SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549

                               FORM 10-K

           [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended June 30, 1998

                                  OR

       [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from------------to-----------.

                      Commission file number 0-23048

                        LINCOLN SNACKS COMPANY
        (Exact name of registrant as specified in its charter)
          Delaware                             47-0758569
  (State of incorporation)          (I.R.S. Employer Identification No.)

   4 High Ridge Park, Stamford, Connecticut                 06905
   (Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code:  (203) 329-4545

    Securities registered pursuant to Section 12(b) of the Act:
                                                Name of each exchange on
      Title of each class                           which registered
      -------------------                           ----------------

           None                                      Not applicable

Securities registered pursuant to Section 12(g) of the Act

                  Common Stock, $.01 par value per share
                          (Title of Class)

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 by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendments to this Form 10-K.  [X]

The aggregate market value of voting stock held by non-affiliates of the 
registrant on September 14, 1998, was approximately $2,753,106.  On such 
date, the closing price of registrant's common stock was $1.813 per share.  
Solely for the purposes of this calculation, shares beneficially owned by 
directors, executive officers and stockholders of the registrant that 
beneficially own more than 10% of the registrant's voting stock have been 
excluded, except shares with respect to which such directors, officers and 
10% beneficial owners disclaim beneficial ownership.  Such exclusion should 
not be deemed a determination or admission by the registrant that such 
individuals are, in fact, affiliates of the registrant.

The number of shares of the registrant's Common Stock, $.01 par value, 
outstanding on September 14, 1998 was 6,331,790.

                    DOCUMENTS INCORPORATED BY REFERENCE:

To the extent specified, part III of this Form 10-K incorporates information 
by reference to the Registrant's definitive proxy statement for the 1998 
Annual Meeting of Shareholders.  

<PAGE>

This Annual Report on Form 10-K contains, in addition to historical 
information, certain forward- looking statements regarding future financial 
condition and results of operations.  The words "expect," "estimate," 
"anticipate," "predict," "believe," and similar expressions are intended to 
identify forward-looking statements.  Such statements involve certain risks 
and uncertainties.  Should one or more of these risks or uncertainties 
materialize, actual outcomes may vary materially from those indicated.  

                                  PART I
                                  ------

Item 1.  Business
------   --------

(a)      General Development of Business
         -------------------------------

Lincoln Snacks Company ("Lincoln Snacks" or the "Company") is one of the 
leading manufacturers and marketers in the United States and Canada of 
caramelized pre-popped popcorn.  The primary product line includes glazed 
popcorn/nut mixes and sweet glazed popcorn sold under the brand names 
Poppycock (Registered Trademark), Fiddle Faddle (Registered Trademark) and 
Screaming Yellow Zonkers (Registered Trademark).  In addition, 
the Company processes, markets and distributes nuts.  

The Company was formed in August 1992, at which time, the Company acquired 
the business and certain assets of Lincoln Snacks Company, a division of 
Sandoz Nutrition Corporation, an indirect subsidiary of the Swiss-based drug, 
pharmaceutical and hospital care company, Sandoz Ltd.  In March 1993, 
Carousel Nut Company, a newly formed wholly owned subsidiary of the Company 
("Carousel"), acquired the business and certain assets of Carousel Nut 
Products, Inc., a producer and marketer of roasted, dry roasted, coated, raw 
and mixed nuts.  In December 1993, Carousel was merged with and into the 
Company, and the operations of Carousel were integrated with the Company's 
plant in Lincoln, Nebraska in the first calendar quarter of 1994.  In March, 
1998, the Company acquired certain assets of Iroquois Popcorn Company 
("Iroquois"), a private label manufacturer of caramelized popcorn.  In June 
1998 Brynwood Partners III, L.P. purchased a controlling interest in 
the Company from Noel Group, Inc. ("Noel").  

The Company markets its Poppycock, Fiddle Faddle, Screaming Yellow Zonkers 
and nut products directly through independent brokers to grocery stores, 
supermarkets, convenience stores, drug stores, mass merchandise outlets, 
warehouse clubs, vending channels, military commissaries and other 
military food outlets, and other retailers.  

Planters Company, a unit of Nabisco, Inc. ("Planters"), exclusively 
distributed the Company's Fiddle Faddle and Screaming Yellow Zonkers 
products, pursuant to a Distribution Agreement dated June 6, 1995 (the 
"Distribution Agreement"), for an initial term which was originally scheduled 
to expire on June 30, 1997.  The Distribution Agreement required Planters to 
purchase an annual minimum number of equivalent cases of Fiddle Faddle 
and Screaming Yellow Zonkers during the initial term.  

On February 28, 1997, the Company and Planters entered into an amendment to 
the Distribution Agreement (the "Amendment"), which was further modified on 
May 9, 1997 (the "Letter Agreement"), pursuant to which the exclusive 
distribution arrangement with respect to the Company's Fiddle Faddle product 
was extended for an additional six month period expiring on December 31, 
1997, at which time the arrangement terminated.  Effective January 1, 1998 
and May 1, 1997, Planters ceased, and the Company resumed, marketing and 
distributing the Company's Fiddle Faddle and Screaming Yellow Zonkers 
products, respectively.  

The Amendment and Letter Agreement required Planters to purchase a specified 
number of manufactured cases of the Products and for Planters to compensate 
the Company for the remaining contract minimums for the twelve month period 
ended June 30, 1997.  The Amendment and Letter Agreement required Planters to 
compensate the Company for contract minimums for the six month period ended 
December 31, 1997 (six month minimums).  Planters has compensated the Company 
for contract minimums, which were 27% less than case sales made to Planters 
for the six month period ended December 31, 1996.  

(b)      Recent Developments
         -------------------

The Amendment required Planters to compensate the Company in the event that 
certain sales levels were not achieved during the calendar year ending 
December 31, 1997.  These sales levels were not achieved during the calendar 
year ending December 31, 1997 resulting in Planters compensating the Company 
$1.9 million which is partially offset on the Company's Statement of 
Operations by approximately $500,000 in non-recurring charges associated 
with initial efforts to rebuild the Fiddle Faddle brand ("Net Planters Other 
Income").  

Although the Amendment contains provisions designed to effect a smooth 
transfer of the distribution business back to the Company, there can be no 
assurance as to the long term effects of the transition.  See Management's 
Discussion and Analysis of Financial Condition and Results of Operations.  

In July and October, 1997, the Company entered into five year Trademark 
License Agreements  with Nabisco, Inc.  granting the Company, subject to the 
terms of the License Agreements, the right to use, commencing January 1, 
1998, certain Planters' trademarks in connection with the sales and marketing 
of the Company's Fiddle Faddle products in the United States and Canada. 

Net sales to Planters were 9% and 47% of net sales for the twelve months 
period ended June 30, 1998 and June 30, 1997, respectively.  Sales to 
Planters during the six months period ended December 31, 1997  represented 
payments,  in lieu of manufactured cases, at predetermined rates which are 
lower than the rates Planters paid for manufactured cases.  

(c)      Financial Information about Industry Segments
         ---------------------------------------------

The Company is engaged principally in one line of business: the 
manufacturing, marketing and distribution of pre-popped caramel popcorn.

(d)      Narrative Description of Business
         ---------------------------------

Products
--------
The Company manufactures and markets three nationally-recognized branded 
products.  Poppycock is a premium priced mixture of nuts and popcorn in a 
deluxe buttery glaze.  Fiddle Faddle is a more moderately priced brand of 
popcorn and peanut clusters with a candied glaze; a fat free version of 
Fiddle Faddle consists of popcorn with a caramel glaze.  Screaming Yellow 
Zonkers is produced by coating popcorn clusters with a sweet buttery glaze.  
The Company manufactures private label caramel popcorn in addition to 
co-packing caramel popcorn.  The Company also processes, markets and 
distributes nuts.  

Marketing, Sales and Distribution
---------------------------------
Lincoln Snacks' brands are broadly distributed through grocery stores, 
supermarkets, convenience stores, drug stores, mass merchandise outlets, 
warehouse clubs, vending channels, military commissaries and other military 
food outlets, and other retailers.  Selling responsibilities for Poppycock, 
Fiddle Faddle, Screaming Yellow Zonkers and the nut products in the U.S. are 
currently handled by five regional business managers located strategically 
across the U.S.  These regional business managers manage approximately 80 
brokers across the U.S. in all classes of trade.  These brokers receive a 
commission on net sales plus incentive payments.  The Company also has a 
business manager who manages all private label and contract manufacture 
accounts.  Certain exports and large volume customers are handled directly 
by Lincoln Snacks' personnel.  Pursuant to the Amendment, Lincoln Snacks 
resumed the sales and distribution of its Fiddle Faddle product as of 
January 1, 1998.  

Seasonality
-----------
Sales of Lincoln Snacks' products are seasonal, peaking during the third and 
fourth calendar quarters.  

Competition
-----------
Lincoln Snacks' primary products participate in the pre-popped caramel 
popcorn segment of the snack food market.  Poppycock competes with other 
premium quality snack products, while Fiddle Faddle and Screaming Yellow 
Zonkers compete directly with Crunch N' Munch (International Home Foods, 
Inc., Food Division), Cracker Jack (Frito Lay, Inc.) Orville Redenbacher 
(Hunt Wesson) and a number of other regional and local brands.  The Company's 
products also compete indirectly with traditional confections and other snack 
food products.

