WASHINGTON, D.C. 20549

                                    FORM 10-Q

                  SECURITITES AND EXCHANGE ACT OF 1934

                            For the Quarterly Period Ended:
                            June 30, 2001
                            Commission File Number 1-12506

                               LUCILLE FARMS INC.
             (Exact Name of Registrant as Specified in its charter)

           Delaware                                  13-2963923
----------------------------                    ---------------------
(State or other Jurisdiction                      (I.R.S. Employer
      of Incorporation)                         Identification number)

     150 River Road, P.O. Box 517
         Montville, New Jersey                                 07045
         ---------------------                                 -----
(Address of Principal Executive Offices)                     (zip code)

(Registrant's Telephone Number, Including Area Code)

Former name, former address and former fiscal year, if changed since last
report. N/A

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 and 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 [ ]

The number of shares of Registrant's common stock, par value $.001 per share,
outstanding as of August 2, 2001 was 2,971,342.



Item 1. Financial Statements

                               LUCILLE FARMS, INC.

                           CONSOLIDATED BALANCE SHEET


                                                  JUNE 30, 2001   MARCH 31, 2001
                                                  -------------   --------------

Cash and cash equivalents                          $   199,000       $   212,000

Accounts receivable, net                             4,796,000         4,614,000
Of allowances of $153,000
At June 30, 2001 and $132,000
At March 31, 2001

Inventories                                          2,885,000         2,163,000

Deferred income taxes                                   71,000            71,000

Prepaid expenses and other
Current assets                                         109,000           119,000
                                                   -----------       -----------

    Total current assets                             8,060,000         7,179,000
                                                   -----------       -----------

PROPERTY, PLANT AND EQUIPMENT, NET                   9,557,000         9,011,000
                                                   -----------       -----------


Due from officers                                      134,000           133,000

Deferred income taxes                                  527,000           527,000

Deferred loan costs, net                               261,000           247,000

Other                                                   83,000            97,000
                                                   -----------       -----------

         Total Other Assets                          1,005,000         1,004,000
                                                   -----------       -----------

         TOTAL ASSETS                              $18,622,000       $17,194,000
                                                   -----------       -----------

                 See notes to consolidated financial statements

                               LUCILLE FARMS,INC.

                           CONSOLIDATED BALANCE SHEET


                                                JUNE 30,2001      MARCH 31, 2001
                                                ------------      --------------

Accounts Payable                                $  4,208,000       $  5,515,000

Current portion of long-term debt                    171,000            171,000

Revolving credit line                              4,510,000               --

Accrued expenses                                     213,000            390,000
                                                ------------       ------------

    Total Current Liabilities                      9,102,000          6,076,000
                                                ------------       ------------


Long-term debt                                     6,869,000          4,983,000

Revolving credit line                                   --            4,267,000

Deferred income taxes                                598,000            598,000
                                                ------------       ------------

     Total Long-Term Liabilities                   7,467,000          9,848,000
                                                ------------       ------------

     TOTAL LIABILITIES                            16,569,000         15,924,000
                                                ------------       ------------

Preferred stock- face value                          540,000               --
Common stock - $.001 par value,                        3,000              3,000
10,000,000 shares authorized,
3,021,342 share issued

Additional paid-in capital                         4,450,000          4,448,000

Retained (Deficit) earnings                       (2,815,000)        (3,056,000)
                                                ------------       ------------
                                                   2,178,000          1,395,000

Less:  50,000 shares treasury
       Stock at cost                                (125,000)          (125,000)
                                                ------------       ------------

       Total Stockholders' Equity                  2,053,000          1,270,000
                                                ------------       ------------

       STOCKHOLDERS' EQUITY                     $ 18,622,000       $ 17,194,000
                                                ------------       ------------

                 See notes to consolidated financial statements

                               LUCILLE FARMS, INC.



