EXHIBIT 13


<TABLE>
<CAPTION>
                                     AMERICAN  CONSUMERS,  INC.

                                 FIVE-YEAR  SUMMARY  OF  OPERATIONS

                              (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
---------------------------------------------------------------------------------------------------

                                                           FISCAL YEAR ENDED
                                    ---------------------------------------------------------------
                                       JUNE 2       JUNE 3       MAY 28       MAY 29       MAY 31
                                        2007         2006         2005         2004         2003
                                     (52 Weeks)   (53 Weeks)   (52 Weeks)   (52 Weeks)   (52 Weeks)
                                    -----------  -----------  -----------  -----------  -----------
<S>                                 <C>          <C>          <C>          <C>          <C>
NET SALES                           $   33,783   $   33,280   $   32,101   $   30,011   $   29,625
                                    -----------  -----------  -----------  -----------  -----------

COST AND EXPENSES:
  Cost of goods sold                    25,766       25,234       24,431       22,819       22,524
  Operating, general and
    administrative expenses              8,001        8,262        8,031        7,473        7,098
  Interest expense                          61           60           59           45           56
  Other income, net                       (143)        (109)         (89)         (90)         (93)
                                    -----------  -----------  -----------  -----------  -----------

    Total                               33,685       33,447       32,432       30,247       29,585
                                    -----------  -----------  -----------  -----------  -----------

Income (loss) before income taxes           98         (167)        (331)        (236)          40
                                    -----------  -----------  -----------  -----------  -----------

INCOME TAXES:
  Federal                                    -            -            -            -            -
  State                                      -            -            -            -            -
                                    -----------  -----------  -----------  -----------  -----------

    Total                                    -            -            -            -            -
                                    -----------  -----------  -----------  -----------  -----------

NET INCOME (LOSS)                   $       98   $     (167)  $     (331)  $     (236)  $       40
                                    ===========  ===========  ===========  ===========  ===========

PER SHARE AMOUNTS:
  Net income (loss)                 $      .12   $     (.21)  $     (.41)  $     (.29)  $      .05
                                    ===========  ===========  ===========  ===========  ===========

  Cash dividends                    $        -   $        -   $        -   $        -   $        -
                                    ===========  ===========  ===========  ===========  ===========

WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                    791          800          807          814          818
                                    ===========  ===========  ===========  ===========  ===========

TOTAL ASSETS                        $    3,724   $    3,512   $    3,607   $    4,090   $    4,046
                                    ===========  ===========  ===========  ===========  ===========

LONG-TERM DEBT                      $      212   $      223   $      426   $      662   $      514
                                    ===========  ===========  ===========  ===========  ===========
</TABLE>

--------------------------------------------------------------------------------
Please refer to "Management's Discussion and Analysis of Financial Condition and
Results  of  Operations"  herein for a discussion of (i) the timing of new store
openings  and  other  factors  which  affect  the  comparability  of the summary
information presented above for each of the Company's past five fiscal years and
(ii)  material  uncertainties  which could cause the data set forth above to not
necessarily be indicative of the Company's future financial condition or results
of  operations.


                                      - 3 -
<PAGE>
               MARKET, DIVIDEND AND STOCK PERFORMANCE INFORMATION


     The  Company's  common  stock  is quoted on the Pink Sheets, and electronic
quotation  service  for  securities  traded  over-the-counter.  The  approximate
number of record holders of the Company's common stock at June 2, 2007, was 782.
The following table gives the range of high and low bid quotations and dividends
for  each  quarterly  period  for  the  two  most  recent  fiscal  years.

<TABLE>
<CAPTION>
                      Bid Prices         Asked Prices     Dividends
-------------------------------------------------------------------
                    High      Low       High      Low     Per Share
                  --------  --------  --------  --------  ---------
<S>               <C>       <C>       <C>       <C>       <C>
2007
-------------------------------------------------------------------
  First Quarter   $   1.26  $   1.26  $   3.00  $   2.25    None
-------------------------------------------------------------------
  Second Quarter  $   1.35  $   1.26  $   2.25  $   2.25    None
-------------------------------------------------------------------
  Third Quarter   $   1.60  $   1.12  $   2.75  $   2.00    None
-------------------------------------------------------------------
  Fourth Quarter  $   1.75  $   1.12  $   2.00  $   1.70    None
-------------------------------------------------------------------

2006
-------------------------------------------------------------------
  First Quarter   $   1.20  $   1.01  $   3.00  $   3.00    None
-------------------------------------------------------------------
  Second Quarter  $   1.20  $   1.20  $   3.00  $   3.00    None
-------------------------------------------------------------------
  Third Quarter   $   1.26  $   1.20  $   3.00  $   3.00    None
-------------------------------------------------------------------
  Fourth Quarter  $   1.26  $   1.26  $   3.00  $   3.00    None
-------------------------------------------------------------------
</TABLE>

     The  information  set  forth  in  the  above table is supplied through Pink
Sheets  LLC  where  available.

     There  is no established public trading market for the Company's stock, and
the  information  set  forth  above  is  based  on  a  small  number of isolated
quotations  and  reflects inter-dealer prices, without retail mark-up, mark-down
or  commission  and  may  not  necessarily  represent  actual  trades.  The
market-makers  as  of  June  2,  2007,  are:

     Carr Securities Corporation        (516) 944-8300

     David A. Noyes & Co.               (312) 606-4694

     Domestic Securities, Inc.          (732) 661-0300

     Hill Thompson Magid & Co.          (800) 631-3083

     Hudson Securities, Inc.            (201) 216-9100

     Knight Equity Markets, LP          (212) 336-8790

     Monroe Securities, Inc.            (800) 766-5560

     The Vertical Group, Inc.           (212) 918-1202

     UBS Securities, LLC                (203) 719-8710


                                      - 4 -
<PAGE>
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                  RESULTS OF OPERATIONS
                                  ---------------------

                                                            FISCAL YEAR ENDED
                                                 ----------------------------------------
                                                    June 2,       June 3,       May 28,
                                                     2007          2006          2005
                                                 ------------  ------------  ------------
<S>                                              <C>           <C>           <C>
Sales                                            $33,783,052   $33,279,928   $32,101,191
% Sales Increase                                        1.51%         3.67%         6.96%
Gross Margin %                                         23.73%        24.18%        23.89%
Operating, General and Administrative Expense:
  Amount                                         $ 8,001,304   $ 8,262,133   $ 8,031,341
  % of Sales                                           23.68%        24.83%        25.02%
Net Income (Loss)                                $    97,502   $  (167,379)  $  (331,360)
</TABLE>

Overview:
--------

American  Consumers,  Inc.  (the  "Company"),  operates  eight  (8) self-service
supermarkets  within  a  compact  geographical  area  that  comprises  Northwest
Georgia,  Northeast  Alabama,  and Southeast Tennessee.  All of our supermarkets
are  operated  under the name "Shop-Rite," and are engaged in the retail sale of
groceries  including  meats, fresh produce, dairy products, frozen foods, bakery
products,  tobacco  products,  and  miscellaneous  other  non-food  items.

The  Company completed the year with net income of $97,502 after struggling with
operating losses for the last three years.  Sales for the current year increased
1.51%  over  fiscal  2006.  The  sales  increase  for  the  current  year  was
significantly  less than that experienced during the prior two fiscal years, due
in  part  to  pricing adjustments implemented during the year to recover certain
prior  increases  in  our  wholesale  costs as well as to the absence of the new
store  openings  and certain major sales promotions which significantly impacted
the  increases  reported  for the prior two years.  Still, we were pleased to be
able  to  grow  the  Company's  sales for an eighth consecutive year despite the
continuous  challenges posed by the competition that we face from larger grocery
retailers  operating  in the markets served by our stores.  Management's ongoing
efforts  to control the Company's operating, general and administrative expenses
helped  us  translate the increased sales into the Company's first net profit in
four years, despite a slight reduction in our gross margin, as compared to a net
loss of $167,379 for the fifty-three (53) week year ended June 3, 2006 and a net
loss  of  $331,360  for  the fifty-two (52) week fiscal year ended May 28, 2005.

The Company's 23.73% gross margin for fiscal 2007 represents a decrease of 0.45%
from  fiscal  2006  and  a  decrease  of 0.16% as compared to fiscal 2005.  This
reduction  reflects  the  impact  of  our  introduction  of certain lower-priced
generic merchandise this year, as well as certain targeted merchandise sales and
other  weekly  advertised specials run to stimulate sales, coupled with the fact
that  competition prevented us from succeeding until the third quarter of fiscal
2007  in adjusting our retail prices to recover increases in our wholesale costs
for certain items (principally certain private label merchandise) which occurred
earlier  in  the  year.

The  gross  margin  for  fiscal 2006 of 24.18% was an important component in the
reduction  of  the  Company's  net  loss  to $167,379 from the $331,360 net loss
experienced  in  fiscal  2005.  The gross margin improved because, whereas gross
margin was negatively impacted during the second half of fiscal 2005 by the fact
that  our  primary  inventory  supplier  increased  its  wholesale  markup  from


                                      - 6 -
<PAGE>
3.0%  to  3.5%  during  the  third  quarter  and  competition  prevented us from
immediately  passing  the  increase  through  to  the  retail  level, management
succeeded  during  fiscal  2006  in strategically adjusting the Company's retail
pricing  mix  to  recapture  the remainder of this increase. Similarly, while we
were  not able to immediately adjust our prices to recover a fuel surcharge that
the  supplier  implemented  during  the  second  quarter of fiscal 2006, ongoing
adjustments  to  our  pricing  mix  also  offset  this increase in our wholesale
inventory costs by fiscal year end. Unfortunately, increases in several items of
operating,  general  and  administrative  expenses,  including  a  significant
non-recurring  theft  loss experienced during the fourth quarter of fiscal 2006,
more  than  offset  the improved gross margin, resulting in the net loss for the
year.  The  gross  margin  reduction  that occurred in the second half of fiscal
2005,  coupled  with  significant  increases  in  operating,  general  and
administrative  expenses for the year, were the principal drivers of the $95,310
increase  in  net  loss  for  fiscal  2005  versus  2004.

