SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
-------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to _________________________
Commission file number 000-24941
Delicious Brands, Inc.
- --------------------------------------------------------------------------------
(Exact name of the registrant as specified in its charter)
Delaware 06-1255882
- ---------------------------------- ----------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2070 Maple Street, Des Plaines, Illinois 60018
- ------------------------------------------- -----------------------------
(Address of Principal executive offices) (Zip code)
Registrant's telephone number including area code: (847) 699-3200
------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES /X/ NO / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
4,440,835 shares of Common Stock were outstanding on April 29, 1999.
<PAGE>
DELICIOUS BRANDS, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1999
I N D E X
Part I: Financial Information Page
Item 1. Financial Statements:
Balance Sheets as of March 31, 1999 and December 31, 1998 2
Statements of Operations, Three Months Ended March 31, 1999 3
and 1998
Statements of Cash Flows, Three Months Ended March 31, 1999 4
and 1998
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk 9
Part II: Other Information
Item 2. Changes in Securities and Use of Proceeds 10
Item 6. Exhibits and Reports on Form 8-K 10
1
<PAGE>
DELICIOUS BRANDS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
------------- ---------------
1999 1998
------------- ---------------
(unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash...................................................................... $ 0 $ 981,646
Accounts receivable including $535,281 and $324,070,
respectively, due from related parties, net of allowances of
$688,418 and $800,980, respectively................................. 4,944,477 5,108,747
Inventory................................................................. 2,247,636 1,879,041
Due from distributors..................................................... 99,317 99,317
Prepaid expenses and other current assets................................. 656,258 327,964
-------------- ---------------
7,947,688 8,396,715
-------------- ---------------
Property and Equipment, Net of Accumulated Depreciation......................... 359,773 381,185
-------------- ---------------
Other Assets:
Goodwill.................................................................. 9,874,173 10,011,946
Other .................................................................... 395,449 436,261
-------------- ---------------
10,269,622 10,448,207
-------------- ---------------
$ 18,577,083 $ 19,226,107
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank loan payable......................................................... $ 3,733,649 $ 3,665,828
Current portion of subordinated debt...................................... 393,332 393,332
Accounts payable including $77,797 and $82,040, respectively,
due to related parties.............................................. 8,656,076 7,173,870
Due to distributors....................................................... 464,466 532,769
Accrued expenses.......................................................... 2,182,309 2,954,389
Current portion of long-term liabilities.................................. 883,276 904,838
-------------- ---------------
16,313,108 15,625,026
-------------- ---------------
Long-term Liabilities:
Restructuring liability................................................... 510,848 544,679
Packaging loss liability.................................................. 200,000 200,000
-------------- ---------------
710,848 744,679
-------------- ---------------
Stockholders' Equity:
Preferred Stock, $.01 par value, 1,000,000 shares authorized,
245,000 shares designated Series A with a liquidation
value of $8.00 per share, 189,584 and 195,834 shares issued and
outstanding in 1999 and 1998, respectively.......................... 1,516,668 1,566,668
Common Stock, $.01 par value, 25,000,000 shares authorized,
4,489,510 and 4,481,767 shares issued in 1999 and 1998,
respectively........................................................ 44,895 44,818
Additional paid-in capital................................................ 18,395,923 18,343,209
Accumulated deficit....................................................... (18,243,310) (16,937,244)
-------------- ---------------
1,714,176 3,017,451
Less, common stock in treasury at cost.................................... (161,049) (161,049)
-------------- ---------------
Total stockholders' equity.......................................... 1,553,127 2,856,402
-------------- ---------------
$ 18,577,083 $ 19,226,107
============== ===============
</TABLE>
The accompanying notes are an integral part of this statement.
