U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549


                                   FORM 10-QSB


    X Quarterly Report under Section 13 or 15 (d) of the Securities Exchange
                          ---------------------------
                                  Act of 1934.

               For the quarterly period ended December 31, 1995.

               Transition Report under Section 13 or 15 (d) of the
                                 Exchange Act.

                      For the transition period from to .

                        Commission File Number 000-19318


                               SPARTA FOODS, INC.
        (exact name of small business issuer as specified in its charter)


                              Minnesota 41-1618240
       (state or other jurisdiction of (IRS Employer Identification No.)
                         incorporation or organization)


                     2570 Kasota Avenue, St. Paul, MN 55108
                    (Address of principal executive offices)

                                 (612) 646-1888
                           (Issuer's telephone number)


 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

State the number of shares outstanding of each of the Issuer's classes of common
                   equity, as of the latest practicable date:

              4,062,799 shares of Common Stock at January 17, 1996

            Transitional Small Business Disclosure Format: Yes No X


<PAGE>



                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                               SPARTA FOODS, INC.
                      Condensed Consolidated Balance Sheet
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                     December 31, 1995
ASSETS

<S>                                                                        <C>
Current Assets
         Cash                                                              $       550
         Accounts receivable, less allowance of $74,848                        780,248
         Inventories:
                  Finished goods                                               320,682
                  Raw materials and packaging                                  581,290
         Prepaid expenses                                                       66,186
                           Total current assets                              1,748,956
Property and Equipment                                                       5,855,952
         Less accumulated depreciation                                       1,840,052
                                                                           -----------
                                                                             4,015,900
Other Assets
         Goodwill, less accumulated amortization of $85,752                    474,138
         Covenants not-to-compete, less accumulated 
         amortization of $199,267                                              134,233
         Property held for resale                                              940,000
         Other                                                                 252,862
                                                                           -----------
                                                                             1,801,233
                                                                             7,566,089
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
         Note payable, bank                                                    853,120
         Note payable, individuals                                             400,000
         Current maturities of long-term debt                                  600,603
         Accounts payable                                                    1,189,028
         Accrued expenses                                                      366,328
                                                                           -----------
                  Total current liabilities                                  3,409,079
Long-term Debt, less current maturities                                      2,484,593
Stockholders Equity
         Preferred Stock, authorized 1,000,000 shares, no designated par
         value; none issued                                                       --
         Common Stock, authorized 15,000,000 shares, $.01 par value;
         issued and outstanding 4,062,799 shares                                40,627
         Additional paid-in capital                                          3,777,317
         Accumulated deficit                                                (2,145,527)
                                                                           -----------
                                                                             1,672,417
                                                                           $ 7,566,089


See Notes to Condensed Consolidated Financial Statements 
</TABLE>
<PAGE>



                               SPARTA FOODS, INC.
                Condensed Consolidated Statements of Operations
                                   (unaudited)

<TABLE>
<CAPTION>

                                                       For the three months ended
                                                              December 31
                                                            1995           1994 

<S>                                                         <C>            <C>

Net Sales                                                   $ 2,920,625    $ 2,792,940

Cost of sales                                                 2,154,317      2,079,995
                                                            -----------    -----------

         Gross profit                                           766,308        712,945

Selling, general and administrative expenses                    701,314        746,990
                                                            -----------    -----------

         Operating income (loss)                                 64,994        (34,045)

Other income (expense), net                                       4,112         (3,071)

Interest expense                                               (141,501)      (120,739)
                                                            -----------    -----------

         Loss before income taxes                               (72,395)      (157,855)

Provision for income tax                                           --             --
                                                            -----------    -----------

         Net loss                                           $   (72,395)   $  (157,855)
                                                            ===========    ===========

Net loss per common share                                   $      (.02)   $      (.05)
                                                            ===========    ===========

Weighted average number of common shares
outstanding                                                   4,062,799      3,369,107
                                                            ===========    ===========


See Notes to Condensed Consolidated Financial Statements 

</TABLE>
<PAGE>



                               SPARTA FOODS, INC.