Significant Customers
---------------------
In the fiscal year ended June 30, 1998, the Company copacked product for 
Golden Valley Microwave Foods and made sales to Wal-Mart representing 18% and 
12% of the Company's sales, respectively.  Although the Company believes its 
relationship with these customers to be good, the loss of such customers 
could have a material adverse effect on the Company.  

Raw Materials and Manufacturing
-------------------------------
Substantially all of the raw materials used in Lincoln Snacks' production 
process are commodity items, including corn syrup, butter, margarine, brown 
and granulated sugar, popcorn, various nuts and oils.  These commodities are 
purchased directly from various suppliers.  The Company believes that such 
materials are in good supply and are available from multiple sources.  

The manufacturing facility located in Lincoln, Nebraska includes, among other 
things, continuous process equipment for enrobing popcorn and nuts, as well 
as four distinct high speed filling and packing lines for canisters, jars, 
single serving packs and bag-in-box packages.  The manufacturing and 
packaging equipment is sufficiently flexible to allow for the manufacture of 
other similar product lines or packaging formats.  The facility is being 
operated at an overall rate varying from approximately 37% to 81% of capacity 
depending on the season.  Lincoln Snacks' management believes that the 
facility is generally in good repair and does not anticipate capital 
expenditures other than normal maintenance and selected equipment 
modernization programs.

Trademarks
----------
Poppycock, Fiddle Faddle and Screaming Yellow Zonkers are registered 
trademarks of Lincoln Snacks.  The Company believes all its trademarks enjoy 
a strong market reputation denoting high product quality.

In July and October, 1997, the Company entered into five year Trademark 
License Agreements with Nabisco, Inc.  granting the Company, subject to the 
terms of the License Agreements, the right to use, commencing January 1, 
1998, certain Planters' trademarks in connection with the sales and marketing 
of the Company's Fiddle Faddle products in the United States and Canada. 

Governmental Regulation
-----------------------
The production, distribution and sale of the Company's products are subject 
to the Federal Food, Drug and Cosmetic Act; the Occupational Safety and 
Health Act; the Lanham Act; various federal environmental statutes; and 
various other federal, state and local statutes regulating the production, 
packaging, sale, safety, advertising, ingredients and labeling of such 
products.  Compliance with the above described governmental entities and 
regulations have not had and are not anticipated to have a material adverse 
effect on the Company's capital expenditures, earnings or competitive 
position.

Employees
---------
As of June 30, 1998, Lincoln Snacks had 93 full-time employees and 2 
part-time employees.  Employment at the Lincoln plant varies according to 
weekly and seasonal production needs, and averaged approximately 90 employees 
during fiscal 1998.  None of Lincoln Snacks' work force is unionized.  
Lincoln Snacks' management believes that Lincoln Snacks' relationship with 
its employees is good.

(e)      Financial Information about Foreign and Domestic Operations and 
         ---------------------------------------------------------------
         Export Sales
         ------------

Foreign operations accounted for less than 10% the Company's sales, assets 
and net income in each of the Company's last three fiscal years.  

Item 2.  Properties.
------   ----------

The Company's principal executive offices are located at 4 High Ridge Park, 
Stamford, Connecticut 06905.  The initial term of the lease on this space 
expires on September 30, 1999.

Lincoln Snacks manufactures and packages all of its products at its owned 
Lincoln, Nebraska manufacturing facility.  The Lincoln plant, constructed in 
1968, is a modern 74,000 square foot one-story building on a 10.75 acre site 
in a light industrial area in the city of Lincoln.  Approximately 67,000 
square feet of the facility is dedicated to production with the balance 
utilized for administration.  In October 1996, the Company sold land adjacent 
to its manufacturing facility in Lincoln, Nebraska.  At the same time, the 
Company entered into a ten year lease agreement for 50,000 square feet of a 
new warehouse which has been constructed on the land.  This facility 
accommodates all of Lincoln Snacks' current warehousing needs.  The Company's 
lease on this facility expires in July 2006, and there is a five year renewal 
option beyond 2006.

The Company believes its properties are sufficient for the current and 
anticipated needs of its business.

Item 3.  Legal Proceedings.
------   -----------------

The Company is not involved in any material pending legal proceedings. 


Item 4.  Submission of Matters to a Vote of Security Holders.
------   ---------------------------------------------------

       Not Applicable. 


                                    PART II
                                    -------
Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters
------   ---------------------------------------------------------------------

     A. Market Information.
        ------------------

The shares of Common Stock of the Company are traded on the NASDAQ Stock 
Market (Small Cap) under the symbol "SNAX".  The range of high and low 
reported sales prices for the Common Stock as reported by NASDAQ for each 
full quarterly period within the two most recent fiscal years were as follows:

<TABLE>
<CAPTION>
                                       Fiscal Year            Fiscal Year
                                          Ended                  Ended
                                      June 30, 1997          June 30, 1998
                                      -------------          -------------
                                      High      Low          High      Low
<S>                                 <C>       <C>         <C>        <C>
First Fiscal Quarter                 $1 1/2    $1 1/8      $1 13/16   $1 1/8
Second Fiscal Quarter                 1 3/4     1           2          1 3/8
Third Fiscal Quarter                  1 7/8     1           2  5/8     1 1/2
Fourth Fiscal Quarter                 1 9/16      7/8       2  3/8     1 3/4

</TABLE>

The public market for Common Stock is limited, and the foregoing quotations 
should not be taken as necessarily reflective of prices which might be 
obtained in actual market transactions or in transactions involving 
substantial numbers of shares.

     B. Holders.
        -------

 On September 14, 1998, as reported by the Company's transfer agent, shares 
of Common Stock were held by 34 persons, based on the number of record 
holders, including several holders who are nominees for an undetermined 
number of beneficial owners.

     C. Dividends.
        ---------

The Company has not declared or paid a cash dividend since its inception, and 
its present policy is to retain any earnings for use in its business.  
Payment of dividends is dependent upon the earnings and financial condition 
of the Company and other factors which its Board of Directors may deem 
appropriate.  The Company expects to use any future earnings in its 
operations and consequently does not intend to pay dividends on its Common 
Stock in the foreseeable future.  In addition, the Company is currently 
prohibited from declaring or paying any cash dividends on its capital stock 
by the terms of its bank loan agreement, as amended.  

Item 6.  Selected Financial Data
------   -----------------------

<TABLE>
<CAPTION>
                                                      (In thousands, except per share data)

                                        12 Months     12 Months     12 Months     12 Months     12 Months
                                          Ended         Ended         Ended         Ended         Ended
                                         June 30,      June 30,      June 30,      June 30,      June 30,
                                          1994          1995          1996          1997          1998
                                        ---------     ---------     ---------     ---------     ---------
<S>                                    <C>           <C>           <C>           <C>           <C>     
  Statement of Operations Data:
  Net sales                             $29,497       $27,136       $23,846(F2)   $23,102(F2)   $24,278(F3)
  Gross profit                           10,320        10,916         6,621(F2)     7,576(F2)     8,872(F3)
  Income (loss) from operations          (5,003)       (1,082)(F1)      897         1,609           292(F4)
  Net income (loss) prior to 
  dividends on preferred stock           (5,810)       (1,602)(F1)      511         1,443         1,667(F5)
  Basic and diluted net income 
  (loss) per common share                ($1.41)        ($.25)(F1)     $.08          $.23          $.26
  Weighted average number of 
  shares outstanding     
     Basic                                4,113         6,340         6,335         6,332         6,332
     Diluted                              4,113         6,340         6,335         6,332         6,342

                                         June 30,      June 30,      June 30,      June 30,      June 30,
                                          1994          1995          1996          1997          1998
                                        ---------     ---------     ---------     ---------     ---------
  Balance Sheet Data     
  Working capital (deficit)             $   327       $  (691)      $  (237)      $ 2,042       $ 3,500
  Total assets                           16,318        13,850        13,979        13,290        16,073
  Total long term debt                    1,909         1,109           309            --            --
  Stockholders' equity                    9,354         7,985         8,506         9,949        11,616

<FN>

    <F1>  Amount includes a non-recurring charge of $726,000 (or $.11 per 
          share) relating to the Distribution Agreement with Planters.

    <F2>  The financial impact of the Planters Distribution Agreement versus 
          historical results was reductions in revenue and gross profit which 
          were offset by reduced selling, marketing and distribution costs.  
          Reference is made to Management's Discussion and Analysis of 
          Financial Condition and Results of Operations.  

    <F3>  The financial impact of the termination of the Planters Distribution 
          Agreement on December 31, 1998 versus Fiscal 1996 and Fiscal 1997 was
          an increase in revenue and gross profit which were offset by 
          increased selling, distribution and marketing costs.  Reference is 
          made to Management's Discussion and Analysis of Financial Condition 
          and Results of Operations.

    <F4>  Amount includes a non-recurring charge of $484,000 (or $.08 per 
          share) which represents severance and other compensation costs in 
          connection with the resignation of the Company's former Chairman and 
          Chief Executive Officer.

    <F5>  Amount includes Net Planters Other Income of $1.4 million.  

</FN>
</TABLE>

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

Introduction
------------
The Company's net sales are subject to significant seasonal variation, with 
results from operations fluctuating due to these trends.  This seasonality is 
due to customers' buying patterns of Poppycock and nut products during the 
traditional holiday season.  As a result, third and fourth calendar quarter 
sales account for a significant portion of the Company's annual sales.  