2
<PAGE>
DELICIOUS BRANDS, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------
1999 1998
---- ----
<S> <C> <C>
Net Sales (including approximately
$1,113,000 and $1,230,000,
respectively, to related parties).................... $ 12,341,817 $ 6,492,406
Cost of Sales (including approximately
$10,000 and $54,000, respectively,
from related parties)................................. 9,496,139 5,281,304
------------ -------------
Gross Profit................................................ 2,845,678 1,211,102
------------ -------------
Selling, general and administrative......................... 3,911,760 1,516,670
------------ -------------
Loss from Operations........................................ (1,066,082) (305,568)
------------ -------------
Other Income (Expense):
Interest expense...................................... (166,475) (112,949)
Other, net............................................ 4,825 10,978
------------ -------------
(161,650) (101,971)
------------ -------------
Loss before Provision for Income Taxes
Provision for Income Taxes.................................. (1,227,732) (407,539)
Net Loss ................................................ 0 0
------------ -------------
$(1,227,732) $ (407,539)
============ =============
Earnings per Share:
Basic:
Net loss per common share....................... $ (.29) $ (.13)
============ =============
Weighted average number of
common shares outstanding..................... 4,435,509 3,226,842
Diluted:
Net loss per common share....................... $ (.29) $ (.13)
============ =============
Weighted average number of
common shares outstanding..................... 4,435,509 3,226,842
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
DELICIOUS BRANDS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1999 1998
---- ----
Cash Flows from Operating Activities:
<S> <C> <C>
Net loss ............................................................ $(1,227,732) $ (407,539)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization..................................... 196,286 72,672
Provision for bad debts........................................... 19,333 7,544
Increase (Decrease) in cash from changes in:
Accounts receivable......................................... 144,937 (914,921)
Inventory................................................... (368,595) (408,360)
Due from distributors....................................... 0 9,446
Prepaid expenses and other current assets................... (328,294) (3,908)
Other assets................................................ 32,062 22,298
Accounts payable and accrued expenses....................... 710,126 385,783
Due to distributors......................................... (68,303) 31,640
Accrued restructuring liabilities........................... (33,831) (65,371)
Other liabilities........................................... (21,562) (32,850)
------------ ------------
Net cash used in operating activities................................... (945,573) (1,303,566)
------------ ------------
Cash Flows from Investing Activities:
Purchase of property and equipment...................................... (28,351) (33,188)
------------ ------------
Net cash used in investing activities................................... (28,351) (33,188)
------------ ------------
Cash Flows from Financing Activities:
Payments of long-term debt.............................................. 0 (4,957)
Proceeds from (payments of) bank loan payable, net...................... 67,821 (159,945)
Proceeds from issuance of notes payable................................. 0 500,000
Proceeds from issuance of common stock.................................. 2,791 840,000
Payment of preferred stock dividend..................................... (78,334) 0
Payment of stock issuance costs......................................... 0 (143,300)
------------ ------------
Net cash provided by (used in) financing activities..................... (7,722) 1,031,798
------------ ------------
Decrease in Cash.............................................................. (981,646) (304,956)
Cash, Beginning of Period..................................................... 981,646 808,349
------------ ------------
Cash, End of Period........................................................... $ 0 $ 503,393
============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Income taxes...................................................... $ 0 $ 0
============ ============
Interest.......................................................... $ 173,470 $ 39,713
============ ============
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
DELICIOUS BRANDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Interim Financial Statements
The unaudited interim financial statements included herein were prepared
pursuant to the rules and regulations for interim reporting under the Securities
Exchange Act of 1934, as amended. Accordingly, certain information and footnote
disclosures normally accompanying the annual financial statements were omitted.
The interim financial statements and notes should be read in conjunction with
the annual audited financial statements and notes thereto contained in the Form
10-K of Delicious Brands, Inc. (the "Company") dated April 15, 1999. The
accompanying unaudited interim financial statements contain all adjustments,
consisting only of normal adjustments, which in the opinion of management were
necessary for a fair statement of the results for the interim periods. Results
for the interim periods are not necessarily indicative of results for the full
year.
Matters Affecting Comparability - Acquisition of Assets
On April 3, 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of Salerno Foods, L.L.C. ("Salerno"). Accordingly,
the Company's results of operations for the three months ended March 31, 1999
include the operating results of Salerno whereas the comparable three months
ended for the prior year do not.
The following unaudited pro forma information has been prepared assuming the
acquisition had taken place at January 1, 1998. The unaudited pro forma
information includes adjustments for interest expense that would have been
incurred to finance the purchase, additional depreciation of the property and
equipment acquired, amortization of the goodwill arising from the acquisition
and the result of conforming Salerno's accounting policy for slotting fees to
the Company's policy. The unaudited pro forma results of operations are not
necessarily indicative of what the results that would have been had the Salerno
acquisition been effected on the assumed date.
Unaudited for the
Three Months Ended
March 31, 1998
---------------
Net sales....................... $ 14,997,000
Loss before income taxes........ $ (1,719,000)
Net loss........................ $ (1,719,000)
Net loss per share:
Basic..................... $ (0.52)
Diluted................... $ (0.52)
Business and Ownership
During the fourth quarter of 1998, the Company issued 1,150,000 shares of its
Common Stock, at $12.00 per share, in an initial public offering. Proceeds of
the offering were $10,690,684 net of commissions and other related expenses
totaling $3,109,316.
