SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB/A

(Mark One)

[x]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

                  For the quarterly period ended June 30, 1998

[  ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

          For the transition period from ____________ to _____________

                        Commission file number 001-13559


                               FRESH'N LITE, INC.
                 (Name of small business issuer in its charter)

                  TEXAS                                75-2337102
     (State of other jurisdiction of       (I.R.S. Employer Identification No.)
       incorporation or organization

     1705 E. WHALEY, LONGVIEW, TEXAS                     75605
(Address of principal executive offices)               (Zip Code)

                    Issuer's telephone number (903) 758-2811


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No[ ]


Number of shares outstanding of each of the issuer's classes of common stock, as
of August 10, 1998: 6,356,852 shares of common stock, par value $.01.




<PAGE> 


                               FRESH'N LITE, INC.


<TABLE>
<CAPTION>
                                                                                             PAGE NO.
                                                                                             --------

<S>              <C>                                                                       <C>
PART I            FINANCIAL INFORMATION..............................................          2

Item 1.           Financial Statements...............................................          2

                  Condensed Balance Sheet for the Six Month Period
                  Ended June 30, 1998................................................          2

                  Condensed Income Statement For Three Month and
                  Six Month Periods Ended June 30, 1997 and June 30, 1998............          4

                  Condensed Statement of Cash Flows for the Six Month
                  Periods Ended June 30, 1997 and June 30, 1998......................          5

                  Notes to Interim Condensed Financial Statements (Unaudited)........          7 

                  Notes to Interim Condensed Financial Statements (Unaudited)........          8

Item 2.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations......................          9


PART II           OTHER INFORMATION..................................................          11

Item 2.           Changes in Securities..............................................          11

Item 4.           Submission of Matters to a Vote of Security Holders................          11

Item 6.           Exhibits and Reports on Form 8-K...................................          12

Signatures        ...................................................................          13

Exhibit Index     ...................................................................          14
</TABLE>



<PAGE>   


                         PART I - FINANCIAL INFORMATION

ITEM 1:  FINANCIAL STATEMENTS

                               FRESH'N LITE, INC.
                            CONDENSED BALANCE SHEET
                         FOR THE SIX MONTH PERIOD ENDED
                                 JUNE 30, 1998

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,          JUNE 30,
                                                                             1997                1998
                                                                         ------------        ------------
                                                                     (Restated Unaudited)     (Unaudited)

<S>                                                                       <C>                  <C>
         ASSETS

         CURRENT ASSETS
Cash ............................................................         $    20,373          $ 1,789,639
Inventory .......................................................              26,571               40,270
                                                                          -----------          -----------
         Total Current Assets ...................................              46,944            1,829,909
                                                                          -----------          -----------

         PROPERTY AND EQUIPMENT (Pledged)
Buildings .......................................................           3,774,141            5,347,868
Land ............................................................             135,000              385,000
Leasehold Improvements ..........................................              30,113               30,113
Vehicles and Equipment ..........................................           1,250,302            2,518,525
                                                                          -----------          -----------
         Total Property and Equipment ...........................           5,189,556            8,281,506

Accumulated Depreciation ........................................            (430,325)            (479,132)
                                                                          -----------          -----------

         Property and Equipment - Net............................           4,759,231            7,802,374
                                                                          -----------          -----------
         OTHER ASSETS
Assets Held for Sale, Net of Accumulated Depreciation ...........             909,835              241,413
Corporate Organizational Costs and Other Assets,
  Net of Accumulated Amortization ...............................              32,651               26,299
Notes Receivable - Related Parties ..............................             164,543               75,000
Deferred Interest ...............................................               -0-                833,333         
                                                                          -----------          -----------
         Total Other Assets .....................................           1,107,029            1,176,045
                                                                          -----------          -----------

         TOTAL ASSETS ...........................................           5,913,204           10,808,328
                                                                          ===========          ===========
</TABLE>



See accompanying notes.




