         Net trade and factor receivables increased from $187,000 at December
31, 1997 to $7,142,000 at September 30, 1998. The significant increase in sales
volume during the 1998 third quarter produced the great increase in receivables.
Sales during the months of August and September, 1998, were approximately
$3,400,000 and $6,000,000, respectively.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 15
<PAGE>   16
                          LITTLEFIELD, ADAMS & COMPANY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL SOURCES

         Effective February 1, 1996, the Company entered into a discount
factoring agreement with Merchant Factors Corp., which was to expire in August
1997. On July 15, 1997, the Company renewed and amended both its factoring and
accounts receivable financing agreements with Merchant Factors Corp., extending
the renewal dates to December 31, 1998. All of the Company's accounts receivable
which Merchant Factors Corp. approves for credit, excluding Wal-Mart, are being
factored at the rate of 1 1/8%. Accounts that are credit approved by Merchant
Factors Corp. are at its risk, which minimizes the Company's credit risk. The
Company, at its option, can factor at a rate of 1 1/8%, with recourse, accounts
that Merchant Factors Corp. does not approve for credit. The servicing of all
factored accounts is done by Merchant Factors Corp. Under the factoring
agreement, the Company may borrow up to 75% of the net accounts receivable at an
annual interest rate of prime plus 2.5%, but not less than a rate of 12.0%. By
letter dated March 24, 1998, Merchant Factors Corp. informed the Company that
the Company may borrow up to 85% of the net accounts receivable. Borrowings are
secured by the Company's accounts receivable and inventories. At September 30,
1998, and December 31, 1997, the Company had net factored receivables amounting
to $1,839,000 and $182,000, respectively, most of which had been approved for
credit by Merchant Factors Corp.

         In addition, the Company has an accounts receivable financing
arrangement with Merchant Factors Corp. covering only its accounts receivable
from Wal-Mart, which amounted to $5,303,000 and $5,000, respectively, at
September 30, 1998, and December 31, 1997. This agreement allowed the Company to
borrow up to 75% of its net receivables from Wal-Mart at an annual interest rate
of prime plus 5%. By letter dated March 24, 1998, Merchant Factors Corp.
informed the Company that the Company may borrow up to 85% of the net accounts
receivable. In a letter dated July 24, 1998, Merchant Factors Corp. informed the
Company that effective August 1, 1998, sales to Kmart would be covered by this
accounts receivable financing arrangement. Prior to August 1, 1998, receivables
from Kmart were factored. Borrowings are secured by the Company's accounts
receivable and inventories. The Company does not pay any factoring fees for the
financing of the Wal-Mart accounts receivable.

         In September 1998, Merchant Factors Corp. informed the Company that the
combined amount borrowed under both the factoring and accounts receivable
financing agreements, plus the amounts of any outstanding purchase guarantees
and/or letters of credit, together, could not exceed $3,000,000. Additionally,
Merchant Factors Corp. verbally informed the Company during September 1998 that
the Company could borrow only up to 75% (not 85%) of the net receivables under
both the factoring and accounts receivable financing agreements.

         In order to stay within the $3,000,000 borrowing limit described above,
the Company has negotiated early payments, at a discount, from its two largest
customers. Each early payment, or "anticipation" must be requested by the
Company, and approved by the customer, on a case by case basis. During the three
months ended September 30, 1998, discounts relating to such early payments
amounted to approximately $50,000. While the customers' anticipations have been
successful so far in maintaining necessary cash flows for the Company, there can
be no assurances that the customers will continue to approve such anticipations.
Additionally, in September 1998, at the suggestion of Merchant Factors Corp.,
the Company began to factor, once again, its accounts receivable from sales to
Kmart.

         The Company is generating sales which it believes support borrowing
well in excess of $3,000,000. If the Company were unable to maintain receiving
the amount of anticipations necessary to obtain required working capital and
keep its total borrowings with Merchant Factors Corp. below $3,000,000, then the
Company would have to seek other sources of funds or delay payments to vendors
until customers made payments within the specified terms of the sales. In
response to this situation, management is currently in negotiations to put in
place an alternative borrowing arrangement which involves both Merchant Factors
Corp. and another potential lender in order to increase the Company's overall
borrowing capacity. Management believes that these new borrowing arrangements
will be in place by December 31, 1998.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 16
<PAGE>   17
                          LITTLEFIELD, ADAMS & COMPANY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

         Merchant Factors Corp. has periodically issued purchase guarantees
and/or letters of credit against the factoring and accounts receivable financing
agreements. At September 30, 1998, there were $709,000 of outstanding purchase
guarantees and/or letters of credit issued by Merchant Factors Corp. At
September 30, 1998, the combined remaining borrowing availability from Merchant
Factors Corp., after considering the $3,000,000 borrowing limit imposed by
Merchant Factors Corp., was approximately $656,000, as compared to $138,000 at
December 31, 1997. Without the borrowing restrictions described above, the
remaining borrowing availability as of September 30, 1998 would have been
approximately $3,500,000.