2. Net Income (Loss) Per Share
Basic net income (loss) per share and diluted net income (loss) per share have
been calculated using the weighted average number of Common shares outstanding
during each period. Preferred stock dividends, totaling $78,334, were paid
during the three months ended March 31, 1999 and have been included in both the
basic and diluted net income (loss) per share calculations. All options and
warrants were omitted from the computation of diluted net income (loss) per
share because the options and warrants are antidilutive when net losses are
reported.
5
<PAGE>
3. Inventory
Inventory is stated at the lower of cost or market with cost determined by the
first-in, first-out (FIFO) method.
4. Recent Account Pronouncements
Effective January 1, 1999, the Company adopted FAS No. 133, "Accounting for
Derivatives Instruments and Hedging Activities," which requires the recording of
all derivatives on the balance sheet at fair value, and Statement of Position
98-5 (SOP 98-5), "Reporting on the Cost of Start-up Activities," which requires
costs of start-up activities and organization costs to be expensed as incurred.
The adoption of FAS No. 133 and SOP 98-5 had no impact on the Company's results
of operations, financial position or cash flows.
5. Subordinated Debt
On April 27, 1999, the remaining outstanding 9% Subordinated Convertible
Promissory Notes (the "9% Notes") aggregate principal amount of approximately
$393,000, matured. The Company has not repaid the 9% Notes. The Company is
currently negotiating with the holders of the 9% Notes with regard to the
conversion of the 9% Notes to equity. Should the Company fail to repay the 9%
Notes or to negotiate their conversion into equity on or before May 27, 1999,
the Company will be in default of the terms of the 9% Notes.
6
<PAGE>
MANAGEMENT'S DISCUSSION ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MATTERS AFFECTING COMPARABILITY - ACQUISITION OF ASSETS
On April 3, 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of Salerno Foods, L.L.C. ("Salerno"). Accordingly,
the Company's results of operations for the three months ended March 31, 1999
include the operating results of Salerno whereas the comparable three months
ended for the prior year do not.
RESULTS OF OPERATIONS
Net Sales. Net sales increased 89% to $12.3 million for the three months ended
March 31, 1999. The net sales increase, $7.9 million, resulted primarily from
the inclusion of the April 3, 1998 acquisition of Salerno. Sales of licensed
products declined by $800,000 or 60% as promotional allowances in 1998 were
reduced significantly in 1999 as the Company focused on raising its gross
margin. Sales of value priced products declined $1.4 million or 34% as
competition from private label and national brands intensified in an attempt to
increase their market share.
Gross Profit. Gross profit increased 135% to $2.8 million for the three months
ended March 31, 1999. The gross profit increase, $1.9 million, resulted
primarily from the inclusion of the April 3, 1998 acquisition of Salerno. Gross
profit as a percentage of sales, excluding Salerno's gross profit, increased
2.5% for the three months ended March 31, 1999. Gross margin increased for
Frookie and Delicious product lines as the Company concentrated on raising gross
margin by reducing promotion costs and obtaining lower supplier costs.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 158% to $3.9 million for the three months
ended March 31, 1999. The increase, $2.4 million, resulted from the inclusion of
the April 3, 1998 acquisition of Salerno.
Other Income (Expense). Other expenses increased 59% to $162,000 for the three
months ended March 31, 1999. The increases were primarily due to higher interest
expense incurred to finance Salerno's operations.
Provision for Income Tax. The provision for income tax for the three months
ended March 31, 1999 was zero as a result of there being a net operating loss
for the period for which a valuation allowance was provided to reduce the tax
benefit of this loss. The valuation allowance for the three months ended March
31, 1999 increased $479,000. The valuation allowance increases were primarily
due to the uncertainty of the future utilization of the net operating losses
generated. The variation of the Company's effective tax rate from the federal
statutory tax rate is principally due to non-deductible amortization of
intangible assets and the effect of the increase in the valuation allowance.
Net Loss. Net loss increased 301% to $1,228,000 for the three months ended March
31, 1999. The increased losses were a result of the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
In recent periods, the Company has utilized its working capital and proceeds
from both private placements and public offerings to cover operating deficits.
Because the Company purchases its products from co-packers, it does not intend
to invest in plant or equipment relating to the manufacture of products for
sale. Further, the Company believes that its existing fleet of leased trucks is
sufficient for the foreseeable future. In addition, the Company's introduction
of new products represents an immaterial capital expenditure because co-packers
are responsible for the research, development and ingredients costs. The only
costs incurred by the Company are packaging design costs, which did not exceed
$100,000 in 1998 and are not expected to increase significantly in 1999.
Consequently, additions to property and equipment are not expected to be
material in future periods.