                                       2
<PAGE>   

                               FRESH'N LITE, INC.
                            CONDENSED BALANCE SHEET
                         FOR THE SIX MONTH PERIOD ENDED
                                 JUNE 30, 1998
(Continued)
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,           JUNE 30,
                                                                        1997                 1998
                                                                    ------------         ------------
                                                                     (Restated           (Unaudited)
                                                                     Unaudited)

<S>                                                                 <C>                  <C>
         LIABILITIES AND SHAREHOLDERS EQUITY

         CURRENT LIABILITIES
Accrued Expenses ..........................................         $   340,635          $    44,715
Accounts Payable ..........................................              52,864               67,547
Bank Overdraft ............................................              48,104                  --
Note Payable - Short Term .................................              10,249                  --
Income Tax Payable ........................................               8,800               62,800
Current Portion of Capital Lease Obligations ..............               6,175                6,175
Current Portion of Notes Payable - Long Term ..............             465,015              292,604
                                                                    -----------          -----------
         Total Current Liabilities ........................             931,842              473,841

         OTHER LIABILITIES
Capital Lease Obligations, Net of Current Portion .........             165,504              165,000
Notes Payable - Long Term, Net of Current Portion .........           1,101,437            2,206,874
Bonds Payable .............................................               -0-              3,000,000
Deferred Income Tax Liability .............................             121,200              174,200
                                                                    -----------          -----------
         Total Other Liabilities...........................           1,388,141            5,546,074
                                                                    -----------          -----------
         Total Liabilities ................................           2,319,983            5,546,074
                                                                    -----------          -----------

         SHAREHOLDERS EQUITY
Common Stock, $.01 Par Value; 50,000,000 Shares Authorized;
  6,356,852 Shares Issued and Outstanding..................              61,585               63,568
Additional Paid In Capital ................................           3,278,499            4,244,071
Retained Earnings - Prior .................................             135,001              254,387
Retained Earnings - Current ...............................             119,386              227,637
Less Treasury Stock, at Cost ..............................              (1,250)              (1,250)
                                                                    -----------          -----------

         Total Shareholders Equity ........................           3,593,221            4,788,413
                                                                    -----------          -----------

TOTAL LIABILITIES AND SHAREHOLDERS EQUITY .................           5,913,204           10,808,328
                                                                    ===========          ===========
</TABLE>




See accompanying notes.



                                       3
<PAGE>   
                               FRESH'N LITE, INC.
                           CONDENSED INCOME STATEMENT
                FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED
                        JUNE 30, 1997 AND JUNE 30, 1998

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED                        SIX MONTHS ENDED
                                                                  JUNE 30,                                 JUNE 30,
                                                      --------------------------------         -----------------------------

                                                         1997                 1998               1997                1998
                                                      -----------          -----------         -----------       -----------
 
                                                      (Restated            (Unaudited)          (Restated         (Unaudited)
                                                      Unaudited)                                Unaudited)
<S>                                                   <C>                  <C>                 <C>                 <C>
SALES .......................................         $   809,930          $   942,635          $ 1,522,822        $ 1,740,854

    EXPENSES
Food and Beverage Costs .....................             221,410              268,455              426,377            473,611
Salaries and Contract Labor .................             209,736              208,857              418,572            436,879
Payroll and other Taxes .....................              32,126               34,389               64,690             74,271
Professional Fees ...........................              27,927               19,087               81,819             27,515
Advertising and Promotional .................              20,138               27,155               38,706             42,440
Rent ........................................              34,308               57,984               69,952            108,563
Insurance ...................................               8,963               17,588               22,767             34,709
Telephone ...................................               9,962                5,983               17,820             11,292
Travel ......................................               4,325                3,657                8,075              6,888
Utilities ...................................              21,208               23,357               46,253             46,949
Depreciation ................................              51,701               34,618               90,165             70,768
Amortization ................................              19,472               16,567              211,766             31,417
Interest ....................................              36,841              210,555               56,585            244,401
Linen and Laundry ...........................              10,946               12,042               16,230             23,617
Repairs and Maintenance .....................              16,765               15,595               34,483             35,654
Supplies ....................................               6,833               11,535               13,351             20,842
Miscellaneous ...............................               6,375                6,080                8,875              6,080
                                                      -----------          -----------          -----------        -----------
    Total Expenses ..........................             739,036              973,504            1,626,486          1,695,896
                                                      -----------          -----------          -----------        -----------

    OPERATING INCOME (LOSS) .................              70,894              (30,869)            (103,664)            44,958

OTHER INCOME/(EXPENSE)
Profit / (Loss) on Sale of Assets ...........                --                150,000                   11            261,593
Rental Income ...............................                --                   --                   --               28,086
Income Tax (Expense) Benefit:
    Current .................................                --               (160,000)                --             (160,000)    
    Deferred ................................                --                 53,000                 --               53,000
                                                      -----------          -----------          -----------        -----------

    NET INCOME ..............................              70,894              12,131             (103,664)            227,637

Basic Earnings Per Share ....................         $      .012          $      .002          $     (.017)       $      .036
Diluted Earnings Per Share ..................         $      .012          $      .002          $     (.017)       $      .036

</TABLE>



See accompanying notes.