Management  actively  monitors  both  the  gross margin and the company's retail
pricing  structure  in  an  attempt to maximize profitability.  Management began
working  on the Company's gross margin during the quarter ended August 31, 2002,
at which time the gross margin stood at 22.79% for the fiscal year ended June 1,
2002.  While  occasional  improvements  in gross profit have been seen in recent
periods, such as the increase we achieved during fiscal 2006, it is difficult to
maintain  a  trend  of  consistent  improvement  in  the  gross  margin  due  to
competitive  conditions  which often delay the Company's ability to pass through
price  increases  experienced  at  the  wholesale  level.  Accordingly,  while
management  attempts  to  offset  increases  in  its cost, such as our principal
supplier's  pricing increases discussed above, further improvements in the gross
margin  may  not  be  achievable  at this time, and further deterioration in the
Company's  gross  margin  is  possible.  Management  believes  that  competitive
pressures  on the Company, which have led to the losses experienced in three out
of  the  last four fiscal years, will continue to increase over time as a result
of the increased presence of larger competitors operating in the Company's trade
area.  These  competitors  have  greater  financial  resources than those of the
Company,  and may be able to obtain preferential treatment from suppliers in the
form of advertising allowances, lower prices and other concessions not available
to  the  Company.  These  factors  allow our competitors to engage in aggressive
pricing  and promotional activities that the Company cannot match, putting us at
a  competitive  disadvantage.

Our  gross  margins  may  not  be  directly  comparable  to  those of our larger
competitors,  since  some  of  those  companies  may  include the costs of their
internal  distribution networks in cost of goods sold - thus impacting the gross
margin  -  while  others  reflect  such  costs  elsewhere (such as in operating,
general  and  administrative expenses).  Unlike many of the larger grocery store
chains with which we compete, the Company does not have an internal distribution
network.  Inventory  is  delivered directly to our individual store locations by
our wholesale supplier, which recovers its distribution costs through the markup
that  it  charges  to  the  Company.  Accordingly,  our  cost  of  goods sold as
reflected  in the Company's financial statements is comprised principally of our
direct  wholesale  cost for the acquisition of such inventory, net of applicable
rebates  and  allowances  as  discussed  under  "Inventories"  in  Note 1 of the
accompanying  financial  statements.

Management  has  been  working  to  reduce operating, general and administrative
expenses,  both in absolute terms and as a percentage of the Company's sales. We
achieved a measure of success on both of these fronts in fiscal 2007 as compared
to  the  prior  two  fiscal  years,  although  the two primary components of the
$260,829  reduction  in  these  expenses  for fiscal 2007 may not be expected to
recur  in  future  periods.  Relative  to  sales,  operating,  general  and
administrative


                                      - 7 -
<PAGE>
expenses  decreased  from  25.02%  of sales in fiscal 2005 to 24.18% of sales in
fiscal  2006  (despite  increasing  in absolute terms by $230,792 over the prior
year) and to 23.68% of sales in fiscal 2007. The two principal components of the
2007  decrease, however, are the absence of the $98,750 charge for a loss due to
employee theft that impacted the fourth quarter of fiscal 2006 and a decrease of
$126,091  in  depreciation  expense  for fiscal 2007 versus 2006. The 2006 theft
loss  was  an  unusual item and, given the age and fully depreciated status of a
significant  portion  of  our  physical  equipment,  management  expects  annual
depreciation  charges  to  return  to more historically consistent levels as the
Company  moves  through  anticipated  replacement  cycles  for this equipment in
future periods. Accordingly, we expect future periods to continue to reflect the
overall  increase  in  these expenses that has occurred with the addition of the
Company's  seventh  and  eighth  grocery stores since April 28, 2001, as well as
with  ongoing  increases  in service charges related to our support for customer
debit  and credit card transactions and check cashing activities undertaken as a
means  of  maintaining sales. Management continues to monitor these expenses and
continues  to evaluate the performance of each of our grocery store locations to
determine  their  long-term  value to the Company. A more detailed discussion of
these expenses and related changes for the periods presented is set forth below.

Interest expense has remained essentially flat over the last three fiscal years.
The $602 increase in interest expense for fiscal 2007 compared to the prior year
reflects the effects of a slight increase in our total indebtedness ($86,442 for
the  year)  coupled with a slight increase in the weighted average interest rate
applicable  to  our  debt (from 7.37% to 8.22%) due to somewhat less significant
increases  in the prime rate than those which occurred last year.  During fiscal
2006,  interest  expense  increased by only $393 over fiscal 2005, in spite of a
$203,627  reduction in our long-term debt, as the effects of this reduction were
offset  by a $93,012 increase in our short-term working capital financing and by
an  increase  in  the  weighted average interest rate on our debt (from 6.11% to
7.37%)  due  to  increases  in  the  prime  rate  during the year.  These slight
increases  in interest expense have been more than offset, however, by increases
in  interest  income of $4,990 for fiscal 2007 versus 2006 and $6,845 for fiscal
2006  versus  2005.  This differential reflects favorable repricings of our bank
certificate of deposit which occurred during each of these years, as a result of
an  environment  of  generally rising interest rates on bank deposits during the
periods  presented.

Sales:
-----

Sales for the 52-week fiscal year ended June 2, 2007 increased by 1.51% over the
previous  53-week  fiscal  year. While this increase was significantly less than
that  experienced  during the prior two fiscal years, adjusting to eliminate the
effects of the extra week of operations during fiscal 2006 would have yielded an
annual  sales  increase  of  3.46%  for  fiscal  2007.  Factors which management
believes  contributed to the overall sales increase for fiscal 2007 included our
introduction  of  certain lower-priced generic merchandise this year, as well as
certain  targeted  merchandise sales and other weekly advertised specials run to
stimulate sales, coupled with the closing of a competitor located between two of
our  stores  during  the  last  quarter  of  fiscal  2006.  We also believe that
prevailing  high  gasoline  prices  during  fiscal  2007  helped  boost sales in
general,  as  customers  chose  to  prepare  more  meals at home to reduce their
spending  at  restaurants  and  also  chose  to patronize grocery stores located
closer  to  their  homes.  During  fiscal  2007,  four  of  our  eight locations
experienced store sales increases (ranging from 2.79% to 6.13%), while the other
four  stores  experienced  decreases  ranging  from  0.95% to 4.71%. Besides the
additional  week  of  operations  that  was  included  in the prior fiscal year,
management  attributes the declines


                                      - 8 -
<PAGE>
experienced  at these locations to the impact of pricing adjustments implemented
during  the  year  to recover certain prior increases in our wholesale costs, as
well as to reductions in our overall level of promotional activity during fiscal
2007.  One  store  location  also  continues to be adversely impacted by ongoing
issues  related to the fact that another tenant moved out of the shopping center
where  it  is  located  during  fiscal 2006 and by generally unfavorable traffic
pattern  conditions  at  that  location.

Sales  for  the  fiscal  year  ended  June  3,  2006 increased by 3.67% over the
previous  year.  Approximately  55%  of  this sales increase was due to the fact
that  our  2006  fiscal year contained 53 weeks, while fiscal 2005 was a 52-week
year.  Besides  the extra week of operations, fiscal 2006 sales also were helped
by  a  successful  Super Bowl promotion and two significant snowfalls during the
third  quarter  (which  tend  to  generate short-term spikes in grocery sales as
customers  "stock  up" on staple items), and by the success of a major promotion
that we ran in celebration of the Company's 50th anniversary in May 2006.  Seven
of our eight locations experienced same-store sales increases (ranging from 1.0%
to  11.4%)  for  fiscal  2006  as compared to fiscal 2005.  Our remaining store,
which experienced a 2.3% sales decrease for fiscal 2006, was negatively impacted
by  the  fact  that  another tenant moved out of the shopping center where it is
located  during  the  year,  as well as by generally unfavorable traffic pattern
conditions at that location.  This store also was the location of the theft loss
that  was  detected  during  the  2006  year-end  audit.

Management  is  continually  working  to  increase  sales  through the Company's
advertising  programs, product selection and overall mix of retail prices.  This
effort  is  hindered,  however, by the effects of ongoing price competition from
larger  competitors  with  greater  financial  resources  than  the  Company.

The following table sets forth information for the last three fiscal years as to
the  amount  of  total  sales  contributed  by  each  class  of  products  which
contributed  a  significant percentage of the total retail sales and revenues of
the  Company  during  such  periods:

<TABLE>
<CAPTION>
                                  Fiscal 2007    Fiscal 2006    Fiscal 2005
     Product Class                 (52 Weeks)     (53 Weeks)     (52 Weeks)
     --------------------------  -------------  -------------  -------------
<S>                              <C>            <C>            <C>
     Grocery and Non-Food Items  $  21,627,218  $  21,183,034  $  20,526,293
     Meat and Deli                   9,419,858      9,533,808      9,230,478
     Produce                         2,735,976      2,563,086      2,344,420
</TABLE>

Gross  Margin:
-------------

As discussed above, the Company's 23.73% gross margin for fiscal 2007 represents
a  decrease  of  0.45%  from  fiscal 2006 and a decrease of 0.16% as compared to
fiscal 2005. This reduction reflects the fact that competition prevented us from
succeeding until the third quarter of fiscal 2007 in adjusting our retail prices
to  recover  increases  in  our  wholesale  costs for certain items (principally
certain private label merchandise) which occurred earlier in the year. The gross
margin  also  was  impacted  by  our  introduction  of  certain  lower-priced,
lower-margin  generic  merchandise  this  year,  as  well  as  certain  targeted
merchandise  sales  and other weekly advertised specials run to stimulate sales.


                                      - 9 -
<PAGE>
The  Company's  gross margin of 24.18% for the year ended June 3, 2006 increased
by  .29% over fiscal year 2005, reversing a 0.08% reduction in gross margin that
occurred  in  2005 and representing a temporary increase of 0.21% over the gross
margin  of  23.97% realized in fiscal years 2004 and 2003. Management attributes
this  improvement  in the gross margin to the Company's success in strategically
adjusting retail prices during fiscal 2006 to offset both our primary supplier's
increase  in  its  wholesale  markup from 3% to 3.5% during the third quarter of
fiscal  2005  and  a  fuel  surcharge  implemented by the supplier in during the
second  quarter  of  fiscal  2006.  While  we  always  attempt  to  sustain such
improvements  in the gross margin by adjusting our retail prices to recover cost
increases  as they occur, the gross margin reduction experienced for fiscal 2007
demonstrates  the extent to which competitive conditions often limit our ability
to  do  so.

Operating,  General  and  Administrative  Expenses:
--------------------------------------------------

The  Company's  ongoing  operating,  general  and  administrative  expenses  are
comprised  mainly  of  personnel salary and related payroll costs, utilities and
telephone  expenses, rent, insurance expense, advertising and promotion expense,
general  and  office  supplies  expense,  repairs  and maintenance, depreciation
expense,  bank  service  charges  and  credit  card  fees,  bad  checks expense,
professional  fees,  and other minor miscellaneous expenses.  In accordance with
EITF  02-16,  advertising  rebates  received  from  suppliers  are deducted from
advertising  expense  within  this  category.

