The following is management's discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying financial statements.

The discussion and analysis which follows in this Quarterly Report and in other reports and documents and in oral statements made on our behalf by our management and others may contain trend analysis and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 which reflect our current views with respect to future events and financial results. These include statements regarding our earnings, projected growth and forecasts, and similar matters which are not historical facts. We remind stockholders that forward-looking statements are merely predictions and therefore are inherently subject to uncertainties and other factors which could cause the actual future events or results to differ materially from those described in the forward-looking statements. These uncertainties and other factors include, among other things, business conditions in the food industry and general economic conditions, both domestic and international; lower than expected customer orders; competitive factors; changes in product mix or distribution channels; and resource constraints encountered in developing new products. The forward-looking statements contained in this Quarterly Report and made elsewhere by or on our behalf should be considered in light of these factors.

CRITICAL ACCOUNTING POLICIES

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The policies discussed below are considered by management to be critical to an understanding of our financial statements because their application places the most significant demands on management's judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. Specific risks for these critical accounting policies are described in the following paragraphs. For all of these policies, management cautions that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment.

Revenue Recognition. We recognize revenue when goods are shipped from our production facilities or outside warehouses and the following four criteria have been met: (i) the product has been shipped and we have no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is probable.
We record as deductions against sales all trade discounts, returns and allowances that occur in the ordinary course of business, when the sale occurs. To the extent we charge our customers for freight expense, it is included in revenues. The amount of freight costs charged to customers has not been material to date.

Accounts Receivable. The majority of our accounts receivables are due from distributors (domestic and international) and retailers. Credit is extended based on evaluation of a customer's financial condition and, generally, collateral is not required. Accounts receivable are most often due within 30 to 90 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We determine whether an allowance is necessary by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss history, the customer's current ability to pay its obligation, and the condition of the general economy and the industry as a whole. We write-off accounts receivable when they become

uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. We do not accrue interest on accounts receivable past due. We provide various promotional allowances to our customers which are included in our reserves based on our estimated expense for the period.

Allowance for Inventory Obsolescence. We are required to state our inventories at the lower of cost or market price. We maintain an allowance for inventory obsolescence for losses resulting from inventory items becoming unsaleable due to expiration of product shelf life, loss of specific customers or changes in customers' requirements. Based on historical and projected sales information, we believe our allowance is adequate. However, changes in general economic, business and market conditions could cause our customers' purchasing requirements to change. These changes could affect our ability to sell our inventory; therefore, the allowance for inventory obsolescence is reviewed regularly and changes to the allowance are updated as new information is received.

Income Taxes. The carrying value of deferred tax assets assumes that we will be able to generate sufficient future taxable income to realize the deferred tax assets based on estimates and assumptions. If these estimates and assumptions change in the future, we may be required to record a valuation allowance against deferred tax assets which could result in additional income tax expense. Our federal and state tax returns are open to examination for the years 2007 and 2008.

RESULTS OF OPERATIONS

Thirteen Weeks Ended March 28, 2009
Compared with Thirteen Weeks Ended March 29, 2008

Net sales for the thirteen weeks ended March 28, 2009 were $4,178,000, a decrease of $477,000, or 10%, from the sales level realized for the thirteen weeks ended March 29, 2008 due to the elimination of certain products that were sold in the 2008 period and the negative effects of the deteriorating economic climate.

Our gross profit in the current period decreased to $1,371,000 in the 2009 period from $1,527,000 in the 2008 period. Our gross profit percentage was 33% for the period ending March 28, 2009, which was the same as for the period ending March 29, 2008. Our gross profit and gross profit percentage for the period ended March 28, 2009 continued to be impacted by the costs associated with certain key ingredients and packaging. Freight out expense, a significant part of our cost of sales, decreased by $27,000, or 10%, to $243,000 for the thirteen weeks ended March 28, 2009 compared with $270,000 for the thirteen weeks ended March 29, 2008. The decrease in freight out expense is attributable to the change in shipping our frozen dessert novelties from our new ice cream plant in Indiana to the West Coast, which is more cost-effective than shipping them from our third-party Pennsylvania warehouse or from our former frozen dessert novelties manufacturer's location. We also increased the minimum size of orders to customers where we pay the freight, and we shipped fewer products due to decreased sales.

Selling expenses decreased by $20,000 to $415,000 for the current fiscal quarter compared with $435,000 for the comparable period in 2008. This decrease was partially due to a decrease in travel, entertainment and commission expenses due to the decline in sales. We anticipate that the current period's selling expenses will continue on the same level for the balance of 2009.

Marketing expenses decreased by $51,000 to $85,000 in the fiscal 2009 period due principally to a $15,000 decrease in television advertising expense and a $43,000 decrease in promotion expenses. We anticipate that the current period's marketing expenses will continue on the same level for the balance of 2009.

Research and development costs, which consist principally of salary expenses and laboratory costs, increased by $5,000 to $130,000 for the thirteen weeks ended March 28, 2009 from $125,000 for the comparable period in 2008.

General and administrative expenses increased by $3,000 to $488,000 for the current quarter compared with $485,000 for the comparable period in 2008 due to slight increases in payroll, entertainment and professional services expenses, which were offset by decreases in public relations and IT expenses. We anticipate that the current period's general and administrative expenses will continue on the same level, or decrease slightly, for the balance of 2009.

The decrease in income tax expense in the first quarter of 2009 to $101,000, or 40% of income before taxes, from $139,000, or 41% of taxable income, in the first quarter of 2008 reflects the decrease in our taxable income. Our tax rates historically fall within a range of 40% to 44%.

