<TABLE>
<CAPTION>
                             AMERICAN  CONSUMERS,  INC.

                         FIVE-YEAR  SUMMARY  OF  OPERATIONS

                      (In thousands, except per share amounts)

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



                                                     FISCAL YEAR ENDED
                                    ------------------------------------------------
                                     MAY 31    JUNE 1    JUNE 2    JUNE 3    MAY 29
                                      2003      2002      2001      2000      1999
                                    --------  --------  --------  --------  --------
<S>                                 <C>       <C>       <C>       <C>       <C>
NET SALES                           $29,625   $28,900   $25,635   $25,619   $25,482
                                    --------  --------  --------  --------  --------

COST AND EXPENSES:
  Cost of goods sold                 22,524    22,313    19,561    19,682    19,831
  Operating, general and
    administrative expenses           7,098     6,881     6,137     6,020     5,759
  Interest expense                       56        73        26        56        52
  Other income, net                     (93)      (96)      (94)      (66)      (71)
                                    --------  --------  --------  --------  --------

    Total                            29,585    29,171    25,630    25,692    25,571
                                    --------  --------  --------  --------  --------

Income (loss) before income taxes        40      (271)        5       (73)      (89)
                                    --------  --------  --------  --------  --------

INCOME TAXES:
  Federal                                 -       (42)       (3)      (18)      (26)
  State                                   -        (2)        -        (4)       (6)
                                    --------  --------  --------  --------  --------

    Total                                 -       (44)       (3)      (22)      (32)
                                    --------  --------  --------  --------  --------

NET INCOME (LOSS)                   $    40   $  (227)  $     8   $   (51)  $   (57)
                                    ========  ========  ========  ========  ========

PER SHARE AMOUNTS:
  Net income (loss)                 $   .05   $  (.27)  $   .01   $  (.06)  $  (.06)
                                    ========  ========  ========  ========  ========

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

WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                 818       825       832       838       883
                                    ========  ========  ========  ========  ========

TOTAL ASSETS                        $ 4,046   $ 4,469   $ 4,566   $ 3,674   $ 4,033
                                    ========  ========  ========  ========  ========

OBLIGATIONS UNDER CAPITAL
  LEASE AGREEMENTS                  $     -   $     -   $     3   $    67   $   185
                                    ========  ========  ========  ========  ========
</TABLE>


                                      -3-
<PAGE>
                         MARKET AND DIVIDEND INFORMATION


     The  Company's  common stock is traded in the over-the-counter market.  The
approximate  number  of  record holders of the Company's common stock at May 31,
2003,  was  849.   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>

2003
---------------------------------------------------------------------------------------
  First Quarter             $0.85       $0.85       $0.95       $0.95       None
---------------------------------------------------------------------------------------
  Second Quarter            $0.76       $0.76       $3.00       $3.00       None
---------------------------------------------------------------------------------------
  Third Quarter             $0.76       $0.76       $2.00       $2.00       None
---------------------------------------------------------------------------------------
  Fourth Quarter            $0.80       $0.80       $4.00       $4.00       None
---------------------------------------------------------------------------------------


2002
---------------------------------------------------------------------------------------
  First Quarter             $0.38       $0.38       $4.00       $4.00       None
---------------------------------------------------------------------------------------
  Second Quarter            $0.38       $0.38       $4.00       $4.00       None
---------------------------------------------------------------------------------------
  Third Quarter             $0.45       $0.45       $4.00       $4.00       None
---------------------------------------------------------------------------------------
  Fourth Quarter            $0.65       $0.65       $4.00       $4.00       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  which do not necessarily represent actual trades.  The market-makers
as  of  May  31,  2003,  are:

     Carr Securities Corporation         (516) 944-8300

     Hill Thompson Magid & Co.           (201) 434-8100

     Monroe Securities, Inc.             (312) 327-2536

     Howe Barnes Investment, Inc.        (312) 655-2897


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

                              RESULTS OF OPERATIONS
                              ---------------------

     The  Company realized an after-tax profit in its fiscal year ended  May 31,
2003,  of  $40,134 as compared  to a loss of $226,831 for the prior fiscal year.
Net  sales  for  the  current  fiscal year increased 2.5% from net sales for the
previous  fiscal  year.   Management believes the small increase in sales is due
primarily  to  direct  competition.