                                       4
<PAGE>   

                               FRESH'N LITE, INC.
                       CONDENSED STATEMENT OF CASH FLOWS
                        FOR THE SIX MONTH PERIODS ENDED
                        JUNE 30, 1997 AND JUNE 30, 1998

<TABLE>
<CAPTION>
                                                           JUNE 30, 1997       JUNE 30, 1998
                                                           -------------       -------------
                                                        (Restated Unaudited)    (Unaudited)

<S>                                                        <C>                  <C>
Cash Flows from Operating Activities:
   Net Income (Loss) .............................         $  (103,653)         $   227,637
                                                           -----------          -----------

Adjustments to Reconcile Net Income to
  Net Cash Provided by Operating Activities:
    Depreciation .................................              90,165               70,768
    Amortization .................................             211,766               31,417

    Net Change in Assets and Liabilities:
        Decrease/(Increase) in other assets.......                -0-              (833,333)                    
        Decrease/(Increase) in Inventory .........             (28,215)             (13,699)
        (Decrease)/Increase in Accounts Payable                 (6,537)              14,683
        (Decrease)/Increase in Accrued Expenses               (114,277)            (295,920)
        (Decrease)/Increase in Income Tax Liabilities             -0-               107,000
                                                           -----------          -----------
    Total Adjustments ............................             152,902             (919,084)
                                                           -----------          -----------
        Net Cash Provided by Operating Activities              (49,249)            (691,447)
                                                           -----------          -----------
Cash Flows from Investing Activities:
    Capital Expenditures .........................            (612,822)          (3,459,426)
    Expenditures for Preopening/Remodel Costs
      and other Assets ...........................             (24,020)                   0
    (Increase)/Decrease in Notes Receivable ......             (25,521)              89,543
    Increase in Deferred Franchise System Costs ..             (39,969)                   0
    Net Proceeds from Sale of Assets .............                  11              930,015
                                                           -----------          -----------
        Net Cash Used in Investing Activities ....            (702,321)          (2,439,868)
                                                           -----------          -----------
Cash Flows from Financing Activities:
    Proceeds from issuance of convertible bonds...                -0-             2,670,000
    Sale of Common Stock .........................             959,500            1,297,555
    Borrowing on Notes Payable ...................                   0            1,433,026
    Principal Payments on Notes Payable ..........            (166,585)            (500,000)
                                                           -----------          -----------
        Net Cash Provided by Financing Activities              792,915            4,900,581
                                                           -----------          -----------

    NET INCREASE / (DECREASE) IN CASH ............              41,345            1,769,266
    CASH AT BEGINNING OF YEAR ....................              18,967               20,373
                                                           -----------          -----------
    CASH AT END OF PERIOD ........................              60,312            1,789,639
                                                           ===========          ===========
</TABLE>


See accompanying notes.




                                       5
<PAGE>   
                               FRESH'N LITE, INC.
                NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
                         FOR THE SIX MONTH PERIOD ENDED
                                 JUNE 30, 1998
                                  (Unaudited)


NOTE 1.    BASIS OF PRESENTATION

           The  condensed  financial  statements  of  Fresh'n  Lite,  Inc.  (the
           "Company")  as of June 30, 1997 and June 30, 1998 have been  prepared
           by  the  Company,  pursuant  to  the  rules  and  regulations  of the
           Securities  and  Exchange  Commission.  The Company owns and operates
           four  restaurants  under the names of "Fresh'n Lite Cafe & Grill" and
           "Street Talk Cafe."

           The information furnished herein reflects all adjustments (consisting
           of normal  recurring  accruals  and  adjustments)  which are,  in the
           opinion  of  management,  necessary  to fairly  state  the  operating
           results for the respective periods.  However, these operating results
           are not necessarily  indicative of the results  expected for the full
           fiscal year. Certain  information and footnote  disclosures  normally
           included in annual financial  statements  prepared in accordance with
           generally accepted  accounting  principals have been omitted pursuant
           to such rules and regulations.  The notes to the condensed  financial
           statements  should  be read in  conjunction  with  the  notes  to the
           financial  statements contained in the Form 10-SB/A-3 filed on August
           14,  1998.  Company  management  believes  that the  disclosures  are
           sufficient for interim financial reporting purposes.

