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 amendment to its 
report to be signed on its behalf by the undersigned, thereunto duly 
authorized, this 25th day of September, 1998.

                                     LINCOLN SNACKS COMPANY
                                         (Registrant)


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


<PAGE>

                           EXPLANATORY NOTE

     This Amendment No. 1 on Form 10-K/A (this "Amendment") to the Company's 
Annual Report on Form 10-K for the fiscal year ended June 30, 1998 is being 
filed only for the following purposes:  

     (1)  To modify the language at the bottom of each of the financial 
statements to refer to the financial statements generally; and 

     (2)  To correct typographical errors in the headings of certain tables 
appearing in Notes 3, 5 and 8 of the Notes to the Financial Statements to 
refer to 1998 and 1997 rather than 1997 and 1996.  



<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 statements.

<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.
<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 statements.



<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>
                                                          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>

(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>
                                                          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>

<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>