SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q



/ 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
                              --------------------------------------------------

/   /       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 000-24941


                             Delicious Brands, Inc.
--------------------------------------------------------------------------------
           (Exact name of the registrant as specified in its charter)


       Delaware                                    06-1225882
--------------------------------         ---------------------------------------
(State of other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization

2070 Maple Street, Des Plaines, Illinois            60018
-----------------------------------------  -------------------------------------
(Address of Principal executive offices)         (Zip code)

Registrant's telephone number including area code:  (847) 699-3200
                                                    ----------------------------


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               NO     X
             --------        ----------


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


    4,282,842 shares of Common Stock were outstanding on November 30, 1998.

<PAGE>
                             DELICIOUS BRANDS, INC.

                                    FORM 10-Q

                    FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998




                                    I N D E X


PART I:    FINANCIAL INFORMATION                                           PAGE

           Balance Sheets as of September 30, 1998 and December 31, 1997     3

           Statements of Operations, Three Months and Nine Months Ended      4
               September 30, 1998 and 1997

           Statements of Cash Flows, Nine Months Ended                       5
               September 30, 1998 and 1997

           Notes to Consolidated Condensed Financial Statements              6

           Management's Discussion and Analysis of Financial Condition       9
               and Results of Operations


PART II:   OTHER INFORMATION

           Changes in Securities and Use of Proceeds                        12

           Submission of Matters to a Vote of Security Holders              12

           Exhibits and Reports on Form 8-K                                 12


                                       2
<PAGE>
                             DELICIOUS BRANDS, INC.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>

ASSETS
<S>                                                                              <C>                <C>
                                                                                 September 30       December 31
                                                                                 ------------       -----------
                                                                                     1998               1997
                                                                                 ------------       -----------
                                                                                  (unaudited)
Current Assets:
      Cash                                                                       $          0       $    808,349
      Accounts receivable including $514,710 and $276,294,                                        
            respectively, due from related parties, net of allowances of                          
            $909,395 and $575,000, respectively.................................    6,887,311          1,924,390
      Inventory.................................................................    2,701,258            152,399
      Due from distributors.....................................................       59,798            172,176
      Prepaid expenses and other current assets.................................      436,555            141,925
                                                                                -------------       ------------
                                                                                   10,084,922          3,199,239
                                                                                -------------       ------------
Property and Equipment, Net of Accumulated Depreciation.........................      927,124            177,852
                                                                                -------------       ------------
Other Assets:                                                                                     
      Goodwill..................................................................    8,732,522          2,698,174
      Other ....................................................................    1,181,835            411,340
                                                                                -------------       ------------
                                                                                    9,914,357          3,109,514
                                                                                -------------       ------------
                                                                                $  20,926,403       $  6,486,605
                                                                                =============       ============
LIABILITIES AND STOCKHOLDERS' DEFICIT 
Current Liabilities:                                        
      Bank loan payable.........................................................$   3,242,874       $  1,498,382
      Notes payable.............................................................    5,200,000                  0
      Current portion of subordinated debt......................................      393,332                  0
      Accounts payable and accrued expenses, including $2,314,562                                 
            and   $62,530, respectively, due to related parties.................   13,725,245          4,617,552
      Due to distributors.......................................................      541,222            326,012
      Current portion of long-term liabilities..................................      906,965          1,120,544
                                                                                -------------       ------------
                                                                                   24,009,638          7,562,490
                                                                                -------------       ------------
Long-term Liabilities:                                                                            
      Subordinated debt.........................................................            0          1,960,000
      Restructuring liability...................................................      753,796            880,573
      Packaging loss liability..................................................      863,892            870,075
      Other ....................................................................            0              1,919
                                                                                -------------       ------------
                                                                                    1,617,688          3,712,567
                                                                                -------------       ------------
Stockholders' Deficit:                                                                            
      Preferred stock, $.01 par value, 1,000,000 shares authorized, 195,834                       
            shares issued and outstanding in 1998, no shares                                      
            issued and outstanding in 1997......................................        1,958                  0
      Class A common stock, voting, $.01 par value, 25,000,000 shares                             
            authorized, 3,331,767 and 3,191,767 shares issued in 1998                             
            and 1997, respectively..............................................       33,318             31,918
      Additional paid-in capital................................................    9,228,735          6,969,815
      Accumulated deficit.........................................................(13,803,885)       (11,629,136)
                                                                                -------------       ------------
                                                                                   (4,539,874)        (4,627,403)
                                                                                -------------       ------------
      Less, common stock in treasury at cost....................................     (161,049)          (161,049)
                                                                                -------------       ------------
            Total stockholders' deficit.........................................   (4,700,923)        (4,788,452)
                                                                                -------------       ------------
                                                                                $  20,926,403       $  6,486,605
                                                                                =============       ============
</TABLE>

         The accompanying notes are an integral part of this statement.

