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SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





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FORM 10-K





Annual Report Pursuant to Section 13 or 15(d)


of the Securities Exchange Act of 1934





For the Fiscal Year Ended January 30, 2002





Commission File No. 0-21486





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HURRY, INC.


(formerly Harrys Farmers Market, Inc.)





A Georgia Corporation


(IRS Employer
Identification No. 58-2037452)


Post Office Box K


Ellijay,
Georgia 30540


(678) 393-1294





Securities Registered Pursuant to Section 12(b)


of the Securities Exchange Act of 1934:





None





Securities Registered Pursuant to Section 12(g)


of the Securities Exchange Act of 1934:





Class A Common Stock, no par value





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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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the
registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ̈





The aggregate market value of the Class A Common Stock of the
registrant held by nonaffiliates of the registrant on August 15, 2002 was approximately $338,780. For purposes of this response, officers, directors and holders of 10% or more of the registrants common stock are considered affiliates of the
registrant at that date.





The number of shares outstanding of the registrants Class A Common Stock, no par
value, as of August 15, 2002 was 4,456,875 shares. The number of shares outstanding of the registrants Class B Common Stock, no par value, as of August 15, 2002 was 2,050,701 shares.





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PART I





Item 1.Business.





Hurry, Inc. (the Company), which was formerly known as Harrys Farmers Market, Inc., is in the process of winding up its operations and intends to liquidate and dissolve as soon as practicable. The Company previously
owned as many as three megastores and six convenience stores specializing in perishable food products, poultry, seafood, fresh bakery goods, and freshly made ready-to-eat, ready-to-heat and ready-to-cook prepared foods as well as deli, cheese and
dairy products. In fiscal 2002, the Company sold or closed all of its megastores and three of its Harrys In A Hurry stores. In the first quarter of 2003, the Company sold or closed its remaining three Harrys In A Hurry stores.





In January 2001, the Companys board of directors formally engaged the investment banking firm of Houlihan
Lokey Howard & Zukin Financial Advisors, Inc. to explore strategic alternatives for the Company that might enhance shareholder value. Houlihan Lokey contacted Whole Foods Market, Inc., among other companies, about a possible transaction with the
Company. On October 31, 2001, the Company completed the sale of substantially all of its assets, including its three megastores, distribution center, commissary kitchen, bakery, office facilities and intellectual property, to Whole Foods Market
Group, Inc., a wholly-owned subsidiary of Whole Foods Market, Inc., for approximately $35 million plus the assumption by Whole Foods of certain related liabilities.





The Companys board of directors and officers continued to seek buyers of one or more of the Harrys In A Hurry stores, and on February 7, 2002, the Company sold
the assets of the Harrys In A Hurry store located on Ponce de Leon Avenue to MKT 1, Inc. Recognizing the need to conserve cash and being unable to find suitable buyers, the Company closed the other Harrys In A Hurry stores during fiscal
2002 and the beginning of fiscal 2003. The Harrys In A Hurry store located in the Dunwoody Plaza Shopping Center closed September 29, 2001 and the store located on Peachtree Street closed October 31, 2001. In addition, the Company closed the
Harrys In A Hurry store located in Peachtree City on December 31, 2001 and the stores located on Akers Mill Road and Powers Ferry Road on March 4, 2002.





The Company presently employs two people who are working to wind up the Companys operations. In connection with the closing of the Harrys In A Hurry stores, the Company negotiated
terminations of all real property leases and other contracts that were not assigned to Whole Foods Market Group or MKT 1 and is continuing to sell its remaining equipment. In addition, the Company dissolved all of its wholly-owned subsidiaries in
March, 2002.





As soon as practicable, the Company intends to call a special shareholders meeting at which the
board of directors will ask the Companys shareholders to vote on a proposal to approve and adopt a Plan of Liquidation and Dissolution. Harry A. Blazer, the Companys president and chief executive officer, is the beneficial owner of all
of the Companys Class B common stock and has indicated that he will vote in favor of the Plan of Liquidation and Dissolution. Because the holders of Class B common stock are entitled to cast 10 votes for each share held, Mr. Blazers vote
in favor of the proposal would ensure approval of the plan.





Executive Officers





Harry A. Blazer is the Chairman, President and Chief Executive Officer of the Company. Mr. Blazer, age 51, was the founder of the Company
and served as the sole General Partner of the




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predecessor to the Company and as Chief Executive Officer from its inception in 1987. Upon the
Companys incorporation in 1993, Mr. Blazer was named a director and President and Chief Executive Officer. In June 1994, Mr. Blazer was elected to the additional office of Chairman. From 1979 to 1987, Mr. Blazer was employed at DeKalb Farmers
Market in Atlanta and served as its General Manager from 1983, until he left to form the Company.





Item
2.Properties.





During fiscal 2002, the Company sold each of the
three megastore sites that it owned in Georgia to Whole Foods Market Group, Inc. as part of a sale of substantially all of the Companys assets. In addition, the Company assigned a lease for a distribution center to Whole Foods Market Group as
part of the transaction.





During fiscal 2002, the Company also entered into negotiations to transfer the lease for
its Harrys In A Hurry store located on Ponce de Leon Avenue in Atlanta, Georgia to MKT 1, Inc. as part of the sale of the assets of that store to MKT 1. The transaction closed on February 7, 2002. In addition, during fiscal 2002 and the
beginning of fiscal 2003, the Company negotiated terminations of its remaining five leases for its Harrys In A Hurry stores. The Company has vacated all of the terminated lease sites.





Item 3.Legal Proceedings.





Other than ordinary routine litigation historically incidental to the Companys business, there are no (i) material legal proceedings to which the Company is a party or to which its properties are subject; (ii) material
proceedings known to the Company to be contemplated by any governmental authority; or (iii) material proceedings known to the Company, pending or contemplated, in which any director, officer or affiliate or any principal security holder of the
Company, or any associate of any of the foregoing is a party or has an interest adverse to the Company.





Item
4.Submission of Matters to a Vote of Security Holders.





No
matters were submitted to a vote of security holders of the Company during the fourth quarter ended January 30, 2002.





PART II





Item 5.Market for Registrants Common Equity and Related
Stockholder Matters.





The Companys Class A Common Stock has been quoted on the OTC Bulletin
Board since February 13, 2001. It previously was quoted on the Nasdaq SmallCap Market. Until November 14, 2001, the Companys Class A Common Stock was quoted under the symbol HARY. Because of the Companys name change, the
Companys Class A Common Stock has been quoted under the symbol HURY since November 14, 2001. No established public trading market exists for the Companys Class B Common Stock. The Company had 762 record holders and
approximately 6,200 beneficial holders of its Class A Common Stock as of May 31, 2002, and two record and beneficial holders of its Class B Common Stock. On January 30, 2002, the




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Company announced a cash dividend of $0.38 per share, which was paid to shareholders of record as of
February 11, 2002.





The following tables set forth, by fiscal quarter, the high and low sales prices of the Class
A Common Stock reported by the Nasdaq SmallCap Market and the OTC Bulletin Board, as appropriate, for the two most recent fiscal years.





Fiscal Year Ended January 30, 2002

High Sale

Low SaleFirst Quarter ended May 2, 2001

$
0.600

$
0.600Second Quarter ended August 1, 2001


0.700


0.560Third Quarter ended October 31, 2001


1.210


1.210Fourth Quarter ended January 30, 2002


0.355


0.355





Fiscal Year Ended January 31, 2001

High Sale

Low SaleFirst Quarter ended May 3, 2000

$
1.5000

$
0.9375Second Quarter ended August 2, 2000


1.2500


0.9688Third Quarter ended November 1, 2000


1.0312


0.5000Fourth Quarter ended January 31, 2001


0.8750


0.3750




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Item 6.Selected Financial Data.





The following selected financial data should be read in conjunction with the Consolidated Financial Statements and notes
thereto included elsewhere herein.





Fiscal Year EndedJanuary 30, 2002


January 31, 2001


February 2, 2000


February 3, 1999


January 28, 1998Statement of Operations Information:

(in thousands, except per share data)Net sales

$
98,556


$
135,953


$
138,695


$
136,146


$
136,999Cost of goods sold


69,947



97,965



98,726



99,974



102,320Gross profits


28,609



37,988



39,969



36,172



34,679Operating expenses


37,561



40,289



40,958



41,417



42,318Operating profit (loss)


(8,952
)


(2,301
)


(989
)


(5,245
)


(7,639
)Interest expense


(2,992
)


(3,686
)


(2,663
)


(2,407
)


(2,254
)Other income


786



1,024



1,827



1,233



4,026Gain on sale of assets


1,971















Loss before provision for accretion of warrants, income taxes and extraordinary items


9,187



(4,963
)


(1,825
)


(6,419
)


(5,867
)Provision for accretion of warrants










(123
)


(148
)


(148
)Loss applicable to common shareholders before income taxes and extraordinary items


(9,187
)


(4,963
)


(1,948
)


(6,567
)


(6,015
)Income tax benefit


-0-



-0-



740
(1)


-0-



-0-Loss applicable to common shareholders before extraordinary gains


(9,187
)


(4,963
)


(1,208
)


(6,567
)


(6,015
)Extraordinary gain (loss) (net of applicable income taxes of $0 and $990 for years 2001 and 2000)


(615
)


(288
)


16,845



-0-



-0-Net earnings (loss) applicable to common shareholders after extraordinary gains


(9,802
)


(5,251
)

$
15,637


$
(6,567
)

$
(6,015
)Net earnings (loss) per share


(1.56
)


(.85
)

$
2.53


$
(1.06
)

$
(0.97
)Weighted average shares outstanding


6,283



6,190



6,190



6,184



6,183





As ofJanuary 30, 2002

January 31, 2001


February 2, 2000

February 3, 1999


January 28, 1998Balance Sheet Information:Working capital (deficit)(2)

$
2,103

$
(555
)

$
3,388

$
(1,447
)

$
3,102Property and equipment, net


1,136


34,469



37,789


41,320



38,046Total assets


9,289


45,552



56,251


56,987



57,247Long-term obligations, net of current maturities





19,312



21,783


14,161



13,359Convertible debt












15,160



13,042Redeemable convertible preferred stock












10,582



10,434Stockholders equity


3,239


15,355



20,606


4,969



11,528


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|(1) |  | Represents the offset of the Companys operating loss on the extraordinary gain.
|--- |  | --------------------------------------------------------------------------------

|(2) |  | The Company had $2.1 million available under its line of credit at January 31, 2001.
|--- |  | ------------------------------------------------------------------------------------



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Item 7.Managements Discussion and Analysis of Financial
Condition and Results of Operations.