On July 17, 1995, Planters Company, a unit of Nabisco, Inc. ("Planters"), 
began exclusively distributing the Company's Fiddle Faddle and Screaming 
Yellow Zonkers products (the "Products") pursuant to a distribution agreement 
dated June 6, 1995 (the "Distribution Agreement") for an initial term which 
was originally scheduled to expire on June 30, 1997.  The Distribution 
Agreement required Planters to purchase an annual minimum number of 
equivalent cases of the Products during the initial term.  

On February 28, 1997, the Company and Planters entered into an amendment to 
the Distribution Agreement (the "Amendment"), which was further modified on 
May 9, 1997 (the "Letter Agreement"), pursuant to which the exclusive 
distribution arrangement with respect to the Company's Fiddle Faddle product 
was extended for an additional six month period expiring on December 31, 
1997, at which time the arrangement terminated.  Effective January 1, 1998 
and May 1, 1997, Planters ceased, and the Company resumed, marketing and 
distributing the Company's Fiddle Faddle and Screaming Yellow Zonkers 
products, respectively.  

The Amendment and Letter Agreement required Planters to purchase a specified 
number of manufactured cases of the Products and for Planters to compensate 
the Company for the remaining contract minimums for the twelve month period 
ended June 30, 1997.  The Amendment and Letter Agreement required Planters to 
compensate the Company for contract minimums for the six month period ended 
December 31, 1997 (six month minimums).  Planters has compensated the Company 
for contract minimums, which were 27% less than case sales made to Planters 
for the six month period ended December 31, 1996.  

The Amendment also required Planters to compensate the Company in the event 
that certain sales levels were not achieved during the calendar year ending 
December 31, 1997.  These sales levels were not achieved during the calendar 
year ending December 31, 1997 resulting in Planters compensating the Company 
$1.9 million which is partially offset on the Company's Statement of 
Operations by approximately $500,000 in non-recurring charges associated with 
initial efforts to rebuild the Fiddle Faddle brand ("Net Planters Other 
Income").  

Although the Amendment contains provisions designed to effect a smooth 
transfer of the distribution business back to the Company, there can be 
no assurance as to the long term effects of the transition.  

In July and October, 1997, the Company entered into five year Trademark 
License Agreements  with Nabisco, Inc.  granting the Company, subject to the 
terms of the License Agreements, the right to use, commencing January 1, 
1998, certain Planters' trademarks in connection with the sales and marketing 
of the Company's Fiddle Faddle products in the United States and Canada. 

Net sales to Planters were 9% and 47% of net sales for the twelve months 
period ended June 30, 1998 and June 30, 1997, respectively.  Sales to 
Planters during the six months period ended December 31, 1997  represented 
payments,  in lieu of manufactured cases, at predetermined rates which are 
lower than the rates Planters paid for manufactured cases.  As a result of 
the termination of the Distribution Agreement, sales to Planters ceased as 
of January 1, 1998.  

Under the Agreement, which required Planters to purchase a minimum number of 
cases during the fiscal year, the Company sold the Products to Planters at a 
selling price which was reduced from the Company's historical customer 
selling prices.  Planters in turn was responsible for the sales and 
distribution of the Products to its customers, therefore, the Company did not 
have any selling, marketing or distribution costs associated with these 
Products.  The financial impact of the Agreement versus historical results 
was reflected in reductions in revenue and gross profit which were offset by 
reduced selling, marketing and distribution costs.  

Upon the termination of the Agreement on December 31, 1998, the Company 
resumed distribution of Fiddle Faddle at its historical selling prices.  
The financial impact of the termination of the Agreement versus the results 
under the Agreement was reflected in an increase in revenue which was offset 
by increased selling, marketing and distribution costs.  

Twelve months ended June 30, 1998 versus June 30, 1997
------------------------------------------------------
Overall net sales increased 5% or $1.2 million to $24.3 million for the 
twelve months ended June 30, 1998 versus $23.1 million in the corresponding 
period of 1997.  The sales increase is attributable to newly secured copack 
and private label business which was partially offset by declines in sales of 
Fiddle Faddle.  The Company sold 34% fewer cases of Fiddle Faddle to its 
customers and Planters in the twelve months ended June 30, 1998 than the 
number of cases sold to Planters under the Planters Agreement a year ago.  
Sales to Planters, excluding Net Planters Other Income, represented 9% and 
47% of net sales for the twelve months ended June 30, 1998 and 1997, 
respectively.  The termination of the Planters Agreement on December 31, 
1997, in addition to reduced minimums and sales rates for the six month 
period ended December 31, 1997, resulted in the sales decline to Planters.  
Sales to Planters during the six months period ended December 31, 1997 
represented payments, in lieu of manufactured cases, at predetermined rates 
which are lower than the rates Planters paid for manufactured cases during 
the corresponding period in 1996.  The sales declines are partially offset by 
the Company resuming distribution of Fiddle Faddle in January 1998 at 
historical selling prices which are higher than its selling prices to 
Planters.  

Gross profit increased 17% or $1.3 million to $8.9 million for the twelve 
months ended June 30, 1998 versus $7.6 million in the corresponding period of 
1997. Gross profit increased due to new copack and private label business, 
increased selling prices to historical levels resulting from the Company 
resuming distribution of Fiddle Faddle, and lower raw material costs.  These 
increases were partially offset by decreased Fiddle Faddle gross profits 
resulting from decreased case volume.  

Selling, general and administrative expenses increased 42% or $2.4 million to 
$8.1 million for the twelve months ended June 30, 1998 versus $5.7 million 
for the same period in 1997.  These expenses primarily increased during this 
period due to the Company resuming the marketing and distribution of the 
Fiddle Faddle and Screaming Yellow Zonkers business.  In addition, expenses 
increased relating to consumer promotions for the Company's other branded 
products.  

The non-recurring charge of $.5 million represents severance and other 
compensation costs in connection with the resignation of the Company's former 
Chairman and Chief Executive Officer.  

Net Planters Other Income of $1.4 million represents Planters compensation of 
$1.9 million to the Company for failing to achieve certain sales levels 
during the calendar year ending December 31, 1997 which was partially offset 
by approximately $.5 million in non-recurring charges associated with initial 
efforts to rebuild the Fiddle Faddle brand.  

The increase in gross profit was offset by increases in selling, general and 
administrative expenses and a non-recurring charge resulting in a decline of 
$1.3 million in income from operations.  The decline in income from 
operations was offset by Net Planters Other Income and interest income 
resulting in an increase in net income of $.2 million to $1.7 million for the 
twelve months ended June 30, 1998 versus $1.4 million in the corresponding 
period in 1997.

Twelve months ended June 30, 1997 versus June 30, 1996
------------------------------------------------------
Net sales decreased 3% or $.7 million to $23.1 million for the twelve months 
ended June 30, 1997 versus $23.8 million in the corresponding period of 
1996.  Sales to Planters and of the Company's  other branded product 
increased for the twelve months period ended June 30, 1997 versus the same 
period in 1996.  Such increases were offset by declines in the Company's Nut 
Division ("Nut Division") sales.  Sales to Planters represented 47% and 43% 
of net sales for the twelve months ended June 30, 1997 and June 30, 1996, 
respectively.  

Gross profit increased 14% or $1.0 million to $7.6 million for the twelve 
months ended June 30, 1997 versus $6.6 million in the corresponding period of 
1996.  The gross profit increase is the result of increased sales to Planters 
and of the Company's other branded product and increased manufacturing 
efficiencies.  These increases were partially offset by a decrease in Nut 
Division gross profits resulting from declines in sales.  

Selling, general and administrative expenses remained equal to a year ago of 
$5.7 million for the twelve months ended June 30, 1997.  

The increase in gross profit and the decrease in interest expense, resulted 
in an increase in net income of $.9 million to $1.4 million for the twelve 
months ended June 30, 1997 versus $.5 million in the corresponding period in 
1996.  

Twelve months ended June 30, 1996 versus June 30, 1995
------------------------------------------------------
Net sales decreased 12% or $3.3 million to $23.9 million for the twelve 
months ended June 30, 1996 versus $27.1 million in the corresponding period 
of 1995.  Combined case sales of Fiddle Faddle and Screaming Yellow Zonkers 
related to the Distribution Agreement were 38% higher than the corresponding 
period in 1995 while revenue dollars declined $2.0 million primarily due to 
the lower selling prices resulting from the Distribution Agreement.  Lincoln 
Snacks' sales, excluding sales relating to the Distribution Agreement, 
decreased 8% or $1.3 million versus the same period in 1995 primarily due to 
a decline in export sales attributable to changing market conditions in the 
Far East and a decrease in liquidation sales.  

Gross profit decreased $4.3 million to $6.6 million for the twelve months 
ended June 30, 1996 versus $10.9 million in the corresponding period of 
1995.  Gross profit primarily decreased as a result of lower selling prices 
under the Distribution Agreement. 

Selling, general and administrative expenses decreased $5.6 million to $5.7 
million in the twelve months ended June 30, 1996 versus $11.3 million the 
same period in 1995.  These expenses decreased during this period primarily 
due to cost reductions resulting from the Distribution Agreement.  

The decline in gross profits, more than offset by significantly lower 
selling, general and administrative expenses coupled with a decrease in 
non-recurring charges of $.7 million, resulted in an increase in net income 
of $2.1 million to $.5 million for the twelve months ended June 30, 1996 
versus a $1.6 million net loss in the corresponding period in 1995.