                                       3
<PAGE>
                             DELICIOUS BRANDS, INC.
                             STATEMENT OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                     THREE MONTHS ENDED SEPTEMBER 30,         NINE MONTHS ENDED SEPTEMBER 30,
                                                 -------------------------------------       --------------------------------------
                                                      1998                 1997                   1998               1997
                                                 ------------            -------             -----------           ----------------

<S>                                                <C>                <C>                    <C>                    <C>          
Net Sales (including approximately
    $1,282,000, $1,342,000, $5,050,000
    and $3,902,000, respectively, to  related
    parties)...................................    $ 17,491,396       $ 8,001,847            $ 39,822,411           $  23,324,239

Cost of Sales (including approximately
    $968,000, $112,000, $2,881,000 and
    $301,000, respectively, from related
    parties)...................................      13,241,731         6,345,059              30,688,685              18,453,664
                                                  -------------       -----------            ------------           -------------
Gross Profit...................................       4,249,665         1,656,788               9,133,726               4,870,575
                                                  -------------       -----------            ------------           -------------
Operating Expenses:
      Promotion and selling....................       2,984,242           983,810               6,307,400               2,562,229
      General and administrative...............       1,652,344           756,887               4,158,140               2,231,915
                                                  -------------       -----------            ------------           -------------
                                                      4,636,586         1,740,697              10,465,540               4,794,144
                                                  -------------       -----------            ------------           -------------
Income (Loss) from Operations..................        (386,921)          (83,909)             (1,331,814)                76,431
                                                  -------------       -----------            ------------           -------------
Other Income (Expense):
      Interest expense.........................        (368,837)          (90,917)               (883,351)               (277,511)
      Other, net...............................           2,611                 0                  40,416                       0
                                                  -------------       -----------            ------------           -------------
                                                       (366,226)          (90,917)               (842,935)               (277,511)
                                                  -------------       -----------            ------------           -------------
Loss before Provision for Income Taxes.........        (753,147)         (174,826)             (2,174,749)               (201,080)
Provision for Income Taxes.....................               0                 0                       0                       0
                                                  -------------       -----------            ------------           -------------
Net Loss    ...................................   $    (753,147)      $  (174,826)           $ (2,174,749)          $    (201,080)
                                                  =============       ===========            ============           =============

Earnings per Share:
      Basic:
            Net loss per common share.........    $       (.23)       $      (.06)           $       (.67)          $        (.07)
                                                  =============       ===========            ============           =============
            Weighted average number of
              common shares outstanding.......       3,282,842          2,927,842               3,264,380               2,927,842

      Diluted:
            Net loss per common share.........    $       (.23)       $      (.06)           $       (.67)          $        (.07)
                                                  =============       ===========            ============           =============
            Weighted average number of
               common shares outstanding......       3,282,842          2,927,842               3,264,380               2,927,842
</TABLE>


         The accompanying notes are an integral part of this statement.

                                       4
<PAGE>
                             DELICIOUS BRANDS, INC.
                             STATEMENT OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                      NINE MONTHS ENDED SEPTEMBER 30,
                                                                     ---------------------------------
                                                                           1998               1997
                                                                     -------------         -----------

<S>                                                                    <C>              <C>         
Cash Flows from Operating Activities:
   Net loss    ..................................................      $ (2,174,749)    $  (201,080)
   Adjustments to reconcile net loss to net cash
         provided by (used in) operating activities:
         Depreciation and amortization...........................           907,841         265,563
         Provision for bad debts.................................           317,144          25,487
         Increase (Decrease) in cash (exclusive of
               Salerno acquisition) from changes in:
               Accounts receivable...............................        (1,562,589)     (1,067,475)
               Inventory.........................................          (999,139)        206,080
               Due from distributors.............................           112,378               0
               Prepaid expenses and other current assets.........            70,779          55,295
               Other assets......................................          (262,229)        (14,637)
               Accounts payable and accrued expenses.............         3,850,969         368,166
               Due to distributors...............................           215,210         213,941
               Accrued restructuring liabilities.................          (146,777)              0
               Other liabilities.................................          (186,186)         (9,560)
                                                                       ------------     -----------
   Net cash provided by (used in) operating activities...........           142,652        (158,220)
                                                                       ------------     -----------