                                                THREE MONTHS ENDED JUNE 30,

                                                   2001                2000
                                               ------------        ------------

SALES                                          $ 12,136,000        $  9,401,000

COST OF SALES                                    10,873,000           8,948,000
                                               ------------        ------------

GROSS PROFIT                                      1,263,000             453,000
                                               ------------        ------------


SELLING                                             560,000             427,000

GENERAL AND ADMINISTRATIVE                          260,000             167,000

INTEREST INCOME                                      (3,000)             (3,000)

INTEREST EXPENSE                                    204,000             192,000
                                               ------------        ------------

TOTAL OTHER EXPENSE (INCOME)                      1,021,000             783,000
                                               ------------        ------------

TAXES                                               242,000            (330,000)

(PROVISION) FOR INCOME TAXES                         (1,000)             (1,000)
                                               ------------        ------------

NET(LOSS) INCOME                               $    241,000        $   (331,000)
                                               ------------        ------------

        :BASIC                                 $        .08        $       (.11)
                                               ------------        ------------
        :DILUTED                                        .08        $       (.11)
                                               ------------        ------------
NET INCOME PER SHARE:BASIC                        2,971,342           2,971,342
                                               ------------        ------------
                    :DILUTED                      2,977,649           2,971,342
                                               ------------        ------------

           See notes to consolidated financial statements


                               LUCILLE FARMS, INC.


                                                   Three Months Ended June 30,

                                                       2001             2000
                                                   -----------      -----------

Cash flows from operating activities:

NET (LOSS)INCOME                                   $   241,000      $  (331,000)

 Adjustments to reconcile net(loss)/
 income To net cash provided(used) by
 Operating activities:

 Value of options issued for service                     2,000             --
 Depreciation and amortization                         154,000          153,000
 Provision for doubtful accounts                        21,000           19,000
(Increase) decrease in assets:
 Accounts receivable                                  (203,000)        (165,000)
 Inventories                                          (722,000)        (220,000)
 Prepaid expenses and other current                     10,000           33,000
 Other assets                                           (5,000)         (15,000)
 Increase (decrease) in liabilities
 Accounts payable                                   (1,307,000)         697,000
 Accrued expenses                                     (177,000)          11,000
                                                   -----------      -----------
 Net Cash provided(used) by
 Operating Activities                               (1,986,000)         182,000
                                                   -----------      -----------


 Purchase of property, plant
 And equipment                                        (156,000)        (333,000)
                                                   -----------      -----------
 Net Cash (Used by) Investing
 Activities                                           (156,000)        (333,000)
                                                   -----------      -----------

 (Payments of) proceeds from revolving
  credit loan-net                                      243,000           12,000
 (Payments of)proceeds from long-term
  debt and notes                                     1,886,000          143,000
                                                   -----------      -----------

 Net Cash Provided by
 Financing Activities                                2,129,000          155,000
                                                   -----------      -----------
CASH EQUIVALENTS                                       (13,000)           4,000
CASH AND CASH EQUIVALENTS-BEGINNING                    212,000          447,000
                                                   -----------      -----------
CASH AND CASH EQUIVALENTS-ENDING                   $   199,000      $   451,000
                                                   -----------      -----------

                 See notes to consolidated financial statements


                               LUCILLE FARMS, INC.

1.       The Consolidated Balance Sheet as of June 30, 2001, the Consolidated
         Statement of Operations for the three month periods ended June 30, 2001
         and 2000 and the Consolidated Statement of Cash Flows for the three
         month periods ended June 30, 2001 and 2000 have been prepared by the
         Company without audit. In the opinion of management, the accompanying
         consolidated financial statements contain all adjustments (consisting
         only of normal recurring adjustments) necessary to present fairly the
         financial position of Lucille Farms, Inc. as of June 30, 2001, the
         results of its operations for the three months ended June 30, 2001 and
         2000 and its cash flows for the three months ended June 30, 2001 and

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principals have been condensed or omitted pursuant to the
         rules and regulations of the Securities and Exchange Commission
         ("SEC"). Although the Company believes that the disclosures are
         adequate to make the information presented not misleading, it is
         suggested that these financial statements be read in conjunction with
         the year-end financial statements and notes thereto for the fiscal year
         ended March 31, 2001 included in the Companies Annual Report on Form
         10-K as filed with the SEC.

         The accounting policies followed by the Company are set forth in the
         notes to the Company's consolidated financial statements as set forth
         in its Annual Report on Form 10-K as filed with the SEC.

2.       The results of operations for the three months ended June 30, 2001 are
         not necessarily indicative of the results to be expected for the entire
         fiscal year.

3.       Inventories are summarized as follows:

                                       June 30, 2001     March 31, 2001
                                       -------------     --------------
         Finished goods                  $2,181,000         $1,011,000
         Raw Materials                      147,000            617,000
         Supplies and Packaging             557,000            535,000
                                         ----------         ----------
                                         $2,885,000         $2,163,000

4.       In May 2001 the Company obtained a new $2,000,000 bank loan. The loan,
         collaterized by the Company's plant and equipment, bears interest at 1%
         above the bank's national variable rate. The loan is due in annual
         principal installments of $500,000 beginning May 2003. Interest is
         payable monthly.


