EXPLANATORY NOTE

     This Amendment No. 2 on Form 10-K/A (this "Amendment") to the
Company's Annual Report on Form 10-K amends Parts II and IV for the fiscal
year ended June 30, 1998 and is being filed only for the following purposes:

                             PART II
                            --------
Item 6.      Selected Financial Data
-------      -----------------------

      Selected Financial Data schedule is amended to reflect "Net
      Planters Other Income" of $1.4 million as income from operations;
      and 

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

      Management's Discussion and Analysis of Financial Condition and
      Results of Operations for the twelve months ended June 30, 1998
      versus June 30, 1997 is amended to reflect "Net Planters Other
      Income" of $1.4 million as income from operations; and


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

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

      Statements of Operations for the fiscal year ended June 30, 1998
      is amended to reflect "Net Planters Other Income" of $1.4 million
      as income from operations; and  

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

      Add as Exhibit 23.1 an updated consent from Arthur Andersen LLP,
      the Company's independent public accountants; and  

      Add as Exhibit 27 an updated Financial Data Schedule
 
<PAGE>
                         SIGNATURES<F1>

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to its
report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                             LINCOLN SNACKS COMPANY
                                  (Registrant)



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


Dated:  May 21, 1999


-------------------------------
[FN]
<F1>   This amendment has been executed in the same manner as a Form 8 would
       have been executed prior to the rescission of Form 8.  See, Part
       V.F.2. of Release 34-31905 (February 23, 1993).  
</FN>
<PAGE>

                             PART II
                             -------
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   
                     ---------  ------------  -----------   -----------   ------------
Statement of 
  Operations Data:
<S>                 <C>        <C>           <C>           <C>           <C>
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         1,668<F4><F5>

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

</TABLE>

<TABLE>
<CAPTION>
                            June 30,  June 30,   June 30,   June 30,   June 30,
                               1994      1995       1996       1997       1998  
                            --------  --------  --------  ---------    --------
Balance Sheet Data
<S>                         <C>       <C>       <C>       <C>          <C>
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

</TABLE>

-------------------------
[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>

<PAGE>
                             PART II
                             -------

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.  

     Net Planters Other Income and the increase in gross profit was
partially offset by increases in selling, general and administrative
expenses and a non-recurring charge 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.  

PAGE
<PAGE>
                             PART IV
                            --------
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
--------  -----------------------------------------------------------------

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

      Statements of Operations for the fiscal year ended June 30, 1998
      is amended to reflect "Net Planters Other Income" of $1.4 million
      as income from operations; and  

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

      Add as Exhibit 23.1 an updated consent from Arthur Andersen LLP,
      the Company's independent public accountants; and  

      Add as Exhibit 27 an updated Financial Data Schedule
<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

                               F-1
<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.

                               F-2
<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.

                               F-3
<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              --              --

NET PLANTERS OTHER INCOME        (1,376,000)             --              --
                              -------------   -------------   -------------
  Income from operations          1,667,827       1,609,415         896,719

OTHER:
  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 statements.
                               F-4
<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 statements.

                               F-5
<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>

                               F-6
<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 statements.

                               F-7

<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:
<PAGE>
<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>
                                                        1998         1997
                                                -------------   -----------
       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>

<PAGE>
(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:<PAGE>
<TABLE>
<CAPTION>
                                                        1998         1997
                                                 -------------   -----------
<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>
<PAGE>
<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>
                                                 1998         1997
                                          ------------   ------------
<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>

<PAGE>
                        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 (Incorporated
           by reference to Exhibit 10(A) filed by the
           Company with the Annual Report on Form 10-K for
           the fiscal year ended June 30, 1998).                    *

     (B)   Amendment No. 10 dated July 17, 1998 To Revolving
           Credit, Term Loan and Security Agreement
           (Incorporated by reference to Exhibit 10(B)
           filed by the Company with the Annual Report on
           Form 10-K for the fiscal year ended June 30, 1998).      *

     (C)   Severance Agreement with Karen Brenner dated 
           February 24, 1998 and Amended Severance Agreement 
           dated June 4, 1998 (Incorporated by reference to 
           Exhibit 10(C) filed by the Company with the Annual
           Report on Form 10-K for the fiscal year ended June 30,
           1998).                                                   *

     (D)   Severance Agreement with R. Scott Kirk dated 
           February 24, 1998 and Amended Severance Agreement
           dated June 4, 1998 (Incorporated by reference to
           Exhibit 10(D) filed by the Company with the Annual
           Report on Form 10-K for the fiscal year ended June 30, 
           1998).                                                   *

     (E)   Severance Agreement with Kristine A. Crabs dated
           February 24, 1998 and Amended Severance Agreement 
           dated June 4, 1998 (Incorporated by reference to
           Exhibit 10(E) filed by the Company with the Annual
           Report on Form 10-K for the fiscal year ended June 30, 
           1998).                                                   *

     (F)   Amendment to 1993 Stock Option Plan dated June 4,
           1998 (Incorporated by reference to Exhibit 10(F) 
           filed by the Company with the Annual Report on 
           Form 10-K for the fiscal year ended June 30, 1998).      *

(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                        23A

(24) Power of Attorney;  Not Applicable

(27) Financial Data Schedule                                      27

(99) Additional Exhibits; Not Applicable