General





The Company is in the process of winding up its operations and intends to liquidate and dissolve as soon as practicable. The Company previously owned three megastores and
six convenience stores specializing in perishable food products, poultry, seafood, fresh bakery goods, and freshly made ready-to-eat, ready-to-heat and ready-to-cook prepared foods as well as deli, cheese and dairy products. In fiscal 2002 and the
beginning of fiscal 2003, the Company sold or closed all of its megastores and the six Harrys In A Hurry stores.





As soon as practicable, the Company intends to call a special shareholders meeting at which the board of directors will ask the Companys shareholders to vote on a proposal to approve and adopt a Plan of Liquidation and
Dissolution. Harry A. Blazer, the Companys president and chief executive officer, is the beneficial owner of all of the Companys Class B common stock and has indicated that he will vote in favor of the Plan of Liquidation and
Dissolution. Because the holders of Class B common stock are entitled to cast 10 votes for each share held, Mr. Blazers vote in favor of the proposal would ensure approval of the plan.





The Companys fiscal year ends on the Wednesday nearest January 31. The 2002 fiscal year ended on January 30, 2002, the 2001 fiscal year ended on January 31, 2001 and
the 2000 fiscal year ended on February 2, 2000. The statements that are not historical facts contained in this Annual Report on Form 10-K are forward looking statements that involve risks and uncertainties. For more information, see Risk
Factors.





Results of Operations





The following table sets forth the percentage relationship to net sales of the listed items included in the Companys consolidated statements of operation:





For the Year EndedJanuary 30, 2002


January 31, 2001


February 2, 2000Net sales

100.0
%

100.0
%

100.0
%Cost of goods sold

71.0


72.1


71.2Gross profit

29.0


27.9


28.8Operating expensesDirect store expenses

18.8


16.7


16.9Selling, general and administrative expenses

11.3


10.0


9.2Depreciation and other amortization

2.8


2.9


3.1Impairment loss

5.3


0.0


0.3Loss from operations

(9.2
)

(1.7
)

(0.7
)Other income (expense)Gain on sale of assets

2.0


0.0


0.0Interest expense

(3.0
)

(2.7
)

(1.9
)Other income

0.8


0.8


1.3Provision for accretion of warrants

0.0


0.0


(0.1
)Income taxes

0.0


0.0


0.0Extraordinary gains (loss)

(0.6
)

(0.2
)

12.7Net income (loss)

(10.0
)%

(3.8
%)

11.3
%




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Comparison of Fiscal 2002 to Fiscal 2001





Net sales in fiscal 2002 decreased 27.5% to approximately $98.6 million from approximately $136.0 million in fiscal 2001. This decrease is
primarily attributable to the sale of the Companys three megastores to Whole Foods Market Group, Inc. on October 31, 2001 and the closing of the three Harrys In A Hurry stores located in Dunwoody, Buckhead and Peachtree City in
September, October and December of 2001, respectively.





Gross profit in fiscal 2002 decreased to approximately
$28.6 million or 29.0% of net sales from approximately $38.0 million or 27.9% of net sales in fiscal 2001. The decrease in dollars of gross profit is primarily due to the sale and closing of the three megastores and three Harrys In A Hurry
stores during fiscal 2002.





Direct store expenses decreased to approximately $18.5 million or 18.8% of net
sales in fiscal 2002 from approximately $22.8 million or 16.7% of net sales in fiscal 2001. During fiscal 2002, direct store expenses were lower as a result of the sale and closing of the three megastores and three Harrys In A Hurry stores. As
a percentage of sales, direct store expenses were higher due to the fact that the Companys overhead did not decrease in direct proportion to the change in sales attributable to the weakened economy as well as the loss of the three megastores
and the three Harrys In A Hurry stores. In addition to such normal overhead costs, the Company also incurred expenses directly associated with the closing of the Harrys In A Hurry stores and the Whole Foods transaction.





Selling, general and administrative expenses for fiscal 2002 decreased to approximately $11.1 million or 11.3% of
net sales from approximately $13.6 million or 10.0% of net sales for fiscal 2001.The decrease in fiscal 2002 is primarily attributable to the termination of substantially all of the Companys corporate employees upon the sale of the
three megastores and the three Harrys In A Hurry stores. The increase in selling, general and administrative expenses as a percentage of sales was primarily due to an accrual of approximately $0.8 million for higher consulting, legal and
related expenses in connection with the Whole Foods transaction and the Companys continuing efforts to seek strategic alternatives regarding the Harrys In A Hurry stores as well as costs associated with the closing of the Harrys In
A Hurry stores.





Depreciation and amortization, which includes depreciation and amortization for the stores and
the corporate facilities but not manufacturing (which is included in cost of goods sold), decreased to approximately $2.7 million or 2.8% of net sales during fiscal 2002 from approximately $3.9 million or 2.9% in fiscal 2001. Depreciation and
amortization decreased due to the fact that the three megastore properties were sold as of October 31, 2001 and the Company recorded an impairment loss in the third quarter of Fiscal 2002 on its remaining assets to record assets at the estimated net
realizable value.





The Company recorded a non-cash impairment loss on its remaining fixed assets, which
consisted of a writedown of the book value of fixed assets of approximately $3.0 million to their estimated net realizable value and the recording of approximately $2.2 million of additional costs anticipated to dispose of the assets and settle
lease agreements related to the assets.





For the reasons set forth above, in fiscal 2002 the Company had an
operating loss of approximately $8.9 million or (9.1)% of net sales as compared to an operating loss in fiscal 2001 of approximately $2.3 million or (1.7)% of net sales.




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In fiscal 2002, the Company recorded a gain on sale of certain assets, net of
related expenses in the amount of $2.0 million. This gain resulted from the sale of substantially all of the Companys assets, including its three megastores, distribution center, commissary kitchen, bakery, office facilities and intellectual
property, to Whole Foods for approximately $35 million plus the assumption by Whole Foods of certain related liabilities.





Interest expense in fiscal 2002 decreased to approximately $3.0 million or 3.0% of net sales in fiscal 2002 from approximately $3.7 million or 2.7% in fiscal 2001. This decrease is primarily attributable to the fact that the Company
paid off its bank debt with a portion of the proceeds of the sale of assets to Whole Foods.





Other income in
fiscal 2002 decreased to approximately $0.8 million or 0.8% of net sales compared to approximately $1.0 million or 0.8% of net sales in fiscal 2001. This was due to the loss of three months of revenue from the Cobb Shopping Center, which was sold to
Whole Foods on October 31, 2001.





In fiscal 2002 the Company did not recognize any income tax benefits because the
Company has had significant operating losses in the past and realizability of the benefits is not assured. The Company has net operating loss carry forwards of approximately $40.5 million that may be applied against future earnings for income tax
purposes.





As a result of the above, the Company generated a net loss before extraordinary gains applicable to
common shareholders for fiscal 2002 of approximately $9.2 million or ($1.46) per common share, compared to a net loss before extraordinary items applicable to common shareholders of approximately $5.0 million or ($0.80) per common share for fiscal
2001. The Company generated a loss after extraordinary gains applicable to common shareholders for fiscal 2002 of approximately $9.8 million of ($1.56) per common share, compared to a net loss after extraordinary items applicable to common
shareholders for fiscal 2001 of approximately $5.3 million or $(0.85) per common share for fiscal 2001.





Comparison of Fiscal 2001 to Fiscal 2000





Net sales in fiscal 2001 decreased 2.0% to
approximately $136.0 million from approximately $138.7 million in fiscal 2000. Management believes the decline in sales can be attributed to increased drive times due to increased traffic congestion in metropolitan Atlanta, a consumer trend placing
an increased emphasis on convenience and accessibility and an increased number of supermarkets and restaurants that provide more accessible alternatives for consumers.





Gross profit in fiscal 2001 decreased to approximately $38.0 million or 27.9% of net sales from approximately $40.0 million or 28.8% of net sales in fiscal 2000. This
decrease was mainly due to the costs associated with the Companys decision to cease using a third-party distributor to distribute nonperishable and specialty groceries and to instead distribute these items itself.





Direct store expenses decreased to approximately $22.8 million or 16.7% of net sales in fiscal 2001 from approximately $23.5
million or 16.9% of net sales in fiscal 2000. During fiscal 2001, direct store expenses were lower as a result of decreases in wages and repairs and maintenance costs. The Company was able to decrease the amount spent on wages by lowering the amount
of overtime worked by employees. Repair and maintenance costs decreased as the Company focused on negotiating more favorable repair contracts with third parties and obtaining cost-effective replacement supplies.




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Selling, general and administrative expense for fiscal 2001 increased to
approximately $13.6 million or 10% of net sales from approximately $12.7 million or 9.2% of net sales for fiscal 2000. The increase in fiscal 2001 is primarily attributable to costs associated with the Companys decision to cease using a
third-party distributor to distribute nonperishable and specialty groceries and to instead distribute these items itself as well as an in increase compensation and expenses related to the Companys retention of consultants from July 2000 to
late January 2001. In addition, advertising and promotional expenses increased because the Company increased its advertising efforts in local newspapers. Bank charges increased because of increased use of charge cards and debit cards by customers.





Depreciation and amortization, which includes depreciation and amortization for the stores and the corporate
facilities but not manufacturing (which is included in cost of goods sold), decreased to approximately $3.9 million or 2.9% of net sales during fiscal 2001 from approximately $4.4 million or 3.1% in fiscal 2000. Depreciation and amortization
decreased because much of the equipment and leasehold improvements in the Companys older stores, particularly the Cobb megastore and the first two Harrys In A Hurry stores, have now been fully or almost fully depreciated due to their
age.





The Company recorded an additional loss on the impairment of its bakery and distribution center of
approximately $0.4 million or 0.3% of net sales in fiscal 2000. The book value of this asset was adjusted to reflect the net amount of proceeds that the Company received upon its sale. This sale was completed during the first quarter of fiscal 2001
for approximately $4.8 million.





For the reasons set forth above, in fiscal 2001 the Company had an operating loss
of approximately $2.3 million or (1.7)% of net sales as compared to an operating loss in fiscal 2000 of approximately $1.0 million or (0.7)% of net sales.





