All statements contained herein, other than historical facts, may constitute "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, or the Exchange Act. These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as "may," "might," "believe," "will," "provided," "anticipate," "future," "could," "growth," "plan," "intend," "expect," "should," "would," "if," "seek," "possible," "potential," "likely" or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others: (1) a significant change of the Company's relationship with its customers in channels where concentration of sales to a certain number of customers exists; (2) the impact on the Company's profitability from the fluctuations in the availability and cost of raw materials; (3) the impact on the Company's reported earnings from fluctuations in currency exchange rates, particularly the Euro; and (4) those factors listed under the caption "risk factors" of the Annual Report on Form 10-K for the fiscal year ended June 28, 2008 as filed with the Securities and Exchange Commission on September 17, 2008. We caution readers not to place undue reliance on any such forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Form 10-Q.

The following analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this report.

BUSINESS OVERVIEW

We produce and market premium, fully cooked, frozen and prepared foods to a variety of channels and geographic regions. We believe that we are recognized in the market place as having the highest quality frozen food product line in the world. Our motto is: exceptional food - ultimate convenience.

Cuisine Solutions currently distributes products through the following sales channels:

·

On Board Services: Airlines, railroad and cruise lines.

·

Foodservice: Hotel banquets, convention centers, sport stadiums and other special events such as the Olympics.

·

Retail: Supermarket in-store deli and premium frozen packaged foods.

·

Military: Naval carriers, Army field feeding, and military dining halls and clubs.

·

National Restaurant Chains: Casual dining multi-unit restaurants.

We also generate services revenue from our training and food safety education classes.

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

Our accounting policies, which are in compliance with U.S. GAAP, require us to apply methodologies, estimates and judgments that have a significant impact on the results we report in our financial statements. In our 2008 Annual Report on Form 10-K, we have discussed those material policies that we believe are critical and require the use of complex judgment in their application. There have been no material changes to the policies during the fiscal quarter ended September 20, 2008.

Comparison of the twelve weeks ended September 20, 2008 to the twelve weeks ended September 22, 2007

NET PRODUCT SALES

                                   September 20,     September 22,      %
           By Geographic Region        2008              2007         change
           USA Sales              $    10,818,000   $    11,599,000   -6.7%
           Europe Sales                 6,145,000         5,833,000    5.3%
           Rest of World Sales          1,310,000            48,000   262.9%
           Net Product Sales      $    18,273,000   $    17,480,000    4.5%



                                     September 20,       September 22,        %
      By Channel                         2008                2007           change
      On Board Services             $     5,174,000     $     5,611,000     -7.8%
      Food Service                        2,887,000           2,628,000      9.8%
      Retail                              3,269,000           3,843,000     14.9%
      Military                            5,627,000           3,932,000     43.1%
      National Restaurant Chain           1,316,000           1,466,000     10.2%
      Net Product Sales             $    18,273,000     $    17,480,000      4.5%

Net product sales of $18,273,000 for the first quarter of fiscal year 2009 increased $793,000, or 4.5%, over the first quarter of fiscal year 2008 net product sales of $17,480,000. We do not have any defined segments since all of our products are similarly produced despite the sales channel or area of distribution. For the first quarter of fiscal year 2009 we had gains in Food Service and Military channels, reflecting strong re-ordering from our current Food Service customers as well as a new military distributor located overseas who also impacted rest of world sales. While we consider channel information helpful to the reader we cannot forecast any particular trends for our sales as a result of such information. Our sales development cycle can run over one year in certain markets before recognizing a sale.

Service revenue from training and education classes was $88,000 for the first quarter of fiscal 2009, this is a new area of growth with no prior year comparison.

GROSS MARGIN

The gross margin increased during the first quarter of fiscal year 2009 to 21.6%, compared to 20.3% in the prior year. However margins from product sales improved to 21.7% from prior year margin of 20.3%. This product sales margin increase was primarily attributable to improvements in France where we have been working to implement more effective purchasing and production improvements. We expect service margins to improve as the year progresses with normal demand.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses decreased in the first quarter of fiscal year 2009 to $224,000 from the first quarter of fiscal year 2008 of $236,000, a 5.1% decrease. Most of the research and development costs are incurred well before an actual sale and the cycle can last over one year in certain markets. The expense decrease is primarily related to decreased salaries of $25,000, offset by increased consulting fees of $21,000.