The  following  table  details  the  changes  in  these components of operating,
general  and  administrative  expenses  for  fiscal  years  2007, 2006 and 2005:

<TABLE>
<CAPTION>
                                                        % of 2007                % of 2006                % of 2005
Expense Item                               2007 Amount    Total    2006 Amount     Total    2005 Amount     Total
-----------------------------------------  -----------  ---------  ------------  ---------  ------------  ---------
<S>                                        <C>          <C>        <C>           <C>        <C>           <C>
Payroll                                    $ 3,964,576       49.6  $  3,936,440       47.6  $  3,932,634       49.0
Utilities and telephone expense                729,462        9.1       718,550        8.7       653,600        8.1
Rent                                           643,711        8.1       628,765        7.6       621,808        7.7
Insurance                                      618,679        7.7       627,826        7.6       674,109        8.4
Advertising and promotion                      527,303        6.6       611,447        7.4       628,455        7.8
General and office supplies                    371,429        4.6       367,303        4.5       327,785        4.1
Repairs and maintenance                        360,472        4.5       359,460        4.4       349,754        4.4
Depreciation                                   153,159        1.9       279,250        3.4       303,820        3.8
Bank service charges and credit card fees      152,952        1.9       160,347        1.9       115,629        1.4
Bad checks                                     130,245        1.6       120,583        1.5        87,502        1.1
Professional fees                              115,411        1.5       118,195        1.4       108,553        1.4
Theft loss                                           -          -        98,750        1.2             -          -
All other misc.                                233,905        2.9       235,217        2.8       227,692        2.8
                                           -----------  ---------  ------------  ---------  ------------  ---------
TOTAL                                      $ 8,001,304      100.0  $  8,262,133      100.0  $  8,031,341      100.0
                                           ===========  =========  ============  =========  ============  =========
</TABLE>


                                      - 10 -
<PAGE>
Overall,  operating,  general  and administrative expenses decreased by $260,829
(or  3.16%)  in  fiscal  2007  as  compared  to  2006. Approximately 38% of this
decrease is attributable to the absence in fiscal 2007 of the $98,750 charge for
a  loss  due  to employee theft that impacted the fourth quarter of fiscal 2006.
Another  48%  of  the  decrease is due to the $126,091 reduction in depreciation
expense  for  fiscal  2007  versus 2006. As noted above, in light of the age and
fully  depreciated  status  of  a significant portion of our physical equipment,
annual  depreciation  charges  may  be  expected  to return to more historically
consistent  levels  as  the Company moves through anticipated replacement cycles
for  this equipment in future periods. The other major reduction contributing to
the  net  decrease  in operating, general and administrative expenses for fiscal
2007  was  a  $84,144 reduction in advertising and promotion expense, reflecting
the  fact  that  certain  major promotions run by the Company during fiscal 2006
were  not  repeated  in  2007.

These  reductions  were  partially offset by less significant increases in other
categories  such  as  payroll  ($28,136  - largely due to an increase in bonuses
awarded  due  to  the  net  profit  achieved  by  the  Company for fiscal 2007),
utilities  and  telephone  expense  ($10,912  -  largely due to increased energy
costs),  rent ($14,946 - due to the renewal during fiscal 2007 of a lease at one
store location at a higher base rent as well as to higher percentage rents based
on the sales increases noted above) and general and office supplies ($4,126).  A
$9,662  increase  in  bad checks expense for fiscal 2007 was more than offset by
the  $23,592 increase in check cashing fees reflected below.  Further, while bad
checks  expense increased overall by comparison to fiscal 2006, we made progress
during  the  year  in  reversing what had been a trend (discussed in more detail
below)  of  significant,  ongoing  increases in both bad checks expense and bank
service  charges  and  credit  card fees.  The dollar amount of bad checks being
written  off  decreased  for  each  of  the  first three quarters of fiscal 2007
(declining  to  $20,103  for the third quarter as compared to $35,428 during the
second  quarter  and  $43,873  for  the  first quarter), although $30,841 in bad
checks expense booked in the fourth quarter of the year disrupted this favorable
trend.  The  decreases  during  the  first three quarters, as well as the $7,395
reduction  in  bank  service  charges  and  credit  card fees for fiscal 2007 as
compared  to  the  prior year, reflect improved supervision of the check cashing
process  by  individual  store managers as a result of efforts by the Company to
improve  training and employee education on this topic, as well as improved cash
management  practices  related  to  this  effort  and  to the change in our lead
banking  relationship  that  occurred  during  the  fourth  quarter.

Approximately  43%  of  the  increase  in  operating, general and administrative
expenses  that occurred in fiscal 2006 was attributable to a net loss of $98,750
recognized  as  the  result  of  an alleged employee theft of cash at one of our
grocery  stores  that  was  detected  during the year end audit of the Company's
financial  statements.  The  Company's  practice  of  cashing payroll checks for
customers  at  its grocery store locations contributed to the circumstances that
led  to  this  theft  loss, and also contributed to the $44,718 increase in bank
service  charges  and  credit  card  fees and the $33,081 increase in bad checks
expense that the Company experienced during fiscal 2006 as compared to the prior
year.  The  increase  in  bank service charges is also partially attributable to
increases  in  merchant  fees  paid  by  the  Company  in recent periods as more
customers  elect  to  pay  for  grocery  purchases  with debit and credit cards.
Management believes that the practice of cashing customers' checks, while posing
certain  risks  for  the  Company, is also vital to our competitive strategy for
maintaining  customer  traffic  and  growing  sales in the face of the increased
competition  from  larger  grocery  retailers that we have experienced in recent
years.  We  have  installed  a  check  verification  system to reduce bad checks
expense  and,  as  reflected above, we also have improved employee education and
training  on  this  topic  and  implemented  additional


                                     - 11 -
<PAGE>
measures  during  fiscal 2007 to improve our process for managing customer check
cashing  activities  and  reducing associated expenses while continuing to offer
this  service  to  our  customers.

Other  significant  increases  in  this  category  of  expenses  for fiscal 2006
included  an increase of $64,950 in utilities and telephone expense during 2006,
largely  due  to increasing energy costs which are beyond the Company's control,
an  increase of $39,518 in expenditures for supplies, primarily related to price
increases  experienced  during  the  year  for  many  of  the  routine  supplies
(particularly  certain  petroleum-based  packaging  materials)  purchased by the
Company,  and  an  increase  of $9,706 in repairs and maintenance related to the
overall  aging of the Company's equipment. These increases were partially offset
by decreases during fiscal 2006 of $46,283 in insurance expense (due mainly to a
decrease  of  approximately $40,000 in our worker's compensation premium for the
year), $17,008 in advertising and promotion expense (reflecting the fact that we
did  not  run  certain  programs that were primarily responsible for the $56,464
increase  in  fiscal  2005,  but  also  offset by increases in the cost of other
promotions)  and  $24,570 in depreciation (reflecting a significant reduction in
our purchases of new equipment during fiscal 2006, as well as the fact that some
of  our  older  equipment  is  now  fully  depreciated).

Looking  forward  to  fiscal 2008, management is concerned about the impact that
the  pending  increase  in  the Federal minimum wage will have on our ability to
control the payroll costs that amount to nearly half of the Company's operating,
general  and  administrative  expenses, as well as the possible impact of future
increases in energy costs.  Finally, while professional fees decreased by $2,784
(or  approximately  2.4%)  in  fiscal 2007 (due principally to discontinuing the
services of an outside security firm that was contracted for one location during
the prior year), these fees increased by $9,642 (or 8.9%) during fiscal 2006 and
by  $11,372  (or  11.7%)  during fiscal 2005 as compared to the respective prior
years,  largely due to increased regulatory costs related to compliance with the
Sarbanes-Oxley  Act  of  2002.  As  discussed  in  more  detail  under "Material
Commitments  and Contingencies" below, we expect to incur significant additional
fees  related  to the Company's initial compliance with Section 404 of this Act,
which  deals  with  management's  report  on the Company's internal control over
financial  reporting,  during  fiscal  2008.

Interest  and  Other  Income:
----------------------------

Other  income  (not  including  interest  income) increased from $97,845 for the
fiscal  year  ended  June  3, 2006 to $126,822 for the fiscal year ended June 2,
2007,  due  principally to an increase implemented during the second quarter (in
September  2006)  in the fees charged to cash checks without a grocery purchase.
This resulted in a $23,592 increase in check cashing fees for fiscal 2007 which,
as noted above, more than offset the increase of $9,662 in bad check expense for
the  year.  Returned  check  fees  collected  by  the  Company  also  increased
significantly  over  fiscal 2006, due to the enhanced employee education efforts
and  enforcement  of  Company  policies  discussed above.  The increase in other
income also was aided by an increase in fees received for handling money orders,
partially  offset  by a decrease in revenues related to Fed-Ex shipments, due to
corresponding  variations  in  the  level  of customer demand for these services
during  fiscal  2007.

The  $12,860 increase in other income (not including interest income) for fiscal
2006  versus  the  prior  year was due principally to volume-driven increases in
check  cashing  fees,  partially  offset  by  a  significant  reduction  in  the
collection  of  returned check fees (reflecting temporary inconsistencies in the
enforcement  of  Company  policy  in  this  area,  which  have  been  corrected


                                     - 12 -
<PAGE>
during  2007).  Most of the remaining increase was attributable to volume-driven
increases  in  funds  received  for handling money orders and revenue related to
Fed-Ex  shipments  for  fiscal  2006  as  compared  to  fiscal  2005.

The  components of other income for the fiscal years ended June 2, 2007, June 3,
2006  and  May  28,  2005  were  as  follows:

<TABLE>
<CAPTION>
     Description                                 2007 Amount   2006 Amount   2005 Amount
     -----------                                ------------  ------------  ------------
<S>                                             <C>           <C>           <C>
     Check cashing fees                         $     90,347  $     66,755  $     52,133
     Funds received for handling money orders         11,021         8,118         5,940
     Vendor's compensation from the States of
       Alabama and Georgia for collecting and
       remitting sales taxes on a timely basis        14,584        14,516        14,153
     Returned check fees                               4,188           570         6,003
     Revenue related to Fed-Ex shipments/other         6,682         7,886         6,756
                                                ------------  ------------  ------------
     TOTAL                                      $    126,822  $     97,845  $     84,985
                                                ============  ============  ============
</TABLE>

As noted above, interest income increased by $4,990 (to $15,868) for fiscal 2007
versus  2006  and by $6,845 (to $10,878) for fiscal 2006 versus 2005, reflecting
increases  in  prevailing  interest  rates  at  each  annual  re-pricing  of the
Company's  bank  certificate  of  deposit  during  these  periods.