     Increased pressure from competition  on  the  Company's market share, sales
and  profits  during fiscal year 2003 continues to threaten the profitability of
the  Company.  Management  believes  that  competitive pressures on  the Company
will  continue to increase over time as a result of its competitors opening more
new  stores  in  the  Company's  trade  area.  Management  continuously seeks to
improve the gross margin and increase profitability by obtaining the lowest cost
for  the  Company's  inventory.

     The Company's gross margin  increased  from  22.79%  to  23.97%  during the
past  year.  The  gross margin was 23.69% for the year ended June 2, 2001.     A
switch  of  our  major  inventory  supplier  in  the last quarter of fiscal 2000
resulted  in  an  increase  in  gross  margin from 2000 to 2001.  However, gross
margin  decreased  for  fiscal  year 2002 due in part to the perodic use of more
aggressive  pricing  strategies  in  an  effort  to compete with larger discount
grocery chains and expand sales at all locations.  The increase to 23.97% is the
major  reason  for  this  years  net  income.  Management  actively monitors the
Company's  mix of retail prices and will attempt to achieve further improvements
in  gross  margin,  to  the extent permitted by competition.  Due to competitive
conditions,  however,  further  improvements  in  the  gross  margin  may not be
achievable  at  this  time.

     The Company's Operating, General and Administrative Expenses for the fiscal
year  ended  May  31, 2003, increased by $216,823 from the previous fiscal year.
Expenses  as a percentage of sales increased from 23.81% to 23.96% over the past
fiscal  year.  Operating, General and Administrative Expenses amounted to 23.94%
of  net  sales  for fiscal year 2001.  Management will continue to monitor these
costs  and  make  adjustments  when  deemed  to  be  beneficial  to  business.

     Interest expense varied throughout the fiscal years presented, from $26,071
in  2001  to  $72,944  in 2002  to  $55,745  in  2003.   The increase in 2002 is
attributable  to  financing  the purchase of new replacements for cash registers
and  scanning equipment which previously had been leased, and to the purchase of
the  Company's  seventh  retail  store  in  late  April  2001.


                                      -5-
<PAGE>
     Other income for the past three fiscal years consists of the following:

<TABLE>
<CAPTION>
                                      2003      2002     2001
                                    --------  --------  -------
<S>                                 <C>       <C>       <C>

     Vendors' compensation          $13,227   $13,095   $12,988
     Gain (loss) on sale of assets   (1,127)   (8,472)    7,971
     Interest income                 17,480    20,347    26,732
     Other income                    63,706    70,566    46,618
     -------                        --------  --------  -------

         Totals                     $93,286   $95,536   $94,309
                                    ========  ========  =======
</TABLE>


     Other  income increased in fiscal 2002 over 2001 due to both an increase in
the  collection  of a check-cashing charge for individuals wishing to cash their
check but not making a purchase and an increase in the price the Company charges
customers  for  money  orders  during  fiscal  2002.

     The Company seeks to improve its profitability by obtaining the lowest cost
for  its  goods.  In  an  effort  to lower its cost of goods, the Company ceased
using  Fleming Co., Inc. as its major supplier of staple groceries in March 2000
and  began  purchasing  its  inventory  from  Mitchell  Grocery  Corporation  in
Albertville,  Alabama  in  March  2000.

Income  Taxes
-------------

     The  provision  for  income  taxes  does  not vary  significantly  from the
Federal  and  state  statutory rates.  The components of income tax are detailed
in  Note  5  of  the  Company's  financial  statements.