NOTE 2.    SALE OF RESTAURANT FACILITY

           On March 17,  1998,  the Company  sold its  facility in  Nacogdoches,
           Texas.  The  Company  realized a gain of $111,593 on the sale of this
           facility which was previously classified as "assets held for sale."

           On June 29, 1998, the Company sold its facility in Texarkana,  Texas.
           The Company  realized a gain of $150,000 on the sale of this facility
           which was previously classified as "assets held for sale."

NOTE 3.    OTHER EVENTS

           On  April  3,  1998,  the  Board  of  Directors  approved  a plan  to
           repurchase  up to  100,000  shares  of the  Company's  common  stock.
           Repurchases   will  be  made  from  time  to  time  in  open   market
           transactions.  All  repurchases  will  be  made  in  accordance  with
           applicable securities regulations,  and the timing of the repurchases
           will be  dependent  upon  market  conditions,  share  price and other
           factors.  The repurchased  common stock may be used by the Company to
           meet the  needs  of its  various  stock  option  plans  or for  other
           corporate purposes.

           On April 8, 1998, the Board of Directors  approved an increase in the
           previously  approved  stock  repurchase  plan from 100,000 to 150,000
           shares.

           On May 29, 1998,  the Company  issued  $1,500,000  of 6%  Convertible
           Debentures  due  May 29,  2000  (the "A  Debentures"),  in a  private
           placement  to  three  accredited  investors  (the  "Investors").  The
           private placement  yielded  $1,335,000 in net proceeds to the Company
           (after  deduction of the  placement  agent's fees and fees of counsel
           for the Investors). In connection with the private




                                       6
<PAGE>   

                               FRESH'N LITE, INC.
                NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
                         FOR THE SIX MONTH PERIOD ENDED
                                 JUNE 30, 1998
                                  (Unaudited)


           placement,  the  Company  also issued to the  Investors,  warrants to
           purchase up to an aggregate of 75,000 shares of the Company's  common
           stock (the  "Warrants").  The Company issued to the placement agent a
           Warrant  to  purchase  up to 50,000  shares of the  Company's  common
           stock. The exercise price for the Warrants is $4.40 per share,  which
           is equal to 110% of the average  closing bid prices of the  Company's
           common stock for the five trading days immediately  preceding May 29,
           1998.

           The A Debentures can be converted into shares of the Company's common
           stock.  The  number of shares of common  stock to be issued  upon any
           such conversion will be determined based upon the lesser of (a) $4.00
           per  share  (the  closing  bid price of the  common  stock on May 28,
           1998), or (b) the average closing bid prices of the Company's  common
           stock for the five  trading  day  period  ending on the  trading  day
           immediately   preceding  the  date  on  which  such  A  Debenture  is
           converted,  multiplied by a discount  ranging from 25% to 17.5%.  The
           Company  granted to the Investors  certain  registration  rights with
           respect to the shares of common stock underlying the A Debentures and
           the Warrants.

           The  beneficial  conversion  feature  attached to the A Debentures is
           valued at $500,000.  The value is  calculated at the date of issue as
           the difference  between the conversion  price most  beneficial to the
           investor  and the fair  value of the  common  stock  into  which  the
           security  is  convertible,  multiplied  by the number of shares  into
           which the security is convertible. This amount will be amortized into
           interest  expense during the period between  issuance of the debt and
           the date  the  securities can  be  converted at the highest discount,
           which is ninety days from date of issuance. The beneficial conversion
           feature is reflected as deferred interest,  which is disclosed net of
           amortization.                                                        
           
           On June 30, 1998,  the Company  issued a second tranche of $1,500,000
           of  its  6%  Convertible   Debentures  due  June  30,  2000  (the  "B
           Debentures"),  in a private  placement to two of the  Investors.  The
           private placement  yielded  $1,335,000 in net proceeds to the Company
           (after  deduction of the  placement  agent's fees and fees of counsel
           for two of the Investors).  In connection with the private placement,
           the Company also issued to two of the Investors  Warrants to purchase
           up to an aggregate of 75,000  shares of the  Company's  common stock.
           The Company issued to the placement agent a Warrant to purchase up to
           50,000 shares of the Company's  common stock.  The exercise price for
           the  Warrants  is  $4.30  per  share,  which  is equal to 110% of the
           average closing bid prices of the Company's common stock for the five
           trading days immediately preceding June 30, 1998.