Income  Taxes:
--------------

The  Company accounts for income taxes in accordance with the provisions of SFAS
No.  109,  "Accounting  for  Income  Taxes," which requires that deferred income
taxes  be  determined  based  on the estimated future tax effects of differences
between  the  financial  statement and tax basis of assets and liabilities given
the provisions of the enacted tax laws.  Valuation allowances are used to reduce
deferred  tax  assets  to  the  amount  considered  likely  to  be  realized.

No  amounts  have  been  provided for current and deferred federal and state tax
expense in the statements of income for any of the three fiscal years ended June
2, 2007, as a result of recurring net operating losses and the related valuation
of  the  Company's  net  deferred  tax  assets.

At  June  2,  2007, the Company has net operating loss carryforwards for federal
and  state  income  tax  purposes  of  approximately  $593,000  and  $701,000,
respectively.  The  Company  has  established  a  valuation  allowance,  which
effectively reduces the carrying value of its net deferred taxes to zero at June
2, 2007 and June 3, 2006.  Unless the Company realizes sufficient taxable income
in  future  periods to demonstrate that the likelihood of realization of the net
deferred  tax  assets  is  reasonably assured under the accounting guidelines of
SFAS  No. 109, this valuation allowance will be continued in future periods.  If
not  utilized,  the  carryforwards  will  expire  at various dates through 2025.

Inflation:
----------

The  Company continues to seek ways to cope with the threat of inflation. To the
extent  permitted  by  competition, increased costs of goods and services to the
Company  are  reflected  in  increased


                                     - 13 -
<PAGE>
selling prices for the Company's goods. As discussed above, however, competitive
conditions  often  delay our ability to pass through price increases experienced
at  the  wholesale  level. When the Company is forced to raise overall prices of
its  goods,  the  Company  attempts  to preserve its market share by competitive
pricing  strategies  that  emphasize  weekly-advertised  specials.


                               FINANCIAL CONDITION
                               -------------------

Liquidity  and  Capital  Resources:
-----------------------------------

Changes  in  the  Company's  liquidity  and capital resources during the periods
presented  resulted  primarily  from  the  following:

During  the  fiscal  year  ended June 2, 2007, the Company generated $203,854 in
cash  flow  from  operating  activities.  This  resulted  primarily from our net
income  of $97,502 for the year plus the impact of non-cash depreciation charges
in  the  amount  of  $153,159, partially offset by a net reduction of $47,281 in
other operating assets and liabilities.  The Company's cash and cash equivalents
increased  by  $247,818 while its certificate of deposit decreased by $2,612 for
fiscal  2007.

Effective  May  3,  2007,  we  entered  into a new $980,000 credit facility with
Gateway Bank & Trust, which replaced our former credit facilities with Northwest
Georgia  Bank.  Between May 3, 2007 and June 2, 2007, we drew $609,650 under our
new  $800,000  line of credit with Gateway Bank & Trust (including $500,000 used
to  pay  off  our  former  line  at  Northwest Georgia Bank), resulting in a net
increase  in borrowings under our line of credit of $109,650 for fiscal 2007 and
leaving  $190,350  available  for  additional  borrowings  under the new line at
fiscal  year  end.  The  new line of credit has a term of 12 months, pursuant to
which  the  Company  is  required  to make monthly interest only payments on the
outstanding  balance  and to repay outstanding principal and accrued interest by
May  2,  2008,  with interest at an annual rate equal to the Wall Street Journal
prime  rate  (subject  to a minimum annual interest rate of 6.0%).  The new line
contains  a  borrowing  base  provision  which  limits  the  maximum outstanding
indebtedness  to forty percent (40%) of the value of the Company's inventory, as
measured on a quarterly basis.  The new credit facility also includes a 60-month
term  loan  in  the amount of $180,000, with interest at an annual rate equal to
the  Wall Street Journal prime rate (8.25% as of the execution date), subject to
a minimum annual interest rate of 6.0%.  The proceeds of the term loan were used
to  retire  the  remaining  $134,789 balance on an existing term note payable to
Northwest  Georgia Bank incurred in December 2003 to finance the addition of the
Company's  eighth  grocery  store,  with  the  remaining $45,211 utilized to pay
closing  costs  and  for working capital.  We also incurred additional long-term
debt  in  the  amount  of  $17,426  during  fiscal  2007  ($15,614  of which was
outstanding  at  fiscal  year  end)  in  connection  with the purchase of a used
vehicle.

In  addition  to  funding  our  ordinary working capital requirements, the funds
resulting  from  the  activities  described  above  were  utilized to reduce the
Company's  long-term  debt  by  a  net  amount  of approximately $10,367 and its
borrowings  from  affiliated parties by a net amount of $12,841 during the year,
to  redeem  $11,039  in  common  stock,  and  to  fund purchases of property and
equipment  of  $34,151.  These  purchases of property and equipment included the
replacement  of one vehicle financed in the amount of $17,426 as well as $16,725
to  replace  a  front door, a dumpster, a security camera system, an ice machine
and  a produce scale as well as adding shelving


                                     - 14 -
<PAGE>
at  some  locations.  Please  refer  to "Material Commitments and Contingencies"
below  for  a  discussion of anticipated capital spending during fiscal 2008 and
beyond.

During  the  fiscal  year  ended June 3, 2006, the Company generated $275,309 in
cash  flow  from  operating  activities,  increased  its draws under its line of
credit  with its lead bank by $100,000 and incurred additional long-term debt in
the  amount  of  $22,212  in  connection with the purchase of a new vehicle. The
Company's  cash and cash equivalents increased by $35,895 and its certificate of
deposit  increased  by  $11,925  for  fiscal  2006.  In  addition to funding our
ordinary  working  capital requirements, these funds were utilized to reduce the
Company's  long-term  debt  by  a  net  amount of approximately $203,627 and its
borrowing from affiliated parties by $6,988 during the year, to redeem $7,082 in
common stock, and to fund purchases of property and equipment of $115,880. These
purchases  of  property  and  equipment included the replacement of two vehicles
financed  through  payment  of $17,678 in cash and manufacturer financing in the
amount  of  $22,212 on one of the vehicles, plus the trade-in value received for
the  two  older  vehicles  replaced,  as  well  as  $68,680  to  replace certain
refrigeration  equipment  at  one store and some smaller equipment purchases and
miscellaneous  shelving  upgrades  and  leasehold  improvements.

The  ratio  of current assets to current liabilities was 1.75 to 1 at the end of
the  latest  fiscal  year,  June 2, 2007 compared to 1.66 to 1 at the end of the
fiscal year ended June 3, 2006 and 1.74 to 1 at the end of the fiscal year ended
May 28, 2005.  Cash, cash equivalents and the certificate of deposit constituted
26.31% of the total current assets at June 2, 2007 as compared to 21.17% at June
3,  2006  and  20.13%  at May 28, 2005.  As previously reported, the Company has
increased  its  reliance  on  bank  financing  and  working  capital  management
(principally  inventory  reductions),  and  limitations  on  additional  capital
spending  to  maintain  adequate liquidity to fund operations in connection with
the  operating  losses  experienced  in  recent  years.  The  foregoing  ratios,
however,  reflect  the  fact  that our liquidity situation has improved over the
past  two years as a result of the $163,981 reduction in the net loss for fiscal
2006  as  compared  to fiscal 2005 and the income of $97,502 reported for fiscal
2007,  coupled  with  a  net reduction of approximately $14,000 in the Company's
monthly  debt service requirements through the retirement of long term debt over
the  past  three  fiscal  years.  As  employment  and  inventory costs increase,
management  will  attempt  to  compensate  for the increases through operational
efficiencies (including both efficient working capital management and seeking to
reduce other expenses where possible), and through seeking to continue favorable
arrangements  with  creditors.

Historically,  we  have  financed  our  working capital requirements principally
through  cash  flow from operations.  Short-term borrowings to finance inventory
purchases  are  provided  by the Company's $800,000 line of credit from its bank
and  through borrowings from related parties, as discussed below.  The bank line
of  credit  is  secured  by our certificate of deposit, as well as by a security
interest  in  substantially  all of our accounts receivable, inventory, machines
and  equipment,  furniture and fixtures and by personal guarantees of Michael A.
Richardson  and Paul R. Cook, the Company's President and CEO and Executive Vice
President  and  CFO,  respectively.  While  we  believe  that these sources will
continue  to  provide us with adequate liquidity to supply the Company's working
capital  needs, if we experience future operating losses at levels which are not
substantially  offset  by depreciation and other non-cash charges, our operating
cash  flows  could be adversely affected.  If this happens, we could be required
to  seek  additional financing through bank loans, or other sources, in order to
meet  our  working  capital  needs.  If we were required to seek such additional
financing  and  were  not  able  to  obtain  it,  or  were  unable  to  do so on
commercially  reasonable  terms,  we  could  be required to reduce the Company's
current  level  of operations in


                                     - 15 -
<PAGE>
order  to  lower  our  working  capital requirements to a level that our present
financing  arrangements  would  support.

Short-term  borrowings  as of the end of the past two fiscal years are presented
below:

<TABLE>
<CAPTION>
                                         June 2,        June 3,
                                          2007           2006
                                        --------       --------
<S>                                     <C>            <C>
     Michael and Diana Richardson       $ 12,832       $ 11,840
     Matthew Richardson                    1,458         15,291
     Line of Credit                      609,650        500,000
                                        --------       --------
     Total                              $623,940       $527,131
                                        ========       ========
</TABLE>

During  fiscal 2007, we reduced the Company's borrowings from related parties by
a  net  amount  of  $12,841  (reflecting  payments  of  $14,000 net of $1,159 in
additional  interest  accrued).  The  largest  principal balances outstanding on
such  notes  at  any time during the Company's fiscal year 2007 were $12,831 and
$15,291,  respectively.  As  discussed  in  more  detail  above,  we  increased
borrowings  on  our  primary  line  of credit by a net amount of $109,650 during
fiscal  2007  in  connection  with  the  refinancing  of the line of credit with
Gateway  Bank  & Trust during the fourth quarter.  We paid a total of $41,555 in
interest  on the Company's outstanding borrowings under its bank lines of credit
during  fiscal  2007.