LIQUIDITY AND CAPITAL RESOURCES

As of March 28, 2009, we had approximately $225,000 in cash and cash equivalents and our working capital was approximately $3.7 million compared to working capital of approximately $3.6 million at December 27, 2008. We expect our cash and cash equivalents will increase during the course of 2009 as a result of suspending our stock repurchase program. Because we are now maintaining larger finished goods inventories to improve customer service, we established a $1,000,000 line of credit with Wachovia Bank in April 2006. Any money borrowed under the line of credit will be at the prime rate of borrowing and any such loans will be secured by the assets of our company. Although management believes that we will be able to fund our operations during 2009 from current resources, there is no guarantee that we will be able to do so, and therefore, we established this facility to support short-term cash flow constraints, if necessary. This agreement was renewed for an additional one-year term with the consent of both parties on April 30, 2009. As of the date of this report, we have not used the line of credit.

The following table summarizes our cash flows for the periods presented:

                                      THIRTEEN WEEKS         THIRTEEN WEEKS
                                   ENDED MARCH 28, 2009   ENDED MARCH 29, 2008
                                   --------------------   --------------------
Net cash provided by (used in)
operating activities...........       $   1,000              $(740,000)
Net cash used in financing
activities.....................         (14,000)              (163,000)
                                        --------              ---------
Net change in cash
  and cash equivalents.........        $(13,000)             $(903,000)
                                       =========             ==========

Our net cash flows used in operating activities was the result of our continued investment in building inventories to support the seasonal aspect of our business and the change in production facilities. During the thirteen weeks ending March 28, 2009, we paid bonuses to management of $500,000. We believe that we will be able to fund our operations during the next twelve months with cash generated from operations and from borrowings on our line of credit. We believe that these sources will be sufficient to meet our operating and capital requirements during the next twelve months.

Our net cash flows used in financing activities represents the repurchase of our common stock. During the thirteen weeks ending March 28, 2009, we repurchased 12,665 shares of our common stock for $14,000. Our Board of Directors first instituted a share repurchase program in September 2000 which has to date authorized the repurchase of 1,850,000 shares of our common stock at prevailing market prices. As of December 29, 2007, we had repurchased 1,342,100 shares with a total cost of approximately $4,171,000,

or an average price of $3.11 per share. During fiscal 2008, we repurchased an additional 464,124 shares for $1,110,000 or an average price of $2.39. We have not repurchased any additional shares since March 28, 2009 in order to conserve our cash position. From the institution of the share repurchase program through the date of this quarterly report, the total number of shares cumulatively purchased is 1,818,889 for a total cost of approximately $5,294,000, or an average price of $2.91 per share.

INFLATION AND SEASONALITY

We do not believe that our operating results have been materially affected by inflation during the preceding two years. There can be no assurance, however, that our operating results will not be affected by inflation in the future. Our business is subject to minimal seasonal variations with slightly increased sales historically in the second and third quarters of the fiscal year. We expect to continue to experience slightly higher sales in the second and third quarters, and slightly lower sales in the fourth and first quarters, as a result of reduced sales of nondairy frozen desserts during those periods.

OFF-BALANCE SHEET ARRANGEMENTS

None.

CONTRACTUAL OBLIGATIONS

As of March 28, 2009, we did not have any contractual obligations or commercial commitments, including obligations relating to discontinued operations.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2007, the FASB issued SFAS No. 141(revised 2007), Business Combinations, which became effective for business combination transactions having an acquisition date on or after January 1, 2009. This standard requires the acquiring entity in a business combination to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date to be measured at their respective fair values. The Statement requires acquisition-related costs, as well as restructuring costs the acquirer expects to incur for which it is not obligated at acquisition date, to be recorded against income rather than included in purchase-price determination. It also requires recognition of contingent arrangements at their acquisition-date fair values, with subsequent changes in fair value generally reflected in income. The adoption of SFAS No. 141 did not have a material effect on us, as no acquisitions are currently contemplated.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, which became effective for us on January 1, 2009, with retroactive adoption of the Statement's presentation and disclosure requirements for existing minority interests. This standard will require ownership interests in subsidiaries held by parties other than the parent to be presented within the equity section of the consolidated balance sheet but separate from the parent's equity. It will also require the amount of consolidated net income attributable to the parent and the noncontrolling interest to be clearly identified and presented on the face of the consolidated income statement. Certain changes in a parent's ownership interest are to be accounted for as equity transactions and when a subsidiary is deconsolidated, any noncontrolling equity investment in the former subsidiary is to be initially measured at fair value. The implementation of SFAS No. 160 did not have an impact on our financial statements.

In February 2008, the FASB issued FSP No. 157-2, Effective Date of FASB Statement No. 157, which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those recognized or disclosed at fair value in the financial statements on a recurring basis (at least

annually), until January 1, 2009. The implementation of this standard on January 1, 2009 did not have a material effect on our financial statements.

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- An Amendment of FASB Statement No. 133" ("SFAS No. 161"), which amends and expands the disclosure requirements of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" to require qualitative disclosure about objectives and strategies in using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about the underlying credit-risk-related contingent features in derivative agreements. SFAS No. 161 is intended to improve financial reporting by requiring transparency about the location and amounts of derivative instruments in an entity's financial statements; how derivative instruments and related hedged items are accounted for under SFAS No. 133; and how derivative instruments and related hedged items affect its financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008. Implementation of this standard did not have a material effect on our financial statements.