                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                       For the three months
                                                                         ended December 31
                                                                           1995           1994
                                                                         ----------     ---------

<S>                                                                        <C>            <C>
Cash Flows From Operating Activities
         Net loss                                                          $   (72,395)   $  (157,855)

         Adjustments to reconcile net loss to net cash used in operating
         activities:
                  Depreciation and amortization                                129,471        130,563
                  Changes in assets and liabilities:
                           Accounts receivable                                (101,790)       (81,568)
                           Inventories                                          28,097         24,426
                           Prepaid expenses                                    (28,691)        (6,437)
                           Other assets                                        (15,527)       (42,157)
                           Accounts payable and accrued expenses               (24,913)       (98,868)
                                                                           -----------    -----------
         Net cash used in operating activities                                 (85,748)      (231,896)
                                                                           -----------    -----------

Cash Flows From Investing Activities
         Purchases of property and equipment                                   (23,444)      (112,673)
                                                                           -----------    -----------
         Net cash used in investing activities                                 (23,444)      (112,673)
                                                                           -----------    -----------

Cash Flows From Financing Activities
         Net short-term borrowings                                             255,399        237,997
         Long-term borrowings                                                     --           80,000
         Payments on long-term borrowings                                     (146,520)       (25,531)
         Issuance of Common Stock, excluding stock issued for
         conversion of debt, net of cost                                          --           71,529
                                                                           -----------    -----------
         Net cash provided by financing activities                             108,879        363,995
                                                                           -----------    -----------
         Net cash increase/(decrease)                                             (313)        19,426

Cash Balance
         Beginning of period                                                       863          4,348
                                                                           -----------    -----------
         End of period                                                     $       550    $    23,774
                                                                           ===========    ===========
Supplemental Disclosures of Cash Flow Information
         Cash payments for:
                  Interest                                                 $   135,884    $   254,339
                                                                           ===========    ===========

Supplemental Schedule of Noncash Financing
         Activities
           Conversion of long-term debt and accounts payable to
           Common Stock                                                    $      --      $ 1,137,800
           Conversion of accounts payable to long-term debt                       --          217,000
                                                                           ===========    ===========

See Notes to Condensed Consolidated Financial Statements 
</TABLE>
<PAGE>

              Notes to Condensed Consolidated Financial Statements
                                December 31, 1995
                                   (unaudited)


NOTE 1.           GENERAL

The unaudited  condensed  consolidated  balance sheet at December 31, 1995,  the
condensed  consolidated  statements of operations  for the  three-month  periods
ended December 31, 1995 and 1994, and the condensed  consolidated  statements of
cash flows for the three-month periods ended December 31, 1995 and 1994, include
all  adjustments  which in the opinion of  management  are necessary in order to
make the financial statements not misleading and are not necessarily  indicative
of results of  operations  to be  expected  for the entire  fiscal  year  ending
September 30, 1996.

The  unaudited  financial  statements  should  be read in  conjunction  with the
audited  financial  statements for the years ended  September 30, 1995 and 1994,
contained  in  Form  10-KSB  and  Form  10-KSB/A   (No.1),   respectively,   and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations contained herein.

NOTE 2.           FINANCING AGREEMENT

The  Company  has a  financing  agreement  with a bank which  involves a line of
credit,  term note and capital  equipment  note. At December 31, 1995,  advances
under  this  agreement  are  secured  by  the  Company's  accounts   receivable,
inventories  and  equipment.  Maximum  borrowings  under the line of credit  are
determined by an accounts receivable and inventory borrowing base calculation or
$1,200,000,  whichever is less;  such  borrowings  bear interest at prime plus 3
percent (11.5 percent at December 31, 1995). At December 31, 1995,  $853,120 was
outstanding on the line of credit.  The Company is required to maintain  certain
minimum net income and net worth  levels.  In  addition,  a maximum  debt to net
worth ratio is specified, dividends and capital expenditures are restricted, and
compensation and new options/warrants are also limited.  Previously, the Company
was in  violation  of certain  financial  covenants  of the bank  agreement  and
obtained a waiver of the covenant  violations from the bank through December 31,
1995. The bank and the Company are currently  negotiating new covenants based on
fiscal 1996 financial projections.

NOTE 3.           SUBSEQUENT EVENT

On  February  2, 1996,  the  Company  raised  $1,280,000  pursuant  to a private
offering of 2,560,000  units,  each unit consisting of one share of Common Stock
at $0.50 per share and a warrant,  exercisable  for three years,  to purchase an
additional  share of Common  Stock at $0.75 per share.  The  Company  granted to
investors in the offering  one-time  demand and piggy-back  registration  rights
which expire on February 1, 1998.  As a result of the  offering,  the  Company's
outstanding common shares have increased to 6,622,799 shares.

<PAGE>

NOTE 3. (continued)

The following Pro Forma Balance Sheet is based upon the actual  balance sheet of
December 31, 1995  (unaudited)  after  giving  effect to the sale on February 2,
1996 of 2,560,000  shares of Common Stock and the payment of certain  debt.  See
Note A.