           The B Debentures can be converted into shares of the Company's common
           stock.  The  number of shares of common  stock to be issued  upon any
           such  conversion  will be  determined  based  upon the  lesser of (a)
           $3.9062 per share (the  closing bid price of the common stock on June
           29,  1998),  or (b) the average  closing bid prices of the  Company's
           common  stock for the five  trading day period  ending on the trading
           day  immediately  preceding  the date on which  such B  Debenture  is
           converted,  multiplied by a discount  ranging from 25% to 17.5%.  The
           Company granted to two of the Investors certain  registration  rights
           with  respect  to  the  shares  of  common  stock  underlying  the  B
           Debentures and the Warrants.




                                       7

<PAGE>


                               FRESH'N LITE, INC.
                NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
                         FOR THE SIX MONTH PERIOD ENDED
                                 JUNE 30, 1998
                                  (Unaudited)




           The  beneficial  conversion  feature  attached to the B Debentures is
           valued at $500,000.  The value is  calculated at the date of issue as
           the difference  between the conversion  price most  beneficial to the
           investor  and the fair  value of the  common  stock  into  which  the
           security  is  convertible,  multiplied  by the number of shares  into
           which the security is convertible. This amount will be amortized into
           interest  expense during the period between  issuance of the debt and
           the date  the securities  can be converted  at the  highest  discount
           which is ninety days from date of issuance. The beneficial conversion
           feature is reflected as deferred interest,  which is disclosed net of
           amortization.









                                       8



<PAGE>   

ITEM 2:    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

         This  Quarterly   Report  on  Form  10-QSB  includes   "forward-looking
statements"  within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities  Act"), and Section 21E of the Securities  Exchange Act
of 1934, as amended (the "Exchange Act"),  which can be identified by the use of
forward-looking  terminology  such as,  "may,"  "believe,"  "expect,"  "intend,"
"anticipate,"  "estimate"  or  "continue"  or  the  negative  thereof  or  other
variations  thereon  or  comparable  terminology.   All  statements  other  than
statements of historical fact included in this Form 10-QSB, are  forward-looking
statements.  Although the Company  believes that the  expectations  reflected in
such  forward-looking  statements are reasonable,  it can give no assurance that
such  expectations  will  prove to have been  correct.  Important  factors  with
respect to any such  forward-looking  statements,  including  certain  risks and
uncertainties  that could cause  actual  results to differ  materially  from the
Company's  expectations  ("Cautionary  Statements")  are  disclosed in this Form
10-QSB,  including,  without limitation, in conjunction with the forward-looking
statements  included in this Form 10-QSB,  and in the Company's Annual Report on
Form  10-KSB/A-1  for the year ended December 31, 1997.  Important  factors that
could   cause   actual   results  to  differ   materially   from  those  in  the
forward-looking  statements herein include,  but are not limited to, the newness
of the Company,  the need for additional capital and additional  financing,  the
Company's limited restaurant base, lack of geographic diversification, the risks
associated with expansion, a lack of marketing experience and activities,  risks
of franchising,  seasonability,  the choice of site  locations,  development and
construction delays, need for additional  personnel,  increases in operating and
food costs and  availability  of  supplies,  significant  industry  competition,
government  regulation,  insurance claims and the ability of the Company to meet
its stated  business  goals.  All  subsequent  written and oral  forward-looking
statements  attributable  to the  Company  or  persons  acting on its behalf are
expressly qualified in their entirety by the Cautionary Statements.

         The following  discussion  of the results of  operations  and financial
condition  should  be read in  conjunction  with the  Financial  Statements  and
related Notes thereto included herein.

OVERVIEW

         The Company was  organized in June of 1990 as Bosko's,  Inc.  under the
laws of the State of Delaware.  In November of 1992 the Company changed its name
to Fresh'n Lite,  Inc.,  and in November of 1995 the Company merged into a Texas
corporation also bearing the name Fresh'n Lite, Inc. The Company  currently owns
and operates 3 Fresh'n Lite Cafe & Grill restaurants,  in Dallas, Irving (Valley
Ranch),  and The  Colony,  Texas.  The  Company's  prototype  Street  Talk  Cafe
restaurant opened May 7, 1998 in Richardson,  Texas. The Company plans to expand
by opening  additional  Street Talk Cafe restaurants on a Company owned basis in
the Dallas/Ft. Worth demographic market area.

