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, 1999
                              --------------------------------------------------

[   ]       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                                  06-1255882
-----------------------------------------         ------------------------------
     (State of other jurisdiction of                    (I.R.S. Employer
     incorporation or organization)                   Identification Number)

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


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


     4,666,085 shares of Common Stock were outstanding on October 29, 1999.
<PAGE>
                             DELICIOUS BRANDS, INC.

                                    FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1999


                                    I N D E X


Part I:      Financial Information                                          Page

    Item 1.  Financial Statements:

             Balance Sheets as of September 30, 1999 and December 31, 1998   2

             Statements of Operations, Three and Nine Months Ended           3
                  September 30, 1999 and 1998

             Statements of Cash Flows, Nine Months Ended September 30,       4
                  1999 and 1998

             Notes to Condensed Financial Statements                         5

    Item 2.  Management's Discussion and Analysis of Financial Condition     7
                  and Results of Operations

    Item 3.  Quantitative and Qualitative Disclosure About Market Risk       12


Part II:     Other Information

    Item 5.  Other Information                                               13

    Item 6.  Exhibits and Reports on Form 8-K                                13


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

                                                                                                 September 30,      December 31,
                                                                                                 -------------      ------------
                                                                                                     1999               1998
                                                                                                     ----               ----
                                                                                                 (unaudited)
ASSETS
Current Assets:
<S>                                                                                             <C>                <C>
      Cash                                                                                      $           0      $     981,646
      Accounts receivable (including $738,894 and $324,070,
            respectively, due from related parties, net of allowances of
            $823,877 and $800,980, respectively)................................................    6,144,020          5,108,747
      Inventory                                                                                     1,369,575          1,879,041
      Due from distributors.....................................................................       99,317             99,317
      Prepaid expenses and other current assets.................................................      378,518            327,964
                                                                                                -------------      -------------
                                                                                                    7,991,430          8,396,715
                                                                                                -------------      -------------
Property and Equipment, Net of Accumulated Depreciation.........................................      299,282            381,185
                                                                                                -------------      -------------

Other Assets:
      Goodwill..................................................................................    9,598,626         10,011,946
      Other.....................................................................................    1,167,988            436,261
                                                                                                -------------      -------------
                                                                                                   10,766,614         10,448,207
                                                                                                -------------      -------------
                                                                                                $  19,057,326      $  19,226,107
                                                                                                -------------      -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
      Bank loan payable.........................................................................$   3,277,845      $   3,665,828
      Notes Payable.............................................................................    5,250,000                  0
      Current portion of subordinated debt......................................................      393,332            393,332
      Accounts payable (including $60,455 and $82,040, respectively,
            due to related parties).............................................................    5,757,920          7,173,870
      Due to distributors.......................................................................      541,626            532,769
      Accrued expenses..........................................................................    2,563,829          2,954,389
      Current portion of long-term liabilities..................................................      759,430            904,838
                                                                                                -------------      -------------
                                                                                                   18,543,982         15,625,026
Long-term Liabilities:
      Restructuring liability...................................................................      379,121            544,679
      Packaging loss liability..................................................................      200,000            200,000
                                                                                                -------------      -------------
                                                                                                      579,121            744,679
                                                                                                -------------      -------------

Stockholders'  Deficit:
      Preferred  stock,  $.01  par  value  1,000,000  shares authorized:
            Class A designated 245,000 shares with a liquidation value of
            $8.00 per share, 189,584 and 195,834 shares issued and
            outstanding in 1999 and 1998, respectively..........................................    1,516,668          1,566,668
            Class B,  designated 35,000 shares issued and
            outstanding in 1999.................................................................          350                  0
      Common Stock,  $.01 par value, 25,000,000 shares authorized,
            4,715,010 and 4,481,767 shares issued in 1999 and 1998,
            respectively........................................................................       47,150             44,818
      Additional paid-in capital................................................................   20,420,002         18,343,209
      Accumulated deficit....................................................................... (21,888,898)       (16,937,244)
                                                                                                -------------      -------------
                                                                                                       95,272          3,017,451
      Less, common stock in treasury at cost....................................................    (161,049)          (161,049)
                                                                                                -------------      -------------
            Total stockholders' equity (deficit)................................................     (65,777)          2,856,402
                                                                                                -------------      -------------
                                                                                                $  19,057,326      $  19,226,107
                                                                                                =============      =============
</TABLE>

         The accompanying notes are an integral part of this statement.
                                       2