Cash Flows from Investing Activities:
   Payment for purchase of assets of Salerno Foods,
         L.L.C. (net of cash acquired of $12,564)................        (3,709,599)              0
   Purchase of property and equipment............................           (69,539)        (43,333)
                                                                       ------------     -----------
   Net cash used in investing activities.........................        (3,779,138)        (43,333)
                                                                       ------------     -----------
Cash Flows from Financing Activities:
   Payments of long-term debt....................................           (15,498)       (13,972)
   Payments of bank loan payable, net............................        (1,558,419)      (122,439)
   Checks issued in excess of funds on deposit...................           790,182              0
   Proceeds from issuance of notes payable.......................         3,500,000              0
   Proceeds from issuance of common stock........................           840,000              0
   Initial public offering costs.................................          (583,738)             0
   Payment of stock issuance costs...............................          (144,390)             0
                                                                       ------------     -----------
   Net cash provided by (used in) financing activities...........         2,828,137        (136,411)
                                                                       ------------     -----------
Increase (Decrease) in Cash......................................          (808,349)       (337,964)
Cash, Beginning of Period........................................           808,349         661,706
                                                                       ------------     -----------
Cash, End of Period..............................................      $          0     $   323,742
                                                                       ============     ===========
Supplemental Disclosure of Cash Flow Information:
   Cash paid during the period for:
         Income taxes............................................      $          0     $         0
                                                                       ============     ===========
         Interest................................................      $    663,640     $   325,889
                                                                       ============     ===========
</TABLE>

         The accompanying notes are an integral part of this statement.

                                       5
<PAGE>

                             DELICIOUS BRANDS, INC.
                     STATEMENT OF CASH FLOWS -- (CONTINUED)

Supplemental Disclosure of Noncash Investing and Financing Activities:
            On April 3, 1998, the Company acquired  substantially
               all of the assets and assumed certain  liabilities
               of Salerno Foods,  L.L.C. In conjunction  with the
               acquisition, liabilities were assumed as follows:
<TABLE>
<CAPTION>

<S>          <C>                                                                                     <C>
             Fair value of assets acquired, including goodwill and transaction costs............     $12,771,886
              Less:  Seller notes...............................................................      (1,500,000)
              Cash paid (net of $220,000 purchase price adjustment).............................      (3,280,000)
              Transaction costs.................................................................        (497,433)
                                                                                                   --------------
              Liabilities assumed...............................................................     $  7,494,453
                                                                                                     ============
</TABLE>

            During 1998, the Company  incurred  $200,000 in financing
                 fees  which  were  included  in notes  payable  at
                 September 30, 1998.

            As of August 1, 1998, holders of $1,566,668 aggregate
               principal  amount of 9% Notes exchanged such notes
               for an  aggregate  of  195,834  shares of Series A
               Preferred  Stock  pursuant to an offer to exchange
               made by the Company.

            As of September 30, 1998, unpaid transaction costs of
               approximately  $275,270  were included in accounts
               payable and accrued expenses.

            During March and October of 1997, in satisfaction for payments
               of trade accounts receivable, an aggregate $150,000 of
               subordinated debt was redeemed and cancelled.

         The accompanying notes are an integral part of this statement.

                                       6
<PAGE>
                             DELICIOUS BRANDS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (Unaudited)

1.     BASIS OF PRESENTATION

INTERIM FINANCIAL STATEMENTS

The  unaudited  interim  financial  statements  included  herein  were  prepared
pursuant to the rules and regulations for interim reporting under the Securities
Exchange Act of 1934, as amended. Accordingly,  certain information and footnote
disclosures normally  accompanying the annual financial statements were omitted.
The interim  financial  statements and notes should be read in conjunction  with
the annual  audited  financial  statements  and notes  thereto  contained in the
prospectus of Delicious  Brands,  Inc. (the "Company")  dated November 12, 1998.
The accompanying unaudited interim financial statements contain all adjustments,
consisting only of normal  adjustments,  which in the opinion of management were
necessary for a fair statement of the results for the interim  periods.  Results
for the interim periods are not  necessarily  indicative of results for the full
year.

