SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(X)      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996)

         FOR FISCAL YEAR ENDED MARCH 2, 1997

( )      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
         For the transition period from                   to                
                                        -----------------    ---------------

Commission File No. 1-7013

                           SLOAN'S SUPERMARKETS, INC.
             (Exact name of registrant as specified in its charter)

                     Delaware                              13-1829183
          (State or other jurisdiction of               (I.R.S. Employer
          incorporation or organization)              Identification No.)

         823 Eleventh Avenue, New York, NY                 10019-3535
     (Address of principal executive offices)              (Zip code)

                                 (212) 541-5534
              (Registrant's telephone number, including area code)


Securities registered pursuant to Section 12 (b) of the Act:

         Title of each class          Name of each exchange on which registered
Common Stock, $0.02 par value               American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

         None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Section  13,  or 15(d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.   Yes [X]   No [ ]

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

As of May 22, 1997, 3,132,289 shares of the registrant's common stock, $0.02 par
value, were outstanding.  The aggregate market value of the common stock held by
nonaffiliates  of the  registrant  (i.e.,  excluding  shares  held by  executive
officers,  directors,  and control  persons as defined in Rule 405) on that date
was $4,374,371 computed at the closing price on that date.

Documents Incorporated by Reference:  None


<PAGE>



ITEM 1.  BUSINESS.

GENERAL

The Company is a Delaware  corporation  whose  principal  executive  offices are
located  at 823  Eleventh  Avenue,  New York,  New York  10019-3535.  Unless the
context otherwise  requires,  the terms "Company" or "Registrant" as used herein
refer to Sloan's  Supermarkets,  Inc. (which is a holding  corporation)  and its
wholly-owned subsidiaries.

The Company owns and operates  fourteen  supermarkets  and one health and beauty
aids  store  (the  "Supermarkets")  under  the  "Sloan's"  name in New York City
(thirteen  supermarkets  are located in Manhattan  and one  supermarket  and one
health and beauty aids store is located in Brooklyn).  The Company leases all of
its Supermarket locations.

The Company competes on the basis of providing customer convenience, service and
a wide  assortment of food products,  including  those that are appealing to the
clientele in the neighborhoods where its Supermarkets are located. The Company's
Supermarkets,  like most Manhattan supermarkets, are smaller than their suburban
counterparts,  ranging in size from approximately 5,000 to 16,000 square feet of
selling space and averaging 9,700 square feet of selling space.

The  Supermarkets  offer,  at competitive  prices,  broad lines of  merchandise,
including nationally and regionally advertised brands, private label and generic
brands.  Merchandise sold includes food items such as fresh meats,  produce, dry
groceries,  dairy  products,  baked  goods,  poultry and fish,  fresh fruits and
vegetables,  frozen  foods,  delicatessen  and  gourmet  foods,  as well as many
non-food items such as cigarettes,  soaps, paper products, and health and beauty
aids.  Check-cashing  services  are  available to  qualified  customers  holding
check-cashing  cards and, for a small fee, the Company will deliver groceries to
a customer's  apartment  door.  The  Supermarkets  accept payment by Mastercard,
Visa,  American  Express and Discover credit cards.  All of the Supermarkets are
open  fourteen  hours  per day,  seven  days a week and on  holidays,  including
Christmas, New Year's and Thanksgiving. Most of the Supermarkets close two hours
earlier on Sundays.

The Company's  predecessor  was  incorporated  in 1956 in New York. In 1985, the
Company's   domicile  was  changed  to  Delaware  by  merging  the   predecessor
corporation  into a newly formed  Delaware  corporation,  incorporated  for such
purpose. The Company became a public company in 1968 and listed its Common Stock
on the American Stock Exchange in 1972.  Until 1992, the Company  engaged in the
jewelry business, operating under the name Designcraft Industries, Inc. for most
of such time.  The  Company  changed its name to Sloan's  Supermarkets,  Inc. in
September 1993 to reflect its current business.