The  Company's  line  of  credit with Gateway Bank & Trust bears interest at the
prime  rate  as  published  in The Wall Street Journal, subject to a 6.0% floor.
                               -----------------------
Notes  to  Michael and Diana Richardson and to Matthew Richardson are unsecured,
payable  on  demand  and  bear  interest  at .25% below the base rate charged by
Gateway  Bank  & Trust on the line of credit.  Michael Richardson is Chairman of
the  Board  and  Chief Executive Officer of the Company. Diana Richardson is the
wife  of  Michael  Richardson,  and  Matthew  Richardson  is  their  son.


Long-Term  Debt:
----------------

At  June  2,  2007, long-term debt consisted of a note payable to Gateway Bank &
Trust  of  $180,000  used  to  pay-off  Northwest  Georgia  Bank on a note which
financed,  in December 2003, the addition of the Company's eighth grocery store.
In  addition,  two  vehicle notes were financed with an aggregate balance due at
June  2,  2007  of  $32,250.

The  components  of  the  Company's  long term debt as of the end of each of the
fiscal years ended June 2, 2007 and June 3, 2006 are set forth in detail in Note
3  to  the  accompanying  financial  statements.

The  following  is  a  schedule  by  years  of  the  amount of maturities of all
long-term  debt  subsequent  to  June  2,  2007:

<TABLE>
<CAPTION>
                    Year            Amount
                    ----            -------
<S>                                 <C>
                    2008            $40,206
                    2009             47,659
                    2010             40,427
                    2011             41,938
                    2012             42,020
</TABLE>


                                     - 16 -
<PAGE>
Material  Commitments  and  Contingencies
-----------------------------------------

We  presently  estimate  that  capital expenditures for required replacements of
equipment  in  the  ordinary  course during fiscal 2008 will be $50,000 or less,
which  we  expect  to  fund  from  operating  cash flows.  Additionally, we have
already  acquired  two vehicles in the first two months of fiscal 2008 at a cost
of  $35,435.  If  it  becomes  necessary  to  replace  the Company's maintenance
vehicle  in fiscal 2008, the estimated cost of replacement will be approximately
$35,000.  The  two  vehicles  already  purchased are being financed through bank
loans.  Future  vehicle  replacements,  to  the extent not paid for in cash, are
expected  to be funded through either bank or manufacturing financing, whichever
option  will  provide  the Company with the most favorable terms.  Additionally,
management is currently obtaining cost estimates for the remodeling of one store
which  may be undertaken in mid to late fiscal 2008, but such estimates have not
yet  been  received.  Finally, while management is attempting to postpone future
upgrades  of  our  existing  cash  register and scanning equipment beyond fiscal
2008,  pending changes that will add an additional digit to the bar codes on the
inventory that we carry and requirements by the credit card industry will likely
require  such  upgrades  within  the  next year or within five fiscal years and,
additionally, some of this equipment is subject to being replaced due to lack of
availability  of  parts  and  wear.  We cannot reliably estimate the cost of any
such  upgrades  at the present time, but we will attempt to manage the number of
units purchased and the timing of such purchases in a manner which both contains
the Company's overall costs and allows us to finance these purchases on the most
favorable  terms  that  we  are  able  to  obtain.

The  Company  has adopted a 401(k) plan that is administered by Capital Bank and
Trust  Company.  Participation  in  the  plan  is  available  to  all  full-time
employees.  The  Company's  annual  contributions to the plan are discretionary.
The  Company's contribution to the plan was $7,500 in each of fiscal years 2007,
2006  and  2005.

The  Sarbanes-Oxley Act of 2002 included provisions addressing audits, financial
reporting  and  disclosure,  conflicts  of  interest and corporate governance at
public  companies.  As  discussed  above,  the  Company  already  has  incurred
increased  professional  fees during fiscal years 2005, 2006 and 2007 related to
compliance  with  these provisions.  Additionally, Section 404 of this Act deals
with  management's  report  on  internal control over financial reporting and an
annual  attestation  report on the effectiveness of such internal control by the
Company's independent accountants, and will require much in the way of resources
to  plan,  implement and document internal controls.  Some of the resources will
be in the form of management effort devoted to complying with the new rules, but
we  also  expect  in incur significant costs in the form of increased accounting
and  consulting  fees.

On  December  15,  2006,  the SEC issued an additional (and likely final) formal
extension of the Section 404 compliance dates for non-accelerated filers such as
the  Company.  Pursuant  to  this  action,  the  Company now will be required to
phase-in compliance with Section 404 as follows: we will have to begin providing
an  annual  report  by  management  assessing  the effectiveness of our internal
control  over financial reporting with our annual report for fiscal 2008, and we
will  have  to  begin  including an annual attestation report by our independent
auditors  addressing the effectiveness of such internal controls with our annual
report  for  fiscal 2009. On June 20, 2007, the SEC issued additional regulatory
releases  containing  interpretive  guidance  intended  to  assist management in
conducting  a top-down, risk-based evaluation of internal control over financial
reporting, coupled with additional rule revisions and changes to the definitions
of  a  "significant


                                     - 17 -
<PAGE>
deficiency"  and  "material  weakness"  in  internal  control  over  financial
reporting,  intended  to  ease  the burden of Section 404 compliance for smaller
public  companies.  On  July  25, 2007, the SEC issued its final approval of the
adoption  by  the  Public  Company  Accounting  Oversight Board (PCAOB) of a new
Auditing  Standard No. 5 to supersede its former Auditing Standard No. 2 (AS No.
2)  in  prescribing  the  standards  which  will  govern  the  auditors'  annual
attestation  reports  on  internal control over financial reporting, designed to
focus  the  auditors'  attention  on  those  areas that pose the highest risk of
material  misstatement  to  the  financial  statements  as  opposed to requiring
multiple  procedures  unnecessary to an effective audit of internal control (for
which  AS  No. 2 had been widely criticized), again with the objective of easing
the  compliance  burden  for  smaller  companies.

While  these measures may ultimately reduce the Company's Section 404 compliance
costs  below  what  they otherwise would have been, we are not presently able to
estimate  the  full  extent of these costs.  Further, our external auditors have
brought  to our attention a need to adopt increased security measures related to
our  financial accounting systems, increase the segregation of duties related to
certain of our accounting and financial reporting processes and improve our cash
controls  and  cash management procedures.  During the course of our testing and
preparations  for  compliance  with  Section  404,  we  may  identify additional
deficiencies.  Accordingly, we expect our efforts to remediate such deficiencies
in  time  to meet the deadlines imposed by the Sarbanes-Oxley Act for compliance
with  the  requirements  of  Section  404 to require a significant commitment of
management  resources  and to result in significant additional expenses over the
next  two  fiscal  years.

Critical  Accounting  Policies:
-------------------------------

Critical  accounting  policies  are  those policies that management believes are
important  to  the portrayal of the Company's financial condition and results of
operations  and  require  management's  most  difficult,  subjective  or complex
judgments,  often  as a result of the need to make estimates about the effect of
matters  that  are  inherently  uncertain.

Management  has determined valuation of its inventories as a critical accounting
policy.  Inventories  are  stated  at  the  lower  of  average  cost  or market.

Off-Balance  sheet  Arrangements:
---------------------------------

The  Company  has  no  significant  off-balance sheet arrangements as of June 2,
2007.

Related  Party  Transactions:
-----------------------------

Except  as  discussed  under  "Liquidity  and  Capital Resources" with regard to
short-term borrowings from related parties, there were no material related party
transactions  during  the  fiscal  year  ended  June  2,  2007.

Contractual  Obligations:
-------------------------

The following table represents the Company's outstanding contractual obligations
at  June  2,  2007  (in  thousands):


                                     - 18 -
<PAGE>
<TABLE>
<CAPTION>
                                              LESS THAN 1
CONTRACTUAL OBLIGATIONS               TOTAL       YEAR      1-3 YEARS   4-5 YEARS   AFTER 5 YEARS
-----------------------                -----------------------------------------------------------
<S>                                   <C>     <C>           <C>         <C>         <C>
Debt Obligations Excluding Interest   $  836  $        664  $       88  $       84  $            0
Operating Lease Obligations (1)        1,846           542         677         486             141
Other Obligations                          0             0           0           0               0
                                      ------  ------------  ----------  ----------  --------------
TOTAL CONTRACTUAL CASH OBLIGATIONS    $2,682  $      1,206  $      765  $      570  $          141
                                      ======  ============  ==========  ==========  ==============
</TABLE>

(1)  These obligations relate primarily to leases of the Company's various store
     locations.

Forward-Looking  Statements
---------------------------

Information  provided by the Company, including written and oral statements made
by  its representatives, may contain "forward looking information" as defined in
Section  21E of the Securities Exchange Act of 1934, as amended.  All statements
that  address  activities,  events  or  developments that the Company expects or
anticipates  will or may occur in the future, including such things as expansion
and  growth of the Company's business, the effects of future competition, future
capital  expenditures  and  the Company's business strategy, are forward-looking
statements.  In reviewing such information it should be kept in mind that actual
results  may  differ  materially  from  those  projected  or  suggested  in such
forward-looking  statements.  This  forward  looking  information  is  based  on
various  factors  and was derived utilizing numerous assumptions.  Many of these
factors  previously have been identified in filings or statements made on behalf
of the Company, including filings with the Securities and Exchange Commission on
Forms  10-Q, 10-K and 8-K.  Important assumptions and other important facts that
could  cause  results  to  differ  materially  from  those  set  forth  in  the
forward-looking  statements  include the following (in addition to those matters
discussed  in  the Risk Factors included in Part I, Item 1A of our Annual Report
on  Form  10-K  for the fiscal year ended June 2, 2007):  changes in the general
economy  or  in the economy of Company's primary markets, the effects of ongoing
price  competition  from  competitors  (some  of  which  have  greater financial
resources  than  those of the Company), changes in consumer spending, the nature
and  extent of continued consolidation in the grocery store industry, changes in
the  rate  of  inflation, changes in state or federal legislation or regulation,
adverse determinations with respect to any litigation or other claims, inability
to  develop  new stores or complete remodels as rapidly as planned, stability of
product  costs,  supply  or quality control problems with the Company's vendors,
and  other  issues and uncertainties detailed from time-to-time in the Company's
filings  with  the  Securities  and  Exchange  Commission.

QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK:
-----------------------------------------------------------------

The  Company  does  not  engage  in derivative transactions, nor does it hold or
issue  financial  instruments  for  trading  or other speculative purposes.  The
Company is exposed to market risk related to changes in interest rates primarily
as  a  result  of  its borrowing activities.  The effective interest rate on the
Company's  borrowings  under  its  Line  of  Credit  Agreements  and  under  its
outstanding notes varies with the prime rate.  The Company does not maintain any
interest  rate  hedging  arrangements.  Based  on  the  Company's  outstanding
indebtedness at June 2, 2007 a one percent (1.0%) increase in the prime interest
rate  would  increase interest expense applicable to our variable rate debt (and
reduce  our income) by approximately $8,000 annually.  Conversely, a one percent
(1.0%)  decrease  in  the  prime  interest  rate would decrease interest expense
applicable  to  our  variable  rate  debt  (and  increase  our  net  income)  by
approximately  $8,000  annually.


                                     - 19 -
<PAGE>
             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------




To the Board of Directors and Stockholders
American Consumers, Inc.
Fort Oglethorpe, Georgia

     We have audited the accompanying balance sheets of American Consumers, Inc.
as  of  June  2,  2007  and  June 3, 2006, and the related statements of income,
changes  in  stockholders' equity, and cash flows for each of the three years in
the  period  ended  June  2,  2007.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

     We  conducted  our  audits  in  accordance with the standards of the Public
Company  Accounting  Oversight  Board  (United States).  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.

     In  our opinion, the financial statements referred to above present fairly,
in  all material respects, the financial position of American Consumers, Inc. as
of June 2, 2007 and June 3, 2006, and the results of its operations and its cash
flows  for  each  of  the  three  years  in  the  period  ended June 2, 2007, in
conformity  with  U.S.  generally  accepted  accounting  principles.


/S/ HAZLETT, LEWIS & BIETER, PLLC
Chattanooga, Tennessee
July 19, 2007


                                     - 20 -
<PAGE>
<TABLE>
<CAPTION>
                            AMERICAN CONSUMERS, INC.

                              STATEMENTS OF INCOME

     For the Fiscal Years Ended June 2, 2007, June 3, 2006 and May 28, 2005

--------------------------------------------------------------------------------

                                            2007          2006          2005
                                         (52 Weeks)    (53 Weeks)    (52 Weeks)
                                        ------------  ------------  ------------
<S>                                     <C>           <C>           <C>
NET SALES                               $33,783,052   $33,279,928   $32,101,191

COST OF GOODS SOLD                       25,766,340    25,233,903    24,430,627
                                        ------------  ------------  ------------

  Gross profit                            8,016,712     8,046,025     7,670,564

OPERATING, GENERAL AND
  ADMINISTRATIVE EXPENSES                 8,001,304     8,262,133     8,031,341
                                        ------------  ------------  ------------

    Operating income (loss)                  15,408      (216,108)     (360,777)
                                        ------------  ------------  ------------

OTHER INCOME (EXPENSE)
  Interest income                            15,868        10,878         4,033
  Interest expense                          (60,596)      (59,994)      (59,601)
  Other income                              126,822        97,845        84,985
                                        ------------  ------------  ------------

                                             82,094        48,729        29,417
                                        ------------  ------------  ------------

    Income (loss) before income taxes        97,502      (167,379)     (331,360)

FEDERAL AND STATE INCOME
  TAXES                                           -             -             -
                                        ------------  ------------  ------------

NET INCOME (LOSS)                       $    97,502   $  (167,379)  $  (331,360)
                                        ============  ============  ============

INCOME (LOSS) PER SHARE                 $       .12   $      (.21)  $      (.41)
                                        ============  ============  ============

WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                     790,521       800,304       806,586
                                        ============  ============  ============
</TABLE>


The Notes to Financial Statements are an integral part of these statements.


                                     - 21 -
<PAGE>
<TABLE>
<CAPTION>
                               AMERICAN CONSUMERS, INC.

                                    BALANCE SHEETS

                            June 2, 2007 and June 3, 2006

------------------------------------------------------------------------------------

                                                              2007          2006
                                                          ------------  ------------
<S>                                                       <C>           <C>
       ASSETS

CURRENT ASSETS
  Cash and cash equivalents                               $   582,472   $   334,654
  Certificate of deposit                                      312,161       314,773
  Accounts receivable                                         233,057       170,316
  Inventories                                               2,118,189     2,124,431
  Prepaid expenses                                            154,213       123,545
                                                          ------------  ------------

      Total current assets                                  3,400,092     3,067,719
                                                          ------------  ------------


PROPERTY AND EQUIPMENT - at cost
  Leasehold improvements                                      300,800       295,057
  Furniture, fixtures and equipment                         3,298,923     3,300,542
                                                          ------------  ------------

                                                            3,599,723     3,595,599
  Less accumulated depreciation                            (3,275,328)   (3,151,622)
                                                          ------------  ------------

                                                              324,395       443,977
                                                          ------------  ------------

                                                          $ 3,724,487   $ 3,511,696
                                                          ============  ============
</TABLE>


The Notes to Financial Statements are an integral part of these statements.


                                     - 22 -
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------

                                                              2007        2006
                                                          ------------  ------------
<S>                                                       <C>           <C>
     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                        $    904,396  $    867,663
  Short-term borrowings                                        623,940       527,131
  Current maturities of long-term debt                          40,206        78,120
  Accrued sales tax                                            152,893       156,442
  Other                                                        224,683       217,981
                                                          ------------  ------------

      Total current liabilities                              1,946,118     1,847,337
                                                          ------------  ------------


LONG-TERM DEBT                                                 172,044       144,497
                                                          ------------  ------------


STOCKHOLDERS' EQUITY
  Nonvoting preferred stock - authorized 5,000,000
    shares of no par value; no shares issued                         -             -
  Nonvoting common stock - $.10 par value; authorized
    5,000,000 shares; no shares issued                               -             -
  Common stock - $.10 par value; authorized 5,000,000
    shares; shares issued of 785,866 in 2007 and 796,905
    in 2006                                                     78,587        79,691
  Additional paid-in capital                                   655,350       664,556
  Retained earnings                                            872,388       775,615
                                                          ------------  ------------

                                                             1,606,325     1,519,862
                                                          ------------  ------------

                                                          $  3,724,487  $  3,511,696
                                                          ============  ============
</TABLE>


                                     - 23 -
<PAGE>
<TABLE>
<CAPTION>
                               AMERICAN CONSUMERS, INC.

                    STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

        For the Fiscal Years Ended June 2, 2007, June 3, 2006 and May 28, 2005

------------------------------------------------------------------------------------------

                              Shares of              Additional
                                Common     Common     Paid-in      Retained
                                Stock      Stock      Capital      Earnings       Total
                              ----------  --------  ------------  -----------  -----------
<S>                           <C>         <C>       <C>           <C>          <C>
Balance, May 29, 2004           813,410   $81,341   $   678,320   $1,275,445   $2,035,106

  Net loss for year                   -         -             -     (331,360)    (331,360)

  Redemption of common stock     (9,423)     (942)       (7,858)        (623)      (9,423)
                              ----------  --------  ------------  -----------  -----------

Balance, May 28, 2005           803,987    80,399       670,462      943,462    1,694,323

  Net loss for year                   -         -             -     (167,379)    (167,379)

  Redemption of common stock     (7,082)     (708)       (5,906)        (468)      (7,082)
                              ----------  --------  ------------  -----------  -----------

Balance, June 3, 2006           796,905    79,691       664,556      775,615    1,519,862

  Net income for year                 -         -             -       97,502       97,502

  Redemption of common stock    (11,039)   (1,104)       (9,206)        (729)     (11,039)
                              ----------  --------  ------------  -----------  -----------

Balance, June 2, 2007           785,866   $78,587   $   655,350   $  872,388   $1,606,325
                              ==========  ========  ============  ===========  ===========
</TABLE>


The Notes to Financial Statements are an integral part of these statements.


                                     - 24 -
<PAGE>
<TABLE>
<CAPTION>
                                      AMERICAN  CONSUMERS,  INC.

                                     STATEMENTS  OF  CASH  FLOWS

                For the Fiscal Years Ended June 2, 2007, June 3, 2006 and May 28, 2005

-----------------------------------------------------------------------------------------------------

                                                                   2007         2006         2005
                                                                (52 Weeks)   (53 Weeks)   (52 Weeks)
                                                                -----------  -----------  -----------
<S>                                                             <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                             $   97,502   $ (167,379)  $ (331,360)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
      Depreciation and amortization                                153,159      279,250      303,820
      Loss on sale of property and equipment                           474        4,143          130
      Change in operating assets and liabilities:
        Accounts receivable                                        (62,741)     (57,618)      24,765
        Inventories                                                  6,242       82,658      156,884
        Prepaid expenses                                           (30,668)     (55,890)      (2,286)
        Accounts payable and accrued liabilities                    39,886      190,145       (1,193)
                                                                -----------  -----------  -----------

          Net cash provided by operating activities                203,854      275,309      150,760
                                                                -----------  -----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of certificate of deposit                              (312,161)    (314,773)    (302,848)
  Proceeds from maturity of certificate of deposit                 314,773      302,848      323,488
  Purchase of property and equipment                               (34,151)    (115,880)     (56,588)
  Proceeds from disposal of property and equipment                     100        6,088            -
                                                                -----------  -----------  -----------

          Net cash used in investing activities                    (31,439)    (121,717)     (35,948)
                                                                -----------  -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in short-term borrowings                             96,809       93,012       94,069
  Proceeds from long-term debt                                     195,613       22,212            -
  Principal payments on long-term debt                            (205,980)    (225,839)    (235,834)
  Redemption of common stock                                       (11,039)      (7,082)      (9,423)
                                                                -----------  -----------  -----------

          Net cash provided by (used in) financing activities       75,403     (117,697)    (151,188)
                                                                -----------  -----------  -----------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                             247,818       35,895      (36,376)

CASH AND CASH EQUIVALENTS, beginning of year                       334,654      298,759      335,135
                                                                -----------  -----------  -----------

CASH AND CASH EQUIVALENTS, end of year                          $  582,472   $  334,654   $  298,759
                                                                ===========  ===========  ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION
  Cash paid during the year for:
    Income taxes                                                $      750   $    4,810   $    6,354
    Interest                                                        63,952       59,463       53,037
                                                                ===========  ===========  ===========
</TABLE>


The Notes to Financial Statements are an integral part of these statements.