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 selling prices for the Company's goods.
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
----------------------------------

     The  Company finances its working  capital requirements principally through
its  cash  flow from operations and short-term borrowings.  Short-term borrowing
to  finance  inventory  purchases  is provided by the Company's $500,000 line of
credit  from  its  bank.  Based  upon  the  Company's  current  working  capital
requirements,  management  believes  that the Company's available credit will be
adequate  to  finance  its  liquidity  needs  for  fiscal year 2004.  Short-term
borrowings  at  the  end  of  the  2003  and  2002  fiscal  year are as follows:

<TABLE>
<CAPTION>
                                                      2003           2002
                                                    --------       --------
<S>                                                 <C>            <C>
     Line of credit at Northwest Georgia Bank       $199,900       $345,000
     Note to Michael and Diana Richardson             22,631         23,626
     Note to Matthew Richardson                       32,216         41,697
                                                    --------       --------
                  Totals                            $254,747       $410,323
                                                    ========       ========
</TABLE>


                                      -6-
<PAGE>
     At  May  31,  2003,  long-term debt consists of a note payable to a bank of
$102,411  that  was  incurred  in  April  2001  to  finance  the addition of the
Company's  seventh  grocery  store in Jasper, Tennessee, and a note payable to a
bank  of  $387,013  to  finance  cash  registers  and  peripheral equipment.  In
addition,  two  vehicles were purchased and financed through GMAC with a balance
due  at  May  31,  2003,  of  $24,821.

     The ratio of current assets to current liabilities was 2.25 to 1 at the end
of  fiscal 2003, as compared to 2.05 to 1 at the end of fiscal 2002, and 1.98 to
1 at the end of fiscal 2001.  Cash constituted  32.75% of  total current  assets
at  May  31,  2003,  as  compared to  35.22% of total current assets at  June 1,
2002,  and  44.91%  at  June  2,  2001.

     During the fiscal year ended May 31, 2003, retained earnings increased as a
result  of  net  income  for  the  fiscal  year.

Material  Commitments
---------------------

     Capital  expenditures  are  not  expected  to  exceed $200,000 for the 2004
fiscal  year.

     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.  Any  contribution  by  the  Company will be at the discretion of the
Board  of  Directors.  The Company's contribution to the plan was $7,500 in 2003
and  2002.

     None  of  the  Company's  employees  are  represented  by  a  union.

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

     Information  provided  by the Company, including written or 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  which  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
by  or  on  behalf  of  the  Company,  including filings with the Securities and
Exchange Commission of Forms 10-Q, 10-K and 8-K. Important assumptions and other
important  factors  that  could  cause  actual results to differ materially from
those  set  forth  in  the  forward-looking  statements  include: changes in the
general  economy  or  in  the  Company's primary markets, the effects of ongoing
price  competition  from competitors with 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
detailed  from  time-to-time  in  the  Company's filings with the Securities and
Exchange  Commission.


                                      -7-
<PAGE>

                     [LOGO OF HAZLETT, LEWIS & BIETER, PLLC]








               Report of Independent Certified Public Accountants
               --------------------------------------------------





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  May  31,  2003  and  June  1,  2002,  and  the related
statements  of  income, changes in stockholders' equity, and cash flows for each
of the three years in the period ended May 31, 2003.  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 auditing standards generally
accepted  in the United States of America.  Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

     In our opinion, the financial statements mentioned above present fairly, in
all  material respects, the financial position of American Consumers, Inc. as of
May  31,  2003  and June 1, 2002, and the results of its operations and its cash
flows  for  each  of  the  three  years  in  the  period  ended May 31, 2003, in
conformity with accounting principles generally accepted in the United States of
America.


/s/ Hazlett, Lewis & Bieter, PLLC


Chattanooga, Tennessee
July 9, 2003


   Market Court, Suite 300  537 Market Street  Chattanooga, Tennessee 37402-1239
                            Telephone (423) 756-6133
    Fax:  (423) 756-2727  E-mail: hlb@hlbcpa.com  Web: http://www.hlbcpa.com


                                      -8-
<PAGE>
<TABLE>
<CAPTION>
                               AMERICAN  CONSUMERS,  INC.