                                        2

<PAGE>


GROWTH STRATEGY

In May 1994, the Company completed its phase one store remodeling program, which
consisted  of  installation  of new  lighting  fixtures,  retiling of floors and
replacement of refrigeration equipment in its stores. The program was instituted
to improve the appearance of the Supermarkets,  attract new customers,  increase
overall customer  satisfaction and thereby increase revenues and  profitability.
The Company believes that its phase one store remodeling program,  combined with
more  effective  merchandising,  will continue to have a positive  effect on the
Company's profitability.

In April of 1996,  the Company  began its phase two  remodeling  program,  which
consists of installation  of state of the art point of sale scanning  terminals,
and automated ordering,  merchandise  receiving,  and reporting equipment.  Such
technology, when fully installed, is expected to increase gross margins, as well
as  increase  customer  satisfaction  by  reducing  check-out  time.  Phase  two
remodeling  also  includes  re-engineering  certain  stores by  converting  back
storage rooms into retail  selling  space and  utilizing  lower level space more
effectively  for  storage  and  replacing  certain  refrigeration  with new more
energy-efficient units.

The Company may also expand its operations through  acquisitions of supermarkets
and/or   businesses  which  the  Company  believes  would  complement  its  core
supermarket  business.  The Company is continuing to pursue the  possibility  of
purchasing   additional   supermarkets   from  other  companies  owned  by  John
Catsimatidis.

ADMINISTRATION

Red Apple Group, Inc. ("Red Apple"),  a corporation  wholly owned and controlled
by Mr. Catsimatidis, supervises all operations of the Supermarkets pursuant to a
management  agreement  entered into in March 1993 (the "Management  Agreement").
The initial  term of the  Management  Agreement  ran until March 19,  1994.  The
current term expires on March 19, 1998.  Unless  terminated by either party, the
Management Agreement is automatically renewed for successive one-year terms. The
Management  Agreement  requires the Company to pay to Red Apple a quarterly  fee
equal to 1-1/4% of all sales made in or from the  Supermarkets  and to reimburse
Red Apple for all reasonable  expenses  incurred by Red Apple in the performance
of services  thereunder.  Mr.  Catsimatidis  and Red Apple have over 20 years of
experience  in operating  supermarkets  in the New York City  metropolitan  area
("NYC Area").

MARKETING

The Company  advertises in local  newspapers  on a weekly  basis.  The Company's
advertising emphasizes competitive prices and variety of merchandise.  Newspaper
advertising for the Supermarkets is frequently pooled with advertising for other
supermarkets  which are not owned by the Company  but which are  operated by Red
Apple and its affiliates  other than the Company under the Sloan's name. In such
cases,  the Company pays a portion of such  advertising  expenses based upon the
number of  Supermarkets  and  supermarkets  of other  companies  covered  in the
advertisements.  The  Company  believes  that the pooling  arrangement  provides
benefits to the Company because the size of typical  advertisements with respect
to the  Supermarkets  that  may be  placed  may be  larger  and  the  number  of
advertisements  that may be run may be greater as a result of the  spreading  of
advertising costs over a greater number of supermarkets. Some

                                        3

<PAGE>

of the  Company's  vendors offer  cooperative  advertising  allowances  (in some
instances as part of a pooling  arrangement  with Red Apple and its affiliates),
which the Company receives for advertising  particular products in its newspaper
advertisements.