                                     - 25 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note  1.  Nature  of  Business and Summary of Significant Accounting Policies

          Nature  of  business:

          The  Company is engaged in a single line of business, the operation of
          a  chain  of retail grocery stores. The stores are located in Georgia,
          Tennessee,  and  Alabama  and  operate  under  the  name  of Shop-Rite
          Supermarket.

          Use  of  estimates:

          The  preparation  of financial statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions that affect certain reported amounts and disclosures.
          Accordingly,  actual  results  could  differ  from  those  estimates.

          Cash  and  cash  equivalents:

          For  purposes  of  reporting  cash  flows,  the  Company considers all
          highly-liquid  debt  instruments  with  an  original maturity of three
          months  or  less  to  be  cash  equivalents.

          Accounts  receivable:

          The  Company  extends  unsecured  credit  for 30-day terms to selected
          customers  in  the  ordinary  course  of  business,  but mitigates the
          associated  credit risk by carefully screening applicants and actively
          pursuing past due accounts. An allowance for doubtful accounts has not
          been  established since management is of the opinion that all accounts
          receivable  at  year-end  are  fully  collectible.

          Inventories:

          Inventories  are  stated  at  the  lower  of  average  cost or market.

          The  Company  receives funds for a variety of merchandising activities
          from vendors whose products the Company buys for resale in its stores.
          These  incentives  and  allowances  include  volume or purchased based
          incentives,  advertising  allowances,  and  promotional discounts. The
          purpose  of these incentives and allowances is generally to aid in the
          reduction  of  the  costs  incurred  by  the  Company  for  stocking,
          advertising,  promoting  and  selling  the  vendor's  products. Due to
          system  constraints  and  the  nature  of  certain  allowances,  these
          allowances  are  applied  as  a  reduction  of inventory costs using a
          rational  and systematic methodology, which results in the recognition
          of these incentives when the inventory related to the initial purchase
          is  sold.  Amounts  that  represent  a  reimbursement  of  specific
          identifiable incremental costs, such as advertising, are recorded as a
          reduction  to  the  related  expense  in  the  period that the related
          expense  is  incurred.


                                     - 26 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note  1.  Nature  of  Business and Summary of Significant Accounting Policies
          (continued)

          Property  and  equipment:

          Expenditures  for property and equipment are charged to asset accounts
          at  cost.  Depreciation  is  provided  on  the  straight-line  and
          declining-balance  methods  at  rates  based upon the estimated useful
          lives  of  the  various  classes  of depreciable property. Repairs and
          maintenance are expensed as incurred. Depreciation expense included in
          the statements of income was $153,159, $279,250, and $303,820 in 2007,
          2006  and  2005,  respectively.

          Revenue  recognition:

          The financial statements of the Company are prepared under the accrual
          method of accounting. The Company recognizes income on the sale of all
          grocery  and  non-food  merchandise  at  the  point-of-sale.

          Advertising  costs:

          Advertising costs are charged to operations when incurred. Advertising
          costs  charged  to operations were $527,303, $611,447, and $628,455 in
          2007,  2006,  and  2005,  respectively.

          Deferred  income  taxes:

          The  Company  accounts  for  income  taxes  in  accordance  with  the
          provisions  of  Statement of Financial Accounting Standards (SFAS) No.
          109,  "Accounting  for  Income  Taxes,"  which  requires that deferred
          income  taxes  be determined based on the estimated future tax effects
          of differences between the financial statement and tax basis of assets
          and  liabilities  given  the  provisions  of  the  enacted  tax  laws.
          Valuation  allowances  are  used  to reduce deferred tax assets to the
          amount  considered  likely  to  be  realized.

          Recent  accounting  pronouncements:

          In  March  2005,  the  FASB  issued  FASB Interpretation (FIN) No. 47,
          "Accounting  for  Conditional  Asset  Retirement  Obligations  -  an
          Interpretation  of  FASB Statement No. 143." FIN No. 47 clarifies that
          the  term  "conditional  asset  retirement obligation" as used in FASB
          Statement  No.  143,  "Accounting  for  Asset Retirement Obligations,"
          refers  to  a legal obligation to perform an asset retirement activity
          in which the timing and (or) method of settlement are conditional on a
          future  event that may or may not be within the control of the entity.
          Accordingly,  an  entity  is required to recognize a liability for the
          fair  value  of  a conditional asset retirement obligation if the fair
          value  of the liability can be reasonably estimated. FIN No. 47 became
          effective for the Company on June 3, 2006, and did not have a material
          effect  on  the  Company's  financial  statements.


                                     - 27 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note  1.  Nature  of  Business and Summary of Significant Accounting Policies
          (continued)

          Recent  accounting  pronouncements:  (continued)

          In  June 2006, the FASB issued FASB Interpretation No. 48, "Accounting
          for  Uncertainty in Income Taxes - an interpretation of FASB Statement
          No.  109."  FIN No. 48 clarifies the accounting for uncertainty in tax
          positions.  FIN  No.  48  prescribes  a  recognition  threshold  and
          measurement  attribute  for  the  financial  statement recognition and
          measurement  of  a tax position taken or expected to be taken in a tax
          return.  This  interpretation also provides guidance on derecognition,
          classification, interest and penalties, accounting in interim periods,
          disclosure  and  transition.  FIN  No.  48  becomes  effective for the
          Company's  fiscal  year beginning June 3, 2007, and is not expected to
          have  a  material  effect  on  the  Company's  financial  statements.

          In  June  2006,  the  FASB  ratified Emerging Issues Task Force (EITF)
          issue  No.  06-03, "How Taxes Collected from Customers and Remitted to
          Governmental  Authorities  Should Be Presented in the Income Statement
          (That Is, Gross versus Net Presentation)." EITF No. 06-03 allows taxes
          assessed by various governmental authorities that are directly imposed
          on  revenue-producing  transactions  between  a seller and a customer,
          such as sales and some excise taxes, to be presented on either a gross
          or  net  basis.  If  such taxes are significant, the accounting policy
          should be disclosed as well as the amount of taxes included in revenue
          if  presented  on  a  gross  basis.  The  Company records sales net of
          applicable  sales taxes. Therefore, the adoption of EITF No. 06-03 had
          no  effect  on the presentation of the Company's financial statements.

          In  September  2006, the FASB issued Statement of Financial Accounting
          Standard No. 157, "Fair Value Measurements." SFAS No. 157 defines fair
          value,  establishes  a framework for measuring fair value in GAAP, and
          expands  disclosures  about  fair value measurement. SFAS No. 157 does
          not  require any new fair value measurements. SFAS No. 157 will become
          effective  for  the  Company's fiscal year beginning June 1, 2008. The
          Company  is  currently evaluating the effect of adopting SFAS No. 157.

          In  February  2007,  the FASB issued Statement of Financial Accounting
          Standard  No.  159,  "The  Fair  Value Option for Financial Assets and
          Financial  Liabilities  - Including an amendment of FASB Statement No.
          115." SFAS No. 159 permits entities to make an irrevocable election to
          measure certain financial instruments and other assets and liabilities
          at  fair  value on an instrument-by-instrument basis. Unrealized gains
          and  losses  on items for which the fair value option has been elected
          should  be  recognized  into net earnings at each subsequent reporting
          date. SFAS No. 159 will become effective for the Company's fiscal year
          beginning June 1, 2008. The Company is currently evaluating the effect
          of  adopting  SFAS  No.  159.


                                     - 28 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note  2.  Short-Term  Borrowings

          At June 3, 2006, the Company had a $500,000 line of credit with a bank
          with  a  maturity  date  of June 27, 2007. The Company entered into an
          $800,000  line  of  credit  with a different bank on May 3, 2007. This
          agreement matures on May 2, 2008. Proceeds from the new line of credit
          were  used  to  pay  off  and  close  the $500,000 line of credit. The
          interest  rate  on  amounts  outstanding  under  both  line  of credit
          agreements  was  based  on  prime,  subject  to  a  6.00%  floor.

          The line-of-credit is secured by the Company's certificate of deposit,
          as well as by a security interest in substantially all of its accounts
          receivable,  inventory, machines and equipment, furniture and fixtures
          and  by personal guarantees of Michael A. Richardson and Paul R. Cook,
          the  Company's President and CEO and Executive Vice President and CFO,
          respectively.

          At  June  2,  2007  and  June  3,  2006,  the  Company  had short-term
          borrowings  consisting of unsecured notes payable to Michael and Diana
          Richardson,  principal  shareholders of the Company, and to their son,
          Matthew Richardson. These notes provide for interest at .25% below the
          bank's  base  rate  and  are  payable  on  demand.

          A  summary of short-term borrowings for the fiscal years ended June 2,
          2007  and  June  3,  2006,  is  as  follows:

<TABLE>
<CAPTION>
                                                        2007       2006
                                                      ---------  ---------
<S>                                                   <C>        <C>
          Line-of-credit agreements                   $609,650   $500,000
          Loans payable to shareholders                 14,290     27,131
                                                      ---------  ---------

            Total outstanding                         $623,940   $527,131
                                                      =========  =========

          Weighted average interest rate at year end      8.24%      7.99%
                                                      ---------  ---------

          Weighted average interest rate during year      8.23%      7.29%
                                                      ---------  ---------

          Maximum amount outstanding during year      $637,773   $534,921
                                                      =========  =========

          Average amount outstanding during year      $516,131   $490,429
                                                      =========  =========
</TABLE>


                                     - 29 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note  3.  Long-Term  Debt

<TABLE>
<CAPTION>

          Long-term debt consists of the following notes payable at June 2, 2007
          and  June  3,  2006:


                                                                     2007      2006
                                                                   --------  --------
<S>                                                                <C>       <C>
          Note payable to Northwest Georgia Bank;
            principal and interest due in monthly installments
            of $11,381, through September 2006; interest
            at prime rate; collateralized by equipment,
            accounts receivable, inventory, and personal
            guarantees of the Company's President and
            Executive Vice President                               $      -  $  5,941

          Note payable to Northwest Georgia Bank;
            principal and interest due in monthly installments
            of $6,781, through December 2008; interest at prime
            rate with 6.00% floor; collateralized by equipment,
            inventory, and personal guarantees of the Company's
            President and Executive Vice President                        -   196,020

          Note payable to Gateway Bank & Trust;
            principal and interest due in monthly installments
            of $3,684, through April 2012; interest at prime
            rate with 6.00% floor; collateralized by equipment,
            inventory, and personal guarantees of the Company's
            President and Executive Vice President                  180,000         -