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

<TABLE>
<CAPTION>

                                                        Three Months Ended September 30,        Nine Months Ended September 30,
                                                        -------------------------------         ---------------- --------------
                                                               1999              1998                 1999               1998
                                                        -----------------     ---------         -------------   ---------------
<S>                                                       <C>                 <C>                 <C>                  <C>
Net Sales (including approximately
      $1,356,000, $1,282,000, $3,634,000
      and $5,050,000, respectively, to related
      parties)..........................................  $ 9,142,453         $17,491,396         $ 32,873,672         $39,822,411

Cost of Sales (including approximately
      $2,000, $968,000, $19,000
      and $2,881,000,  respectively, from
      related parties)..................................    6,935,195          13,241,731           25,252,463          30,688,685
                                                          -----------         -----------         -----------          -----------
Gross Profit............................................    2,207,258           4,249,665            7,621,209           9,133,726
                                                          -----------         -----------         -----------          -----------
Selling, general and administrative.....................    4,455,798           4,636,586           12,127,598          10,465,540
                                                          -----------         -----------         -----------          -----------
Loss from Operations:                                      (2,248,540)           (386,921)          (4,506,389)         (1,331,814)
                                                          -----------         -----------         -----------          -----------
Other Income (Expense):
      Interest Expense..................................     (142,158)           (368,837)            (484,234)           (883,351)
      Other, net........................................       (3,894)              2,611              117,303              40,416
                                                          -----------         -----------         -----------          -----------
                                                             (146,052)           (366,226)            (366,931)           (842,935)
                                                          -----------         -----------         -----------          -----------
Loss before Provision for Income Taxes..................   (2,394,592)           (753,147)          (4,873,320)         (2,174,749)
Provision for Income Taxes..............................            -                   -                    -                   -
                                                          -----------         -----------         ------------         -----------
Net Loss    ............................................  $(2,394,592)        $  (753,147)        $ (4,873,320)        $(2,174,749)
                                                          ===========         ===========         ============         ===========
Earnings per Share:
      Basic:
            Net Loss per common share...................  $      (.52)        $      (.23)        $      (1.10)        $      (.67)
                                                          ===========         ===========         ============         ===========
            Weighted average number of
            common shares outstanding..................     4,590,270           3,282,842            4,489,675           3,264,380

      Diluted:
            Net loss per common share..................   $      (.52)        $      (.23)        $      (1.10)        $      (.67)
                                                          ===========         ===========         ============         ===========
            Weighted average number of
            common shares outstanding..................     4,590,270           3,282,842            4,489,675           3,264,380
</TABLE>


The accompanying notes are an integral part of this statement.

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

<TABLE>
<CAPTION>

                                                                                     Nine Months Ended Sept. 30,
                                                                                     ---------------------------
                                                                                      1999                1998
                                                                                      ----                ----
<S>                                                                           <C>                  <C>
Cash Flows from Operating Activities:
      Net loss    ............................................................$   (4,873,320)      $    (2,174,749)
      Adjustments to reconcile net loss to net cash used in
            operating activities:
            Common Stock issued for serviced rendered.........................       360,000                     0
            Depreciation and amortization.....................................       587,304               907,841
            Provision for bad debts...........................................       334,547               317,144
            Increase (Decrease) in cash from changes in:
                  Accounts receivable.........................................    (1,369,820)           (1,562,589)
                  Inventory...................................................       509,466              (999,139)
                  Due from distributors.......................................             0               112,378
                  Prepaid expenses and other current assets...................       (50,554)               70,779
                  Other assets................................................        84,577              (262,229)
                  Accounts payable and accrued expenses.......................    (2,138,008)            3,850,969
                  Due to distributors.........................................         8,857               215,210
                  Accrued restructuring liabilities...........................      (165,558)             (146,777)
                  Other liabilities...........................................      (145,408)             (186,186)
                                                                               -------------       ---------------
      Net cash provided by (used in) operating activities.....................    (6,857,917)              142,652
                                                                               -------------       ---------------
Cash Flows from Investing Activities:
      Payment for purchase of assets of Salerno Foods,
                  L.L.C. (net of cash acquired of $12,564)....................             0            (3,709,599)
      Purchase of property and equipment......................................       (71,638)              (69,539)
                                                                               -------------       ---------------
      Net cash used in investing activities...................................       (71,638)           (3,779,138)
                                                                               -------------       ---------------
Cash Flows from Financing Activities:
      Payments of long-term debt..............................................             0               (15,498)
      Proceeds (Payments) of bank loan payable, net...........................      (387,983)           (1,558,419)
      Checks issued in excess of funds on deposit.............................       331,498               790,182
      Proceeds from issuance of notes payable.................................     5,360,000             3,500,000
      Payment of notes payable................................................      (110,000)                    0
      Payment of notes payable issuance costs.................................      (836,747)                    0
      Proceeds from issuance of preferred stock...............................     1,750,000                     0
      Proceeds from issuance of common stock..................................       243,191               840,000
      Payment of preferred stock dividend.....................................       (78,334)                    0
      Initial public offering costs...........................................             0              (583,738)
      Payments of stock issuance costs........................................      (323,716)             (144,390)
                                                                               -------------       ---------------
      Net cash provided by financing activities...............................     5,947,909             2,828,137
                                                                               -------------       ---------------
Decrease in Cash..............................................................      (981,646)             (808,349)
Cash, Beginning of Period.....................................................       981,646               808,349
                                                                               -------------       ---------------
Cash, End of Period...........................................................$            0       $             0
                                                                               =============       ===============
Supplemental Disclosure of Cash Flow Information:
      Cash paid during the period for:
            Income taxes......................................................$           0        $             0
                                                                               =============       ===============
            Interest..........................................................$     508,910        $       663,640
                                                                               =============       ===============
</TABLE>
Supplemental Disclosure of Noncash Financing Activities:

      On August 18,  1999  165,000  shares of common  stock were issued upon the
      exercise of outstanding  options.  The total consideration for the 165,000
      shares,  $360,000,  was  received  in  exchange  for  advisory  consulting
      services.

         The accompanying notes are an integral part of this statement.

                                       4
<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 Form
10-K of  Delicious  Brands,  Inc.  (the  "Company")  dated April 15,  1999.  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 nine months ended September 30, 1999
include the  operating  results of Salerno  whereas the  comparable  nine months
ended for the prior year  include  the  operating  results of Salerno  beginning
April 3, 1998.

The following  unaudited pro forma  information  has been prepared  assuming the
acquisition  had  taken  place at  January  1,  1998.  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, 1999
                                                   ------------------
         Net sales.........................      $         48,327,000
         Loss before income taxes..........      $         (3,486,000)
         Net loss..........................      $         (3,486,000)
         Net loss per share:
               Basic.......................      $              (1.07)
               Diluted.....................      $              (1.07)

BUSINESS AND OWNERSHIP

During the fourth quarter of 1998, the Company  issued  1,150,000  shares of its
Common Stock,  at $12.00 per share, in an initial public  offering.  Proceeds of
the offering were  $10,690,684  net of  commissions  and other related  expenses
totaling $3,109,316.

On April 12, 1999, the Company  consummated a private placement of 35,000 shares
of Series B Convertible Preferred Stock, $.01 par value per share, and a warrant
to purchase  700,000  shares of Common  Stock,  for an aggregate  price of $1.75
million. Proceeds of the offering were $1,456,290,  net of commissions and other
related expenses totaling $293,710. Each share of Series B Convertible Preferred
Stock is  currently  convertible  into five shares of Common  Stock,  subject to
certain  antidilution  provisions.  The  warrant to purchase  700,000  shares of
Common  Stock has an  initial  exercise  price of $0.01 per  share,  subject  to
certain  antidilution  provisions,  for a term of ten years from the date of its
issuance.


                                       5
<PAGE>

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 shares of Common Stock
outstanding  during each period.  Preferred stock dividends,  totaling  $78,334,
were paid during the three months ended March 31, 1999 and have been included in
both the basic and diluted net income (loss) per share calculations for the nine
months ended  September 30, 1999. 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.

3.       INVENTORY

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

4.       RECENT ACCOUNTING PRONOUNCEMENTS

Effective  January 1, 1999,  the Company  adopted FAS No. 133,  "Accounting  for
Derivatives Instruments and Hedging Activities," which required the recording of
all  derivatives  on the balance sheet at fair value,  and Statement of Position
98-5 (SOP 98-5),  "Reporting on the Cost of Start-up Activities," which requires
costs of start-up  activities and organization costs to be expensed as incurred.
The adoption of FAS No. 133 and SOP 98-5 had no impact on the Company's  results
of operations, financial position or cash flows.

5.       SUBORDINATED DEBT

On April  27,  1999,  the  remaining  outstanding  9%  Subordinated  Convertible
Promissory Notes (the "9% Notes"),  aggregate  principal amount of approximately
$393,000,  matured.  The  Company  has not repaid the 9% Notes.  The  Company is
currently  negotiating  with the  holders  of the 9% Notes  with  regard  to the
conversion  of the 9% Notes to  equity.  As the  Company  failed to repay the 9%
Notes or to negotiate  their  conversion  into equity on or before May 27, 1999,
the Company is in default of the terms of the 9% Notes.