Liquidity and Capital Resources
-------------------------------
As of June 30, 1998, the Company had working capital of $3.5 million compared 
with a working capital of $2.0 million at June 30, 1997, an increase of $1.5 
million.  The increase in working capital is primarily attributable to a $3.5 
million increase in net cash provided by operations which was partially 
offset by the acquisition of certain assets of Iroquois Popcorn Company, 
capital expenditures and note payable repayments.  

Management continues to focus on increasing product distribution and 
continues to review all operating costs with the objective of increasing 
profitability and ensuring future liquidity.  However, there can be no 
assurance that any of these objectives will be achieved in future periods.  
Although the Amendment contained provisions designed to effect a smooth 
transfer of the distribution of the Fiddle Faddle business back to the 
Company, there can be no assurance as to the long term effects of the 
transition.  Management has secured new copack and private label business 
which partially offsets the decrease in Fiddle Faddle sales, however, there 
can be no assurance that this business will continue.  

The Company's short-term liquidity is affected by seasonal increases in 
inventory and accounts receivable levels, payment terms in excess of 60 days 
granted in some situations during certain months of the year, and seasonality 
of sales.  Inventory and accounts receivable levels increase substantially 
during the latter part of the third calendar quarter and during the remainder 
of the calendar year.

The following chart represents the net funds provided by or used in 
operating, financing and investment activities for each period as indicated.


<TABLE>
<CAPTION>
                                                      Twelve Months Ended
                                                      -------------------
                                                        (in thousands) 

                                              June 30, 1998      June 30, 1997
                                              --------------------------------
<S>                                               <C>                <C>
Cash provided by operating activities              $ 3,508            $ 3,141
Cash provided by (used in) investing activities     (1,222)                72
Cash used in financing activities                     (167)            (1,665)

</TABLE>

Cash provided by operating activities increased to $3.5 million during the 
twelve months ended June 30, 1998 compared to $3.1 million in 1997.  The 
increase in cash provided by operating activities is primarily due to the 
increase in the Company's net profit of $.2 million.   

Net cash used in investing activities of $1.2 million for the twelve months 
ended June 30, 1998 is primarily comprised of the $.8 million acquisition of 
certain assets of Iroquois and $.5 million in capital expenditures.  Net cash 
provided by investing activities of $.7 million during the twelve months 
ended June 30, 1997 represents proceeds from the sale of land and is 
partially offset by capital expenditures.  

Net cash used in financing activities for the period ended June 30, 1998 
represents payments under the short term note relating to the Iroquois 
Acquisition.  Net cash used in financing activities for the period ended 
June 30, 1997 was $1.7 million, which consisted of revolver repayments under 
its credit agreement of $.6 million and term loan repayments of $1.1 
million.  In December 1993, the Company entered into a bank loan agreement, 
as amended, which provides for up to $4.0 million in revolver borrowings.  
The Company believes that cash flow from operations and available cash and 
revolver borrowings are adequate to fund the Company's operations for the 
foreseeable future.  

Y2K Disclosure
--------------
The Company is working to resolve the potential impact of the year 2000 on 
the ability of the Company's computerized information systems to accurately 
process information that may be date-sensitive.  Any of the Company's 
programs that recognize a date using "00" as the year 1900 rather than the 
year 2000 could result in errors or system failures.  The Company utilizes a 
number of computer programs, and although the Company has not completed its 
assessment, it currently believes that costs of addressing this issue will 
not have a material adverse impact on the Company's financial position.  
However, if the Company and third parties upon which it relies are unable to 
address this issue in a timely manner, it could result in a material 
financial risk to the Company.  In order to assure that this does not occur, 
the Company plans to devote all resources required to resolve any significant 
year 2000 issues in a timely manner.  

Item 7A.  Quantitative and Qualitative Disclosure About Market Risk
-------   ---------------------------------------------------------

Not Applicable

Item 8.  Financial Statements and Supplementary Data
------   -------------------------------------------

The financial information required by Item 8 is included elsewhere in this 
report.  See Part IV, Item 14.

Item 9.  Changes in and Disagreements with Accountants on Accounting and 
------   ---------------------------------------------------------------
         Financial Disclosure
         --------------------

None.  


                                    PART III
                                    --------

Item 10.  Directors and Executive Officers of the Registrant
-------   --------------------------------------------------

The Company's definitive Proxy Statement to be issued in conjunction with the 
1998 Annual Meeting of Shareholders is incorporated herein by reference.  

Item 11.  Executive Compensation
-------   ----------------------

The Company's definitive Proxy Statement to be issued in conjunction with the 
1998 Annual Meeting of Shareholders is incorporated herein by reference.  

Item 12.  Security Ownership of Certain Beneficial Owners and Management
-------   --------------------------------------------------------------

The Company's definitive Proxy Statement to be issued in conjunction with the 
1998 Annual Meeting of Shareholders is incorporated herein by reference.  

Item 13.  Certain Relationships and Related Transactions
-------   ----------------------------------------------

The Company's definitive Proxy Statement to be issued in conjunction with the 
1998 Annual Meeting of Shareholders is incorporated herein by reference.  


                                    PART IV
                                    -------

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
-------   ----------------------------------------------------------------

(a)      (1)  Financial Statements.
              ---------------------

         The financial statements listed in the accompanying Index to 
         Financial Statements and Financial Statement Schedules are filed as 
         part of this annual report

         (2)  Exhibits.  
              ---------

         Financial statement schedules are omitted because they are not 
         applicable or the required information is shown in the financial 
         statements or notes thereto.  

(b)      Reports on Form 8-K.
         --------------------

         On June 16, 1998 the Company filed a Current Report on Form 8-K with 
         respect to a Change of Control of the Registrant.  

<PAGE>
                                 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                     LINCOLN SNACKS COMPANY
                                         (Registrant)


                                     By: /s/ R. Scott Kirk
                                         -----------------
                                         R. Scott Kirk
                                         President and Chief Operating Officer

                                     Date:  September 22, 1998


Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.


/s/ Kristine A. Crabs                                       September 22, 1998
--------------------------------------------------------
Kristine A. Crabs
Vice President and Chief Financial Officer,
Secretary and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)


/s/ Hendrik J. Hartong, Jr.                                 September 22, 1998
--------------------------------------------------------
Hendrik J. Hartong, Jr.
Director


/s/ John T. Gray                                            September 22, 1998
--------------------------------------------------------
John T. Gray
Director


/s/ C. Alan MacDonald                                       September 22, 1998
--------------------------------------------------------
C. Alan MacDonald
Director


/s/ Ian B. MacTaggart                                       September 22, 1998
--------------------------------------------------------
Ian B. MacTaggart
Director


<PAGE>
                          LINCOLN SNACKS COMPANY
                          ----------------------

                      INDEX TO FINANCIAL STATEMENTS
                    -----------------------------

<TABLE>
<CAPTION>
Financial Statements:                                                 Page(s)
                                                                      -------
<S>                                                             <C>
Report of Independent Public Accountants                                  F-1
Balance Sheets as of June 30, 1998 and 1997                        F-2 to F-3
Statements of Operations for the Years Ended 
     June 30, 1998, 1997 and 1996                                         F-4
Statements of Changes in Stockholders' Equity 
     for the Years Ended June 30, 1998, 1997 and 1996                     F-5
Statements of Cash Flows for the Years Ended 
     June 30, 1998, 1997 and 1996                                  F-6 to F-7
Notes to Financial Statements                                      F-8 to F-18

</TABLE>
<PAGE>
                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Lincoln Snacks Company:

We have audited the accompanying balance sheets of Lincoln Snacks Company 
(a Delaware corporation) as of June 30, 1998 and 1997, and the related 
statements of operations, changes in stockholders' equity, and cash flows for 
the years ended June 30, 1998, 1997 and 1996.  These financial statements are 
the responsibility of the Company's management.  Our responsibility is to 
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of Lincoln Snacks Company as of 
June 30, 1998 and 1997, and the results of its operations and its cash flows 
for the years ended June 30, 1998, 1997 and 1996 in conformity with generally 
accepted accounting principles.