7
<PAGE>
On February 6, 1998, the Company consummated a second closing of a private
placement (the "Second Closing") pursuant to which it issued an aggregate of
140,000 shares of common stock, $.01 par value per share ("Common Stock"), for
an aggregate price of $840,000. The net proceeds of $695,610 from the Second
Closing were applied by the Company to increase cash balances and reduce
outstanding trade payables balances.
On March 30, 1998, the Company borrowed $500,000 (the "Acquisition Loan"). Such
indebtedness bore interest at the rate of 12% per annum and matured on the
consummation of the Company's initial public offering of Common Stock on
November 17, 1998 (the "Initial Public Offering"). The Acquisition Loan and
accrued interest thereon were repaid from the proceeds of the Initial Public
Offering.
On April 3, 1998, the Company entered into an amendment to a revolving credit
facility with U.S. Bancorp Republic Commercial Finance, Inc. ("Republic") for a
revolving line of credit of up to $7.0 million. Borrowings under the revolving
credit facility are due upon demand and bear interest at 1.50% per annum above
the reference rate of interest publicly announced from time to time by U.S. Bank
National Association (9.25% at March 31, 1999). Borrowings under the revolving
credit facility at March 31, 1999 were $3.7 million. Borrowings under the
revolving credit facility are collateralized by a first lien on substantially
all of the assets of the Company.
On April 3, 1998, the Company consummated the acquisition of Salerno. The
purchase price for Salerno consisted of (i) $3.3 million in cash, (ii) a $1.5
million promissory note from the Company to Salerno (the "Salerno Promissory
Note"), bearing interest at a rate of 12% per annum, secured by a second lien on
substantially all of the Company's assets, and (iii) the assumption of
substantially all of the liabilities of Salerno. In connection therewith, the
Company entered into a loan agreement with American Pacific Financial
Corporation ("APFC") pursuant to which the Company borrowed $4.6 million,
bearing interest at a rate of 12% per annum through August 3, 1998 and 15% per
annum thereafter, from APFC (the "APFC Loan") consisting of $3.0 million in cash
used by the Company to fund a portion of the cash purchase price for Salerno,
$1.5 million in the form of APFC assuming the Salerno Promissory Note and
$100,000 as a fee for the APFC Loan. In addition, the Company issued to APFC a
promissory note in the principal amount of $100,000, bearing interest at a rate
of 12% per annum, as a fee for assuming the Salerno Promissory Note. The notes
and accrued interest thereon were repaid from the proceeds of the Initial Public
Offering.
As of August 1, 1998, holders of approximately $1.6 million aggregate principal
amount of 9% Subordinated Convertible Promissory Notes (the "9% Notes")
exchanged such notes for an aggregate of 195,834 shares of Series A Convertible
Preferred Stock, $.01 par value per share ("Series A Preferred Stock"), pursuant
to an offer to exchange made by the Company. Annual dividends of 10% paid
semi-annually are payable on the shares of Series A Preferred Stock out of the
assets of the Company legally available for payment thereof. The expiration date
of warrants to purchase 107,730 shares of Common Stock collectively held by the
holders of the 9% Notes exchanged for the Series A Preferred Stock was extended
to April 27, 2001 from April 27, 1999.
On November 17, 1998, the Company consummated the Initial Public Offering of
1,000,000 shares of Common Stock, at a price of $12.00 per share. On December
31, 1998, the Company consummated the sale of 150,000 shares of Common Stock, at
a price of $12.00 per share, pursuant to the underwriters' exercise of the
over-allotment option on December 29, 1998. After deducting underwriting
discounts and expenses, the Company received approximately $10.7 million of net
proceeds from the Initial Public Offering.
On April 12, 1999, the Company consummated a private placement of 35,000 shares
of Series B Convertible Preferred Stock, $.01 par value per share ("Series B
Preferred Stock"), and a warrant to purchase 700,000 shares of Common Stock, for
an aggregate price of $1.75 million. The net proceeds of $1.5 million were
applied by the Company primarily to reduce outstanding trade payables balances.
Each share of Series B Preferred Stock is currently convertible into five shares
of Common Stock, subject to certain antidilution provisions. The warrant to
purchase 700,000 shares of Common Stock has an initial exercise price of $0.01
per share, subject to certain antidilution provisions, for a term of ten years
from the date of its issuance.
On April 27, 1999, the remaining outstanding 9% Notes, aggregate principal
amount of approximately $393,000, matured. The Company has not repaid the 9%
Notes. The Company is currently negotiating with the holders of
8
<PAGE>
the 9% Notes with regard to the conversion of the 9% Notes to equity. Should the
Company fail to repay the 9% Notes or to negotiate their conversion into equity
on or before May 27, 1999, the Company will be in default of the terms of the 9%
Notes. The Company does not currently have the funds to repay the 9% Notes and
no assurance can be made that the Company will be successful in converting them
into equity. The Company's credit facility prohibits the repayment of principal
on the 9% Notes without the prior consent of Republic and there can be no
assurance that such consent shall be given.