RESULTS OF OPERATIONS

         Comparison of Three Months Ended June 30, 1997 and 1998

         Revenues.  For the three months  ended June 30,  1998,  the Company has
generated  revenues of $942,635  compared to revenues in the same period of 1997
of $809,930, a 16.4% gain. The increase in revenues was due to the fact that the
Valley Ranch  location only operated for 4 1/2 months of the same period in 1997
and The Colony  facility was not operating  during the same period of 1997.  The
Company  attributes  the increase to increased  promotion  associated  with Chad
Hennings' involvement with the



                                       9

<PAGE>   

Company.  The Fresh'n Lite  restaurant at Preston and Frankford which would have
been able to  demonstrate  same store  sales was  closed for 45 days  during the
period in order to convert it to a Street Talk Cafe concept.

         Costs and Expenses. Costs and expenses for the three month period ended
June 30,  1998  increased  by  $234,468,  or 32.0% to  $973,504  as  compared to
$739,036 for the corresponding  period of 1997. This was primarily due to higher
volume  stores in the  Dallas  market.  Other  variances  between  the costs and
expenses for the three month  periods are due to income tax expense and interest
expense from the debenture.

         Net Income.  The Company  had a net income for the three  months  ended
June 30, 1998 of $12,131 compared to net income of $70,894 for the corresponding
three  months of 1997,  representing  $..002 and $.012 per share,  respectively.
Earnings per share figures are based on basic and diluted earnings per share.

         Comparison of Six Months Ended June 30, 1997 and 1998

         Revenues.  For the six months  ended June 30,  1998,  the  Company  has
generated revenues of $1,740,854 compared to revenues in the same period 1997 of
$1,522,282,  a 14.4%  gain,  a profit of $12,131 compared  to a loss in the same
period of 1997 of  $103,653.  The  increase in revenues was due to the fact that
the Valley Ranch  location  only operated for 4 1/2 months of the same period in
1997 and The Colony  facility was not operating  during the same period of 1997.
The Company attributes the increase to increased promotion  associated with Chad
Hennings'  involvement with the Company.  The Fresh'n Lite restaurant at Preston
and  Frankford  which would have been able to  demonstrate  same store sales was
closed for 45 days  during  the  period in order to convert it to a Street  Talk
Cafe concept.

         Costs and  Expenses.  Costs and expenses for the six month period ended
June 30,  1998  increased  by  $69,410,  or 4.2% to  $1,695,896  as  compared to
$1,626,486  for the  corresponding  period of 1997.  This was  primarily  due to
accelerated  amortization  costs associated with the closing of the Nacogdoches,
Texas,  facilities in the first  quarter of 1997.  Other  variances  between the
costs and expenses for the first six months of 1998 and 1997 are minimal.

         Net Income.  The Company had a net income for the six months ended June
30, 1998 of $226,637  compared to a net loss of $103,653  for the  corresponding
six months of 1997,  representing  $.036 and  $(.017)  per share,  respectively.
Earnings per share figures are based on basic and diluted earnings per share.

LIQUIDITY AND CAPITAL RESOURCES

         Historically,  the Company has required  capital to fund the operations
and capital expenditure requirements of its Company-owned restaurants.

         From January 4, 1995 through  December 12, 1997,  the Company  received
gross  proceeds from an  intra-state  offering of  $2,219,500.00.  Approximately
$287,600.00 of the proceeds were used to cover offering related costs, including
underwriting discounts and commissions. The net proceeds were used primarily for
the acquisition of the Company's corporate offices.  The remaining proceeds were
used to develop additional restaurants and for general corporate purposes.

         The Company met fiscal 1997 capital requirements with cash generated by
operations,  the proceeds from the  intra-state  offering and borrowing on notes
payable.  In  fiscal  1997  the  Company's  operations  generated  approximately
$644,352 in cash, as compared to $551,804 in fiscal 1996 and



                                       10

<PAGE>   

$461,811 in fiscal 1995. The Company's restaurant operations are labor intensive
and do not have significant receivables or inventory. The Company receives trade
credit  based  upon  negotiated  terms  in  purchasing  food  and  supplies  and
ordinarily operates with a relatively small level of working capital.