6.       BORROWINGS

On August 18, 1999, the Company issued $360,000  aggregate  principal  amount of
promissory  notes (the "Notes").  Interest on the Notes accrued at a rate of 10%
per annum.  A Note,  $250,000  principal  amount,  was converted at the holder's
request to an 8% Note (as defined below) on August 30, 1999. The remaining Note,
$110,000 principal amount,  along with all accrued interest on the Note was paid
on September 3, 1999.

On August 30, 1999, the Company issued $5,250,000  aggregate principal amount of
8% Non-Negotiable  Unsecured Convertible  Promissory Notes (the "8% Notes"). The
8% Notes and  accrued  interest  thereon  are due and  payable one year from the
issuance of the 8% Notes. The 8% Notes are convertible,  at the option of the 8%
Note  holder,  into shares of the  Company's  common  stock,  $.01 par value per
share, at the rate of one share for each $5.00 of outstanding  principal  amount
of 8% Notes.  No  conversion  can take  place  until the  Company  has  obtained
approval of The Nasdaq  Stock  Market  ("Nasdaq")  of the  Company's  additional
listing  application  in respect of the shares of common stock to be issued upon
conversion.

                                       6
<PAGE>
                     MANAGEMENT'S DISCUSSION AND 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 nine months ended September 30, 1999
include the  operating  results of Salerno  whereas the  comparable  nine months
ended for the prior year include the results of Salerno beginning April 3, 1998.

RESULTS OF OPERATIONS

Net Sales.  Net sales  decreased  48% to $9.1 million for the three months ended
September  30,  1999.  Delicious  brand  product  sales  decreased  $3.6 million
partially as a result of changes in the buying habits of distributors as well as
increased  competition  from  private  label and national  brands.  Distributors
formerly visited retailers multiple times each week and relied on unit volume to
earn profits.  Distributors  currently  rely on less visits per week,  and lower
volume sales at a higher gross  margin.  Effective  August 2, 1999,  the Company
terminated business with its largest distributor of Delicious brand products due
to  poor  performance  and  replaced  it  with  new  distributors.  The  Company
experienced  a  decline  in sales  due to the start up  process.  Salerno  brand
product sales as compared to 1998 decreased  $4.6 million  primarily as a result
of reduced  sales to grocery  chains,  caused by increased  competition,  in two
regions of the country and lower volume sales to certain national accounts. Both
brands'  sales were  negatively  affected by the  Company's  inability to obtain
inventory,  as discussed in "Liquidity and Capital  Resources"  below. Net sales
decreased 17% to $32.9 million for the nine months ended September 30, 1999. The
net sales decrease, $6.9 million, resulted primarily from the sales reduction in
Delicious  and Salerno  discussed  above,  partially  offset by the inclusion of
Salerno for the entire nine months in 1999.

Gross  Profit.  Gross profit  decreased 48% to $2.2 million for the three months
ended  September  30,1999.  The gross profit  decrease,  $2.0 million,  resulted
primarily from the sales reduction discussed above. Gross profit as a percentage
of sales  remained  constant  for the three months  ended  September  30,1999 as
Frookie and Delicious gross margins  increased 2.9% while Salerno's gross profit
decreased  by 1.3%.  The gross  margin  percentage  increased  for  Frookie  and
Delicious product lines as the Company  concentrated on raising gross margins by
reducing promotion costs and obtaining lower supplier costs.  Salerno's decrease
in gross  margin  percentage  was a result of increased  promotional  allowances
caused by  competitive  pressures  in the premium  sector of the cookie  market.
Gross profit  decreased  17% to $7.6 million and gross profit as a percentage of
sales  increased  .3% for the nine months ended  September  30, 1999.  The gross
profit decrease, $1.5 million, resulted primarily from the reduced sales and the
gross margin  variance  discussed  above,  partially  offset by the inclusion of
Salerno for the entire nine months in 1999.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses decreased 4% to $4.5 million for the three months ended
September 30, 1999. The selling,  general and  administrative  expense decrease,
$181,000,  resulted  primarily  from lower selling  expenses  related to reduced
sales offset by higher advisory  consulting fees and severance  costs.  Selling,
general and administrative  expenses increased 16% to $12.1 million for the nine
months ended September 30, 1999. The selling, general and administrative expense
increase,  $1.7  million,  resulted  from the  inclusion  of the  April 3,  1998
acquisition of Salerno partially offset by decreases noted above.