Interest expense in fiscal 2001 increased to approximately $3.7 million or 2.7% of net sales in fiscal 2001 from approximately $2.7 million or 1.9% in fiscal 2000. This increase is primarily
attributable to the fact that fiscal 2001 interest expense reflects a full fiscal year of borrowings under the Companys line of credit whereas fiscal 2000 interest expense only reflects approximately two months of borrowings because the loan
agreement was not entered into until the fourth quarter of fiscal 2000.





Other income in fiscal 2001 decreased to
approximately $1.0 million or 0.8% of net sales compared to approximately $1.8 million or 1.3% of net sales in fiscal 2000. Prior to the sale of the distribution center, the Company rented a portion of the space to third parties. Because the
distribution center was sold in the first quarter of 2000, the Company lost this source of other income. Other income includes rent from tenants of the Cobb Crossing shopping center, which the Company owns. Rent received during fiscal 2001 from
these tenants was approximately $1.0 million in fiscal 2001 compared to $1.2 million in fiscal 2000, excluding rent from the Companys Cobb county megastore, which is also a tenant at the shopping center (all intercompany rent is eliminated in
the Companys financial statements). The shopping center had one vacant space of approximately 900 square feet as of the end of fiscal 2001.





In fiscal 2001 the Company did not recognize any income tax benefits because the Company has had significant operating losses in the past and realizability of the benefits is not assured. The Company
has net operating loss carry forwards of approximately $33.5 million that may be applied against future earnings for income tax purposes.




9




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As a result of the above, the Company generated a net loss before extraordinary
gains applicable to common shareholders for fiscal 2001 of approximately $5.0 million or ($0.80) per common share, compared to a net loss before extraordinary items applicable to common shareholders of approximately $1.9 million or ($0.14) per
common share for fiscal 2000. The Company generated a loss after extraordinary gains applicable to common shareholders for fiscal 2001 of approximately $5.3 million or $(0.85) per common share, compared with the Companys generated net income
after extraordinary gains applicable to common shareholders of approximately $15.6 million or $2.53 per common share for fiscal 2000.





Liquidity and Capital Resources





As the Company winds up its operations, its principal cash
needs are for payment of salaries for its remaining two employees, satisfaction of tax and similar liabilities, and payment of accounting, legal and other costs associated with the liquidation and dissolution of the Company. The Company expects to
meet these cash requirements using cash it has from sales of its assets and prior operations as well as cash generated by ongoing equipment sales. After adequate provision has been made for payment of all of the Companys claims and
obligations, any remaining cash will be distributed to the Companys shareholders in one or more liquidating distributions.





Seasonality and Effects of Inflation





Although the Companys operations during much of
fiscal 2002 were affected by seasonality as its operations in past years had been, seasonality no longer affects the Company as it winds up its operations. Similarly, because the Company is in the process of winding up its operations and no longer
has any stores open, the effects of inflation on the Company are minimal.




10




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RISK FACTORS





Shareholders could be liable to the extent of any distributions to them if we are unable to satisfy our liabilities.





As soon as practicable, we intend to hold a special meeting of our shareholders at which shareholders will be asked to approve and adopt a Plan of Liquidation and
Dissolution. Pursuant to the terms of the Plan of Liquidation and Dissolution, we will promptly pay our expenses and other known liabilities. In addition, we will request that all parties having claims against us submit those claims to us so that we
can make provision for them. Our board of directors also may establish a contingency reserve for payment of remaining obligations or establish a liquidating trust. However, if enough cash is not put into the reserve or enough assets into the
liquidating trust, claims may be brought against us that we cannot pay. In addition, in specific circumstances, claims may be brought against us after our dissolution. In any of these instances, under Georgia law, our shareholders may be liable to
successful claimants to the extent of their pro rata share of the claim or the corporate assets previously distributed to them in the liquidation, whichever is less. Shareholders liability may exist for a period of up to five years after we
publish our Notice of Intent to Dissolve.





If the Plan of Liquidation and Dissolution is not approved, our board of directors will be
forced to evaluate other alternatives, which may be less favorable to us and our shareholders than dissolution.





If our shareholders fail to approve the Plan of Liquidation and Dissolution at the special meeting, our board of directors will continue to evaluate all appropriate alternatives to maximize shareholder value. Because we have a
history of significant operating losses, the alternatives available to us would be limited. As of January 30, 2002, the end of our 2002 fiscal year, we had an accumulated deficit of approximately $36.7 million. We incurred a net loss, before
extraordinary items, of approximately $9.2 million, $5.0 million and $1.2 million the fiscal years ended January 30, 2002, January 31, 2001 and February 2, 2000. Our board of directors believes that it has explored all viable alternatives for our
company and has determined that the best method to maximize shareholder value is for us to liquidate and dissolve. If the Plan of Liquidation and Dissolution is not approved, we may be unable to become a financially viable company and then would
have to consider declaring bankruptcy. If we were forced to declare bankruptcy, our shareholders may receive less than they might in a liquidation.





Decreases in the underlying value of our assets may adversely affect the amount of any liquidating distributions.





We are continuing to sell all of our remaining non-cash assets, which mainly consist of equipment. The underlying value of our assets may be adversely affected by a number of factors that are beyond our control, including:





| |  |  | adverse changes in economic conditions;
| | - |  | ---------------------------------------




| |  |  | over availability of equipment similar to ours in the market place because of other recent grocery store closings; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------




| |  |  | the inability of third parties to pay accounts receivable owed to us.
| | - |  | ---------------------------------------------------------------------



11




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Any decrease in the value of our assets would hinder our efforts to obtain the
most cash possible for our non-cash assets. We will need cash to pay and discharge most of our debts and liabilities. Because we must pay or make provision for payment of our obligations and liabilities prior to making any liquidating distributions,
any decrease in available cash would decrease the likelihood that we would be able to make any liquidating distribution to our shareholders and the amount available for any distributions.





Prior to a final distribution to shareholders, we may be required to register as an investment company under the Investment Company Act of 1940, which could subject us to various
reporting requirements and increased expenses.





While we wind up our business, our board of directors intends
to invest our cash assets in investment-grade securities. If we fail to meet certain exemptions from registration under the Investment Company Act of 1940, we would be required to register as an investment company and comply with the requirements of
the Investment Company Act. We would then be subject to restrictions on our capital structure and be required to comply with various reporting and other requirements that would subject us to additional expense.





Generally, an issuer is deemed to be an investment company subject to registration if its holdings of investment securities,
which usually are securities other than securities issued by majority owned subsidiaries and government securities, exceed 40% of the value of its total assets exclusive of government securities and cash items on an unconsolidated basis. However, a
company that otherwise would be deemed to be an investment company may be excluded from such status for a one-year period provided that such company has a bona fide intent to be engaged as soon as reasonably possible, and in any event within that
one-year period, primarily in a business other than that of investing, reinvesting, owning, holding or trading in securities. If we would otherwise be deemed to be an investment company under the Investment Company Act, we intend to rely on this
exemption while we attempt to resolve all contingencies pending against us and to liquidate all of our remaining assets. Accordingly, we do not intend to register as an investment company under the Investment Company Act.





If we have not resolved all contingencies pending against us and liquidated all of our remaining assets within the one-year period
referred to above, we may be required to (1) apply to the Securities and Exchange Commission for exemptive relief from the requirements of the Investment Company Act, or (2) invest certain of our assets in government securities and cash equivalents
that are not considered investment securities under the Investment Company Act. There can be no assurance that we will be able to obtain exemptive relief from the Commission. Alternatively, investment in government securities and cash
equivalents could yield a significantly lower rate of return than other investments that we could make if we chose to register as an investment company.





Assuming approval of the Plan of Liquidation and Dissolution, we will continue to have expenses that may further decrease any distribution.





Following approval of the Plan of Liquidation and Dissolution and the filing of the Notice of Intent to Dissolve with the Georgia Secretary of State, our activities will be
limited to those necessary to wind up our company. These actions will include selling our remaining assets, establishing any necessary contingency reserves for payment of known, expected or threatened expenses and liabilities, terminating any
remaining commercial agreements, relationships or outstanding obligations and distributing any remaining assets to our shareholders. In connection with these winding up activities, we will continue to incur various costs and expenses, including




12




---




operating costs, salaries, payroll, local and other taxes, and miscellaneous office expenses. In
addition, expenses for professional fees and other expenses of liquidation may be significant, and we will continue to indemnify our officers, directors, employees and agents in accordance with our Articles of Incorporation and Bylaws, including for
actions taken in connection with the Plan of Liquidation and Dissolution and the winding up of our affairs. These costs and expenses will reduce the amount of assets available for any ultimate distributions to our shareholders.





Item 7A.Quantitative and Qualitative Disclosures About Market Risk.





Not Applicable.





Item
8.Financial Statements and Supplementary Data.





The following
financial statements are filed with this report:





Report of Independent Certified Public
Accountants





Consolidated Balance SheetsFiscal Years Ended January 30, 2002 and January 31,
2001





Consolidated Statements of OperationsFiscal Years Ended January 30, 2002, January 31,
2001 and February 2, 2000





Consolidated Statements of Changes in EquityFiscal Years Ended
January 30, 2002, January 31, 2001 and February 2, 2000





Consolidated Statements of Cash
FlowsFiscal Years Ended January 30, 2002, January 31, 2001 and February 2, 2000





Notes to
Consolidated Financial Statements





|Item |  | 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
|---- |  | ---------------------------------------------------------------------------------------




Not applicable.





PART III





Item 10.Directors and Executive
Officers of the Registrant.





Directors





The directors of the Company are as follows:





Harry A. Blazer, age 51, is the founder of Harrys Farmers Market and served as the sole General Partner and as Chief Executive Officer of the Companys predecessor from its inception in 1987. Upon the Companys
incorporation in 1993, Mr. Blazer was named a director and




13




---




President and Chief Executive Officer and was elected to the additional office of chairman in June 1994.
From 1979 to 1987, Mr. Blazer was employed at DeKalb Farmers Market in Atlanta, Georgia and served as its General Manager from 1983 until 1987, when he left to form Harrys Farmers Market.





Donald M. Pamenter, age 63, is an independent management consultant. Since 1984 he has served a wide variety of medium to large manufacturing, marketing and
service companies. His practice focuses on improving strategic operations and competitor management for companies throughout North America and Europe. Mr. Pamenter was an executive with General Foods Corporation from 1978 to 1984. Prior to this, he
served as a management consultant with McKinsey & Company in its Toronto and Amsterdam offices. Mr. Pamenter was the co-founder, director and Executive Vice President of Consolidated Computer, Inc., a publicly traded international computer
manufacturing and software company established in 1968. Mr. Pamenter was first elected to the board of directors in July 1999.