         The Company's  principal  capital  requirements  are the funding of new
restaurant  development or acquisitions and remodeling of existing units. During
fiscal 1997, the Company  constructed and opened one unit in The Colony,  Texas,
and began construction of a second unit in Richardson,  Texas, and purchased its
corporate  offices  facility.   The  total  capital  outlay  for  the  year  was
$2,288,392.  Opening additional Company-owned  restaurants is a key component of
its expansion strategy.

         The Company is currently  operating  out of cash flow from  operations.
The Company did two private  placements of the A Debentures and the B Debentures
on May 29,  1998 and June 29,  1998  providing  net  proceeds  to the Company of
$2,670,000.  The proceeds will be used to fund the Company's  expansion strategy
of opening  additional  Street Talk Cafe  restaurants  in the  Dallas/Ft.  Worth
market  area.  (See Note 3 to  interim  condensed  financial  statements  "Other
Events").

PLAN OF OPERATIONS

         The Company has planned the following  operations for the 1998 calendar
year, including:

         (i)  Open three  additional  Street Talk Cafe  restaurants at locations
              still to be negotiated.

         (ii) Convert the Fresh'n Lite Cafe & Grill located in The Colony, Texas
              to a Street Talk Cafe.

EMPLOYEES

         The Company  expects to hire three full time  management  personnel and
thirty  part time  hourly  personnel  with the  opening  of each new  restaurant
operation.  The cost of these  personnel  should be 25% of the annual  operating
revenue  to be  generated  by each  operation.  The  initial  cost of hiring and
training of all personnel is covered in the store start up costs.

YEAR 2000 COMPLIANCE

         The Company uses current  versions of widely used,  publicly  available
software  for its  accounting,  data  processing,  and  point  of sale  computer
requirements.  The providers of the software utilized by the Company have stated
that there will be no failures  in the  programs  used by the Company  resulting
from the year 2000.  The Company does not utilize any customized  software.  The
Company has not yet  determined  the impact,  if any,  that year 2000 issued may
have  on  its  vendors.   However,  the  Company  believes  there  are  adequate
alternative  vendors  that can supply  products  and  services to the Company if
necessary.  Finally,  the  Company's  business  is  not  highly  dependent  upon
electronic data processing. In conclusion, the Company does not believe it is at
a material risk from year 2000 issues.



                                      11


<PAGE>  
                          PART II - OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

         On May 29,1998,  the Company  issued  $1,500,000 of the A Debentures to
the Investors.  The private placement yielded  $1,335,000 in net proceeds to the
Company (after deduction for the payment of the placement  agent's fees and fees
of counsel for the  Investors).  In connection with the private  placement,  the
Company also issued to the Investors, Warrants to purchase up to an aggregate of
75,000 shares of the Company's common stock. The Company issued to the placement
agent a Warrant to purchase up to 50,000 shares of the  Company's  common stock.
The  exercise  price for the  Warrants  is $4.43,  which is equal to 110% of the
average  closing bid prices of the  Company's  common stock for the five trading
days immediately preceding May 29, 1998.

         The A Debentures can be converted  into shares of the Company's  common
stock.  The  number  of  shares  of  common  stock  to be  issued  upon any such
conversion will be determined  based upon the lesser of (a) $4.00 per share (the
closing  bid price of the  common  stock on May 28,  1998),  or (b) the  average
closing bid prices of the Company's common stock for the five trading day period
ending  on the  trading  day  immediately  preceding  the date on  which  such A
Debenture is converted,  multiplied by a discount ranging from 25% to 17.5%. The
Company granted to the Investors certain registration rights with respect to the
shares of common stock underlying the A Debentures and the Warrants.

         The  beneficial  conversion  feature  attached to the A  Debentures  is
valued  at  $500,000.  The  value  is  calculated  at the  date of  issue as the
difference  between the conversion price most beneficial to the investor and the
fair  value  of the  common  stock  into  which  the  security  is  convertible,
multiplied by the number of shares into which the security is convertible.  This
amount  will be  amortized  into  interest  expense  during the  period  between
issuance of the debt and the date the securities can be converted at the highest
discount.