Other Income  (Expense).  Other  expenses  decreased  60% to $146,000 and 56% to
$367,000 for the three and nine months ended  September 30, 1999,  respectively.
For the three and nine months ended September 30, 1999 interest expense declined
$227,000  and  $399,000,  respectively.  This  decrease  was  primarily  due  to
additional  interest expense related to the April 3, 1998 acquisition of Salerno
incurred during the six months ended September 30, 1998.

Provision  for Income Tax. The  provision  for income tax for the three and nine
months  ended  September  30,  1999 was zero as a  result  of there  being a net
operating  loss for the period for which a valuation  allowance  was provided



                                       7
<PAGE>

to reduce the tax benefit of this loss.  The  valuation  allowance for the three
and nine months ended  September  30, 1999  increased  $934,000 and  $1,900,000,
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 and
the effect of the increase in the valuation allowance.

Net Loss.  Net loss  increased  218% to $2.4  million for the three months ended
September 30, 1999 and 124% to $4.9 million for the nine months ended  September
30, 1999. The increased losses were a result of the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

In recent  periods,  the Company has utilized  its working  capital and proceeds
from both private  placements  and the Company's  initial  public  offering (the
"Initial  Public  Offering") of common stock,  $.01 par value per share ("Common
Stock") to cover operating deficits.  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 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 1998 and are not
expected to increase significantly in 1999. Consequently,  additions to property
and equipment are not expected to be material in future periods.

On  February  6, 1998,  the Company  consummated  a second  closing of a 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 March 30, 1998, the Company borrowed $500,000 (the "Acquisition  Loan"). Such
indebtedness  bore  interest  at the rate of 12% per  annum and  matured  on the
consummation of the Company's  Initial Public Offering on November 17, 1998. The
Acquisition  Loan and accrued  interest thereon were repaid from the proceeds of
the Initial Public Offering.

On April 3, 1998,  the Company  entered into an amendment to a revolving  credit
facility with U.S. Bancorp Republic Commercial Finance,  Inc. ("Republic") 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  (9.75%  at  September  30,  1999).  Borrowings  under the
revolving  credit  facility at September 30, 1999 were $3.3 million.  Borrowings
under the  revolving  credit  facility  are  collateralized  by a first  lien on
substantially  all of the assets of the Company.  The revolving  credit facility
expires on November 30, 1999. Republic has notified the Company of its intention
not to renew the revolving  credit  facility,  but have granted the Company a 60
day extension of the November 30, 1999 expiration date. The Company is currently
in negotiations  with other lending  organizations  to establish a new revolving
credit facility. No assurance can be made that the Company will be able to enter
into a new  facility  on  acceptable  terms or at all.  Failure  to obtain a new
facility  would have a material  adverse  effect on the  Company's  business and
financial condition.

On April 3, 1998,  the Company  consummated  the  acquisition  of  Salerno.  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 Initial Public
Offering.


                                       8
<PAGE>

As of August 1, 1998, holders of approximately $1.6 million aggregate  principal
amount  of  9%  Subordinated  Convertible  Promissory  Notes  (the  "9%  Notes")
exchanged  such notes for an aggregate of 195,834 shares of Series A Convertible
Preferred Stock, $.01 par value per share ("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  the Initial  Public  Offering of
1,000,000  shares of Common Stock,  at a price of $12.00 per share.  On December
31, 1998, the Company consummated the sale of 150,000 shares of Common Stock, at
a price of $12.00 per  share,  pursuant  to the  underwriters'  exercise  of the
over-allotment  option. After deducting underwriting discounts and expenses, the
Company  received  approximately  $10.7 million of net proceeds from the Initial
Public Offering.

On April 12, 1999, the Company  consummated a private placement of 35,000 shares
of Series B Convertible  Preferred  Stock,  $.01 par value per share  ("Series B
Preferred Stock"), and a warrant to purchase 700,000 shares of Common Stock, for
an  aggregate  price of $1.75  million.  The net  proceeds of $1.5  million were
applied by the Company primarily to reduce  outstanding trade payables balances.
Each share of Series B Preferred Stock is currently convertible into five shares
of Common  Stock,  subject to certain  antidilution  provisions.  The warrant to
purchase  700,000 shares of Common Stock has an initial  exercise price of $0.01
per share, subject to certain antidilution  provisions,  for a term of ten years
from the date of its issuance.