MATTERS AFFECTING COMPARABILITY - ACQUISITION OF ASSETS

On April 3,  1998,  the  Company  acquired  substantially  all of the assets and
assumed certain liabilities of Salerno Foods, L.L.C. (Salerno). Accordingly, the
Company's  results of  operations  for the three  months and nine  months  ended
September  30,  1998  include  the  operating  results  of Salerno  whereas  the
comparable three months and nine months ended for the prior year do not.

The following  unaudited pro forma  information  has been prepared  assuming the
acquisition  had  taken  place at  January  1,  1997.  The  unaudited  pro forma
information  includes  adjustments  for  interest  expense  that would have been
incurred to finance the purchase,  additional  depreciation  of the property and
equipment  acquired,  amortization of the goodwill  arising from the acquisition
and the result of conforming  Salerno's  accounting  policy for slotting fees to
the Company's  policy.  The  unaudited  pro forma results of operations  are not
necessarily  indicative of what the results that would have been had the Salerno
acquisition been effected on the assumed date.

                                          Unaudited for the Nine Months Ended
                                          -----------------------------------
                                             September 30,     September 30,
                                                  1998              1997
                                             -------------     --------------
         Net sales.......................... $  48,927,759      $52,154,880
         Loss before income taxes........... $ (2,649,792)      $(1,192,222)
         Net loss........................... $ (2,649,792)      $(1,192,222)
         Net loss per share:
               Basic........................ $      (0.81)      $     (0.41)
               Diluted...................... $      (0.81)      $     (0.41)

BUSINESS AND OWNERSHIP

On November  17, 1998 the Company consummated an initial  public  offering  (the
"offering") of 1,000,000  shares of its common stock at $12.00 per share.  Total
net proceeds to the Company of approximately  $9,700,000 are being used to repay
acquisition  debt and fees,  reduce  trade  payables  and for general  corporate
purposes.

2.     NET INCOME (LOSS) PER SHARE

Basic net income  (loss) per share and diluted net income  (loss) per share have
been calculated using the weighted  average number of common shares  outstanding
during each period.  All options and warrants were omitted from the  computation
of diluted net income  (loss) per share  because the  options and  warrants  are
antidilutive when net losses are reported.


                                       7
<PAGE>
3.     INVENTORY

Inventory is stated at the lower of cost or market with cost  determined  by the
first-in, first-out (FIFO) method.

4.     SUBORDINATED DEBT

Effective   August  1,  1998,   $1,566,668  of  the  Company's  9%  Subordinated
Convertible  Notes was exchanged for 195,834 shares of Series A Preferred  Stock
pursuant  to an  offer  to  exchange  made  by the  Company.  Upon  liquidation,
dissolution or winding up, the holders of Series A Preferred  Stock are entitled
to receive  liquidation value and any declared but unpaid dividends prior and in
preference to any  distribution to the holders of common stock,  any other class
of Preferred  Stock or any other class of the Company's  capital stock,  whether
now existing or hereafter  created.  Upon the exchange,  the expiration  date of
warrants to purchase  107,730  shares of common  stock was extended to April 27,
2001 from April 27, 1999.

The holders of shares of Series A Preferred Stock are entitled to receive,  when
and as  declared  by the Board of  Directors  out of the  assets of the  Company
legally  available  for payment,  dividends at the rate per share of ten percent
(10%) per annum on the aggregated stated value ($8.00 per share) of the Series A
Preferred Stock.

Each  holder of Series A Preferred  Stock has the right to convert  each of such
holder's shares of Series A Preferred Stock into one share of Common Stock until
July 31,  2001.  However,  on August 1, 2001,  each share of Series A  Preferred
Stock will automatically convert into one share of common stock.