          Vehicle installment loan; due in monthly installments
            of $433, through December 2010; collateralized
            by an automobile                                         16,636    20,656

          Vehicle installment loan; due in monthly installments
            of $524, through January 2010; collateralized
            by an automobile                                         15,614         -
                                                                   --------  --------

                                                                    212,250   222,617

          Less current maturities                                    40,206    78,120
                                                                   --------  --------

          Total long-term debt                                     $172,044  $144,497
                                                                   ========  ========
</TABLE>


                                     - 30 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note  3.  Long-Term  Debt  (continued)

          The  aggregate  maturities or principal payments required on long-term
          debt  for  years  subsequent  to  June  2,  2007,  are  as  follows:

<TABLE>
<CAPTION>
                      Year             Amount
                      ----            -------
<S>                                   <C>
                      2008            $40,206
                      2009             47,659
                      2010             40,427
                      2011             41,938
                      2012             42,020
</TABLE>

Note  4.  Lease  Commitments

          The  Company  leases  the  facilities  in  which  its  retail  grocery
          operations  are  located  under  noncancelable  operating  leases that
          expire  at  various dates through April 2014. Substantially all of the
          leases  include  renewal options. The following is a schedule by years
          of future minimum rental payments required under operating leases that
          have  initial  or remaining noncancelable lease terms in excess of one
          year  as  of  June  2,  2007:

<TABLE>
<CAPTION>
                      Fiscal            Minimum
                    Year Ending         Rentals
                    -----------       ----------
<S>                                   <C>
                      2008            $  542,380
                      2009               395,590
                      2010               281,408
                      2011               255,170
                      2012               231,253
                    Thereafter           140,685
                                      ----------

                        Total         $1,846,486
                                      ==========
</TABLE>

          Rental  expense for the fiscal years ended June 2, 2007, June 3, 2006,
          and  May  28,  2005,  is  as  follows:

<TABLE>
<CAPTION>
                                               2007      2006      2005
                                             --------  --------  --------
<S>                                          <C>       <C>       <C>
          Minimum rentals                    $627,399  $611,417  $609,105
          Contingent rentals based on sales    14,604    17,348    12,703
                                             --------  --------  --------

              Total                          $642,003  $628,765  $621,808
                                             ========  ========  ========
</TABLE>


                                     - 31 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note 5.   Federal and State Income Taxes

          No  amounts  have  been  provided for current and deferred federal and
          state  tax  expense  in  the statements of income for any of the three
          years  ended  June  2,  2007,  as  a result of recurring net operating
          losses  and  the related full valuation allowance on the Company's net
          deferred  tax  assets.

          A  reconciliation  of income tax expense computed by applying the U.S.
          Federal  statutory  rates  to  income  before  income taxes and actual
          income  tax  expense  is  as  follows:

<TABLE>
<CAPTION>
                                                     2007       2006       2005
                                                   ---------  ---------  ---------
<S>                                                <C>        <C>        <C>
          Federal income tax expense (benefit)
            computed at the statutory rates        $ 14,700   $(25,100)  $(49,700)
          State income tax, net of federal
            income tax expense (benefit)              5,400     (9,300)   (18,000)
          Change in deferred tax asset valuation
            allowance                               (20,100)    34,400     67,700
                                                   ---------  ---------  ---------

              Total income tax expense (benefit)   $      -   $      -   $      -
                                                   =========  =========  =========
</TABLE>

          The  tax  effects  of  significant temporary differences that comprise
          deferred  tax assets and liabilities at June 2, 2007 and June 3, 2006,
          are  as  follows:

<TABLE>
<CAPTION>
                                                            2007        2006
                                                         ----------  ----------
<S>                                                      <C>         <C>
          Deferred tax assets:
            Net operating loss carryforward              $(128,000)  $(148,900)
            Other                                          (12,200)    (22,500)

          Deferred tax liabilities:
            Depreciable basis of property and equipment      4,600      15,700

          Deferred tax asset valuation allowance           135,600     155,700
                                                         ----------  ----------

                                                         $       -   $       -
                                                         ==========  ==========
</TABLE>

          At  June 2, 2007, the Company has net operating loss carryforwards for
          federal  and  state  income tax purposes of approximately $593,000 and
          $701,000,  respectively.  The Company has established a full valuation
          allowance,  which  effectively  reduces  the carrying value of its net
          deferred  taxes  to  zero at June 2, 2007 and June 3, 2006. Unless the
          Company  realizes  sufficient  taxable  income  in  future  periods to
          demonstrate that the likelihood of realization of the net deferred tax
          assets  is  reasonably assured under the accounting guidelines of SFAS
          No. 109, this valuation allowance will be continued in future periods.
          If  not  utilized,  the  carryforwards  will  expire  at various dates
          through  2025.


                                     - 32 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note 6.   Employee Benefit Plan

          The  Company  has  adopted  a  401(k)  employee  benefit plan covering
          substantially  all  employees  who  have  met  minimum service and age
          requirements.  The  service  and  age requirements were waived for the
          initial  plan  participants  to encourage participation. The Company's
          annual  contribution  is  discretionary. The Company's contribution to
          the  plan  was  $7,500  in  2007,  2006  and  2005.

Note  7.  Concentration  of  Credit  Risk  and  Major  Supplier

          The  Company  maintains  a  certificate  of  deposit and other deposit
          accounts  at financial institutions in amounts that exceed the Federal
          Deposit  Insurance  Corporation  (FDIC)  insurance limit. The total of
          deposits  that  exceeded the FDIC insurance limit was $639,345 at June
          2,  2007.  The  Company  believes  that  maintaining deposits in these
          financial  institutions  does  not represent a significant credit risk
          and  that the Company benefits from favorable banking relationships as
          a  result  of  maintaining  deposits  with  these  institutions.

          Approximately  81  percent  of the Company's purchased merchandise for
          the  year  ended  June  2,  2007, was procured from the Company's main
          supplier.

Note  8.  Related  Party  Transactions

          As described in greater detail in Note 2 above, the Company finances a
          portion  of  its  working  capital  requirements  through  borrowings
          consisting  of  two  unsecured  notes,  payable  to  Michael and Diana
          Richardson,  principal  shareholders of the Company, and to their son,
          Matthew Richardson. These notes bear interest at a rate per annum .25%
          below  the  base  rate of interest charged on the Company's borrowings
          from  its  lead  bank  and  are  payable  on  demand.

Note  9.  Segment  Reporting

          SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
          Information" provides for the identification of reportable segments on
          the  basis  of discrete business units and their financial information
          to  the  extent  such units are reviewed by an entity's chief decision
          maker (which can be an individual or group of management persons). The
          Statement  permits  aggregation  or  combination of segments that have
          similar  characteristics.  In  the Company's operations, each store is
          viewed  by  management  as being a separately identifiable business or
          segment  from the perspective of monitoring performance and allocation
          of  financial resources. Although the stores operate independently and
          are managed and monitored separately, each is substantially similar in
          terms  of  business  focus,  type of customers, products and services.
          Accordingly,  the  Company's  financial  statements  reflect  the
          presentation  of  segment  information  on  an aggregated basis in one
          reportable  segment.


                                     - 33 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note 10.  Fair Value of Financial Instruments

          The  carrying  values of cash and cash equivalents, the certificate of
          deposit,  accounts receivable, short-term borrowings, accounts payable
          and  accrued liabilities are reasonable estimates of their fair values
          because of the short maturity of these financial instruments. Based on
          the  borrowing  rates available to the Company for long-term debt with
          similar terms and average maturities, the carrying amounts approximate
          the  fair  value  of  such  financial  instruments.


                                     - 34 -
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

--------------------------------------------------------------------------------

Note 11.  Quarterly Data (unaudited)

<TABLE>
<CAPTION>
                                                                     Years Ended
                       -------------------------------------------------------------------------------------------------------
                                           June 2, 2007                                      June 3, 2006
                       --------------------------------------------------  ---------------------------------------------------
                        Thirteen     Thirteen     Thirteen     Thirteen     Fourteen     Thirteen      Thirteen     Thirteen
                          Weeks        Weeks        Weeks        Weeks        Weeks        Weeks        Weeks         Weeks
                          Ended        Ended        Ended        Ended        Ended        Ended        Ended         Ended
                        6/2/2007     3/3/2007     12/2/2006    9/2/2006     6/3/2006     2/25/2006    11/26/2005    8/27/2005
                       -----------  -----------  -----------  -----------  -----------  -----------  ------------  -----------
<S>                    <C>          <C>          <C>          <C>          <C>          <C>          <C>           <C>
Net sales              $8,554,004   $8,446,070   $8,392,267   $8,390,711   $9,060,496   $8,176,572   $ 8,047,771   $7,995,089
Cost of goods
  sold                  6,562,864    6,408,085    6,417,697    6,377,694    6,892,914    6,201,916     6,098,898    6,040,175
                       -----------  -----------  -----------  -----------  -----------  -----------  ------------  -----------

  Gross profit          1,991,140    2,037,985    1,974,570    2,013,017    2,167,582    1,974,656     1,948,873    1,954,914

Operating, general
  and administrative
  expenses              1,991,231    2,006,513    1,995,765    2,007,795    2,260,671    2,032,786     1,998,887    1,969,789
                       -----------  -----------  -----------  -----------  -----------  -----------  ------------  -----------

  Operating income
    (loss)                    (91)      31,472      (21,195)       5,222      (93,089)     (58,130)      (50,014)     (14,875)

Other income               38,293       35,357       39,062       29,978       30,067       23,457        31,023       24,176
Interest expense          (16,576)     (14,531)     (14,636)     (14,853)     (17,127)     (15,414)      (14,251)     (13,202)
                       -----------  -----------  -----------  -----------  -----------  -----------  ------------  -----------

Income (loss) before
  income taxes             21,626       52,298        3,231       20,347      (80,149)     (50,087)      (33,242)      (3,901)
Income taxes                    -            -            -            -            -            -             -            -
                       -----------  -----------  -----------  -----------  -----------  -----------  ------------  -----------

Net income (loss)      $   21,626   $   52,298   $    3,231   $   20,347   $  (80,149)  $  (50,087)  $   (33,242)  $   (3,901)
                       ===========  ===========  ===========  ===========  ===========  ===========  ============  ===========


Earnings (loss) per
  common share:        $     0.02   $     0.07   $     0.00   $     0.03   $    (0.10)  $    (0.06)  $     (0.04)  $    (0.01)
                       ===========  ===========  ===========  ===========  ===========  ===========  ============  ===========
</TABLE>


                                     - 35 -