Charles W. Sapp, age 67, was first elected to the board of directors in February 1999. Prior to his retirement in 1999, he served as Senior Vice President of Distribution and Manufacturing of H.E. Butt Grocery Company, where
he worked from 1981 through 1998. From 1989 until 1993, Mr. Sapp served as Group Vice President, Marketing and Store Operations for H.E. Butt Grocery Company. Prior to his employment with H.E. Butt Grocery Company, Mr. Sapp served as the Vice
President of Distribution and Manufacturing with the Alpha Beta Company in California, a subsidiary of American Stores Incorporated, a national grocery store chain. Mr. Sapp has over 40 years experience in the food manufacturing and retailing
industry.





Section 16(a) Beneficial Ownership Reporting Compliance





The United States securities laws require our directors, executive officers and any persons who beneficially own more than 10% of our common stock to file with the SEC and
the Nasdaq Stock Market initial reports of ownership and subsequent reports of changes in ownership. To our knowledge, based solely on a review of the copies of the reports furnished to us and written representations that no other reports were
required, during fiscal 2002 all directors, executive officers and beneficial owners of more than 10% of our common stock made all required filings, although Donald Pamenter and Charles Sapp inadvertently made the required filings reflecting the
automatic annual grants of options to them under our 1996 Director Stock Option Plan after the prescribed due date.





Item
11.Executive Compensation.





The following table sets forth
certain summary information concerning compensation paid or accrued by us for services rendered in all capacities during fiscal 2002, fiscal 2001 and fiscal 2000 for our Chief Executive Officer, and our other executive officers whose annual salary
and bonus for fiscal 2002 exceeded $100,000.




14




---




SUMMARY COMPENSATION TABLE





Annual CompensationName and Principal Position

Fiscal Year


Salary


Other CompensationHarry A. Blazer Chairman,
President, Chief Executive Officer and a Director

2002 2001 2000


$
208,808 250,000 250,000
(1)


  Jim Drummond Chief
Operating Officer

2002
(2)


230,769


$
59,000
(4)Stephen Whitesmith Chief
Technology Officer

2002
(3)


138,462



4,375
(4)


---

|(1) |  | During fiscal 2002, Mr. Blazer agreed to decrease his salary from $250,000 to $100,000 and later to $52,000. During the first quarter of fiscal 2003, Mr. Blazer
agreed to further decrease his salary to $26,000.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Mr. Drummond was elected our Chief Operating Officer on January 25, 2001 and resigned his position on October 31, 2001.
|--- |  | -----------------------------------------------------------------------------------------------------------------------

|(3) |  | Mr. Whitesmith was elected our Chief Technology Officer on January 25, 2001. On January 3, 2002, Mr. Whitesmith accepted a salary reduction to $100 per week,
and he resigned his position on March 6, 2002.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Represents severance payments made pursuant to Mr. Drummonds and Mr. Whitesmiths respective employment agreements.
|--- |  | --------------------------------------------------------------------------------------------------------------------

|
|




Option Grants





None of our named executed officers received option grants in fiscal 2002 nor did any of our named executive officers hold unexercised options at the end of fiscal 2002.
Mr. Blazer has never received options to purchase our common stock.





OPTION EXERCISES IN LAST FISCAL YEAR





Name

Shares Acquired on Exercise

Value Realized(1)Jim Drummond Chief
Operating Officer

200,000

$
144,250Stephen Whitesmith Chief
Technology Officer

100,000

$
71,125


---

|(1) |  | Value based on the fair market value of the Class A Common Stock on the date of exercise. As of August 15, 2002, Messrs. Drummond and Whitesmith continued to
beneficially own such shares.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



15




---




Directors Compensation





We pay each of our directors a quarterly retainer of $5,000, as well as reimbursing directors for any travel and related expenses incurred in connection with their
attendance in person at each meeting of our Board of Directors.





Our 1996 Director Stock Option Plan provides that
each director who does not hold more than 5% of our stock will be granted five-year options to purchase 10,000 shares of our Class A common stock upon (i) his initial election as a director and (ii) the day immediately following the day of each of
our annual shareholders meetings, provided that such director was not granted an option under clause (i) during that same calendar year. Because of his beneficial ownership of our Class B common stock, Mr. Blazer has never been eligible to receive
options under the Director Stock Option Plan. The exercise price of the options is equal to the fair market value of the Class A common stock on the date of grant, and the options vest in one-third increments on each of the first three anniversaries
of the date of grant. In addition to the automatic grants, upon the initial adoption of the Director Stock Option Plan, each eligible director received an option to purchase 30,000 shares of our Class A common stock. These options vested as to
20,000 of the shares on the date of grant and the remaining 10,000 shares vested on the day prior to the 1997 annual meeting of shareholders.





In order to facilitate the pursuit of alternatives to maximize shareholder value, on January 25, 2001, our board of directors appointed Donald Pamenter and Charles Sapp, two of our independent
directors, to serve as a special committee of the board for the purposes of (i) considering, negotiating and evaluating potential transactions and alternatives for us in an effort to enhance shareholder value and (ii) recommending to the full board
of directors for its consideration the advisability of entering into any transaction. During fiscal 2002, we paid the members of the special committee an aggregate of $99,878 for their service.





Compensation Committee Interlocks and Insider Participation





Harry Blazer, Donald Pamenter and Charles Sapp serve on the executive compensation committee of our board of directors. Mr. Blazer serves as our President and Chief Executive Officer, but neither Mr. Pamenter nor Mr. Sapp are our
employees. None of the committee members served as a member of a compensation committee, or other board committees performing similar functions, of any other entity during fiscal 2002. Mr. Blazer routinely excludes himself when the committee
discusses and makes determinations regarding his salary and compensation.





Item 12.Security
Ownership of Certain Beneficial Owners and Management.





The following table sets forth information
as of August 15, 2002, unless otherwise indicated, regarding the beneficial ownership of our equity securities by each person known by us to own more than 5% of any class of our voting securities, each director and nominee for director, each
executive officer named in the Summary Compensation Table and all directors and executive officers as a group.





Pursuant to SEC rules, the number of shares of common stock beneficially owned by a specific person or group includes shares issuable pursuant to convertible securities, warrants and options held by such person or group that may be
converted or exercised within 60 days after August 15, 2002. These shares are deemed to be outstanding for the purpose of computing the




16




---




percentage of the class beneficially owned by such person or group but are not deemed to be outstanding
for the purpose of computing the percentage of the class beneficially owned by any other person or group.





The
persons named in the table gave us the stock ownership information about themselves. Except as explained in the footnotes below, the named persons have sole voting and investment power with regard to the shares shown as beneficially owned by them.
Harry A. Blazer is the beneficial holder of all of the shares of our Class B common stock. Holders of Class B shares are entitled to ten votes per share. If at any time any shares of Class B common stock are beneficially owned by any person other
than Mr. Blazer (or entities controlled by him) or upon his death, these shares of Class B common stock automatically convert to an equal number of shares of our Class A common stock.





Shares Beneficially Owned

Percent of
Class

Percent of Total Voting PowerBeneficial Owner

Class

SharesHarry A. Blazer

Class A Common Stock

38,0001

*Class B Common Stock

2,050,7012

100.00%Total





82.30%Charles W. Sapp

Class A Common Stock

157,4663

3.51%

*Donald C. Pamenter

Class A Common Stock

26,66624

*

*Hummingbird Management, LLC5

Class A Common Stock

283,210

6.36%

1.13%All directors and executive officers

Class A Common Stock

222,1326

4.94%as a group

Class B Common Stock

2,050,701

100.00%(3 persons)

Total





82.29%


---

|* |  | Represents beneficial ownership of less than 1%.
|- |  | ------------------------------------------------

|1 |  | Shares owned by Mr. Blazers wife, with respect to which Mr. Blazer disclaims beneficial ownership.
|- |  | ---------------------------------------------------------------------------------------------------

|2 |  | Includes 2,049,400 shares owned by Harry Blazer, Inc., an entity of which Mr. Blazer is sole director and sole shareholder. Mr. Blazers address is c/o
Hurry, Inc., Post Office Box K, Ellijay, Georgia 30540.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 |  | Includes 26,666 shares subject to presently exercisable stock options or stock options exercisable within 60 days of August 15, 2002.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------

|4 |  | Includes 16,666 shares subject to presently exercisable stock options or stock options exercisable within 60 days of August 15, 2002.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------

|5 |  | The address of Hummingbird Management, LLC (formerly Morningside Value Investors, LLC) is 153 East 53rd Street, New York, New York 10022. We obtained all
information about Hummingbird Management from a Schedule 13D filed by Hummingbird Management with the SEC on June 13, 2002.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6 |  | Includes 43,332 shares subject to presently exercisable stock options or stock options exercisable within 60 days of August 15, 2002. Also includes 38,000
shares owned by Mr. Blazers wife, with respect to which Mr. Blazer disclaims beneficial ownership.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17




---




Item 13.Certain Relationships and Related Transactions.





Robert Glustrom was a director of the Company until his resignation on January 30, 2002. He is the
sole shareholder of RCG Management LLC, which was the management company for the Harrys Crossing Shopping Center in Cobb County, Georgia, where our Cobb County megastore store was located. RCG was responsible for the daily management of the
stores in the shopping center, and we paid RCG a fee of $2,500 per month for the management services until the property was sold to Whole Foods Market Group on October 31, 2001. During fiscal 2002, we paid RCG a total of $22,500.




18




---




PART IV





Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-K.





(a)  1.  Financial Statements and Auditors Report.    The following financial statements and auditors report have
been filed as Item 8 in Part II of this report:





Report of Independent Certified Public
Accountants





Consolidated Balance SheetsFiscal Years Ended January 30, 2002 and January 31,
2001





Consolidated Statements of OperationsFiscal Years Ended January 30, 2002, January 31,
2001 and February 2, 2000





Consolidated Statements of Changes in EquityFiscal Years Ended
January 30, 2002, January 31, 2001 and February 2, 2000





Consolidated Statements of Cash
FlowsFiscal Years Ended January 30, 2002, January 31, 2001 and February 2, 2000





Notes to
Consolidated Financial Statements





2.    Financial Statement Schedules.





The following supporting financial statement schedule is filed with this report:





Schedule IIConsolidated Schedule of Valuation and Qualifying Accounts





All other schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial
statements or related notes.





(b)  The registrant has not filed any reports on Form 8-K during the last
quarter of the period covered by this report.