                                       8
<PAGE>
                       MANAGEMENT'S DISCUSSION ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MATTERS AFFECTING COMPARABILITY - ACQUISITION OF ASSETS

On April 3,  1998,  the  Company  acquired  substantially  all of the assets and
assumed certain liabilities of Salerno Foods, L.L.C. (Salerno). Accordingly, the
Company's  results of  operations  for the three  months and nine  months  ended
September  30,  1998  include  the  operating  results  of Salerno  whereas  the
comparable three months and nine months ended for the prior year do not.

RESULTS OF OPERATIONS

Net Sales.  Net sales increased 119% to $17.5 million for the three months ended
September  30, 1998.  For the nine months ended  September  30, 1998,  net sales
increased 71% to $39.8 million.  The net sales increases resulted primarily from
the inclusion of the April 3, 1998  acquisition of Salerno Foods,  L.L.C.  which
totaled  $9.9  million and $18.4  million,  respectively.  During  both  periods
Frookie sales declined in anticipation  of the 1998 fourth quarter  introduction
of a new reformulated Frookie product line.

Gross  Profit.  Gross profit increased 147% to $4.2 million for the three months
ended  September  30, 1998.  For the nine months ended  September 30, 1998 gross
profit  increased 86% to  $9.1  million.  The gross  profit  increases  resulted
primarily from the inclusion of the April 3, 1998  acquisition of Salerno Foods,
L.L.C. which totaled $2.8 million and $5.4 million,  respectively.  Gross profit
as a percentage of sales,  excluding  Salerno's  gross profit,  decreased 1% and
3.3% for the three and nine months ended September 30, 1998,  respectively.  The
decline was caused by lower sales in the higher  margin  Frookie  product  line,
discussed above, combined with higher promotional allowances required to dispose
of  discontinued  inventory and  introduce new products.  The lower margins were
partially offset by higher margins on the value-oriented product line.

Promotions,   Selling  and  Administrative  Expenses.  Promotions,  selling  and
administrative  increased  166%  to $4.6  million  for the  three  months  ended
September 30, 1998.  For the nine months ended  September  30, 1998  promotions,
selling  and  administrative  expenses  increased  119% to  $10.5  million.  The
increase resulted  primarily from the inclusion of the April 3, 1998 acquisition
of  Salerno  Foods,   L.L.C.  which  totaled  $2.7  million  and  $5.3  million,
respectively.

Other Income (Expense).  Other expenses increased 333% to $400,000 for the three
months ended  September  30, 1998 for the nine months ended  September  30, 1998
other expenses  increased 167% to $800,000.  The increases were primarily due to
higher interest expense incurred to finance the Salerno Acquisition.

Provision  for Income Tax. The provision for income tax for the three months and
nine  months  ended  September  30,  1998 and 1997 was zero as a result of there
being a net  operating  loss for the period for which a valuation  allowance was
provided to reduce the tax benefit of this loss. The valuation allowance for the
three  months and nine months ended  September  30, 1998  increased  $68,000 and
$289,000,  respectively. The valuation allowance increases were primarily due to
the uncertainty of the future utilization of the net operating losses generated.
The variation of the Company's effective tax rate from the federal statutory tax
rate is principally due to non-deductible amortization of intangible assets.

Net Loss.  Net loss  increased to $800,000 for the three months ended  September
30, 1998.  For the nine months ended  September  30, 1998 net loss  increased to
$2.2 million. The increased losses were a result of the factors discussed above.

The Company  anticipates  that it will continue to experience a net loss for the
three months ended December 31, 1998.


LIQUIDITY AND CAPITAL RESOURCES

In recent  periods,  the  Company  has  utilized  its  working  capital to cover
operating deficits. At September 30, 1998, the Company had accumulated a working
capital  deficit of $13.5  million.  Because the Company  purchases its products
from co-packers,  it does not intend to invest in plant or equipment relating to
the  manufacture of products


                                       9
<PAGE>

for sale. Further, the Company believes that its existing fleet of leased trucks
is  sufficient  for  the  foreseeable   future.   In  addition,   the  Company's
introduction  of new  products  represents  an  immaterial  capital  expenditure
because co-packers are responsible for the research, development and ingredients
costs. The only costs incurred by the Company are packaging design costs,  which
did  not  exceed  $100,000 in 1997 or 1998  and  are not  expected  to  increase
significantly in the future.  Consequently,  additions to property and equipment
are not  expected  to be  material in future  periods.  The Salerno  Acquisition
negatively  impacted the liquidity of the Company. As of September 30, 1998, the
Company had  incurred  $5.2 million of  short-term  debt plus  interest  accrued
thereon at either 12% or 15% per annum.  As of December 20, 1998,  substantially
all of these  amounts  had been  repaid out of the  proceeds  received  from the
Company's  initial public offering (the  "offering").  The Company  believes the
amount  available  under its revolving  credit  facility,  together with the net
proceeds from the offering,  will be sufficient  for at least the next 12 months
to  finance  its  operations,  service  interest  payments  on its debt and fund
capital expenditures.