                                STATEMENTS  OF  INCOME

    For the Fiscal Years Ended May 31, 2003, June 1, 2002, and June 2, 2001

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


                                              2003          2002          2001
                                           (52 Weeks)    (52 Weeks)    (53 Weeks)
                                          ------------  ------------  ------------
<S>                                       <C>           <C>           <C>
NET SALES                                 $29,624,631   $28,900,428   $25,634,552

COST OF GOODS SOLD                         22,524,276    22,312,787    19,560,530
                                          ------------  ------------  ------------

      Gross profit                          7,100,355     6,587,641     6,074,022

OPERATING, GENERAL AND
   ADMINISTRATIVE EXPENSES                  7,097,762     6,880,939     6,137,240
                                          ------------  ------------  ------------

      Operating income (loss)                   2,593      (293,298)      (63,218)
                                          ------------  ------------  ------------

OTHER INCOME (EXPENSE)
   Interest expense                           (55,745)      (72,944)      (26,071)
   Other income                                93,286        95,536        94,309
                                          ------------  ------------  ------------

                                               37,541        22,592        68,238
                                          ------------  ------------  ------------

      Income (loss) before income taxes        40,134      (270,706)        5,020
                                          ------------  ------------  ------------

FEDERAL AND STATE INCOME
   TAXES                                            -       (43,875)       (2,674)
                                          ------------  ------------  ------------

NET INCOME (LOSS)                         $    40,134   $  (226,831)  $     7,694
                                          ============  ============  ============

EARNINGS (LOSS) PER SHARE                 $       .05   $      (.27)  $       .01
                                          ============  ============  ============

WEIGHTED AVERAGE NUMBER
   OF SHARES OUTSTANDING                      817,802       825,467       831,955
                                          ============  ============  ============
<FN>
The Notes to Financial Statements are an integral part of these statements.
</TABLE>


                                      -9-
<PAGE>
<TABLE>
<CAPTION>
                            AMERICAN CONSUMERS, INC.

                                 BALANCE SHEETS

                          May 31, 2003 and June 1, 2002

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


                                                           2003          2002
                                                      ------------  ------------
<S>                                                   <C>           <C>
         ASSETS

CURRENT ASSETS
   Cash and short-term investments                    $   745,659   $   743,370
   Certificate of deposit                                 309,821       450,000
   Accounts receivable                                    113,267       108,756
   Inventories                                          1,997,929     2,001,339
   Prepaid expenses                                        56,141        40,657
   Refundable income taxes                                      -        43,891
                                                      ------------  ------------

         Total current assets                           3,222,817     3,388,013
                                                      ------------  ------------











PROPERTY AND EQUIPMENT - at cost
   Leasehold improvements                                 258,122       258,122
   Furniture, fixtures and equipment                    2,974,836     2,959,273
                                                      ------------  ------------

                                                        3,232,958     3,217,395
   Less accumulated depreciation                       (2,409,558)   (2,136,594)
                                                      ------------  ------------

                                                          823,400     1,080,801
                                                      ------------  ------------

                                                      $ 4,046,217   $ 4,468,814
                                                      ============  ============


<FN>
The Notes to Financial Statements are an integral part of these statements.
</TABLE>


                                      -10-
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------


                                                               2003        2002
                                                            ----------  ----------
<S>                                                         <C>         <C>
         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                          $  702,170  $  801,407
  Short-term borrowings                                        254,747     410,323
  Current maturities of long-term debt                         176,184     131,451
  Accrued sales tax                                            115,064     138,948
  Federal and state income taxes                                   905       4,000
  Other                                                        185,353     169,743
                                                            ----------  ----------
      Total current liabilities                              1,434,423   1,655,872
                                                            ----------  ----------

LONG-TERM DEBT                                                 338,052     549,703
                                                            ----------  ----------

DEFERRED INCOME                                                      -      22,580
                                                            ----------  ----------

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 815,996 in 2003 and 823,047
    in 2002                                                     81,600      82,305
  Additional paid-in capital                                   680,477     686,357
  Retained earnings                                          1,511,665   1,471,997
                                                            ----------  ----------

                                                             2,273,742   2,240,659
                                                            ----------  ----------

                                                            $4,046,217  $4,468,814
                                                            ==========  ==========
</TABLE>


                                      -11-
<PAGE>
<TABLE>
<CAPTION>
                            AMERICAN CONSUMERS, INC.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

    For the Fiscal Years Ended May 31, 2003, June 1, 2002, and June 2, 2001

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


                                        Additional
                                Common    Paid-in    Retained
                                Stock     Capital    Earnings       Total
                               --------  ---------  -----------  -----------
<S>                            <C>       <C>        <C>          <C>
Balance, June 3, 2000          $83,562   $696,839   $1,691,965   $2,472,366