On April 27, 1999, 9%  promissory  notes in the  aggregate  principal  amount of
approximately  $393,000 matured.  The Company did not repay the promissory notes
and currently does not have funds to repay the promissory notes.

On August 18, 1999,  the Company  issued  $360,000  aggregate  principal  amount
promissory  notes (the "Notes").  Interest on the Notes accrued at a rate of 10%
per annum.  A Note,  $250,000  principal  amount,  was converted at the holder's
request to an 8% Note (as defined below) on August 30, 1999. The remaining Note,
$110,000 principal amount,  along with all accrued interest on the Note was paid
on September 3, 1999.

On August 30, 1999, the Company issued $5,250,000  aggregate principal amount of
8% Non-Negotiable  Unsecured Convertible  Promissory Notes (the "8% Notes"). The
8% Notes and  accrued  interest  thereon  are due and  payable one year from the
issuance of the 8% Notes. The 8% Notes are convertible,  at the option of the 8%
Note holder,  into shares of the Company's Common Stock at the rate of one share
for each $5.00 of outstanding  principal  amount of 8% Notes.  No conversion can
take place until the Company has  obtained  approval of The Nasdaq  Stock Market
("Nasdaq") of the Company's  additional  listing  application  in respect of the
shares of Common Stock to be issued upon conversion.

During July and August 1999,  the Company was unable to obtain all the inventory
needed to fill customer orders, due to its inability to pay vendor  obligations.
Certain  vendors  who  refused to ship  merchandise  began to provide  inventory
during  September  as the  proceeds of the 8% Notes were applied to reduce trade
payables.

Currently,  the Company  has  insufficient  funds for its needs.  The Company is
seeking  additional  debt  and/or  equity  financing;  however,  there can be no
assurance that additional funds can be obtained on acceptable  terms, if at all.
If the Company is unable to obtain  additional  financing  or generate  positive
cash flow, the Company's business will be materially adversely affected.

FORWARD-LOOKING STATEMENTS

This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe  harbors  created  thereby.  Although  the  Company  believes  that the
assumptions  underlying  the



                                       9
<PAGE>

forward-looking   statements  contained  herein  are  reasonable,   any  of  the
assumptions  could  be  inaccurate  and  are  dependent  on  certain  risks  and
uncertainties, and therefore, there can be no assurance that the forward-looking
statements  included in this report will prove to be  accurate.  In light of the
significant  uncertainties  inherent in the forward-looking  statements included
herein,  the  inclusion  of  such  information  should  not  be  regarded  as  a
representation  by the Company or any other person that the objectives and plans
of the Company will be achieved.  Certain of these major risks and uncertainties
are described below.

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 has  completed an  assessment of Year 2000 issues,
including issues with third-party suppliers and warehouse communications.  Based
on its  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.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

PREVIOUS DEFAULT ON REPAYMENT OF PROMISSORY NOTES

In  April  1999,   promissory  notes  in  the  aggregate   principal  amount  of
approximately  $393,000 matured.  The Company did not repay the promissory notes
and currently does not have funds to repay the promissory notes and believes its
credit facility with Republic  prohibits  repayment of the principal  portion of
these promissory notes.  There can be no assurance that the noteholders will not
utilize any or all legal means necessary to recover the principal  amount of the
promissory  notes,  including  an  action  for  judgment  or  the  filing  of an
involuntary petition for bankruptcy, which may have a material adverse effect on
the Company's business, results of operations and financial condition.

HISTORICAL AND PROJECTED FUTURE LOSSES; ACCUMULATED DEFICIT; NET WORKING CAPITAL
DEFICIT

Since 1994, the Company has not operated  profitably and has incurred  continued
net losses. Additionally, the Company's negative net working capital (the amount
by which current liabilities exceed current assets) continues to increase and is
currently  insufficient  to operate the  Company.  The Company  expects to incur
additional  net losses  through  1999.  Management  of the  Company is unable to
predict  the  extent  of any  future  losses  or the time  required  to  achieve
profitability.  Future operating results will depend on many factors,  including
the  demand  for  the  Company's  products,  the  level  of  product  and  price
competition, the Company's success in maintaining and expanding its distribution
channels,  the  ability of the  Company to develop  and market  products  and to
control costs and general economic conditions.