On December  2, 1997,  the Company  consummated  the first  closing of a private
placement  (the "First  Closing") of a minimum of 87,500  shares of Common Stock
and  a  maximum  of  350,000  shares  of  Common  Stock  (the  "October  Private
Placement").  At the First  Closing,  the Company issued an aggregate of 210,000
shares of Common Stock for an aggregate price of $1.3 million.  The net proceeds
of $956,171  from the First closing were applied by the Company to increase cash
balances and reduce  outstanding trade payables  balances.  On February 6, 1998,
the Company  consummated a second closing of the October Private  Placement (the
"Second Closing")  pursuant to which it issued an aggregate of 140,000 shares of
Common  Stock for an aggregate  price of $840,000.  The net proceeds of $695,610
from the Second  Closing,  were applied by the Company to increase cash balances
and reduce outstanding trade payables balances.

On April 3, 1998,  the Company  entered into an amendment to a revolving  credit
facility with Republic Acceptance  Corporation for a revolving line of credit of
up to $7.0 million.  Borrowings under the revolving credit facility are due upon
demand and bear interest at 1.50% per annum above the reference rate of interest
publicly announced from time to time by U.S. Bank National  Association (8.5% at
September 30, 1998). Borrowings under the revolving credit facility at September
30, 1998 was $3.2 million.  Borrowings  under the revolving  credit facility are
collateralized  by a  first  lien  on  substantially  all of the  assets  of the
Company.

On April 3, 1998, the Company consummated the Salerno Acquisition.  The purchase
price for Salerno  consisted  of (i) $3.3  million in cash,  (ii) a $1.5 million
promissory  note from the Company to Salerno (the  "Salerno  Promissory  Note"),
bearing  interest  at a rate of 12%  per  annum,  secured  by a  second  lien on
substantially  all  of  the  Company's  assets,  and  (iii)  the  assumption  of
substantially all of the liabilities of Salerno.  In connection  therewith,  the
Company  entered  into  a  loan  agreement  with  American   Pacific   Financial
Corporation  ("APFC")  pursuant  to which the  Company  borrowed  $4.6  million,
bearing  interest at a rate of 12% per annum through  August 3, 1998 and 15% per
annum thereafter, from APFC (the "APFC Loan") consisting of $3.0 million in cash
used by the Company to fund a portion of the cash  purchase  price for  Salerno,
$1.5  million  in the form of APFC  assuming  the  Salerno  Promissory  Note and
$100,000 as a fee for the APFC Loan. In addition,  the Company  issued to APFC a
promissory note in the principal amount of $100,000,  bearing interest at a rate
of 12% per annum, as a fee for assuming the Salerno  Promissory  Note. The notes
and accrued  interest  thereon were repaid from the proceeds of the Offering.

As of August 1, 1998, holders of approximately $1.6 million aggregate  principal
amount of 9% Notes  exchanged  such notes for an aggregate of 195,834  shares of
Series A Preferred  Stock  pursuant to an offer to exchange made by the Company.
Annual dividends of 10% paid semi-annually are payable on the shares of Series A
Preferred Stock out of the assets of the Company  legally  available for payment
thereof.  The  expiration date of warrants to purchase  107,730 shares of Common
Stock  collectively held by the holders of the 9% Notes exchanged for the Series
A Preferred Stock was extended to April 27, 2001 from April 27, 1999.

On November  17,  1998 the Company  consummated  an initial  public  offering of
1,000,000  shares  of  common  stock,  at a price of  $12.00  per  share.  After
deducting underwriting discounts and expenses the Company received approximately
$9.7 million of net proceeds from the offering.