         On June 30, 1998, the Company issued  $1,500,000 of the B Debentures to
two of the Investors.  The private placement yielded  $1,335,000 in net proceeds
to the Company  (after  deduction for the payment of the placement  agent's fees
and fees of counsel for two of the  Investors).  In connection  with the private
placement, the Company also issued to two of the Investors, Warrants to purchase
up to an aggregate of 75,000 shares of the Company's  common stock.  The Company
issued to the  placement  agent a Warrant to purchase up to 50,000 shares of the
Company's common stock.  The exercise price for the Warrants is $4.43,  which is
equal to 110% of the average  closing bid prices of the  Company's  common stock
for the five trading days immediately preceding May 29, 1998.

         The B Debentures can be converted  into shares of the Company's  common
stock.  The  number  of  shares  of  common  stock  to be  issued  upon any such
conversion will be determined  based upon the lesser of (a) $4.00 per share (the
closing  bid price of the  common  stock on May 28,  1998),  or (b) the  average
closing bid prices of the Company's common stock for the five trading day period
ending  on the  trading  day  immediately  preceding  the date on  which  such B
Debenture is converted,  multiplied by a discount ranging from 25% to 17.5%. The
Company granted to two of the Investors certain registration rights with respect
to the shares of common stock underlying the B Debentures and the Warrants.

         The  beneficial  conversion  feature  attached to the B  Debentures  is
valued  at  $500,000.  The  value  is  calculated  at the  date of  issue as the
difference  between the conversion price most beneficial to the investor and the
fair  value  of the  common  stock  into  which  the  security  is  convertible,
multiplied by the number of shares into which the security is convertible.  This
amount  will be  amortized  into  interest  expense  during the  period  between
issuance of the debt and the date the securities can be converted at the highest
discount.

         If the A Debentures and the B Debentures are converted and the Warrants
are  exercised,  then the ownership  positions of the  shareholders  who own the
Company's common stock will be diluted.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         (a)      The Annual Meeting of Shareholders was held on May 1, 1998.

         (b)      Each of the  management's  nominees,  as described  below, was
                  elected  a  director  to hold  office  until  the next  annual
                  meeting  of  shareholders  or until  his or her  successor  is
                  elected and qualified.



                                      12
<PAGE>   

                  Stanley L. Swanson, Curtis A. Swanson, Henry Leonard, 
                  Ed Dmytryk and Bob Lilly.

                        Number of Affirmative                Number of Withhold
                             Votes Cast                     Authority Votes Cast
                        ---------------------               --------------------


                               4,567,896                              0


         (c)  The  following  matter  was also  voted  upon at the  meeting  and
              approved by the following shareholders:

              (i)  approval of the Company's  1997  Incentive  Stock Option Plan
                   authorizing the issuance of up to 300,000 options to purchase
                   the Company's  common stock at a price equal to the bid price
                   of the common  stock as quoted by the NASDAQ  OTC-BB or other
                   applicable  market on the day of  issuance.  Said options are
                   exercisable  for  a  period  of 5  years  from  the  date  of
                   issuance.

                   Number of Affirmative                     Number of Negative
                        Votes Cast                              Votes Cast
                   ---------------------                     ------------------

                          4,567,896                                   0


                             Number of Abstain Votes Cast
                             ----------------------------
 
                                         0
 


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Hereafter set forth as an exhibit to the Form 10-QSB of Fresh'n
             Lite, Inc. is the following exhibit:

                 No.               Description of Exhibit
                 ---               ----------------------

                 27                Financial Data Schedule


        (b) Current Reports on Form 8-K:

            1. Current Report on Form 8-K dated May 29, 1998 pursuant to Item 5.





                                      13
<PAGE> 

                                   SIGNATURES

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

                                       FRESH'N LITE, INC.
                                       (Registrant)


Date:    September 25, 1998               By: /s/ Stanley L. Swanson
                                           ------------------------------------
                                           Stanley L. Swanson, Chief
                                           Executive Officer
                                           (Duly Authorized Signatory)


Date:    September 25, 1998               By: /s/ Curtis A. Swanson
                                           ------------------------------------
                                           Curtis A. Swanson, Chief Financial
                                           Officer and Executive Vice
                                           President
                                           (Duly Authorized Signatory)





                                      14
<PAGE>   

                                 EXHIBIT INDEX



No.               Description of Exhibit
----              ----------------------
27                Financial Data Schedule