RELIANCE ON OUTSIDE PRODUCT MANUFACTURING

The Company relies  exclusively on outside  manufacturers to produce and deliver
its  products  to its  distributors.  The  Company  does not have any  long-term
contracts  with its  manufacturers.  Due to the Company's  current  negative net
working capital,  many of the Company's outside manufacturers have restricted or
eliminated  credit terms and  currently  require  payment  upon  delivery of the
Company's products.  During July and August,  certain  manufacturers  refused to
ship product due to the Company's liquidity  problems.  Vendor shipments resumed
in September as the proceeds of the $5.25 million raised from the sale of the 8%
Notes was applied to reduce trade payables.  One  manufacturer has given written
notice to the  Company  and  Republic  of the  Company's  alleged  breach of its
manufacturing  agreement  with that  manufacturer  for failure to timely pay its
invoices, but continues



                                       10
<PAGE>

to ship  product to the Company.  No assurance  can be given that if the Company
needed  to  change  manufacturers,  it  would  be able to do so on a  timely  or
effective basis. Additionally,  production problems encountered by these outside
manufacturers  could have a material adverse effect on the business,  results of
operations and financial condition of the Company.  Any such production problems
could  have  a  greater  adverse  effect  on  the  Company  as a  result  of  it
streamlining of its supplier base.

POTENTIAL NASDAQ DELISTING FOR VIOLATION OF MARKETPLACE RULE

In May  1999,  the  Company  received  a letter  from The  Nasdaq  Stock  Market
("Nasdaq")  stating that the Company had violated a Nasdaq marketplace rule as a
result of the  Company's  sale and  issuance  of shares of Series B  Convertible
Preferred  Stock,  $.01 par value per share,  and warrants to purchase shares of
Common Stock (the "Violation  Letter").  The Violation Letter stated that Nasdaq
would  initiate  its  delisting  procedure in respect of the Common Stock if the
Company failed to propose a satisfactory plan of compliance.  In accordance with
Nasdaq's  instructions,  the  Company  submitted  to Nasdaq a  proposed  plan of
compliance  that the Company  believed  would cure the alleged  violation of the
Nasdaq marketplace rule. The Company has received verbal approval of the revised
plan and is awaiting  formal written  approval.  If Nasdaq  determines  that the
proposal  is not  satisfactory  and  that the  Common  Stock  does  not  warrant
continued listing, Nasdaq will issue a formal notice of deficiency, and, pending
the outcome of a hearing,  if one is requested by the Company,  the Common Stock
may be delisted from Nasdaq. Moreover,  Nasdaq has discretionary power to delist
companies  from  Nasdaq  even if they  satisfy the  requirements  for  continued
listing.  There can be no assurance  that Nasdaq will  approve of the  Company's
proposal or, if a delisting hearing is conducted,  that the Company will prevail
at the delisting hearing. If the Company's Common Stock is delisted from Nasdaq,
trading,  if any, of the Common Stock would  thereafter  be conducted on the OTC
Bulletin  Board.  See  "Potential   Nasdaq  Delisting  for  Failure  to  Meeting
Maintenance Requirements."

POTENTIAL NASDAQ DELISTING FOR FAILURE TO MEET MAINTENANCE REQUIREMENTS

The  Company  currently  does not  satisfy  all of the  Nasdaq  SmallCap  Market
maintenance  criteria,  and its continued failure may result in the Common Stock
no longer  being  eligible  for  quotation  on the  Nasdaq  SmallCap  Market and
trading,  if any,  of the Common  Stock would  thereafter  be  conducted  in the
over-the-counter  market. Under Nasdaq rules, in order for the Company to remain
eligible for listing on the Nasdaq SmallCap Market,  among other things, (i) the
Company's  Common  Stock  must  have a  minimum  bid price of $1.00 and (ii) the
Company  must  have  minimum  tangible  net  assets  of $2  million  or a market
capitalization  of $35  million  or net income of  $500,000  in two of the three
prior years. On August 18, 1999, Nasdaq notified the Company that the Company no
longer  met the  maintenance  criteria  described  in (ii)  above,  and gave the
Company until  September 1, 1999 to submit its plan to achieve  compliance  with
all of the maintenance criteria.  The Company has not received Nasdaq's response
to such  plan.  If Nasdaq  delists  the Common  Stock  from the Nasdaq  SmallCap
Market,  an  investor  may find it more  difficult  to dispose  of, or to obtain
accurate  quotations as to the market value of, the Common  Stock.  Furthermore,
the  regulations  of  the  Securities  and  Exchange  Commission  ("Commission")
promulgated  under the  Securities  Exchange  Act of 1934,  as amended,  require
additional  disclosure  relating  to the  market  for penny  stocks.  Commission
regulations  generally  define a penny stock to be an equity security that has a
market  price of less than $5.00 per share,  subject  to certain  exceptions.  A
disclosure  schedule  explaining the penny stock market and the risks associated
therewith is required to be delivered to a purchaser and various sales  practice
requirements  are  imposed on  broker-dealers  who sell penny  stocks to persons
other  than   established   customers  and   accredited   investors   (generally
institutions).  In addition,  the  broker-dealer  must provide the customer with
current bid and offer  quotations for the penny stock,  the  compensation of the
broker-dealer  and  its  salesperson  in the  transaction  and  monthly  account
statements  showing the market value of each penny stock held in the  customer's
account.  If  the  Company's   securities  become  subject  to  the  regulations
applicable to penny stocks,  the market  liquidity for the Company's  securities
could be severely  affected.  In such an event,  the  regulations on penny stock
could limit the ability of broker-dealers  to sell the Company's  securities and
thus the  ability  of  purchasers  of the  Company's  securities  to sell  their
securities in the secondary market.