3.    Exhibits.





The following exhibits are filed with or incorporated by reference into this report. The Company previously filed with the
Securities and Exchange Commission the exhibits denominated by an asterisk (*) as part of and the exhibits are hereby incorporated by reference from the Companys following documents: (i) Form S-1 Registration Statement under the Securities Act
of 1933, Registration No. 33-60452,(Form S-1); (ii) Current Report on Form 8-K filed January 30, 1995 (1/30/95 8-K); (iii) Current Report on Form 8-K filed February 18, 1997 (the 2/18/97 8-K); (iv) Quarterly
Report on Form 10-Q for the quarter ended November 1, 2000 (11/1/00 10-Q); and (v) Current Report on Form 8-K filed August 14, 2001 (the 8/14/01 8-K).





Exhibit No.

Description of Exhibit*3.1.1

Articles of Incorporation of HFM, Inc. (Form S-1 Exhibit 3.1)


|
|




|
|



19




---




*3.1.2

Articles of Amendment to Articles of Incorporation of the Company (Form S-1 Exhibit 3.2)*3.1.3

Articles of Amendment to Articles of Incorporation of the Registrant (1/30/95 8-K Exhibit 3(I).2)*3.1.4

Articles of Amendment to Articles of Incorporation of the Company regarding Series AA Preferred Stock (2/18/97 8-K
Exhibit 3(I).3)*3.1.5

Articles of Amendment to Articles of Incorporation of the Company regarding Series B Preferred Stock (2/18/97 8-K
Exhibit 3(I).4)*3.2

By-Laws of HFM, Inc. (Form S-1 Exhibit 3.3)*4.1

Specimen Certificate of Class A Common Stock (Form S-1 Exhibit 4)*4.2

Bank Warrant Certificate issued to NationsBank (1/30/95 8-K Exhibit 4.10)*4.3

Bank Warrant Certificate issued to Creditanstalt-Bankverein (1/30/95 8-K Exhibit 4.11)*4.4

Amendment to Bank Warrant Certificate issued to Creditanstalt-Bankverein (2/18/97 8-K Exhibit 4.11.2)*10.1

Harrys Farmers Market, Inc. 1993 Management Incentive Plan (Form S-1 Exhibit 10.2)*10.2

Harrys Farmers Market, Inc. Employee Stock Purchase Plan (Form S-1 Exhibit 10.4)*10.3

Warrant Agreement dated December 30, 1994, among the Registrant, NationsBank and Creditanstalt-Bankverein (1/30/95
8-K Exhibit 10.16.5)*10.4

Severance Agreement and General Release, dated October 6, 2000, by and between John D. Branch and the Company
(11/1/00 10-Q Exhibit 10.2)*10.5

Asset Purchase Agreement dated August 9, 2001 by and between the Company and Whole Foods Market Group, Inc. (8/14/01
8-K Exhibit 2.1)23

Consent of Grant Thornton LLP




20




---




SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) 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.








HURRY, INC.By:

/s/    HARRY A. BLAZERHARRY A. BLAZER Chairman,
President and Chief Executive Officer (principal executive officer)





Dated: August 27, 2002


By:

/s/    BARBARA WORRELLBARBARA WORRELL Director of
Accounting (principal financial and accounting officer)





Dated: August 27, 2002





Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated:





By:

/s/    HARRY A. BLAZERHARRY A. BLAZER, Chairman,
President, Chief Executive Officer and Director


August 27, 2002











By:

/s/    CHARLES W. SAPPCHARLES W. SAPP, Director





August 27, 2002








By:

/s/    DONALD M. PAMENTERDONALD M. PAMENTER, Director





August 27, 2002







21




---




REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





Board of Directors


Hurry, Inc.





We have audited the accompanying consolidated balance sheets of Hurry, Inc. and
Subsidiaries (formerly Harrys Farmers Market, Inc. and Subsidiaries) as of January 30, 2002 and January 31, 2001, and the related consolidated statements of operations, changes in stockholders equity, and cash flows for each of the three
years in the period ended January 30, 2002. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.





As more fully described in Notes A-1 and A-2 to the consolidated financial statements, the
Company sold substantially all of its net operating assets on October 31, 2001, and consequently, the Company has begun cessation of its operations, and intends to liquidate and dissolve as soon as practicable.





In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position
of Hurry, Inc. and Subsidiaries (formerly Harrys Farmers Market, Inc. and Subsidiaries) as of January 30, 2002 and January 31, 2001, and the consolidated results of their operations and their consolidated cash flows for each of the three years
in the period ended January 30, 2002, in conformity with accounting principles generally accepted in the United States of America.





We have also audited Schedule II of Hurry, Inc. and Subsidiaries, for each of the three years in the period ended January 30, 2002. In our opinion, this schedule presents fairly, in all materials respects, the information
required to be set forth therein.





/s/    GRANT THORNTON
LLP





Atlanta, Georgia


May 29, 2002




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





CONSOLIDATED BALANCE SHEETS





January 30, 2002


January 31, 2001ASSETSCURRENT ASSETSCash (Note B)

$
5,270,207


$
167,475Cash in escrow (Note A-2)


1,000,000



Trade accounts receivable, net of an allowance for doubtful accounts of $0 and $19,155 in 2002 and 2001,
respectively


6,504



185,466Inventories


661,433



8,995,201Prepaid expenses


88,351



444,790Receivable for sale of assets


992,984



Other current assets


133,134



49,792Total current assets


8,152,613



9,842,724PROPERTY AND EQUIPMENT (Note A-5)Buildings


5,179,079



31,857,603Equipment


3,403,563



31,631,206Vehicles






184,5748,582,642



63,673,383Accumulated depreciation


(4,380,678
)


(36,428,690
)4,201,964



27,244,693Land






7,223,891Property and equipment, net of accumulated depreciation


4,201,964



34,468,584Impairment loss


(3,065,540
)


1,136,424



34,468,584OTHER ASSETSDeposits on equipment






283,134Loan costs, net of accumulated amortization of $1,306,511 in 2002 and $276,367 in 2001






711,942Other






245,791



1,240,867$
9,289,037


$
45,552,175





The accompanying notes are an integral part of these statements.




F-2




---




January 30, 2002


January 31, 2001LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESCurrent maturities of long-term obligations

$
299,917


$
2,397,901Accounts payabletrade


1,231,318



6,341,418Workers compensation and general liability insurance


255,699



339,102Accrued payroll and payroll taxes


82,285



614,307Sales taxes payable


60,208



201,700Accrued lease penalties and releases


1,195,550



Accrued liquidation costs


274,450



Other accrued liabilities


177,686



503,689Capital distribution payable (Note F)


2,472,879



Total current liabilities


6,049,992



10,398,117LONGTERM OBLIGATIONS,net of current maturities






19,311,905OTHER NONCURRENT LIABILITIES






486,811REDEEMABLE PREFERRED STOCK, $9 stated value, 3,000,000 Series AA shares authorized; no shares issued or
outstanding






STOCKHOLDERS EQUITYCommon stock:Class A, No par value, 22,000,000 shares authorized; issued and outstanding, 4,456,875 and 4,139,375 shares in 2002 and
2001 , respectively


34,681,075



34,681,075Class B, No par value, 3,000,000 shares authorized; issued and outstanding, 2,050,701 in 2002 and 2001


3,936,337



3,936,337Additional paid-in capital


1,415,027



1,256,902Accumulated deficit


(36,793,394
)


(24,518,972
)Total stockholders equity


3,239,045



15,355,342$
9,289,037


$
45,552,175




F-3




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





CONSOLIDATED STATEMENTS OF OPERATIONS


Years ended





January 30, 2002


January 31, 2001


February 2, 2000Net sales

$
98,555,992


$
135,953,426


$
138,694,861Cost of goods sold


69,947,385



97,965,043



98,725,697Gross profit


28,608,607



37,988,383



39,969,164Operating expensesDirect store expenses


18,487,055



22,772,158



23,467,781Selling, general and administrative expenses


11,122,597



13,570,032



12,726,961Depreciation and other amortization


2,719,007



3,947,360



4,363,641Impairment loss and termination charges


5,232,112







400,00037,560,771



40,289,550



40,958,383Operating loss


(8,952,164
)


(2,301,167
)


(989,219
)Other income (expense)Gain on sale of certain assets, net of related expenses (Note A-2)


1,970,898







Interest expense


(2,991,985
)


(3,685,407
)


(2,663,571
)Other income


786,398



1,023,846



1,827,434(234,689
)


(2,661,561
)


(836,137
)Loss before provision for accretion of warrants, income taxes and extraordinary items


(9,186,853
)


(4,962,728
)


(1,825,356
)Provision for accretion of warrants










122,950Loss applicable to common shareholders before income taxes and extraordinary items


(9,186,853
)


(4,962,728
)


(1,948,306
)Income tax benefit










740,000Loss applicable to common shareholders before extraordinary items


(9,186,853
)


(4,962,728
)


(1,208,306
)Extraordinary (loss) gain (net of applicable income taxes of $0 for 2002 and 2001, and $990,000 for 2000)


(614,690
)


(287,850
)


16,845,197Net (loss) earnings applicable to common shareholders

$
(9,801,543
)

$
(5,250,578
)

$
15,636,891




F-4




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





CONSOLIDATED STATEMENTS OF OPERATIONSContinued


Years ended





January 30, 2002


January 31, 2001


February 2, 2000Net earnings (loss) per common sharebasic and diluted:Loss applicable to common shareholders before extraordinary items

$
(1.46
)

$
(0.80
)

$
(0.19
)Extraordinary (loss) gain


(0.10
)


(0.05
)


2.72Net earnings (loss) applicable to common shareholders

$
(1.56
)

$
(0.85
)

$
2.53





The accompanying notes are an integral part of these statements.




F-5




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY


Years ended January 30, 2002, January 31, 2001 and February 2, 2000





Common stock Class A

Common stock Class B

Additional paid-in capital


Accumulated deficit


Total equityShares

Amount

Shares

AmountBalance, February 3, 1999

4,139,375

$
34,681,075

2,050,701

$
3,936,337

$
1,379,852


$
(35,028,235
)

$
4,969,029Accretion of warrant value












(122,950
)






(122,950
)Net earnings
















15,759,841



15,759,841Balance, February 2, 2000

4,139,375


34,681,075

2,050,701


3,936,337


1,256,902



(19,268,394
)


20,605,920Net loss
















(5,250,578
)


(5,250,578
)Balance, January 31, 2001

4,139,375


34,681,075

2,050,701


3,936,337


1,256,902



(24,518,972
)


15,355,342Issuance of 317,500 shares of Class A, no par stock

317,500










158,125







158,125Capital distribution declared ($0.38 per share)
















(2,472,879
)


(2,472,879
)Net loss
















(9,801,543
)


(9,801,543
)Balance, January 30, 2002

4,456,875

$
34,681,075

2,050,701

$
3,936,337

$
1,415,027


$
(36,793,394
)

$
3,239,045





The accompanying notes are an integral part of this statement.