<TABLE>
<CAPTION>
                                                                                           Pro Forma
                                        Balance Sheet      Pro Forma Adjustments       Balance Sheet at
                                      at Dec. 31, 1995           (Note A)                 Dec. 31, 1995
                                                                 --------                                      
                                         (unaudited)      (increase)      (decrease)       (unaudited)
                              ---------------------------------------------------------------------------------

<S>                                         <C>            <C>            <C>           <C>

ASSETS
         Cash                               $       550    $ 1,239,445    $   700,000   $
                                                                              411,507       128,488
         Receivables                            780,248        780,248
         Inventories                            901,972        901,972
         Prepayments                             66,186         66,196
                                            -----------    -----------    -----------   -----------
           Current assets                     1,748,956      1,239,445      1,111,507     1,876,894
         Property and equipment, net          4,015,900      4,015,900
         Other assets                         1,801,233         40,000      1,761,233
                                            -----------    -----------    -----------   -----------
                                              7,566,089      1,239,445      1,151,507     7,654,027
                                            ===========    ===========    ===========   ===========
Liabilities and
  Stockholders Equity
         Note payable, bank                     853,120        700,000        153,120
         Note payable, individuals              400,000        400,000           --
         Long-term debt, current                600,603        600,603
         Accounts payable and accrued
         expenses                             1,555,356         11,507      1,543,849
                                                           -----------    -----------   -----------
           Current Liabilities                3,409,079      1,111,507      2,297,572
                                                           -----------    -----------   -----------
         Long-term debt, net                  2,484,593      2,484,593
                                                                          -----------   -----------
         Stockholders equity:
           Preferred Stock                         --             --
           Common Stock - outstanding
           shares 4,062,799 and 6,622,799        40,627         25,600         66,227
         Additional paid-in capital           3,777,317      1,173,845      4,951,162
         Accumulated deficit                 (2,145,527)    (2,145,527)
                                                           -----------    -----------   -----------
                                                             1,672,417      1,199,445     2,871,862
                                            -----------    -----------    -----------   -----------
                                            $ 7,566,089      1,199,445    $ 1,111,507   $ 7,654,027
                                            ===========    ===========    ===========   ===========

</TABLE>
<PAGE>



NOTE 3. (continued)

Note A

On  February  2, 1996,  the Company  received  $1,239,445,  net of broker's
commission and miscellaneous fees of $40,555,  from the sale of 2,560,000 shares
of its Common  Stock at $0.50 per share.  The  proceeds  were used to reduce its
Line of Credit with a bank by $700,000  and to pay in full its notes  payable to
individuals  of  $400,000  and  accrued  interest  thereon.  Financing  cost  of
approximately $40,000 is charged to Additional Paid-in Capital.


NOTE 4.           NET INCOME (LOSS) PER COMMON SHARE

Net income (loss) per common share is calculated  based on the net income (loss)
for the period and the  weighted  average  number of common  shares  outstanding
during  the  period.   Common  Stock  equivalents  (options  and  warrants)  are
anti-dilutive  for both of the  three-month  periods ended December 31, 1995 and
1994.


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

Overview

La Canasta of Minnesota, Inc. ("La Canasta"), the Company's predecessor, and now
a wholly-owned  subsidiary of the Company,  began  producing  limited volumes of
hand  stretched  tortillas,  corn  tortillas  and corn  tortilla  chips  shortly
following  its  organization  in 1981,  primarily for sale to  restaurants.  The
Company  was  organized  under  the  laws of the  State  of  Minnesota  in 1988,
originally  under the name of "Sparta Corp." for the purposes of raising capital
for the  acquisition  of, or investment  in, a business.  In January  1991,  the
Company  acquired  all of the  outstanding  capital  stock  of La  Canasta.  The
shareholders of La Canasta  entered into this  transaction to obtain capital for
La Canasta and to  facilitate  La Canasta's  plans to expand its product  lines,
markets and production capabilities.  La Canasta began expanding its product mix
in 1990 when it acquired  food  processing  equipment  from  SuperValu,  Inc. in
Hopkins,  Minnesota,  and started  producing  Ken Davis  barbecue  sauces.  This
enabled La Canasta to expand into other tomato-based  products,  such as Mexican
salsas and picante  sauces.  In January 1992,  the Company  continued  with this
expansion by acquiring the business of Cruz Distributing, Inc., a distributor of
Cruz  brand  press  flour  tortillas  to retail  establishments  and  McDonald's
restaurants.  In November 1992, the Company acquired from Chapala International,
Inc. the Chapala registered trademarks and trade names, and certain other assets
related to the sale and distribution of  Mexican-style  foods to wholesalers and
others for retail  sale,  including  product  formulas  for salsas and  customer
lists.