                                            /s/ Arthur Andersen LLP
                                            -----------------------
                                            ARTHUR ANDERSEN LLP


Stamford, Connecticut,
August 5, 1998
<PAGE>
<TABLE>
<CAPTION>
                                                   LINCOLN SNACKS COMPANY
                                                   ----------------------
                                                       BALANCE SHEETS
                                                       --------------
                                                          ASSETS
                                                          ------
                                                   JUNE 30, 1998 AND 1997
                                                   ----------------------

                                                    June 30,         June 30,
                                                       1998             1997
                                               -------------   --------------
                          ASSETS
                          ------
CURRENT ASSETS:
<S>                                             <C>              <C>
  Cash                                           $ 3,726,400      $ 1,606,357
  Accounts receivable, net of allowances
    for doubtful accounts and cash 
    discounts of $322,509 and $237,778             1,703,427        1,951,937
  Inventories                                      2,363,287        1,680,253
  Prepaid and other current assets                    61,557           29,023
                                                ------------      ------------
        Total current assets                       7,854,671        5,267,570
                                                ------------      ------------

PROPERTY, PLANT AND EQUIPMENT:
  Land                                               370,000          370,000
  Building and leasehold improvements              1,782,992        1,526,705
  Machinery and equipment                          5,023,795        4,800,284
  Construction in process                             13,093          122,319
                                                ------------      ------------
                                                   7,189,880        6,819,308
  Less-accumulated depreciation                   (2,877,571)      (2,263,689)
                                                ------------      ------------
                                                   4,312,309        4,555,619
INTANGIBLE AND OTHER ASSETS, net of
  accumulated amortization of 
  $826,967 and $667,111                            3,906,515        3,466,371
                                                ------------      ------------
        Total assets                             $16,073,495      $13,289,560
                                                 ===========      ============
</TABLE>

                               The accompanying notes to financial statements 
                                are an integral part of these balance sheets.
<PAGE>
<TABLE>
<CAPTION>

                                              LINCOLN SNACKS COMPANY
                                              ----------------------
                                                  BALANCE SHEETS
                                                  --------------
                                         LIABILITIES AND STOCKHOLDERS' EQUITY
                                         ------------------------------------
                                              JUNE 30, 1998 AND 1997
                                              ----------------------

                                                    June 30,         June 30,
                                                       1998             1997
                                               -------------    -------------
                            LIABILITIES AND STOCKHOLDERS' EQUITY 
                            ------------------------------------
CURRENT LIABILITIES:
<S>                                              <C>             <C>
  Accounts payable                                $ 1,197,444     $ 1,357,170
  Accrued expenses                                  1,381,928       1,178,601
  Accrued trade promotions                          1,428,669         675,585
  Deferred gain-short term (Note 9)                    13,434          13,434
  Current portion of note payable                     333,333              --
                                                -------------    -------------
        Total current liabilities                   4,354,808       3,224,790
DEFERRED GAIN - LONG TERM (Note 9)                    102,863         115,784
                                                -------------    -------------
        Total liabilities                           4,457,671       3,340,574
                                                -------------    -------------
COMMITMENTS (Notes 7 and 10)

STOCKHOLDERS' EQUITY:
  Common stock, $0.01 par value,
    20,000,000 shares authorized,
    6,450,090 outstanding 
    at June 30, 1998 and 1997                          64,501          64,501
  Special stock, $0.01 par value,
  300,000 shares authorized,
  none outstanding                                         --              --
  Additional paid-in capital                       18,010,637      18,010,637
  Accumulated deficit                              (6,433,288)     (8,100,126)
                                                -------------    -------------

                                                   11,641,850       9,975,012
  Less - cost of common stock in treasury;
  118,300 shares at June 30, 1998 and 1997            (26,026)        (26,026)
                                                -------------    -------------
   Total stockholders' equity                      11,615,824       9,948,986
                                                -------------    -------------
   Total liabilities and stockholders' equity     $16,073,495     $13,289,560
                                                 ============    =============

</TABLE>
                               The accompanying notes to financial statements 
                                 are an integral part of these balance sheets.

<PAGE>
<TABLE>
<CAPTION>
                                       LINCOLN SNACKS COMPANY
                                       ----------------------
                                      STATEMENTS OF OPERATIONS
                                      ------------------------
                             FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                             ------------------------------------------------

                                   Year Ended      Year Ended      Year Ended
                                June 30, 1998   June 30, 1997   June 30, 1996
                                -------------   -------------   -------------
<S>                              <C>             <C>             <C>
NET SALES                         $24,277,772     $23,101,704     $23,845,844
COST OF SALES                      15,405,319      15,525,387      17,224,348
                                -------------   -------------   -------------
  Gross profit                      8,872,453       7,576,317       6,621,496
SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES            8,096,238       5,697,404       5,724,777
WRITE DOWN OF FIXED
 ASSETS (Note 11)                          --         269,498              --
NON-RECURRING CHARGE (Note 12)        484,388              --              --
                                -------------   -------------   -------------
  Income from operations              291,827       1,609,415         896,719
OTHER:
  Net Planters' other income        1,376,000              --              --
  Interest income (expense)           128,452        (126,820)       (356,910)
  Other expense                       (19,441)             --              --
                                -------------   -------------   -------------
    Income before provision
     for income taxes               1,776,838       1,482,595         539,809

PROVISION FOR INCOME TAXES            110,000          40,000          29,000
                                -------------   -------------   -------------
    Net income                   $  1,666,838    $  1,442,595   $     510,809
                                 ============    ============   ==============
BASIC AND DILUTED NET
 INCOME PER SHARE (Note 2)       $        .26    $        .23   $         .08
                                 ============    ============   ==============
WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING

  Basic                             6,331,790       6,331,790       6,334,757
                                 ============    ============   ==============
  Diluted                           6,341,804       6,331,790       6,334,757
                                 ============    ============   ==============

</TABLE>
                               The accompanying notes to financial statements 
                                 are an integral part of these balance sheets.

<PAGE>
<TABLE>
<CAPTION>
                                                  LINCOLN SNACKS COMPANY
                                                  ----------------------
                                       STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY 
                                       ---------------------------------------------
                                      FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                                      ------------------------------------------------

                                         Additional
                   Common    Special       Paid-in     Accumulated    Treasury
                    Stock      Stock       Capital       (Deficit)       Stock
                ---------   --------   -----------   -------------   ---------
<S>              <C>         <C>      <C>            <C>            <C>        
June 30, 1995     $64,501     $  --    $17,997,746    $(10,053,530)  $(24,024)
  Net income         --          --          --            510,809       --
  Purchase of
   9,100 shares
   of treasury       --          --          --               --       (2,002)
  Noel payment
   under tax
   agreement         --          --         12,891            --          --
                ---------   --------   -----------   -------------   ---------
June 30, 1996      64,501        --     18,010,637      (9,542,721)   (26,026)
  Net income         --          --          --          1,442,595       --
                ---------   --------   -----------   -------------   ---------
June 30, 1997      64,501        --     18,010,637      (8,100,126)   (26,026)
  Net income         --          --          --          1,666,838       --
                ---------   --------   -----------   -------------   ---------
June 30, 1998     $64,501     $  --    $18,010,637    $ (6,433,288)  $(26,026)
                =========   ========   ===========   =============   =========
</TABLE>

                               The accompanying notes to financial statements 
                                 are an integral part of these balance sheets.
<PAGE>
<TABLE>
<CAPTION>

                                           LINCOLN SNACKS COMPANY
                                           ----------------------
                                          STATEMENTS OF CASH FLOWS
                                          ------------------------
                               FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                               ------------------------------------------------

                                   Year Ended      Year Ended      Year Ended
                                June 30, 1998   June 30, 1997   June 30, 1996
                                -------------   -------------   -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                               <C>             <C>            <C>
  Net income                       $1,666,838      $1,442,595     $   510,809
  Adjustments to reconcile
    net income to net cash 
    provided by operating
    activities:
      Depreciation                    645,305         640,738         636,943
      Amortization                    159,856         177,116         221,700
      Loss on sale of equipment        19,441              --              --
      Write down of fixed assets           --         269,498              --
      Provision for doubtful accounts
       and cash discounts, net         39,198          64,254         (84,439)
  Changes in assets and liabilities:
      (Increase) decrease in
       accounts receivable            686,620         677,684      (1,087,214)
      (Increase) decrease in
       inventories                   (460,182)        403,275         279,953
      (Increase) decrease in
       prepaid and other current
       assets                         (32,534)         61,313           8,692
      Increase in other assets             --              --          (6,017)
      Increase (decrease) in
       accounts payable              (159,726)       (472,885)      1,054,514
      Increase (decrease) in
       accrued trade promotions       753,084        (184,595)       (140,784)
      Increase (decrease) in
       accrued expenses               190,406          61,938        (121,396)
                                -------------     -----------     -----------
        Net cash provided
        by operating activities     3,508,306       3,140,931       1,272,761
                                -------------     -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition, net of seller
   note payable                      (800,160)             --              --
  Capital expenditures               (488,782)       (314,529)       (119,844)
  Proceeds on sale of land                 --         369,218              --
  Proceeds on sale of fixed assets     67,346          17,640              --
                                -------------     -----------     -----------
        Net cash provided by
        (used in) investing
        activities                 (1,221,596)         72,329        (119,844)
                                -------------     -----------     -----------
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                        LINCOLN SNACKS COMPANY
                                        ----------------------
                                       STATEMENTS OF CASH FLOWS
                                       ------------------------
                          FOR THE YEARS ENDED JUNE 30, 1998, 1997 AND 1996
                          ------------------------------------------------
                                             (continued)

                                   Year Ended      Year Ended      Year Ended
                                June 30, 1998   June 30, 1997   June 30, 1996
                                -------------   -------------   -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                               <C>            <C>             <C>
  Repayments under note payable    $ (166,667)    $        --     $        --
  Repayments under term loan               --      (1,109,326)       (800,004)
  Borrowings (repayments)
   under revolver, net                     --        (556,115)       (385,476)
  Noel payment under tax agreement         --              --          12,891
  Purchase of treasury stock               --              --          (2,002)
                                -------------     -----------     -----------
    Net cash used in
     financing activities            (166,667)     (1,665,441)     (1,174,591)
                                -------------     -----------     -----------
    Net increase (decrease)
     in cash                        2,120,043       1,547,819         (21,674)

CASH, beginning of period           1,606,357          58,538          80,212
                                -------------     -----------     -----------
CASH, end of period                $3,726,400     $ 1,606,357     $    58,538
                                =============    ===========     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid                    $   13,010     $   120,059     $   279,582
                                =============    ===========     ============
  Income taxes paid                $  105,672     $    21,388     $    22,140
                                =============    ===========     ============

</TABLE>
                               The accompanying notes to financial statements 
                                 are an integral part of these balance sheets.