F-6




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





CONSOLIDATED STATEMENTS OF CASH FLOWS


Years ended





January 30, 2002


January 31, 2001


February 2, 2000Cash flows from operating activities:Cash received from customers

$
98,721,054


$
135,888,969


$
139,099,821Cash paid for purchases and operating expenses


(101,278,548
)


(131,773,356
)


(139,758,884
)Interest paid


(3,241,872
)


(3,755,120
)


(2,514,335
)Interest received


28,639



743



299Net cash (used in) provided by operating activities


(5,770,727
)


361,236



(3,173,099
)Cash flows from investing activities:Capital expenditures


(1,352,050
)


(458,487
)


(1,324,516
)Proceeds from sale of certain assets (Note A-2)


34,553,997







Proceeds from sale of property and equipment


172,178



59,250



172,065Proceeds from sale of other assets






4,354,625



280,407Net cash provided by (used in) investing activities


33,374,125



3,955,388



(872,044
)Cash flows from financing activities:Proceeds from long-term debt


1,014,341



1,127,760



19,500,000Net payments on line of credit and revolving credit facility


(1,984,145
)


(1,647,715
)


(2,209,545
)Principal payments on long-term obligations


(20,688,987
)


(4,061,127
)


(10,591,838
)Payment to buyout redeemable preferred stock










(2,751,031
)Payment of loan costs










(1,167,413
)Proceeds from employee stock purchases


158,125







Net cash (used in) provided by financing activities


(21,500,666
)


(4,581,082
)


2,780,173Net increase (decrease) in cash


6,128,261



(264,458
)


(1,264,970
)Cash at beginning of year


167,475



431,933



1,696,903Cash at end of year

$
6,270,207


$
167,475


$
431,933Supplemental Schedule of Noncash Investing and Financing Activities:Capital leases

$
66,706


$
268,591


$






Capital distribution totaling $2,472,879 was declared in fiscal 2002, but
not paid as of January 30, 2002.




F-7




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





CONSOLIDATED STATEMENTS OF CASH FLOWSContinued


Years ended





January 30, 2002


January 31, 2001


February 2, 2000Reconciliation of net earnings (loss) to cash provided by operating activities:Net earnings (loss), before accretion of warrants

$
(9,801,543
)

$
(5,250,578
)

$
15,759,841Adjustments to reconcile net earnings (loss) to cash provided by (used in) operations:Depreciation and amortization


2,904,752



4,468,571



4,827,254Amortization of debt discount










186,823(Gain) loss on sale of property and equipment


(134,260
)


(9,732
)


36,820Gain on sale of certain assets, before related expenses paid (Note A-2)


(4,045,885
)






Impairment loss and termination charges


4,535,540







400,000Extraordinary items


614,690



287,850



(19,193,902
)Changes in operating assets and liabilities:Decrease (increase) in trade accounts receivable


165,062



(64,457
)


404,960(Increase) decrease in other receivables


(83,342
)


30,927



(4,576
)Decrease (increase) in inventories


2,261,267



1,992,200



(3,849,397
)Decrease (increase) in prepaid expenses


150,153



275,546



(220,793
)Decrease (increase) in deposits on equipment


255,704



(36,262
)


(6,415
)Decrease (increase) in other assets


204,497



(119,296
)


(77,189
)(Decrease) increase in trade accounts payable


(1,936,869
)


(932,037
)


(1,455,266
)Increase (decrease) in accrued and other liabilities


(860,493
)


(147,329
)


139,574Increase (decrease) in unearned revenue






(134,167
)


(120,833
)$
(5,770,727
)

$
361,236


$
(3,173,099
)





The accompanying notes are an integral part of these statements.




F-8




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


January 30, 2002 and January 31, 2001





NOTE ANATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





1.Nature of Business





Hurry, Inc. (the Company), which was formerly known as Harrys Farmers Market, Inc., is a corporation formed pursuant to the laws of the State of Georgia. The Company is a retailer in the Atlanta, Georgia
metropolitan area of fresh fruits and produce, seafood, poultry and meat, dairy products, baked goods, beer and wine and other assorted grocery items. In connection with the sale of substantially all assets and the assumption of certain related
liabilities of the Company, as fully described in Note A-2, the Company began cessation of its operations and intends to liquidate and dissolve as soon as practicable. The Company previously owned as many as three megastores and six convenience
stores. In fiscal 2002, the Company sold or closed all its megastores and three of its convenience stores. There were three convenience stores open as of January 30, 2002.





2.Sale of Substantially All Assets and Assumption of Certain Related Liabilities of the Company





On October 31, 2001, the Company completed the sale (the Asset Sale) of substantially all of its assets to Whole Foods Market Group, Inc. (Whole
Foods), a wholly-owned subsidiary of Whole Foods Market, Inc., pursuant to the terms of an Asset Purchase Agreement dated August 9, 2001 (the Agreement). Pursuant to the Agreement, the Company sold its three megastores and support
facilities to Whole Foods for a cash purchase price of approximately $35,000,000, subject to certain post-closing adjustments. In addition to the Companys three megastores and related real estate, Whole Foods purchased the Companys
intellectual property, distribution center, commissary kitchen, bakery and office facilities. In connection with the transaction, Whole Foods assumed certain specified liabilities of the Company. The Company retained all other assets, including its
Harrys In A Hurry stores, and related liabilities.





The Company recorded a receivable of $992,984 related to
certain post-closing adjustments pursuant to the Agreement which was collected subsequent to January 30, 2002.





At
the time of the closing, $1,000,000 of the purchase price was placed into escrow for: (i) any indemnification claims that may arise against the Company under the terms of the Agreement; (ii) repayment of a post-closing purchase price adjustment
based on the net working capital of the purchased assets and (iii) real estate prorations if not otherwise paid in accordance with the terms of the Agreement. The escrow will terminate October 31, 2002, unless any unsettled claims remain pending at
that time. Any indemnification claims by the Company or purchase price adjustments in favor of the Company will be paid directly by Whole Foods.





The Company used approximately $23,000,000 of the cash proceeds to pay off and retire its credit facility with its primary senior lender. In addition, the Company used a portion of the proceeds to pay
off certain corporate liabilities and transaction expenses.





The Company changed its name from Harrys
Farmers Market, Inc. to Hurry, Inc. after the closing of this transaction.




F-9




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE ASUMMARY OF SIGNIFICANT ACCOUNTING POLICIESContinued





3.Principles of Consolidation





The financial statements include the accounts of Hurry, Inc., and its three wholly owned subsidiaries, Karalea, Inc., Marthasville Trading Company and Roman Properties, Inc. All material intercompany balances and transactions have
been eliminated in consolidation.





4.Revenue Recognition





Revenues from the sale of products are recognized at the point of sale of the Companys products. Discounts provided to
customers at the point of sale are recognized as a reduction in sales as the products are sold.





5.Inventories





Inventories consist primarily
of grocery items and are stated at the lower of cost or market. Cost is determined under the first-in, first-out (FIFO) valuation method.





6.Property and Equipment





Property and
equipment are stated at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on a straight-line basis. The estimated lives used in determining
depreciation are: buildings, 31-39 years and equipment and vehicles, 3 to 10 years. The portion of depreciation expense attributed to product cost is included with cost of goods sold in the statements of operations. This depreciation expense
amounted to $256,163, $521,211 and $463,613, for the years ended January 30, 2002, January 31, 2001 and February 2, 2000, respectively.





Property and equipment are carried at an estimated net realizable value of $1,136,424. The Company recognized a non-cash impairment loss of $3,065,540 in the third and fourth quarters of fiscal 2002 to write down the assets
to their estimated net realizable value based on the estimated sales price of the assets less reasonable estimates of additional costs to sell the facility. The recognition of this impairment was in accordance with the provisions of Statement of
Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.





The Company capitalizes purchased software that is ready for service and software development costs incurred from the time technological feasibility of the software is established until the software is
ready for use. Other computer software maintenance costs related to software development are expensed as incurred. Software development costs are amortized using the straight-line method generally over three to five years after being placed in
service. The carrying value of software and development costs at January 30, 2002 and January 31, 2001 were $0 and $109,384, respectively.





7.Loan Costs





Costs of obtaining financing are
being amortized over the term of the related loans.




F-10




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE ASUMMARY OF SIGNIFICANT ACCOUNTING POLICIESContinued





8.Advertising Expense





All advertising costs are expensed in the period incurred. Advertising expense for the years ended January 30, 2002, January 31, 2001 and February 2, 2000 was approximately $1,065,000, $1,057,000 and $770,000, respectively.





9.Income Taxes





The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable
income. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets when it is more likely than not that
the asset will not be realized.





10.Stock Based Compensation





The Companys stock option plans are accounted for under the intrinsic value method in which compensation expense is recognized for
the amount, if any, that the fair value of the underlying common stock exceeds the exercise price at the date of grant.





11.Fiscal Year





The Company is on a 52/53-week
fiscal year ending on the Wednesday nearest January 31. Fiscal years 2002, 2001 and 2000 were all 52-week fiscal years.





12.Earnings Per Share





The Company reports
earnings per share in accordance with Statement of Financial Accounting Standards No. 128 (SFAS 128), Earnings Per Share.Basic net earnings per common share are based upon the weighted average number of common shares outstanding during the
period. Diluted net earnings per common share is based upon the weighted average number of common shares outstanding plus dilutive potential common shares, including options and warrants outstanding during the period, unless such items are
antidilutive.





13.Use of Estimates in the Preparation of Financial Statements





The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Actual results could differ from those estimates.




F-11




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE ASUMMARY OF SIGNIFICANT ACCOUNTING POLICIESContinued





14.Reclassifications





Certain reclassifications have been made to the fiscal 2001 and 2000 financial statements to conform to the fiscal 2002 presentation.