<PAGE>

In  October  1993,  the  Company  acquired  substantially  all of the  assets of
International  Food Products,  Inc. ("IFP") of Lakeville,  Minnesota,  which was
engaged in the  manufacture  and sale of  tortillas  and  tortilla  chips.  This
acquisition provided the Company with additional manufacturing capabilities, the
established La Campana Paradiso and Mexitos brand names, and the retail and food
service  distribution   services  of  Bradley   Distributing,   Inc.  and  Sysco
Corporation, respectively.

The foregoing  acquisitions  were effected to improve the Company's  capacity to
efficiently  manufacture  a broad line of  Mexican-style  food  products  and to
increase  sales and market share by  developing  a  broad-based  responsive  and
capable  distribution  network.  While these  acquisitions  increased sales, the
Company incurred  significant  legal,  accounting and  debt-related  expenses to
complete the transactions.  As a result, the Company incurred a substantial loss
in fiscal 1994.

     In response to this loss, the ongoing  problems  integrating  the Company's
acquisitions  and other  corporate  problems,  the Board of Directors  adopted a
restructuring  plan in October 1994.  In the first  quarter of fiscal 1995,  the
Board of Directors  hired Joel Bachul and Merrill  Ayers as its new CEO and CFO,
respectively,  and they were given the primary  responsibility  of managing  the
restructuring  process.  The focus of  management's  efforts to date has been to
complete a  comprehensive  financial  restructuring  and  effectuate  changes in
connection  with  its  products  and its  production  and  distribution  systems
necessary to attain future profitability.  In August 1995, the company relocated
its Lakeville, Minnesota tortilla and tortilla chip production operations to its
St. Paul  manufacturing  facility.  The 45,000  square-foot  Lakeville  facility
operated  four  production  lines and  employed  33  people.  For the year ended
September 30, 1995,  the Company  recorded a $943,778 loss  including a $302,612
write-down  of the  Lakeville  facility  to reflect the  recorded  value of this
property at the lower of cost or fair  market  value.  On February 1, 1996,  the
Company  leased the Lakeville  facility for a period of 10 years with a purchase
option.


Results of Operations

The Company's  net sales  increased  $127,685  (4.6%) for the three months ended
December 31, 1995, as compared to the three months ended December 31, 1994. This
increase  primarily  resulted from expansion of the Company's  existing customer
base in the retail and food service  industries  as well as  expansion  into new
territories.

<PAGE>

The Company has  historically  had higher  sales in its third and fourth  fiscal
quarters which end June 30 and September 30, respectively, than in its first and
second  quarters.  Management  believes  that  this  is  a  result  of  seasonal
consumption  patterns  with  respect to the  Company's  food  products,  such as
consumption of higher volumes of tortilla chips,  salsas,  and barbecue  sauces,
during  the summer  months.  This  seasonality  may cause  quarterly  results of
operations to fluctuate.

Gross profit,  as a percentage of net sales, for the three months ended December
31, 1995,  was 26.2%  compared to 25.5% for the three months ended  December 31,
1994. The higher  percentage  reflects some of the cost savings  achieved in the
initial stages of consolidation of the Company's two production facilities which
was completed during the fourth fiscal quarter of 1995.

Selling,  general and  administrative  expenses  decreased  $45,676 or 6% in the
three  months ended  December 31, 1995,  as compared to the same period in 1994.
Selling,  general and  administrative  expenses,  as a percentage  of net sales,
decreased 3% to 24% for the three months ended December 31, 1995, as compared to
the same period in 1994.  These  decreases  are due mainly to the return to more
normal  expense  levels  following the costs  associated  with the IFP operating
activities,  related  integration  costs of the acquisition and costs associated
with the comprehensive financial restructuring in December 1994.

Interest expense increased $20,762 for the three month period ended December 31,
1995  compared to the three  months  ended  December  31,  1994.  This  reflects
primarily  the effect of increased  interest  rates and fees from the  Company's
bank debt.  Expected  interest  expense rate reductions did not occur due to the
delay in raising additional capital until the second fiscal quarter of 1996.

Liquidity and Capital Resources

The Company has financed its  activities to date  primarily  through debt,  cash
generated from its operations  and, to a lesser extent,  through the issuance of
Common Stock.