<PAGE>
                          LINCOLN SNACKS COMPANY
                          ----------------------
                      NOTES TO FINANCIAL STATEMENTS
                      -----------------------------


(1)  The Company:
     -----------

     Lincoln Snacks Company ("Lincoln" or the "Company"), formerly Lincoln 
     Foods Inc., is a Delaware corporation and is a majority-owned subsidiary 
     of Brynwood Partners III, L.P. (the "Parent").  Prior to June 1998, the 
     Company was a majority-owned subsidiary of Noel Group, Inc. ("Noel").  
     Lincoln is engaged in the manufacture and marketing of caramelized 
     pre-popped popcorn and glazed popcorn/nut mixes primarily throughout the 
     United States and Canada.  Sales of the Company's products are subject to
     seasonal trends with a significant portion of sales occurring in the last
     four months of the calendar year.  The Company was formed in August 1992.

     In January 1994, the Company sold 2,472,500 shares of common stock as 
     part of an initial public offering.  The Company received net proceeds 
     of approximately $9,600,000 from the sale of this stock.  The Company's 
     certificate of incorporation authorizes the issuance of special stock 
     with such designations, rights and preferences as may be determined from 
     time to time by the Board of Directors.

     On July 17, 1995, Planters Company, a unit of Nabisco, Inc. 
     ("Planters"), began exclusively distributing the Company's Fiddle Faddle 
     and Screaming Yellow Zonkers products (the "Products") pursuant to a 
     distribution agreement dated June 6, 1995 (the "Distribution Agreement") 
     for an initial term which was originally scheduled to expire on June 30, 
     1997 unless renewed for additional one year periods.  The Distribution 
     Agreement required Planters to purchase an annual minimum number of 
     equivalent cases of the Products during the initial term.

     On February 28, 1997, the Company and Planters entered into an amendment 
     to the Distribution Agreement, which was further modified on May 9, 1997 
     (the "Amendment"), pursuant to which the exclusive distribution 
     arrangement with respect to the Company's Fiddle Faddle product was 
     extended for an additional six month period expiring on December 31, 
     1997, at which time the arrangement terminated.  Effective January 1, 
     1998 and May 1, 1997, Planters ceased, and Lincoln resumed, marketing 
     and distributing the Company's Fiddle Faddle and Screaming Yellow 
     Zonkers products, respectively.

     The Amendment required Planters to purchase a specified number of 
     manufactured cases of the Products and for Planters to compensate the 
     Company for the remaining contract minimums for the twelve month period 
     ended June 30, 1997.  The Amendment required Planters to compensate the 
     Company for contract minimums for the six month period ended December 
     31, 1997 (six month minimums).  Planters compensated the Company in the 
     six months ended December 31, 1997 for contract minimums, which were 27% 
     less than case sales made to Planters for the six month period ended 
     December 31, 1996.  

     The Amendment also required Planters to compensate the Company in the 
     event that certain sales levels were not achieved during the calendar 
     year ending December 31, 1997.  These sales levels were not achieved 
     during the calendar year ending December 31, 1997, resulting in Planters 
     compensating the Company approximately $1,880,000 which is partially 
     offset on the Company's statement of operations by approximately 
     $500,000 in non-recurring charges associated with initial efforts to 
     rebuild the Fiddle Faddle brand ("Net Planters Other Income").

     Although the Amendment contains provisions designed to effect a smooth 
     transfer of the distribution business back to the Company, there can be 
     no assurance as to the long term effects of the transition.  

     Net sales to Planters for the year ended June 30, 1996 were equal to the 
     minimum number of cases required to be purchased during the fiscal year 
     as part of the Distribution Agreement.  Sales to Planters represented 
     9%, 47% and 43% of net sales for the years ended June 30, 1998, 1997 and 
     1996 and amounts due from Planters represented 69% and 85% of accounts 
     receivable at June 30, 1997 and 1996, respectively.

     In July and October 1997, the Company entered into Trademark License 
     Agreements with Nabisco, Inc. pursuant to which Nabisco, Inc. granted 
     the Company the right to use the Planters trademarks in connection with 
     the sales and marketing of the Company's Fiddle Faddle products in the 
     United States and Canada for a period of five years commencing on 
     January 1, 1998.  This agreement is royalty free for the first two years 
     of its term.  Royalty payments, based on net sales of products included 
     in the agreement, are payable in subsequent years.

(2)  Summary of Significant Accounting Policies:
     -------------------------------------------

     Use of estimates-
     -----------------
     The preparation of financial statements in conformity with generally 
     accepted accounting principles requires management to make estimates and 
     assumptions that affect the reported amounts of assets and liabilities 
     and disclosure of contingent assets and liabilities at the date of the 
     financial statements and the reported amounts of revenues and expenses 
     during the reporting period.  Actual results could differ from those 
     estimates.

     Revenue recognition-
     --------------------
     Revenue is recognized by the Company when products are shipped and title 
     passes to the customer.

     Advertising and promotion-
     --------------------------
     Advertising costs are expensed in the period in which the related 
     advertisements occur.  The estimated cost of the total ultimate 
     redemptions of various coupon programs are expensed immediately at the 
     time a coupon program is distributed to the public.

     Inventories-
     ------------
     Inventories, which include material, labor and manufacturing overhead, 
     are stated at the lower of cost (first in, first out) or market (net 
     realizable value).

     Property, plant and equipment-
     ------------------------------
     Property, plant and equipment is stated at cost and is depreciated on 
     the straight-line method based upon the estimated useful lives of the 
     assets.  The estimated useful lives of assets are as follows:


          Building and leasehold improvements            10-30 years
          Machinery and equipment                         3-10 years
          Furniture and fixtures                          7-10 years

     Expenditures for maintenance and repairs are charged against income as 
     incurred.  Significant expenditures for betterments are capitalized.  
     Capital expenditures which are not able to be put into use immediately 
     are included in construction in process.  As these programs are 
     completed, they are transferred to depreciable assets.

     Intangible assets-
     ------------------
     Intangible assets are carried at cost, less accumulated amortization 
     which is calculated on a straight-line basis over the estimated useful 
     lives as follows:

          Excess of purchase price over
             net assets acquired                   10-30 years
          Intellectual property and other           1-20 years

     The Company believes no impairment of intangible assets exists at 
     June 30, 1998.

     Impairment of long-lived assets-
     --------------------------------
     The Company adopted the provisions of SFAS No. 121, "Accounting for the 
     Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed 
     Of" in 1997.  This statement requires that long-lived assets and certain 
     identifiable intangibles held and used by an entity be reviewed for 
     impairment whenever events or changes in circumstances indicate that the 
     carrying amount of an asset may not be recoverable.  In general, this 
     statement requires recognition of an impairment loss when the sum of 
     undiscounted expected future cash flows is less than the carrying amount 
     of such assets.  The measurement for such impairment loss is then based 
     on the fair value of the asset.  Adoption of this statement had no 
     material effect on the financial statements. 

     Income taxes-
     -------------
     The Company follows Statement of Financial Accounting Standards No. 109, 
     "Accounting for Income Taxes", under which deferred income taxes are 
     determined based on the differences between the financial statement and 
     tax bases of assets and liabilities using presently enacted tax rates 
     and regulations.  A valuation allowance is established for any deferred 
     tax asset for which realization is not likely.

     Net income per share-
     ---------------------
     The Company adopted the provisions of Statement of Financial Accounting 
     Standards No. 128 ("SFAS No. 128") in 1998.  This statement establishes 
     standards for computing and presenting basic and diluted earnings per 
     share.

     Below is a reconciliation of the numerators and denominators of the 
     basic and diluted earnings per share computations:

<TABLE>
<CAPTION>
                                             1998         1997         1996
                                          ---------    ---------    ---------
<S>                                       <C>          <C>          <C>
     Basic earnings per share:
     Weighted average number of 
       shares outstanding                 6,331,790    6,331,790    6,334,757
     Dilutive effect of stock options        10,014           --           --
                                          ---------    ---------    ---------

     Diluted earnings per share:
     Weighted average number of 
       shares outstanding                 6,341,804    6,331,790    6,334,757
     Net Income                          $1,666,838   $1,442,595   $  510,809

     Basic and diluted earnings 
       per share                              $ .26        $ .23        $ .08

</TABLE>

     Options and warrants to purchase 290,000, 822,550 and 473,800 shares of 
     common stock were outstanding at June 30, 1998, 1997 and 1996, 
     respectively, but were not included in the computation of diluted 
     earnings per share because the options' exercise price was greater than 
     the average market price of the common shares.

     Reclassifications-
     ------------------
     Certain amounts have been reclassified in the prior year statements to 
     conform with current year presentation.