SELLING AND MARKETING EXPENSES

Our sales and marketing teams are focused on customers primarily in the USA and Europe. Expenses for the first quarter of fiscal year 2009 increased $138,000 to $1,673,000, or 9.0%, over the first quarter of fiscal year 2008 expense of $1,535,000 (selling and marketing expenses represented 9.1% and 8.8% of revenue for the first quarters of fiscal years 2009 and 2008, respectively). This increase was primarily related to increased distribution costs of $99,000 and increased salaries of $16,000.

General and administrative expenses for the first quarter of fiscal year 2009 increased $50,000 to $1,750,000, or 2.9%, over the first quarter of prior fiscal year 2008 expenses of $1,700,000 (general and administrative expenses represented 9.5% and 9.7% of revenue for the first quarters of fiscal years 2009 and 2008, respectively). This increase was primarily due to increased equity compensation costs on recently issued restricted stock units of $66,000, increased costs for the new ERP system of $50,000, partially offset by decreased travel costs of $58,000.

NON-OPERATING EXPENSE

Non-operating expense increased to $89,000 in the first quarter of fiscal year 2009 from $65,000 in first quarter of fiscal year 2008, due primarily other expense increase of $30,000, partially offset by decreased interest expense of $6,000 related to lower borrowings.

INCOME BEFORE INCOME TAXES

Income before income taxes in the first quarter of fiscal year 2009 of $225,000 increased substantially from the first quarter fiscal year 2008 of $11,000, or 1,945.4%. This increase was primarily related to higher gross margin percentages principally from better purchasing and production in France resulting in approximately a $239,000 increase in margins, which was partially offset by higher selling and marketing and general and administrative expenses.

INCOME TAXES

We recorded a provision for income tax expense of $90,000 and $4,000 for the first quarter of fiscal years 2009 and 2008, respectively. Our effective income tax rate for the first quarter of fiscal year 2009 was computed to be 40% as compared to 38% for the first quarter of fiscal year 2008.

NET INCOME

Net income increased $128,000 to $135,000 for the first quarter of fiscal year 2009 from $7,000 in first quarter of fiscal year 2008. The primary reason for the increase was improved gross margins.

LIQUIDITY AND CAPITAL RESOURCES

Selected financial ratios at the end of the first quarters of fiscal years 2009
and 2008 were as follows:

                                         September 20,   September 22,
                                             2008            2007
             Liquidity Ratios
             Current ratio                         2.1             1.8
             Receivables turnover                  9.2             9.6
             Days sales in receivables            33.6            41.4
             Inventory turnover                    4.3             4.4
             Days sales in inventory              70.1            89.1
             Leverage Ratio
             Long-term debt to equity             24.1 %          25.3 %
             Operating Ratios
             Return on investment                  0.5 %             0 %
             Return on assets                      0.3 %             0 %

Cash, cash equivalents, and short-term marketable securities were $1,155,000 at the end of the first quarter of fiscal year 2009 compared to $390,000 at the end of the first quarter of fiscal year 2008.

During the first quarter of fiscal year 2009, net cash provided by operating activities was $1,645,000, compared to cash used of $1,119,000 in the first quarter of fiscal year 2008. The increase in cash provided by operating activities was primarily due to changes in working capital items: decreases in accounts receivable of $846,000 and increases in accounts payable and payroll of $1,169,000 were partially offset by increases in inventory of $1,369,000. Improved first quarter income before tax of $225,000 also contributed $214,000 to cash from operations.

Net cash used in financing activities was $1,241,000 in the first quarter of fiscal year 2009, compared to cash provided of $1,878,000 in the first quarter of fiscal year 2008 due to reduced borrowings from repayment of line-of-credit.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our principal executive officer and our principal financial officer, the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, the principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act, are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission.

Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all errors and fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management's override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended September 20, 2008 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.