Cash used in operating  activities during the three months ended  December
31,  1995,  was  $85,748  consisting  primarily  of the net loss of  $72,395,  a
decrease in accounts  payable  and accrued  expenses of $24,913,  an increase in
accounts  receivable  of $101,790 and an increase in prepaid  expenses and other
assets of $44,218,  offset by  depreciation  and  amortization of $129,471 and a
decrease  in  inventories  of $28,097.  Cash used in  investing  activities  was
$23,444,  primarily the result of capitalized  costs associated with a new press
tortilla line in fiscal 1995 and the installation of production  equipment moved
from the IFP  production  facility.  Cash provided by financing  activities  was
$108,879 due mainly to a net increase in short-term borrowings under the line of
credit and short-term  Convertible  Notes payable to  individuals,  as described
below.

On October 20, 1995 the Company raised $400,000 from the issuance of Convertible
Notes that carry an annual interest rate of 10%. As additional  consideration to
the  Noteholders,  the Company issued Warrants to purchase an aggregate  400,000
shares of Common Stock,  exercisable at $0.50 per share.  The Warrants expire 36
months from the date the loans were made.  The  Noteholders  converted the Notes
into Units sold by the Company as part of the private offering.

<PAGE>

As of December 31, 1995, the Company had fully drawn its availability  under its
bank Line of Credit and had been granted an  overadvance  availability  of up to
$100,000  through  January 31,  1996.  The amount  available  under this Line of
Credit fluctuates daily based upon the Company's  eligible  accounts  receivable
and  inventory.  The Line of Credit,  Bank Term Note and Bank  Capital  Note are
subject to various financial  covenants,  the violation of which could result in
termination of the loan agreements  which would require the Company to repay the
loans in full.  The  Company  was in default of the  financial  covenants  as of
December 31, 1995,  and the bank has waived such defaults  through  December 31,
1995. The Company and the bank are currently  negotiating new covenants based on
fiscal 1996 financial  projections.  It is management's opinion that the Company
will be able to meet the  requirements  of these new  covenants  in the  future.
However,  there is no assurance  that the Company will not violate the financial
covenants in the future or that the bank will waive any such violations.

At  December  31,  1995,  the  Company  had cash of $550 and a negative  working
capital of $1,660,123.  As of December 31, 1995, none of the Company's creditors
have threatened or instituted formal legal proceedings against the Company.

On  February  2, 1996,  the  Company  raised  $1,280,000  pursuant  to a private
offering of 2,560,000  units,  each unit consisting of one share of Common Stock
at $0.50 per share and a warrant,  exercisable  for three years,  to purchase an
additional  share of Common  Stock at $0.75 per share.  The  Company  granted to
investors in the offering  one-time demand and piggy-back  registration  rights,
which expire on February 1, 1998.

The  Company  believes  that the  additional  capital  raised,  its bank  credit
facilities  and  cash  flow  from  operations  will be  sufficient  to meet  its
operating  requirements  through fiscal 1996,  assuming the  following:  (i) the
Company's fiscal 1996 sales equal or exceed fiscal 1995 sales; (ii) there are no
significant  increases in expenses in fiscal 1996; and (iii) the Company is able
to keep its bank credit facilities operative.  With the Company's retail brands'
dominant  position in the local retail  market and the strong growth in the food
service  sector,  management  believes  that  fiscal 1996 sales will exceed 1995
sales. It also believes that the Company will significantly  reduce its expenses
in fiscal 1996 with the consolidation and lease of the Lakeville facility. While
the Company  believes these  assumptions are  reasonable,  there is no assurance
that the  Company  will not  require  additional  working  capital to be able to
maintain its operations.

<PAGE>

                           PART II. OTHER INFORMATION

ITEM 5.           OTHER INFORMATION

                  (a)  Warrants  of 582,246  were  issued by the  Company in its
         Private  Placement of December 9, 1994,  and were  repriced to $0.50 on
         October 20, 1995 in conjunction with bridge  financing  obtained by the
         Company, which financing included warrants at that price.

                  (b) Reference is invited to Form 8-K,  which is dated February
         2, 1996 and relates to the Private Placement of February 2, 1996.


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      Exhibits

                           None

                  (b)      Reports on Form 8-K

                  A report on Form 8-K was not filed  during the  quarter  ended
December 31, 1995.

                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                       SPARTA FOODS, INC.
                                         (Registrant)


Dated:  February 13, 1996              By: /s/ Joel P. Bachul
                                           Joel P. Bachul,
                                           President and Chief Executive Officer


Dated:  February 13, 1996              By: /s/ A. Merrill Ayers
                                          A. Merrill Ayers
                                         Treasurer, Secretary and Chief
                                         Financial Officer