   Net income for year               -          -        7,694        7,694

   Redemption of common stock     (839)    (6,992)        (554)      (8,385)
                               --------  ---------  -----------  -----------

Balance, June 2, 2001           82,723    689,847    1,699,105    2,471,675

   Net loss for year                 -          -     (226,831)    (226,831)

   Redemption of common stock     (418)    (3,490)        (277)      (4,185)
                               --------  ---------  -----------  -----------

Balance, June 1, 2002           82,305    686,357    1,471,997    2,240,659

   Net income for year               -          -       40,134       40,134

   Redemption of common stock     (705)    (5,880)        (466)      (7,051)
                               --------  ---------  -----------  -----------

Balance, May 31, 2003          $ 81,600  $ 680,477  $ 1,511,665  $ 2,273,742
                               ========  =========  ===========  ===========
<FN>
The Notes to Financial Statements are an integral part of these statements.
</TABLE>


                                      -12-
<PAGE>
<TABLE>
<CAPTION>
                                     AMERICAN  CONSUMERS,  INC.

                                    STATEMENTS  OF  CASH  FLOWS

               For the Fiscal Years Ended May 31, 2003, June 1, 2002, and June 2, 2001

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

                                                                   2003          2002         2001
                                                                 (52 Weeks)   (52 Weeks)   (53 Weeks)
                                                                -----------  -----------  -----------
<S>                                                             <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                             $   40,134   $ (226,831)  $    7,694
  Adjustments to reconcile net income (loss) to net cash
    provided by (used in) operating activities:
      Depreciation and amortization                                268,370      259,484      191,910
      Deferred income taxes                                              -       (3,827)      (8,760)
      (Gain) loss on sale of property and equipment                  1,127        8,472       (7,713)
      Change in operating assets and liabilities:
        Accounts receivable                                         (4,511)      (3,839)      35,676
        Inventories                                                  3,410     (107,193)    (234,558)
        Prepaid expenses and other assets                          (15,484)      39,346      (26,530)
        Refundable income taxes                                     43,891      (43,891)           -
        Accounts payable and accrued liabilities                  (107,511)      42,897      140,040
        Federal and state income taxes                              (3,095)      (5,422)       5,716
                                                                -----------  -----------  -----------

          Net cash provided by (used in) operating activities      226,331      (40,804)     103,475
                                                                -----------  -----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of certificate of deposit                              (309,821)    (450,000)    (450,000)
  Proceeds from maturity of certificate of deposit                 450,000      450,000      434,887
  Purchase of property and equipment                               (41,026)    (583,443)    (469,784)
  Proceeds from disposal of property and equipment                   6,350        5,000        8,380
                                                                -----------  -----------  -----------

          Net cash provided by (used in) investing activities      105,503     (578,443)    (476,517)
                                                                -----------  -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase (decrease) in short-term borrowings                (155,576)    (386,871)     668,519
  Proceeds from long-term debt                                           -      627,012      169,421
  Principal payments on long-term debt                            (166,918)    (115,279)           -
  Principal payments on obligations under capital leases                 -       (3,195)     (64,030)
  Redemption of common stock                                        (7,051)      (4,185)      (8,385)
                                                                -----------  -----------  -----------

    Net cash provided by (used in) financing activities           (329,545)     117,482      765,525
                                                                -----------  -----------  -----------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                               2,289     (501,765)     392,483

CASH AND CASH EQUIVALENTS, beginning of year                       743,370    1,245,135      852,652
                                                                -----------  -----------  -----------

CASH AND CASH EQUIVALENTS, end of year                          $  745,659   $  743,370   $1,245,135
                                                                ===========  ===========  ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION
    Cash paid (received) during the year for:
      Income taxes                                              $  (31,888)  $   13,266   $    4,369
      Interest                                                      55,060       72,944       25,342
                                                                ===========  ===========  ===========
<FN>
The Notes to Financial Statements are an integral part of these statements.
</TABLE>


                                      -13-
<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.

          Inventories:

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

          Depreciation  of  property  and  equipment:

          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.

          Advertising  costs:

          Advertising costs are charged to operations when incurred. Advertising
          costs  charged  to operations were $602,244, $619,875, and $451,712 in
          2003,  2002,  and  2001,  respectively.