         The Company's revolving credit line of $5,000,000 matures on June

5.       Income (loss) per share of common stock was computed by dividing net
         income (loss) by the weighted average number of common shares
         outstanding during the period in accordance with the provisions of the
         Statement of Financial Accounting Standards No. 128. The dilution in
         the three month period ended June 30, 2001 is due to the net
         incremental effect of incentive stock options and warrants of 6,307
         shares. Basic and diluted per share amounts are the same for the three
         month period ended June 30,2000 since the effect of stock options would
         be antidilutive and therefore not taken into consideration. Conversion
         of preferred stock was not taken into consideration since the effect
         would be antidilutive.

6.       For the 3 months ended June 30,2001, non cash investing and financing
         activities were $540,000 for the preferred stock issued for equipment.



         Results of Operations


         The Company's conventional cheese products, which account for
substantially all of the Company's sales, are commodity items. The Company
prices its conventional cheese products competitively with others in the
industry, which pricing, since May 1997, is referenced to the Chicago Mercantile
Exchange (and was formerly referenced to the Wisconsin Block Cheddar Market).
The price the Company pays for fluid milk, a significant component of cost of
goods sold, is not determined until the month after its cheese has been sold.
While the Company generally can anticipate a change in price of milk, it cannot
anticipate the extent thereof. By virtue of the pricing structure for its cheese
and the competitive nature of the marketplace, the Company cannot always pass
along to the customer the changes in the cost of milk in the price of its
conventional cheese. As a consequence thereof, the Company's gross profit margin
for such cheese is subject to fluctuation, which fluctuation, however slight,
can have a significant effect on profitability.

         The Company is unable to predict any future increase or decrease in the
prices in the Chicago Mercantile Exchange as such markets are subject to
fluctuation based on factors and commodity markets outside of the control of the
Company. Although the cost of fluid milk does tend to move correspondingly with
the Chicago Mercantile Exchange, the extent of such movement and the timing
thereof also is not predictable as it is subject to government control and
support. As a result of these factors, the Company is unable to predict pricing

Three months ended June 30, 2001 compared to the three months ended June 30,

         Sales for the three months ended June 30, 2001 increased to $12,136,000
from $9,401,000 for the comparable period in 2000, an increase of $2,735,000 (or
29.1%). Approximately $2,815,000 (or 102.9%) of such amount was due to an
increase in the average selling price of cheese and approximately $ 281,000 or
(10.3%) was due to increased whey sales produced in our new facility. These
increases were offset by a decrease in the number of pounds of cheese sold
resulting in a $361,000 or (13.2%) decrease in sales when compared to the year
ago period.

  Cost of sales and gross profit margin for the three months ended June 30, 2001
were $10,873,000 (or 89.6% of sales) and $1,263,000 (or 10.4% of sales),
respectively, compared to a cost of sales and gross profit margin of $8,948,000
(or 95.2% of sales) and $453,000 (or 4.8% of sales), respectively, for the
comparable period in 2000. The decrease in cost of sales and corresponding
increase in gross profit margin for 2001 as a percentage of sales is primarily
due to a decrease in the Company's cost of raw materials as a percentage of
selling price


   Selling, general and administrative expenses for the period ended June 30,
2001 amounted to $820,000 (or 6.7% of sales) compared to $594,000 (or 6.3% of
sales) for the comparable period in 2000. The increase in selling, general and
administrative expenses as a percentage of sales was primarily due to the
increased sales in the period and a corresponding increase in freight out
expenses and consulting fees.

         Interest expense for the period ended June 30, 2001 amounted to
$204,000 compared to $192,000 for the period ended June 30, 2000 an increase of
$12,000. This increase is the result of increased borrowing due to the addition
of new production equipment and higher revolving credit line usage in the

         The provision for income tax for the period ended June 30, 2001 of
$1,000 and June 30, 2000 of $1,000 reflect minimum state taxes. Charges and
credits for Federal income taxes were offset by changes in the valuation
allowances for the three months ended June 30, 2001 and June 30, 2000. Such
amounts are re-evaluated each quarter based on the results of operations.

         The Company's net income of $241,000 for the period ended June 30, 2001
represents an increase of $572,000 from the net loss of $331,000 for the
comparable period in 2000. The primary factors contributing to these changes are
discussed above.

Liquidity and Capital Resources

         The Company's revolving bank line of credit which is available for the
Company's working capital requirements has been reclassified from long term to
current due to an expiration date of June 1, 2002.