NOTE BLIQUIDITY AND OPERATIONAL MATTERS





Subsequent to year end, the Companys
activities have been primarily limited to selling remaining assets, paying creditors, terminating any remaining commercial agreements, relationships and outstanding obligations, and conserving cash. As the Company ceases its operations, its
principal cash needs are for rent for the remaining locations and office space, payment of salaries for its remaining employees, satisfaction of tax and similar liabilities and payment of accounting, legal and other costs associated with the
liquidation and dissolution of the Company. The Company expects to meet these cash requirements using cash received from sales of its assets and prior operations as well as cash generated by ongoing equipment sales. After adequate provision has been
made for payment of all of the Companys claims and obligations, any remaining cash will be distributed to the Companys shareholders in one or more liquidating distributions.





The Company has made adjustments in order to state its assets and liabilities at net realizable value as follows:





Write down of property and equipment

$
3,065,540Lease termination charges


1,195,550Employment contract termination charges


121,000Legal costs associated with terminations of agreements


153,450





The estimated net realizable value of assets represents
managements best estimate of the recoverable value of the assets, net of selling expenses.





NOTE CLONG-TERM OBLIGATIONS





On October 31, 2001, the Company used approximately $23,000,000 of the cash proceeds received in the Asset
Sale, as discussed in Note A-2, to pay off and retire its credit facility with its primary senior lender.





The
Companys retired credit facility (Credit Facility) under the previous credit agreement (Credit Agreement), entered into on December 2, 1999 was for a committed amount of up to $24.5 million and consisted of a term loan
for $19.5 million and a senior revolving credit facility of up to $5.0 million. The term note and the revolving credit facility were due to mature on November 28, 2002, at which time the remaining unpaid balance were due. Under the Credit Agreement,
substantially all of the Companys assets had been pledged as collateral. In addition, the Credit Agreement included various operational and financial covenants that included, among other things, a minimum earnings before interest, taxes,
depreciation and amortization (EBITDA) that the Company was required to achieve and a limitation on the amount of capital expenditures that the Company could spend in any one year.




F-12




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE CLONG-TERM OBLIGATIONSContinued





At January 31, 2001, the Company was in default under certain of the financial covenants. Pursuant to an amendment to the Credit Agreement, the lender agreed to waive the defaults and amend the
covenant requirements for fiscal 2002. As of January 30, 2002, in connection with the pay-off and retirement of the Credit Facility, all obligations under the Credit Agreement have been fully satisfied, and the relationship with its primary senior
lender has been terminated.





Notes payable at year-end consisted of:





January 30, 2002


January 31, 2001Term loan to a financial institution, bearing interest at 17.5%, maturing November 28, 2002. The term loan, which was
paid-off in full on October 31, 2001, had been collateralized by substantially all assets of the Company.

$



$
18,100,000Revolving credit facility to a financial institution, bearing interest at 13%, maturing November 28, 2002. The revolving
credit facility, which was paid-off in full on October 31, 2001, had been collateralized by substantially all assets of the Company.






1,984,145PIK note payable to a financial institution, bearing interest at 4.5% maturing November 28, 2002. The PIK note was
paid-off in full on October 31, 2001.






1,127,760



21,211,905Capital lease obligations


299,917



497,901299,917



21,709,806Less current maturities


(299,917
)


(2,397,901
)$



$
19,311,905




F-13




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE CLONG-TERM OBLIGATIONSContinued





Capital Lease Obligations





The Company leases certain
equipment under agreements that are classified as capital leases. Most equipment leases have purchase options at the end of the original lease term. The effective interest rate on these leases range from 8% to 12%. Substantially all capital lease
obligations, and their associated property and equipment, were terminated and sold in fiscal 2002 and the beginning of fiscal 2003 as the Company winds up its operations. Property and equipment includes the following amounts for leases that have
been capitalized:





January 30, 2002


January 31, 2001Equipment

$
1,444,771


$
4,361,312Accumulated depreciation and impairment write-down


(1,405,682
)


(3,207,470
)$
39,089


$
1,153,842





Future minimum payments of capital leases as of January 30, 2002,
are as follows:





Year Ending 2003

$
299,917





NOTE DCOMMITMENTS AND CONTINGENCIES





Operating Leases





The Company leases certain facilities and equipment under agreements classified as operating leases. Total rental expense, excluding lease release and prepayment penalties, under all operating lease arrangements was
approximately $2,400,000, $2,900,000 and $2,500,000 for the years ended January 30, 2002, January 31, 2001 and February 2, 2000, respectively. Terms of the equipment leases range from four to five years and include an option to terminate at the end
of two or three years. At the end of the maximum term, the Company has the option to continue renting the equipment or purchase the equipment at fair market value.





Substantially all equipment operating leases were assumed by Whole Foods in connection with the Asset Sale. Substantially all of the remaining equipment and facility leases
were terminated in fiscal 2002 and the beginning of fiscal 2003 in connection with the Companys intent to liquidate and dissolve the Company. Prepayment penalties and lease release payments totaled approximately $850,000 for fiscal 2002. The
future minimum lease payments on leases existing at year end to be paid in fiscal year 2003 are $499,558. The Company also anticipates paying prepayment penalties and lease release payments of $1,195,550 in 2003 related to the termination of the
remaining leases. These penalties and release payments have been accrued as of January 30, 2002, as these operations had ceased as of January 31, 2002.




F-14




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE DCOMMITMENTS AND CONTINGENCIESContinued





Claims and Litigation





The Company is involved in various
claims and litigation that arise in the ordinary course of business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position of the Company.





NOTE ERELATED PARTY TRANSACTIONS





In connection with the Asset Sale discussed in Note A-2, Harry A. Blazer, the Companys President, Chief Executive Officer and Chairman of the Board of Directors, entered into a Consulting and
Non-Competition Agreement with Whole Foods. Mr. Blazer will act as a consultant to Whole Foods for a period of five years. During the five-year period, Mr. Blazer must be available to assist Whole Foods in the integration of the purchased assets for
no more than ten hours per week and no more than a total of 500 hours in the first year, 400 hours in the second year, 300 hours in the third year, 200 hours in the fourth year and 100 hours in the fifth year. In addition, during the five-year
period, Mr. Blazer agreed to not compete directly or indirectly against the interests of Whole Foods in the ownership or operation of similar retail entities within 30 miles of any existing Whole Foods Market store and in metropolitan areas that
Whole Foods Market presently has locations or intends to enter. In addition to other exceptions, Mr. Blazer is permitted to continue managing the operations of the Harrys In A Hurry stores. As compensation for these agreements, Whole Foods
will pay Mr. Blazer $250,000 per year during the five-year term of the Consulting and Non-Competition Agreement.





NOTE FCAPITAL
DISTRIBUTION





On January 30, 2002, the Companys Board of Directors declared a capital distribution of
$0.38 per share to shareholders of record as of the close of business on February 11, 2002. The total amount of the declared capital distribution of $2,472,879 was paid immediately following the record date. Such amount is in connection with the
Asset Sale to Whole Foods and the intended liquidation and dissolution of the Company as described in Notes A-1 and A-2.





NOTE
GIMPAIRMENT LOSS AND TERMINATION CHARGES





During fiscal year 2002, the Company has recognized a
impairment loss of the remaining fixed assets of the Company consisting of a write down of the book value of fixed assets of approximately $3,066,000 and $2,166,000 of additional costs anticipated to dispose of these assets and settle lease and
employment contracts of which approximately $696,000 had been paid as of year end.





During fiscal year 2000, the
Company recognized an impairment loss of $400,000 to write down certain assets held for sale to their estimated net realizable value based on estimated sales price of the assets less estimates of costs to sell.




F-15




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE HEXTRAORDINARY ITEMS





Loss on Debt Extinguishment





In connection with the Asset Sale on October 31, 2001, as
described in Note A-2, the Company incurred an extraordinary loss of $614,690 on the early repayment of its Credit Facility due to prepayment fees and the write-off of deferred financing costs.





In connection with the first quarter fiscal 2001 sale of the warehouse and distribution facility, the Company incurred an extraordinary loss of $287,850 on the early
repayment of the note due to prepayment fees and the write-off of related deferred financing costs.





Gain on
Debt Extinguishment





During fiscal 2000, the Company negotiated a redemption with the holders of the
Companys Series AA Redeemable Convertible Preferred Stock, which had a total redemption value of $11.0 million, and certain warrants that could be exercised to purchase shares of Class A common stock for $2.75 million. In addition, during
fiscal 2000, the United States Bankruptcy Court approved a settlement with Boston Chicken, Inc. (BCI) and Progressive Food Concept, Inc. (PFCI) pursuant to which the Company paid $4.0 million for the satisfaction of all debt
owed to BCI and PFCI, including $15.5 million of convertible debt, and the termination of warrants for the purchase of two million shares of the Companys Class A common stock. As a result of these two transactions the Company had an
extraordinary gain of approximately $16.8 million, net of applicable income taxes of $990,000, in fiscal 2000. The effective tax rate on the extraordinary gains was only 5.56% due to the Company utilizing net operating loss carryforwards generated
in fiscal 2000 and previous periods to offset income taxes attributable to the extraordinary gain. The net income tax expense of $250,000 for fiscal 2000 arises from alternative minimum tax that is not eligible for offset by net operating loss
carryforwards.





NOTE ICONCENTRATION OF CREDIT RISK AND FINANCIAL INSTRUMENTS





The Company operates retail grocery stores in the metropolitan Atlanta area. The Company also sells to a limited number of commercial
entities and carries trade accounts receivable for these customers. Management continually monitors these receivables to minimize the risk of loss.





The Companys financial instruments recorded on the balance sheet include cash, accounts receivable, accounts payable and debt. Because of their short maturities, the carrying amount of cash,
accounts receivable, accounts payable and debt approximates fair market value.




F-16




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE JNET EARNINGS (LOSS) PER COMMON SHARE





The following table sets forth the computation of basic and diluted earnings (loss) per share.





January 30, 2002


January 31, 2001


February 2, 2000Numerators for basic and diluted net loss per common shareLoss applicable to common shareholders before extraordinary items

$
(9,186,853
)

$
(4,962,728
)

$
(1,208,306
)Extraordinary (loss) gain


(614,690
)


(287,850
)


16,845,197Net (loss) earnings applicable to common shareholders after extraordinary items

$
(9,801,543
)

$
(5,250,578
)

$
15,636,891Denominator for basic net loss per common shareweighted average shares outstanding


6,283,049



6,190,076



6,190,076Effect of dilutive options and warrants










Denominator for diluted net loss per common shareadjusted weighted average shares outstanding


6,283,049



6,190,076



6,190,076





The exchange or exercise of common stock equivalents had no effect
on the weighted average shares outstanding or earnings (loss) per share for all years presented because the exercise or exchange would be antidilutive on the earnings (loss) applicable to common shareholders. The Company has 412,505, 1,097,225, and
944,830 options outstanding as of January 30, 2002, and January 31, 2002 and February 2, 2000, respectively, which are potentially dilutive.