The Company's liquidity problems have not significantly delayed purchases of
inventory from suppliers. There can be no assurance that the Company will not
experience future supply problems which could have a material adverse effect on
the Company's business, financial condition and results of operations.
Currently, the Company has insufficient funds for its needs. The Company is
seeking additional debt and/or equity financing; however, there can be no
assurance that additional funds can be obtained on acceptable terms, if at all.
If the Company is unable to obtain additional financing or generate positive
cash flow, the Company's business will be materially adversely affected.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements included in this report will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
YEAR 2000 PROGRAM
Many computer systems used in the current business environment were designed to
use only two digits in the date field and thus may experience difficulty
processing dates beyond the year 1999 and, as such, some computer hardware and
software will need to be modified prior to the Year 2000 to remain functional.
The Company's core internal systems that have been recently implemented are Year
2000 compliant. The Company is also completing a preliminary assessment of Year
2000 issues not related to its core systems, including issues with third-party
suppliers and warehouse communications. Based on its initial evaluation, the
Company does not believe that the cost of remedial actions will have a material
adverse effect on the Company's results of operations, liquidity or financial
condition. However, due to the general uncertainty of the Year 2000 readiness of
third-party suppliers and customers, the Company is unable to determine at this
time whether the consequences of Year 2000 failures will have a material impact
on the Company's results of operations, liquidity or financial condition. The
Company believes that, with the implementation of new business systems and
completion of projects as scheduled, the possibility of significant
interruptions of normal operations should be reduced.
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
At March 31, 1999, the Company had no outstanding derivative financial
instruments. All of the Company's transactions occur in U.S. dollars. Therefore,
the Company is not subject to significant foreign currency exchange risk.
9
<PAGE>
PART II: Other Information
ITEM 2: Changes in Securities and Use of Proceeds
(c) The following unregistered securities were issued by the Company during
the three months ended March 31, 1999:
<TABLE>
<CAPTION>
Description of Number of Shares Exercise Price
Date of Issuance Securities Issued Issued Subject to Options Per Share
---------------- ----------------- ------------------------- ---------
<S> <C> <C> <C>
1/1/99 Common Stock Options 3,000 $12.38
2/11/99 Common Stock Options 1,500 $11.75
3/24/99 Common Stock Options 2,000 $11.25
</TABLE>
All of the above options were granted to non-employee directors
pursuant to the 1994 Formula Stock Option Plan or to two former
directors pursuant to grants which are not covered by a formal plan.
These options have a vesting period of either two years or three years
and a life of ten years.
The issuance of these securities is claimed to be exempt from
registration pursuant to Section 4(2) of the Securities of Act of 1933,
as amended, as transactions by an issuer not involving a public
offering. There were no underwriting discounts or commissions paid in
connection with the issuance of any of these securities.
USE OF PROCEEDS
(4) (vii) As of the end of the reporting period, $10,690,684 of the net
proceeds were used including $6,186,249 for debt repayment and
$4,504,435 for working capital.
ITEM 6: Exhibits and reports on Form 8-K:
a) Exhibits: 27 - Financial Data Schedule
b) Form 8-K: None
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DELICIOUS BRANDS, INC.
(Registrant)
May 20, 1999 /s/ Michael J. Kirby
- ------------------- -----------------------------
Date Michael J. Kirby
President, Director and
Chief Executive Officer
May 20, 1999 /s/ Jeffry W. Weiner
- ------------------- -----------------------------
Date Jeffry W. Weiner
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DELICIOUS
BRANDS, INC. CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 5,632,895
<ALLOWANCES> 688,418
<INVENTORY> 2,247,636
<CURRENT-ASSETS> 7,947,688
<PP&E> 955,957
<DEPRECIATION> 596,184
<TOTAL-ASSETS> 18,577,083
<CURRENT-LIABILITIES> 16,313,108
<BONDS> 710,848
0
1,516,668
<COMMON> 44,895
<OTHER-SE> (8,346)
<TOTAL-LIABILITY-AND-EQUITY> 18,577,083
<SALES> 12,341,817
<TOTAL-REVENUES> 12,341,817
<CGS> 9,496,139
<TOTAL-COSTS> 9,496,139
<OTHER-EXPENSES> 3,892,427
<LOSS-PROVISION> 19,333
<INTEREST-EXPENSE> 166,475
<INCOME-PRETAX> (1,227,732)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,227,732)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,227,732)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