         At June 30, 2001, $4,510,000 was outstanding under such revolving line
of credit and $245,000 was available for additional borrowing at that time
(based on the inventory and receivable formula). Advances under this facility
are limited to 50% of inventory and 80% of receivables. The rate of interest on
amounts borrowed against the revolving credit facility is prime plus 1%. A .25%
annual unused line fee is also charged on this facility. The Company intends to
continue to utilize this line of credit as needed for operations.


         On February 8, 1999, a $4,950,000 bank loan agreement was signed. The
loan is collateralized by the Company's plant and equipment. Provisions of the
loan are as follows:

         A $3,960,000 commercial term note with interest fixed at 9.75 percent
         having an amortization period of 20 years with a maturity in February,

         A $990,000 commercial term note with interest fixed at 10.75 percent
         having an amortization period of 20 years with a maturity in February,

         On May 23, 2001, a new $ 2,000,000 bank loan agreement was signed. The
new loan is collaterized by the Company's plant and equipment. Provisions of the
loan are as follows:

         A promissory note with interest payable at 1% above the rate of
interest established by the bank as its National Variable Rate and principle
repayable in four consecutive annual installements of $500,000.00 with the first
such installment due on May 1, 2003 and the last such installment due on May 1,

         Proceeds of the new loan were used for working capital.

         The Company's major source of external working capital financing has
been the revolving line of credit. For the foreseeable future the Company
believes that its current working capital, it's new $2,000,000 bank loan, and
its existing lines of credit will continue to represent the Company's major
source of working capital financing besides income generated from operations.

         For the three months ended June 30, 2001 cash used by operating
activities was $1,986,000. Income from operations of $241,000 increased cash. In
addition increases in accounts receivable of $203,000, and an increase in
inventories of $722,000 decreased cash. Decreases in accounts payable of
$1,305,000, accrued expenses of $177,000 also decreased cash. A net decrease in
prepaid expenses and other assets of $5,000 provided cash.

         Net cash used by investing activities was $156,000 for the period ended
June 30, 2001 which represented purchase of property, plant and equipment.

         Net cash provided by financing activities was $2,128,000 for the period
ended June 30, 2001. Net proceeds from the revolving credit loan of $243,000 and
net proceeds from long-term debt of $1,886,000 provided cash in the period.


         The Company estimates that based upon its current plans, its resources
including revenues from operations and utilization of its existing credit lines,
will be sufficient to meet its anticipated needs for at least 12 months.

Forward Looking Statements

         This Quarterly Report on Form 10Q (and any other reports issued by the
Company from time to time) contains certain forward-looking statements made in
reliance upon the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements, including statements
regarding the Company's ability to improve margins and increase retail sales,
are based on current expectations that involve numerous risks and uncertainties.
Actual results could differ materially from those anticipated in such
forward-looking statements as a result of various known and unknown factors
including, without limitation, future economic, competitive, regulatory, and
market conditions, future business decisions, the uncertainties inherent in the
pricing of cheese on the Chicago Mercantile Exchange upon which the Company's
prices are based, changes in consumer tastes, fluctuations in milk prices, and
those factors discussed above under Management's Discussion and Analysis of
Financial Condition and Results of Operations. Words such as "believes,"
"anticipates," "expects," "intends," "may," and similar expressions are intended
to identify forward-looking statements, but are not the exclusive means of
identifying such statements. The Company undertakes no obligation to revise any
of these forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The registrant does not utilize market rate sensitive instruments for trading or
other purposes.


                           PART II - OTHER INFORMATION

Item 2.              Changes in Securities and Use of Proceeds

         On June 12, 2001, the Company sold $540,000 of Series A Redeemable
         Convertible Preferred Stock to an accredited investor in exchange for
         roll drying equipment. The shares were sold pursuant to Section 4(2) of
         the Securities Act and Rule 506 of Regulation D promulgated thereunder.

Item 6.                  Exhibits and Reports on Form 8-K

(a)      Exhibits


(b)      Reports on Form 8-K

         There were no reports on Form 8-K filed during the three months ended
         June 30, 2001.



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

August 2, 2001                       Lucille Farms, Inc.

                                  By:  /s/ Alfonso Falivene
                                       Alfonso Falivene,

                                  By:  /s/ Stephen M. Katz
                                       Stephen M. Katz,
                                       Vice President-Finance
                                       and Administration
                                       (Principal Financial Officer)