(3)  Balance Sheet Components:
     -------------------------

     The components of certain balance sheet accounts are as follows:
<TABLE>
<CAPTION>
                                                          1997         1996
                                                  -------------   -----------
       Inventories-
<S>                                                 <C>           <C>
         Raw and packaging materials                  $1,385,854   $1,293,280
         Finished goods                                  977,433      386,973
                                                   -------------   -----------
 
                                                      $2,363,287   $1,680,253
                                                   =============   ===========

       Intangible and other assets-

         Excess of purchase price over net 
           assets acquired                            $4,577,631   $3,977,631
         Intellectual property and other                 155,851      155,851
                                                   -------------   -----------

                                                       4,733,482    4,133,482
         Less:  accumulated amortization                (826,967)    (667,111)
                                                   -------------   -----------
         Intangible assets, net                       $3,906,515   $3,466,371
                                                   =============   ===========
</TABLE>

(4)  Income Taxes:
     -------------------------

     The income tax provisions for the years ended June 30, 1998, 1997 and 
     1996 consist primarily of state taxes and federal alternative minimum 
     taxes.

     The following represents a reconciliation of the federal statutory 
     income tax rate to the effective income tax rate:

<TABLE>
<CAPTION>
                                               1998         1997         1996
                                             -------       -------      ------
<S>                                          <C>           <C>          <C>
       Statutory federal income 
         (benefit) tax rate                    34.0%        34.0%        34.0%
       State income and franchise taxes, 
         net of federal benefit                 1.5          1.1          3.6
       Utilization of loss 
         carryforwards, net                   (29.7)       (32.6)       (34.7)
       Non-deductible meals and 
         entertainment                           .4           .2          0.7
                                             -------       -------      ------
       Effective income tax rate                6.2%         2.7%         3.6%
                                             =======       =======      ======

</TABLE>

     The principal temporary items comprising the net unrecognized deferred 
     income tax asset are as follows:

<TABLE>
<CAPTION>
                                           June 30,     June 30,     June 30,
                                             1998         1997         1996
                                        -----------     --------     ---------
<S>                                    <C>          <C>          <C>
       Net operating loss carryforward, 
         net of amount utilized 
         by Parent                      $ 1,386,000  $ 2,428,000  $ 3,079,000
       Depreciation and amortization       (985,000)    (864,000)    (504,000)
       Accrued expenses not 
         yet deductible                     660,000      165,000      476,000
       All other                            456,000      385,000      192,000
                                        -----------   ----------   -----------
       Net deferred tax asset 
         unrecognized                     1,517,000    2,114,000    3,243,000
       Less:  valuation reserve          (1,517,000)  (2,114,000)  (3,243,000)
                                        -----------   ----------   -----------
       Net deferred tax asset 
         recognized                     $        --  $        --  $         --
                                        ===========  ===========  ============
</TABLE>

     At June 30, 1998, the Company had a net operating loss carryforward 
     ("NOLs") for income tax purposes, subject to Internal Revenue Service 
     review, of approximately $3,464,000 which expire in 2007 through 2011 if 
     not utilized.  The above NOLs include those NOLs generated subsequent to 
     deconsolidating from Noel in 1994.  The Company has been reimbursed for 
     the portion of the Company's pre-fiscal 1996 NOLs utilized by Noel prior 
     to deconsolidating, including $12,891 in fiscal 1996, which was recorded 
     by the Company as additional paid-in capital.

     Under section 382 of the Internal Revenue Code, if the Company undergoes 
     an ownership change, the amount of its pre-change losses that may be 
     utilized to offset future taxable income generally will be subject to an 
     annual limitation.  In general, the annual limitation would be based on 
     the value of the Company's outstanding stock immediately before the 
     ownership change and the adjusted Federal long-term interest rate in
      effect for the month in which the ownership change occurs.  Any unused 
     portion of the annual limitation would be available in subsequent years.

     On June 8, 1998, the Company underwent an ownership change as a result 
     of the acquisition of Noel's interest in the Company by the Parent.  As 
     a result of the ownership change, utilization of the Company's NOL will 
     be subject to an annual limitation of approximately $650,000.   

(5)  Stock Options and Warrants:
     ---------------------------

     In November 1993, the Company adopted the 1993 Stock Option Plan and the 
     Non-Employee Directors' Stock Option Plan.  A total of 550,000 shares of 
     common stock are reserved for issuance under the 1993 Stock Option Plan 
     and 200,000 shares of common stock are reserved for issuance under the 
     Non-Employee Directors' Stock Option Plan.    The Company has granted 
     options to purchase 198,659 shares and 143,400 shares, respectively, 
     through June 30, 1998.  Under both Plans, the option exercise price 
     equals the stock's market price on date of grant.  The 1993 Stock Option 
     Plan options normally vest over periods ranging from 12 to 36 months.  
     In June 1998, all existing nonvested options became vested upon the 
     change of control of the Company.  The Non-Employee Director's Stock 
     Option Plan options vest immediately upon grant.  All options expire ten 
     years from date of grant.  The Company accounts for these plans under 
     APB Opinion No. 25, under which no compensation cost has been recognized.

     Under the Non-Employee Directors' Stock Option Plan, each individual 
     subsequently elected to the Board of Directors who is not an employee of 
     the Company will receive a grant of stock options covering 20,000 shares 
     of common stock, with an exercise price equal to the fair market value 
     of a share of common stock as of the date of grant.  In addition, each 
     non-employee director of the Company will receive a stock option 
     covering 5,000 shares of common stock immediately following each annual 
     meeting of stockholders of the Company during the ten-year term of the 
     Non-Employee Directors' Stock Option Plan, with an exercise price equal 
     to the fair market value of a share of common stock as of the date of 
     grant.

     In connection with the offering of common stock in January 1994, the 
     Company issued to the underwriters warrants to purchase 215,000 shares 
     of common stock.  These warrants are exercisable for a period of five 
     years beginning in January 1994 at an exercise price of $5.40 per share.

     Had compensation cost for these plans been determined consistent with 
     Statement of Financial Accounting Standards No. 123 ("SFAS 123"), the 
     Company's net income and earnings per share would have been reduced to 
     the following pro forma amounts:

<TABLE>
<CAPTION>
                                                          1997         1996
                                                   -------------   -----------
<S>                                                  <C>          <C>
       Net income:
         As reported                                  $1,666,838   $1,442,595
         Pro forma                                     1,218,607    1,300,723

       Basic and diluted income per share:
         As reported                                        $.26         $.23
         Pro forma                                           .19          .21

</TABLE>

     Because the SFAS 123 method of accounting is not applicable to options 
     granted prior to July 1, 1995, the resulting pro forma compensation cost 
     may not be representative of that to be experienced in future years.

     A summary of the status of the Company's two stock option plans at 
     June 30, 1998, 1997, and 1996 and changes during the years then ended 
     is presented in the table and narrative below:

<TABLE>
<CAPTION>
                      1998                  1997                  1996
             --------------------   -------------------   --------------------
                         Wtd. Avg.             Wtd. Avg.             Wtd. Avg.
                Shares   Ex. Price    Shares   Ex. Price    Shares   Ex. Price
             --------   ---------   -------   ---------   -------   ----------
<S>          <C>           <C>      <C>         <C>       <C>         <C>
  Outstanding at 
    beginning of
    year       822,550       $2.73   473,800       $4.35   499,600       $4.59
  Granted      116,800        1.81   437,750        1.32    55,000        2.10
  Canceled    (380,200)       1.81   (75,000)       4.50        --          --
  Forfeited     (2,091)       1.54        --          --   (19,000)       3.53
  Expired           --          --   (14,000)       4.31   (61,800)       4.50
              --------   ---------   -------   ---------   -------   ----------
  Outstanding
   at end of
   year        557,059       $3.16   822,550       $2.73   473,800       $4.35
              ========   =========   =======   =========   =======   =========
  Exercisable
   at end of
   year        557,059               435,940               310,492
             =========             =========             =========
  Weighted 
   average
   fair value
   of options
   granted      $1.37                 $1.00                 $1.58

</TABLE>

<TABLE>
<CAPTION>

     The following table summarizes information about stock options and 
     warrants outstanding at June 30, 1998:

                              Options Outstanding             Options Exercisable
                  --------------------------------------    -----------------------
                    Number         Weighted                   Number
                  Outstanding      Average      Weighted    Exercisable    Weighted
    Range of          at          Remaining     Average         At         Average
    Exercise       June 30,       Contractual   Exercise     June 30,      Exercise
     Prices          1998        Life (Years)    Price         1998         Price
 --------------  ------------    ------------   --------    -----------    --------
<C>               <C>             <C>           <C>         <C>            <C>
 $1.25 - $1.875    267,059          5.22         $1.58       267,059        $1.58
 $2.28 - $2.70      75,000          1.95          2.39        75,000         2.39
 $5.40             215,000          5.58          5.40       215,000         5.40
 -------------     -------                                   -------
 $1.25 - $5.40     557,059                                   557,059
                   =======                                   =======
</TABLE>

     The fair value of each option grant is estimated on the date of grant 
     using the Black-Scholes option pricing model with the following weighted 
     average assumptions used   for grants in 1998 and 1997, respectively:  
     risk-free interest rates of 6.25% and 6.92 %, no expected dividend 
     yields, expected lives of ten years and expected volatility of 61% 
     and 59%.

(6)  Credit Facility:
     ----------------

     In December 1993, the Company entered into a bank loan agreement, as 
     amended, which provides for up to $4 million in revolver borrowings.  
     There were no amounts outstanding under the revolving credit facility at 
     June 30, 1998.  The credit facility is available through December 2, 
     2000.  At that time, any borrowing under the credit facility becomes due.