                                       10
<PAGE>

FORWARD-LOOKING STATEMENTS

Statements   contained  in  this  filing  that  are  not  historical  facts  are
forward-looking  statements  as that term is defined in the  Private  Securities
Litigation  Reform Act of 1995.  All  Forward-Looking  Statements are subject to
risks and  uncertainties  that could cause  actual  results to differ from those
projected.  Other factors may cause  results to differ from the  forward-looking
statements  contained in this filing and may affect the  Company's  prospects in
general and  readers  are urged to  carefully  review and  consider  the various
disclosures made by the Company.

YEAR 2000 PROGRAM

Many computer systems used in the current business  environment were designed to
use only  two  digits  in the date  field  and  thus may  experience  difficulty
processing  dates beyond the year 1999 and, as such, some computer  hardware and
software will need to be modified  prior to the Year 2000 to remain  functional.
The Company's core internal systems that have been recently implemented are Year
2000 compliant.  The Company is also completing a preliminary assessment of Year
2000 issues not related to its core systems,  including  issues with third-party
suppliers and warehouse  communications.  Based on its initial  evaluation,  the
Company does not believe that the cost of remedial  actions will have a material
adverse effect on the Company's  results of  operations,  liquidity or financial
condition. However, due to the general uncertainty of the Year 2000 readiness of
third-party suppliers and customers,  the Company is unable to determine at this
time whether the  consequences of Year 2000 failures will have a material impact
on the Company's results of operations,  liquidity or financial  condition.  The
Company  believes  that,  with the  implementation  of new business  systems and
completion   of  projects  as  scheduled,   the   possibility   of   significant
interruptions of normal operations should be reduced.

                                       11
<PAGE>
PART II:         Other Information


ITEM 2:          Changes in Securities and Use of Proceeds

(F)     USE OF PROCEEDS
         1.     Effective date:  November 12, 1998
         2.     Offering date:  November 13, 1998
         3.     Not applicable
         4.     (i)      The offering terminated November 17, 1998
                (ii)     Managing  Underwriter:  Network 1 Financial Securities,
                         Inc.
                (iii)    Title of Securities Registered:  Common Stock, $.01 par
                         value per share
                (iv)     Amount  Registered:  1,150,000  shares  by the  issuer,
                         1,042,000 shares by selling security holders  Aggregate
                         Offering Price: $13,800,000 by the issuer,  $12,504,000
                         by selling  security  holders  Amount  Sold:  1,000,000
                         shares Aggregate Offering Price of Amount Sold to Date:
                         $12,000,000
                (v)      No expenses  were  incurred  during the period from the
                         effective  date  of  the  Securities  Act  registration
                         statement  (November 12, 1998) and ending on the ending
                         date  of the  reporting  period  (September  30,  1998)
                         because  the  ending  date  of  the  reporting   period
                         occurred  prior to the effective date of the Securities
                         Act registration statement.
                (vi)     Not applicable
                (vii)    Not applicable
                (viii)   Not applicable


ITEM 4:          Submission of Matters to a Vote of Security Holders

In the three months ended  September 30, 1998, the following  actions were taken
by written consent of the stockholders of the Company pursuant to Section 228 of
the General Corporation Law of the State of Delaware:

                                  No. of Shares
                                    Approving
         ACTION TAKEN             ACTION TAKEN                  DATE OF APPROVAL

1. Changing Company name to       3,774,507 (pre-split shares)   July 9, 1998
   "Delicious Brands, Inc."
2. Approving a 1-for-2 reverse    3,774,507 (pre-split shares)   July 9, 1998
   stock split of the Common
   Stock of the Company

There were  6,565,656  shares of Common Stock  outstanding  during the period in
which written  consents  were  delivered to the Company.  Written  notice of the
actions described above was sent to all stockholders on July 16, 1998.

ITEM 6:   Exhibits and reports on Form 8-K:
          a)     Exhibits:  27 - Financial Data Schedule
          b)     Form 8-K:  None


                                       12
<PAGE>
                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                                DELICIOUS BRANDS, INC.
                                                      (Registrant)

       December 28, 1998                            /s/ Michael J. Kirby
---------------------------------               --------------------------------
             Date                                    Michael J. Kirby
                                                 President, Director and
                                                 Chief Executive Officer


       December 28, 1998                           /s/ Jeffrey W. Weiner
---------------------------------               --------------------------------
           Date                                          Jeffry W. Weiner
                                                        Vice President and
                                                      Chief Financial Officer