F-17




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE KEMPLOYEE BENEFIT PLANS





Stock Option Plans





The Companys board of directors approved stock option plans that
cover up to 675,000 shares of common stock. The plans provide for the expiration of options five to ten years from the date of grant and require the exercise price of the options granted to be at least equal to 100% of market value on the date
granted.





In addition to the stock option plans, the board of directors periodically approve the grant of options
to employees and directors. The board of directors approved the grant of 0, 300,000 and 285,000 options outside of the Companys stock option plans during fiscal 2002, 2001 and 2000, respectively. During fiscal 2002, 300,000 of these options
were exercised, while 10,000, 21,875 and 0 were forfeited during fiscal 2002, 2001 and 2000, respectively. The number of stock options outstanding as of January 30, 2002, January 31, 2001 and February 2, 2000, which were granted outside of the
Companys stock option plans was 323,125, 633,125 and 355,000, respectively.





Due to the sale of
substantially all assets of the Company to Whole Foods, and in connection with the Companys intent to liquidate and dissolve, the Company anticipates that no further options will be granted, and it is the Companys intent to terminate the
stock option plans as soon as practicable.





All stock option transactions for each of the three years in the
period ended January 30, 2002, are summarized below:





January 30, 2002

January 31, 2001

February 2, 2000Shares


Weighted Average Exercise Price

Shares


Weighted Average Exercise Price

Shares


Weighted Average Exercise PriceOutstanding, beginning of year

1,097,225


$
1.76

944,830


$
2.38

563,940


$
3.63Granted







340,000



0.54

476,100



1.07Exercised

(317,500
)


0.50











Forfeited

(367,220
)


3.10

(187,605
)


2.64

(95,210
)


3.10Outstanding, end of year

412,505


$
1.54

1,097,225


$
1.76

944,830


$
2.38




F-18




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE KEMPLOYEE BENEFIT PLANSContinued





Stock OptionsContinued





The following table
summarizes information about stock options outstanding at January 30, 2002:





Options Outstanding

Options ExercisableExercise Price

Number Outstanding at January 30, 2002

Weighted Average Remaining Contractual Life (Years)

Weighted Average Exercise Price

Number Exercisable at January 30, 2002

Weighted Average Exercise PriceLess than $1.00

263,125

1.1

$
0.96

259,792

$
0.961.002.00

49,000

3.6


1.04

35,667


1.032.503.00

86,180

1.6


2.85

86,180


2.856.00

14,200

3.0


6.00

14,200


6.00412,505

1.6

$
1.59

395,839

$
1.56





The Company uses the intrinsic value method in accounting for its
stock option plans. In applying this method, no compensation cost has been recognized in the accompanying financial statements. Had compensation cost for the Companys stock option plans been determined based on the fair value at the grant
dates for awards under those plans, the Companys net earnings (loss) and earnings (loss) per share would have resulted in the pro forma amounts indicated below:





January 30, 2002


January 31, 2001


February 2, 2000Net earnings (loss)

As reported

$
(9,696,014
)

$
(5,250,578
)

$
15,636,891Pro forma


(9,752,948
)


(5,466,484
)


15,420,707Basic net earnings (loss) per common shares

As reported

$
(1.54
)

$
(0.85
)

$
2.53Pro forma


(1.55
)


(0.88
)


2.49Diluted net earnings (loss) per common

As reported

$
(1.54
)

$
(0.85
)

$
2.53Pro forma

$
(1.55
)

$
(0.88
)

$
2.49




F-19




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE KEMPLOYEE BENEFIT PLANSContinued





Stock OptionsContinued





For purposes of the pro forma
amounts above, the fair value of each option grant was estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted-average assumptions:





January 30, 2002


January 31, 2001


February 2, 2000Expected volatility

92.9
%

92.9
%

78.8
%Risk-free interest rate

5.4
%

5.4
%

6.5
%Expected option life (years)

9


9


9





Health Care Plan





The Company has a fully insured health care plan that covers all employees who elect to participate. Expenses for this plan charged to
operations for the years ended January 30, 2002, January 31, 2001 and February 2, 2000, totaled $805,275, $1,146,286 and $1,035,160, respectively. As the Company winds up its operations, the Company intends to terminate the health care plan as soon
as practicable.





Qualified Retirement Plan





The Company has a qualified retirement plan whereby all employees meeting eligibility requirements based on number of hours worked and length of service may elect to make
tax-deferred contributions under Internal Revenue Code Section 401(k). The Companys contribution is determined at the discretion of the board of directors. There were no contributions made by the Company during the three years ended January
30, 2002. On April 3, 2002, the Company received a favorable determination letter from the Internal Revenue Service for the termination of the Plan.





Stock Purchase Plan





The Company has an employee stock
purchase plan that covers up to 300,000 shares of common stock whereby all employees meeting eligibility requirements based on number of hours worked and length of service may elect to make contributions which are used to purchase shares of the
Companys common stock. The purchase price for shares is 85% of the fair market value of common stock at the end of the purchasing cycle. No shares were purchased by employees under this plan during the three years ended January 30, 2002. As
the Company winds up its operations, the Company intends to terminate the employee stock purchase plan as soon as practicable.




F-20




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE LINCOME TAXES





The income tax benefit for the year ended February 2, 2000 of $740,000 arose due to the Company being able to recognize current tax benefits to the extent of current tax charges generated from the extraordinary gains.





The Companys temporary differences result in a net deferred income tax asset which is reduced to zero by a related
valuation allowance summarized as follows:





Estimated deferred income tax
effectJanuary 30, 2002


January 31, 2001Deferred income tax assetsNet operating loss carryforward

$
15,592,000


$
12,897,000Inventories


6,000



91,000Impairment losses


1,180,000



Charitable contributions carryforward


7,000



6,000Accrued liabilities not deductible until paid


68,000



302,000Other






7,000Gross deferred income tax assets


16,853,000



13,303,000Deferred income tax asset valuation allowance


(16,146,000
)


(12,482,000
)Net deferred income tax assets


707,000



821,000Deferred income tax liabilitiesProperty and equipment


(707,000
)


(821,000
)$



$






At January 30, 2002, the Company had net operating loss
carryforwards of approximately $40,500,000 available to reduce future taxable income, which expire as follows:





Fiscal Year

Net Operating
Loss2010

$
4,857,0002011


9,822,0002012


2,564,0002013


1,051,0002018


5,824,0002020


9,382,0002021


7,000,000$
40,500,000




F-21




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE LINCOME TAXESContinued





Reconciliations of statutory Federal tax rates to the effective tax rate for the years ended January 30, 2002, January 31, 2001 and February 2, 2000 are as follows:





January 30, 2002


January 31, 2001


February 2, 2000Income tax benefit at 34%

(34.0
)%

(34.0
)%

(34.0
)%State taxes, net of Federal income tax effect

(4.5
)

(4.5
)

(4.5
)Other







0.5Tax benefit of losses not recognized

38.5


38.5


Effective tax rate


%


%

(38.0
)%





NOTE MSUBSEQUENT EVENTS





On February 7, 2002, the Company completed the sale of one of its convenience stores to MKT 1 for an aggregate purchase price of $900,000 plus a short-term note for
$299,422 as payment for the stores inventory.





In addition, as of March 4, 2002, the Company closed down its
two remaining convenience stores, consistent with the Companys intention to wind up its operations, dissolve its net assets, and liquidate.




F-22




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





NOTES TO CONSOLIDATED FINANCIAL STATEMENTSContinued


January 30, 2002 and January 31, 2001





NOTE NQUARTERLY RESULTS OF OPERATIONS (UNAUDITED)





Quarter EndedMay 2, 2001


August 1, 2001


October 31, 2001


January 30, 2002(in thousands, except per share data)Sales

$
31,167


$
33,266


$
29,092


$
5,031Gross profit

$
9,513


$
9,850


$
7,724


$
1,521Earnings (loss) before extraordinary items

$
(844
)

$
(941
)

$
(7,559
)

$
157Extraordinary loss

$



$



$



$
(615
)Net loss

$
(844
)

$
(941
)

$
(7,559
)

$
(458
)Per share, basic and diluted:Net (loss) earnings before extraordinary items

$
(0.14
)

$
(0.15
)

$
(1.20
)

$
0.03Extraordinary loss

$



$



$



$
(0.10
)Net loss

$
(0.14
)

$
(0.15
)

$
(1.20
)

$
(0.07
)Quarter EndedMay 3, 2000


August 2, 2000


November 1, 2000


January 31, 2001(in thousands, except per share data)Sales

$
34,912


$
35,277


$
32,432


$
33,332Gross profit

$
9,980


$
10,032


$
9,012


$
8,964Earnings (loss) before extraordinary items

$
(873
)

$
(1,141
)

$
(1,416
)

$
(1,533
)Extraordinary loss

$
(288
)

$



$



$
Net loss

$
(1,161
)

$
(1,141
)

$
(1,416
)

$
(1,533
)Per share, basic and diluted:Net (loss) earnings before extraordinary items

$
(0.14
)

$
(0.18
)

$
(0.23
)

$
(0.25
)Extraordinary loss

$
(0.05
)

$



$



$
Net loss

$
(0.19
)

$
(0.18
)

$
(0.23
)

$
(0.25
)




F-23




---




HURRY, INC. AND SUBSIDIARIES


(formerly Harrys Farmers Market, Inc. and Subsidiaries)





SCHEDULE II


CONSOLIDATED SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS





For the year ended

Description

Balance at Beginning of Period

Additions

Deductions

Balance at End
of PeriodJanuary 30, 2002

Allowance for doubtful accounts receivable

$
19,155

$


$
19,155

$
Valuation allowanceDeferred tax asset

$
12,482,000

$
3,644,000

$


$
16,126,000January 31, 2001

Allowance for doubtful accounts receivable

$
19,155

$


$


$
19,155Valuation allowanceDeferred tax asset

$
10,731,000

$
1,751,000

$


$
12,482,000February 2, 2000

Allowance for doubtful accounts receivable

$
8,118

$
11,037

$


$
19,155Valuation allowanceDeferred tax asset

$
13,713,000

$


$
2,982,000

$
10,731,000




F-24