     The facilities require the maintenance of various financial and other 
     covenants including, but not limited to, earnings before interest, 
     taxes, depreciation and amortization, tangible net worth and debt 
     coverage.  The financial covenants are to be met on a quarterly basis, 
     and the minimum requirements vary by quarter.

     Borrowings under the revolver are limited to a percentage of eligible 
     receivables and inventory.  The revolving credit facility bears interest 
     at a rate equal to the sum of the average monthly Eurodollar rate plus 
     1.5%.  In addition to this rate, the Company has the option to pay 
     interest on the revolving credit facility at the alternate base rate, as 
     defined, plus 0.25%.  At June 30, 1998 and 1997, the interest rate 
     8.658% and 8.696%, respectively.  Interest is payable monthly.

     The facility requires an annual monitoring fee of $6,000 and an unused 
     facility fee of 0.4% on the unused portion of the revolver.  The 
     facilities are collateralized by substantially all of the Company's 
     assets.

(7)  Commitments:
     ------------

     In the normal course of business, Lincoln enters into purchase 
     commitments with certain of its raw material suppliers generally for 
     periods up to one year.  Amounts to be purchased under these 
     arrangements are not anticipated to exceed raw material requirements for 
     the period to which the commitments apply.  The total remaining amount 
     of inventory to be purchased under these commitments as of June 30, 1998 
     is approximately $4,100,000.  These purchase commitments expire 
     primarily through December 31, 1998.

(8)  Acquisition:
     ------------

     On March 17, 1998, the Company acquired certain assets of Iroquois 
     Popcorn Company ("Iroquois"), a private label manufacturer of 
     caramelized popcorn, for approximately $1,300,000, of which $800,000 was 
     paid in cash and $500,000 is a non-interest bearing note to be paid in 
     equal monthly installments over a twelve-month period commencing March 
     31, 1998.  A contingent payment of up to $350,000 may be paid in the 
     future if the Company maintains 70% of the sales volume to Iroquois' 
     largest customer.

     The acquisition was accounted for as a purchase with the assets acquired 
     recorded at their fair values at the date of acquisition.  The excess of 
     purchase price over net assets acquired is being amortized over a period 
     of 10 years.  The purchase price has been allocated as follows:

<TABLE>
<S>                                          <C>
          Accounts receivable                 $  477,000
          Inventory                              223,000
          Excess of purchase price over
            net assets acquired                  600,000
                                              ----------
                                              $1,300,000
                                              ==========

</TABLE>

     The following is unaudited pro forma information as if the Company's 
     acquisition of Iroquois had occurred at the beginning of the respective 
     fiscal periods.  The incremental revenue reflected below consists 
     primarily of sales to one customer.  These results may not be indicative 
     of what the actual results would have been or may be in the future.

<TABLE>
<CAPTION>
                                                 1997         1996
                                          ------------   ------------
<S>                                       <C>           <C>
       Net sales                           $27,859,707   $27,118,445
       Net income                          $ 2,594,054   $ 2,137,211
       Net income per share                      $0.41         $0.34

</TABLE>

(9)  Sale of Land:
     -------------

     In October 1996, the Company sold land adjacent to its manufacturing 
     facility in Lincoln, Nebraska.  At the same time, the Company entered 
     into a ten year lease agreement for 50,000 square feet of a new 
     warehouse to be constructed on the land.  The proceeds from the sale, of 
     $369,218, were used to pay down the Company's term loan.  The sale 
     resulted in a net gain of $129,218 which was deferred and will be 
     recognized as income over the ten-year lease term.

(10) Leases:
     -------

     At June 30, 1998, the Company's minimum future rental payments on a 
     fiscal year basis under non-cancelable operating leases are as follows:

               1999                       $  332,000
               2000                          274,000
               2001                          249,000
               2002                          242,000
               2003 and thereafter         1,303,000

     Rent expense for operating leases amounted to approximately $310,000, 
     $286,000, and $283,000 for the years ended June 30, 1998, 1997 and 1996, 
     respectively.

(11) Write Down of Fixed Assets:
     ---------------------------

     During the year ended June 30, 1997, the Company recorded a write-down 
     of $269,498 on certain fixed assets that are no longer used in the 
     operations of the Company.

(12) Non-recurring Charge:
     ---------------------

     During the year ended June 30, 1998, the Company recorded a 
     non-recurring charge of $484,388 relating to severance and other 
     compensation costs in connection with the resignation of the Company's 
     former chairman and chief executive officer.

(13) Related Party Transactions:
     ---------------------------
     During the years ended June 30, 1998, 1997 and 1996, the Company paid 
     legal fees of approximately $38,000, $72,000 and $86,000, respectively, 
     to a law firm of which one of its partners is a director of Noel.

     A director was paid export brokerage commissions of $9,000 during the 
     year ended June 30, 1996.

     During the year ended June 30, 1996, one of the Company's executives was 
     paid by Noel.  Lincoln did not receive any allocation of expenses from 
     Noel for this executive's services.

(14) Employee Benefit Plans:
     -----------------------

     The Company sponsors a defined contribution savings plan (401(k)).  
     Participation in the plan is available to substantially all salaried and 
     hourly employees.  Company contributions to the plan are based on a 
     percentage (2%) of employee contributions.  During the years ended 
     June 30, 1998, 1997 and 1996, Company contributions to the plan totaled 
     $52,000, $46,000 and $51,000, respectively.


(15) Sales Data:
     -----------

     Export sales-
     -------------
     During the years ended June 30, 1998, 1997 and 1996, export sales were 
     approximately $1,520,000, $2,157,000 and $2,241,000, respectively.

     Significant customer-
     ---------------------
     For the year ended June 30, 1998, two customers represented 
     approximately 18% and 12% of net sales, respectively.  For the years 
     ended June 30, 1997 and 1996, Planters represented approximately 47% and 
     43%, respectively, of net sales.

(16) Valuation and Qualifying Accounts:
     ----------------------------------
<TABLE>
<CAPTION>

                           Balance at   Charged to                 Balance
                            Beginning    Costs and                  at end
      Description           of Period     Expenses   Deductions   of Period
      -----------          ----------   ----------   ----------   ---------
<S>                       <C>          <C>          <C>          <C>
 Year ended June 30, 1996, 
   allowances for 
   doubtful accounts 
   and cash discounts       $257,963     $242,673    $(327,112)   $173,524
 Year ended June 30, 1997, 
   allowances for 
   doubtful accounts 
   and cash discounts       $173,524     $210,633    $(146,379)   $237,778
 Year ended June 30, 1998, 
   allowances for 
   doubtful accounts 
   and cash discounts       $237,778     $315,526    $(230,795)   $322,509

</TABLE>

INDEX OF EXHIBITS

     Exhibit Title                                                Exhibit No.
     -------------                                                -----------
(2)  Plan of acquisition, reorganization, arrangement, 
     liquidation or succession; Not Applicable   
(3)  Articles of Incorporation and By-Laws 
     (A) Certificate of Incorporation, as amended and as currently 
         in effect (Incorporated by reference to Exhibit 3(A), 
         filed by the Company with the Registration Statement on 
         Form S-1 (33-71432))                                           *
     (B) By-laws as currently in effect (Incorporated by reference 
         to Exhibit 3(B) filed by the Company with the Registration 
         Statement on Form S-1 (33-71432))                              *
(4)  Instruments defining the rights of security holders, 
     including indentures 
     (A) Excerpts from Certificate of Incorporation, as amended, 
         (Incorporated by reference to Exhibit 4(A) filed by the
         Company with the Registration Statement on Form S-1 
         (33-71432))                                                    *
     (B) Excerpts from By-Laws, as amended, (Incorporated by 
         reference to Exhibit 4(B) filed by the Company with the 
         Registration Statement on Form S-1 (33-71432))                 *
(9)  Voting Trust Agreement; Not Applicable 
(10) Material Contracts 
     (A) Waiver and Consent dated July 16, 1998 granted by BNY 
         Financial Corporation.                                         10(A)
     (B) Amendment No. 10 dated July 17, 1998 To Revolving Credit, 
         Term Loan and Security Agreement.                              10(B)
     (C) Severance Agreement with Karen Brenner dated 
         February 24, 1998 and Amended Severance Agreement 
         dated June 4, 1998                                             10(C)
     (D) Severance Agreement with R. Scott Kirk dated 
         February 24, 1998 and Amended Severance Agreement 
         dated June 4, 1998.                                            10(D)
     (E) Severance Agreement with Kristine A. Crabs dated 
         February 24, 1998 and Amended Severance Agreement 
         dated June 4, 1998.                                            10(E)
     (F) Amendment to 1993 Stock Option Plan dated June 4, 1998.        10(F)
(11) Statement of computation of per share earnings:  Not required 
     because the relevant computations can be clearly determined 
     from the material contained in the financial statements 
     included herein 
(12) Statement re computation of ratios; Not applicable 
(13) Annual report to security holders, Form 10-Q or quarterly 
     report to security holders; Not applicable 
(16) Letter re change in certifying accountant; Not Applicable 
(18) Letter re change in accounting principles; Not Applicable 
(21) Subsidiaries of Registrant; Not Applicable 
(22) Published report regarding matters submitted to vote of 
     security holders; Not Applicable 
(23) Consents of Experts and Counsel
     (A) Consent of Arthur Andersen, LLP                                23 A
(24) Power of Attorney;  Not Applicable 
(27) Financial Data Schedule                                            27
(99) Additional Exhibits; Not Applicable  

     *  Incorporated by reference