         For the nine months ended September 30, 1998, operating activities used
cash of $2,622,000, while $209,000 was used in investing activities. The Company
borrowed a total of $11,855,000 during the nine months ended September 30, 1998,
and repaid $9,024,000. Additionally, the Company received $12,000 from the sale
of common stock upon exercise of stock options. This resulted in net cash
provided by financing activities of $2,843,000. During the first nine months of
1998, there was a net increase in cash of $12,000.

         At September 30, 1998, the Company had working capital of $2,551,000
and a working capital ratio of 1.37/1. This compares to December 31, 1997, when
the Company had net working capital of $21,000 and a working capital ratio of
1.02/1.

         The availability of cash flow from operations subsequent to September
30, 1998 is dependent on the ability of the Company to acquire and sell licensed
and proprietary products throughout 1998 and beyond. In order to generate the
funds needed to acquire and develop the Company's new license with WCW and
support general operations, management raised $1.2 million with a private
offering of 7% Convertible Subordinated Debentures (the "Debentures") completed
on April 24, 1998. Based on the Company's estimates which include the funds from
the Debentures, the sales and bookings subsequent to September 30, 1998
discussed above, the Company believes it can sustain itself for the foreseeable
future.

         On September 16, 1998, Twentieth Century Fox granted one year
extensions to the original terms of the Company's licenses for The Simpsons and
King of the Hill. The Simpsons license now expires on December 31, 2000, while
the King of the Hill license now concludes on December 31, 2001.

         On November 2, 1998, World Championship Wrestling, Inc. (a Time Warner
company), in conjunction with its exclusive licensing agent Leisure Concepts,
Inc. ( the licensing division of 4 Kids Entertainment, Inc.) presented the
Company with the first annual "Golden Goldberg" award to signify Littlefield,
Adams & Company being named the WCW licensee of the year for 1998.

         The Company manufactures and sells imprinted apparel primarily to
national and regional retail discount chains. The success of the Company's
licensed product sales with World Championship Wrestling, The Simpsons, King of
the Hill, Pepsi and Mountain Dew, Miller Brewing Company and Kawasaki Motors
Corp., U.S.A. is an integral part of that effort. The Company gained entry into
the boxer shorts segment of the apparel industry with the delivery of
approximately $160,000 of Simpsons' boxer shorts in May 1998. The Company
coordinates the development of marketing and sales strategies with its licensors
and customers whenever possible.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 17
<PAGE>   18
                          LITTLEFIELD, ADAMS & COMPANY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


YEAR 2000 READINESS

         The Year 2000 issue exists because many computer systems and
applications currently use a two-digit year field to represent a four-digit
year, such as 98 to represent 1998. Computer systems that incorrectly process
dates occurring for the year 2000 and beyond can either fail or yield unreliable
and erroneous information. The Company is continuing to assess its Year 2000
readiness with regards to information technology ("IT") systems, which include
the Company's computer systems and applications that provide accounting and
financial reporting, and its non-IT systems, which include the Company's
production, shipping and office equipment.

<TABLE>
<CAPTION>

                                                                    Projected                  Estimated
                                            Year 2000               Year 2000                  Cost of
                                            Readiness               Readiness                  Year 2000
                                             Status                   Date                     Readiness  
                                      ----------------         ----------------        -------------------------   
<S>                                    <C>                       <C>                     <C>     
IT Systems:
     Computer Hardware                   Not ready                May 1999                $ 2,000 - $ 25,000
     Operating software                  Not ready                May 1999                $ 5,000 - $ 15,000
     Application software                Not ready                May 1999                $ 2,000 - $ 50,000

Non-IT Systems:
     Production equipment                Ready
     Shipping equipment                  Ready
     Office Equipment                    Not assessed             June 1999               $ 0 - $ 20,000
</TABLE>

         In the fourth quarter of 1998, the Company plans to begin testing, in
conjunction with its largest customer and third-party network providers, it's
Electronic Data Interchange ("EDI") systems. The EDI systems are used to
transact business electronically with the Company's larger customers. The
Company anticipates that the EDI systems will be Year 2000 ready in June 1999.