          Deferred  income  taxes:

          Deferred tax assets and liabilities are reflected at currently enacted
          income  tax  rates  applicable to the period in which the deferred tax
          assets  or  liabilities  are  expected  to  be realized or settled. As
          changes  in  tax  laws  or  rates are enacted, deferred tax assets and
          liabilities  are  adjusted  through  the  provision  for income taxes.


                                      -14-
<PAGE>

                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

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


Note 2.   Short-Term  Borrowings

          The Company had line-of-credit agreements with banks totaling $500,000
          and  $600,000  at  May  31,  2003  and June 1, 2002, respectively. The
          interest  rate  on  amounts  outstanding  under  the  line-of-credit
          agreements  fluctuates  with  the  prime  interest rate. The Company's
          certificate  of  deposit  is  pledged  as  collateral  under  these
          agreements.

          At  May  31,  2003 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 May 31,
          2003  and  June  1,  2002,  is  as  follows:

<TABLE>
<CAPTION>
                                                        2003        2002
                                                      ---------  -----------
<S>                                                   <C>        <C>
          Line-of-credit agreements                   $199,900   $  345,000
          Loans payable to shareholders                 54,847       65,323
                                                      ---------  -----------

            Total outstanding                         $254,747   $  410,323
                                                      =========  ===========

          Weighted average interest rate at year end      5.57%        5.76%
                                                      ---------  -----------

          Weighted average interest rate during year      6.95%        7.25%
                                                      ---------  -----------

          Maximum amount outstanding during year      $411,024   $1,045,562
                                                      =========  ===========

          Average amount outstanding during year      $385,893   $  473,977
                                                      =========  ===========
<FN>
The carrying amount of short-term borrowings approximates fair value.
</TABLE>


                                      -15-
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

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

Note 3.   Long-Term  Debt

          Long-term debt consists of the following notes payable at May 31, 2003
          and  June  1,  2002:

<TABLE>
<CAPTION>
                                                                    2003      2002
                                                                  --------  --------
<S>                                                               <C>       <C>
          Note payable to Northwest Georgia Bank;
            principal and interest due in monthly installments
            of $11,381, through September 2006; interest at
            the prime rate plus 1.5%; collateralized by equipment,
            accounts receivable, inventory, and personal
            guarantees of the Company's President and
            Executive Vice President                              $387,013  $502,822

          Note payable to Northwest Georgia Bank;
            principal and interest due in monthly installments
            of $3,576, through May 2006; interest at 5.75%;
            collateralized by equipment, inventory, and
            personal guarantees of the Company's President
            and Executive Vice President                           102,411   137,850

          Vehicle installment loans; due in monthly installments
            of $1,305, through December 2004; collateralized
            by automobiles                                          24,812    40,482
                                                                  --------  --------
                                                                   514,236   681,154

          Less current maturities                                  176,184   131,451
                                                                  --------  --------

          Total long-term debt                                    $338,052  $549,703
                                                                  ========  ========
</TABLE>

          The  fair  value  of  the  Company's  long-term  debt approximates the
          carrying  amount  reported  in  the  balance  sheet  based  on current
          interest  rates  for  similar  types  of  borrowings.

          The  aggregate  maturities or principal payments required on long-term
          debt  for  years  subsequent  to  May  31,  2003,  are  as  follows:

<TABLE>
<CAPTION>
                       Year               Amount
                     --------            --------
<S>                                      <C>
                       2004              $176,184
                       2005               177,202
                       2006               157,472
                       2007                 3,378
</TABLE>


                                      -16-
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

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


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 2008. 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  May  31,  2003:

<TABLE>
<CAPTION>
                        Fiscal              Minimum
                      Year Ending           Rentals
                      ------------          -------
<S>                                         <C>
                         2004             $  566,357
                         2005                453,617
                         2006                429,397
                         2007                350,579
                         2008                170,010
                                          ----------

                           Total          $1,969,960
                                          ==========
</TABLE>

          Rental  expense for the fiscal years ended May 31, 2003, June 1, 2002,
          and  June  2,  2001,  is  as  follows:

<TABLE>
<CAPTION>
                                                  2003       2002      2001
                                               ---------  ---------  --------
<S>                                            <C>        <C>        <C>
            Minimum rentals                    $ 535,645  $ 522,135  $451,549
            Contingent rentals based on sales     10,509      7,402    13,360
                                               ---------  ---------  --------
              Total                            $ 546,154  $ 529,537  $464,909
                                               =========  =========  ========
</TABLE>



Note 5.   Federal  and  State  Income  Taxes

          The  components  of  income tax expense for the fiscal years ended May
          31,  2003,  June  1,  2002,  and  June  2,  2001,  are  as  follows:

<TABLE>
<CAPTION>
                                                    2003     2002       2001
                                                    -----  ---------  --------
<S>                                                 <C>    <C>        <C>
            Current tax expense (benefit):
              Federal                               $   -  $(38,463)  $ 4,649
              State                                     -    (1,585)    1,437
                                                    -----  ---------  --------
                                                        -   (40,048)    6,086
                                                    -----  ---------  --------
            Deferred tax expense (benefit):
              Federal                                   -    (3,297)   (7,438)
              State                                     -      (530)   (1,322)
                                                    -----  ---------  --------

                                                        -    (3,827)   (8,760)
                                                    -----  ---------  --------

                Total income tax expense (benefit)  $   -  $(43,875)  $(2,674)
                                                    =====  =========  ========
</TABLE>


                                      -17-
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

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




Note 5.   Federal  and  State  Income  Taxes  (continued)

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

<TABLE>
<CAPTION>
                                                     2003      2002       2001
                                                   --------  ---------  --------
<S>                                                <C>       <C>        <C>
          Federal income tax expense (benefit)
             computed at the statutory rates       $ 6,000   $(88,800)  $   800
          State income tax, net of federal
             income tax benefit                      2,200    (10,700)      300
          Change in deferred tax asset valuation
             allowance                              (8,200)    23,100         -
          Other                                          -     32,525    (3,774)
                                                   --------  ---------  --------

               Total income tax expense (benefit)  $     -   $(43,875)  $(2,674)
                                                   ========  =========  ========
</TABLE>

          The  tax  effects  of  significant temporary differences that comprise
          deferred  tax assets and liabilities at May 31, 2003 and June 1, 2002,
          are  as  follows:

<TABLE>
<CAPTION>
                                                             2003       2002
                                                           ---------  ---------
<S>                                                        <C>        <C>

            Deferred tax assets:
              Net operating loss carryforward              $(53,700)  $(58,400)
              Deferred income                                     -     (5,500)
              Other                                         (22,100)   (13,700)

            Deferred tax liabilities:
              Depreciable basis of property and equipment    60,900     54,500

            Deferred tax asset valuation allowance           14,900     23,100
                                                           ---------  ---------

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

            At  May  31,  2003, the Company has net operating loss carryforwards
            for  federal and state income tax purposes of $157,000 and $324,700,
            respectively. These net operating loss carryforwards may be utilized
            to  offset  future  taxable  income  through  2022.


                                      -18-
<PAGE>
                           AMERICAN  CONSUMERS,  INC.

                        NOTES  TO  FINANCIAL  STATEMENTS

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



Note 6.   Sale  of  Assets  and  Deferred  Income

          On  April 29, 1988, the Company sold its strip shopping center located
          in  Chatsworth,  Georgia.  The  strip shopping center consisted of two
          separate  buildings  with a total of 42,900 square feet. Approximately
          18,540  square  feet  of the shopping center were leased to others and
          approximately  24,360  square  feet  were  used by the Company for its
          retail  grocery  store.

          Effective  as  of  the date of sale, the Company leased back its store
          location  in  the  center for a period of 15 years. The minimum annual
          rental  payments  of $94,192 are included in the minimum annual rental
          payments  of  operating leases described in Note 4. The gain resulting
          from  the  sale  of  these  assets  has  been  deferred  for financial
          reporting purposes and is being amortized over the 15-year lease term.


Note 7.   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  2003  and  2002.


Note 8.   Concentration  of  Credit  Risk

          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 $554,940 at May
          31,  2003.  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.


Note 9.   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.


                                      -19-
<PAGE>