                                       11
<PAGE>


Item 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At  September  30, 1999,  the Company had no  outstanding  derivative  financial
instruments. All of the Company's transactions occur in U.S. dollars. Therefore,
the Company is not subject to significant foreign currency exchange risk.








                                       12
<PAGE>
Part II: OTHER INFORMATION

Item 2:  Changes in Securities and Use of Proceeds

         (C) The following  unregistered  securities  were issued by the Company
         during the three months ended September 30, 1999:

                              Description of             Number of
         Date of Issuance     Securities Issued         Shares Issued
         ----------------     -----------------         -------------
             8/18/99            Common Stock               225,000

         All of the above  shares were issued upon the  exercise of  outstanding
         options.  The  options  were  not  covered  by a formal  plan,  and had
         exercise  prices of $2 and $4 per share for  150,000  shares and 75,000
         shares,  respectively.  The total  consideration for the 225,000 shares
         was $600,000,  of which the Company  received  $240,000 in cash and for
         past advisory consulting services valued at $360,000.

Item 5: OTHER INFORMATION:

On August 18, 1999,  Nasdaq  notified the Company that the Company no longer met
the  maintenance  criteria  described in (ii) above,  and gave the Company until
September  1,  1999 to submit  its plan to  achieve  compliance  with all of the
maintenance  criteria.  The Company has not received  Nasdaq's  response to such
plan. If Nasdaq  delists the Common Stock from the Nasdaq  SmallCap  Market,  an
investor  may find it more  difficult  to  dispose  of,  or to  obtain  accurate
quotations  as to the  market  value of,  the  Common  Stock.  Furthermore,  the
regulations of the Securities and Exchange Commission ("Commission") promulgated
under the  Securities  Exchange  Act of 1934,  as  amended,  require  additional
disclosure  relating  to the market  for penny  stocks.  Commission  regulations
generally  define a penny stock to be an equity security that has a market price
of less than  $5.00 per  share,  subject to  certain  exceptions.  A  disclosure
schedule explaining the penny stock market and the risks associated therewith is
required to be delivered to a purchaser and various sales practice  requirements
are  imposed  on  broker-dealers  who sell penny  stocks to  persons  other than
established  customers and accredited  investors  (generally  institutions).  In
addition, the broker-dealer must provide the customer with current bid and offer
quotations for the penny stock,  the compensation of the  broker-dealer  and its
salesperson in the transaction and monthly account statements showing the market
value of each  penny  stock held in the  customer's  account.  If the  Company's
securities  become subject to the  regulations  applicable to penny stocks,  the
market  liquidity for the Company's  securities could be severely  affected.  In
such an event,  the  regulations  on penny  stock  could  limit the  ability  of
broker-dealers  to sell  the  Company's  securities  and  thus  the  ability  of
purchasers of the Company's securities to sell their securities in the secondary
market.

Item 6:  Exhibits and reports on Form 8-K:
         a)  Exhibits:  27 - Financial Data Schedule
         b)  Form 8-K: On  September  15,  1999,  the  Company  filed a Form 8-K
             disclosing  under Item 5 the sale and  issuance of the 8% Notes and
             the  appointment of Thomas Guinan as the Company's  Chief Executive
             Officer and President and his election to the Board of Directors.




                                       13
<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)


November 12, 1999                                 /s/ Thomas J. Guinan
----------------------------------                ------------------------------
            Date                                  Thomas J. Guinan
                                                  President, Director and
                                                  Chief Executive Officer



November 12, 1999                                 /s/ Jeffry W. Weiner
----------------------------------                ------------------------------
            Date                                  Jeffry W. Weiner
                                                  Executive Vice President and
                                                  Chief Financial Officer





                                       14