         In addition to the Company's internal Year 2000 readiness, the Company
had planned to initiate, in the third quarter of 1998, a communication process
with third parties including its lending and financial institutions and its
largest customers and vendors, to assess their Year 2000 readiness and the
potential risk to the Company. The Company delayed the initiation of this
process until the fourth quarter of 1998 to allow for additional preparation
time in planning a more thorough inquiry. The Company's largest customers have
established Year 2000 readiness plans and have communicated their expected
readiness.

         Currently, the Company does not anticipate an interruption in business
as the millennium approaches due to the relatively minor nature of its internal
Year 2000 deficiencies, the sufficient time available to correct those
deficiencies and the ability of the Company's largest customers, possessing
substantial financial resources, to timely become Year 2000 ready. Failure of
the Company and/or third parties to be adequately Year 2000 ready would likely
have a negative effect on the Company's operations. The Company plans to begin
developing Year 2000 contingency responses as specific predicaments are
examined.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 18
<PAGE>   19
                          LITTLEFIELD, ADAMS & COMPANY
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


         This report contains projections and forward-looking statements that
are based on management's beliefs as well as assumptions made by and information
currently available to management. When used in this report, the words
"anticipate," "estimate," "expect," "predict," "project," "believe," and similar
expressions are intended to identify forward looking statements. The
forward-looking statements were prepared on the basis of assumptions which
relate, among other things, to the market acceptance of the Company's products,
including the Company's licensed and proprietary products; the cost of producing
and marketing the Company's products; the prices at which the Company's products
may be sold; and the Company's market share for its products. Such assumptions
may prove not to be accurate or appropriate, and even if such assumptions do
prove to be accurate and appropriate, the actual results of the Company's
operations in the future may vary widely due to increased competition in the
industry, an increase in interest rates, general economic conditions and other
risks and uncertainties, including without limitation, risks associated with
having a very high percentage of the Company's revenues being derived from sales
related to one license. Accordingly, the actual results of the Company's
operations in the future may vary widely from the forward-looking statements
included herein.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 19
<PAGE>   20



                          LITTLEFIELD, ADAMS & COMPANY

                           PART II - OTHER INFORMATION


Item 1.           LEGAL PROCEEDINGS

                  The Company is currently not involved in any litigation or
                  other reportable legal proceedings.

Item 5.           OTHER INFORMATION

                  Any shareholder proposal submitted with respect to the
                  Company's 1999 Annual Meeting of Shareholders, which proposal
                  is submitted outside the requirements of Rule 14a-8 under the
                  Securities Exchange Act of 1934, as amended (the "Exchange
                  Act"), will be considered untimely for purposes of Rule 14a-4
                  and 14a-5 under the Exchange Act if notice thereof is received
                  by the Company after March 21, 1999.

Item 6.           EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      Exhibits required by Item 601 of Regulation S-K

                           10.1  Amendment Number 1, dated September 16, 1998,
                                 to the Merchandising License Agreement dated
                                 July 15, 1997 with the Twentieth Century Fox
                                 Licensing and Merchandising unit of Fox, Inc.
                                 for "The Simpsons". This amendment extends the
                                 original term of the license for The Simpsons
                                 by one year until December 31, 2000.

                           10.2  Amendment Number 1, dated September 16, 1998,
                                 to the Merchandising License Agreement dated
                                 August 7, 1997 with the Twentieth Century Fox
                                 Licensing and Merchandising unit of Fox, Inc.
                                 for "King of the Hill". This amendment extends
                                 the original term of the King of the Hill
                                 license by one year until December 31, 2001.

                           27.   Financial Data Schedule

                  (b)      Reports on Form 8-K

                           None.


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 20
<PAGE>   21


                                   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.

                                LITTLEFIELD, ADAMS & COMPANY  
                                ----------------------------  
                                        (Registrant)



Date:    November 10, 1998      /s/ Michael B. Balber                          
                                ------------------------------------------------
                                Michael B. Balber
                                President and Chief Executive Officer
                                (principal executive officer)

Date:    November 10, 1998      /s/ Warren L. Rawls                          
                                ----------------------------------------------
                                Warren L. Rawls
                                Chief Financial Officer, Treasurer and Secretary
                                (principal financial & accounting officer)


Littlefield, Adams & Company, September 30, 1998 Quarterly Report on Form 10-Q;
                                    Page 21