COMPETITION

The Company's retail business is subject to intense  competition,  characterized
by low profit margins and requiring regular advertising. All of the Supermarkets
are in direct  competition  with Food Emporium,  D'Agostino,  A&P,  Pathmark and
independent  supermarket/grocery  operators  which do  business  under the names
"Pioneer",  "Key  Food"  and  "Associated",  many of which are  larger  and have
substantially greater resources than the Company. Red Apple Supermarkets,  Inc.,
Supermarket  Acquisition Corp.  ("SAC") and Gristede's  Supermarkets,  Inc., all
affiliates  of Red Apple,  operate an  additional  34 stores in the NYC area, 13
under the  tradename  "Sloans",  20 under  "Gristedes"  and one  under  "Pioneer
Supermarkets".  These  affiliates  of Red Apple also compete with the  Company's
retail  business.  The  Supermarkets  also compete with other outlets which sell
products sold by  supermarkets  in New York City.  Those outlets include gourmet
food stores, health and beauty aid stores, drug stores, produce stores, bodegas,
delicatessens and other retail food establishments.  In addition, several of the
Company's competitors have announced plans to open larger stores.

SOURCES OF SUPPLY

During the fiscal year ended  March 2, 1997,  the  Company  obtained  45% of the
merchandise sold in its stores from one principal  merchandise  supplier,  White
Rose Foods, and the balance from other vendors, none of which accounted for more
than 10% of merchandise  purchased by the Company. The Company believes that its
supplier relationships are currently satisfactory.  The Company is not dependent
on these supplier  relationships  since  merchandise  is readily  available from
numerous  sources under different brand names,  subject to conditions  affecting
food supplies generally.

ACQUISITION OF SUPERMARKETS

Eleven Supermarkets were acquired in March 1993 from CKMR Corporation  ("CKMR"),
a  privately-held   corporation   unaffiliated  with  the  Company.   The  total
consideration  paid by the Company for the acquisition of the Supermarkets  (the
"Supermarket Acquisition") was approximately $13,800,000 including payment under
non-competition agreements with certain principals of CKMR and the assumption of
certain accounts payable of CKMR aggregating $5,000,000 which the Company agreed
to pay. The Company has paid virtually all of such assumed debt.

In October 1995,  the Company  acquired three  Supermarkets  from SAC. The total
consideration  paid by the Company for the acquisition of the three Supermarkets
was  $5,000,000  plus the cost of inventory.  The purchase  price was based on a
fair market evaluation  performed by an independent third party. The acquisition
was financed by a new term loan from a bank in the amount of  $7,000,000,  which
also refinanced existing debt. An additional  $1,000,000 line of credit was also
provided  by the  bank  for  working  capital.  The  balance  of  this  loan  is
approximately  $6,400,000 at March 2, 1997. (See Item 13. "Certain Relationships
and Related Transactions").

                                        4

<PAGE>

TRADENAME

At the  closing of the  Supermarket  Acquisition,  the  Company  entered  into a
license  agreement  with SAC (the "License  Agreement")  under which the Company
obtained for a nominal consideration a non-exclusive license from SAC throughout
the NYC  Area  to use the  name  "Sloan's"  in  connection  with  the  Company's
supermarket  operations  for a period of five  years.  The  Sloan's  name has an
established  reputation in the areas served by the Supermarkets for convenience,
competitive  prices,   service  and  a  wide  variety  of  quality  produce  and
merchandise.

While the Company is not aware that its use of the tradename  infringes upon the
rights of any  persons,  SAC has not  obtained  any  federal or state  trademark
registration  for the  tradename.  The  assertion  by a third  party of superior
rights in the tradename or the loss of the Company's  right to use the tradename
could have a material adverse effect on the Company.

LABOR CONTRACTS

All of the  employees of the Company  other than three  executives  and 12 store
managers are  represented  by unions.  The Company has entered into a collective
bargaining agreement with Retail,  Wholesale & Chain Store Food Employees Union,
Local 338 and Amalgamated  Meat Cutters and Retail Food Store  Employees  Union,
Local  342-50  for terms  expiring  on  October 3, 1998 and  October  23,  1999,
respectively. The Company has entered into collective bargaining agreements with
United Food and Commercial  Workers  International  Union,  Local 174 for a term
expiring on December 19, 1998.

GOVERNMENTAL APPROVALS

All of the stores have obtained all necessary governmental  approvals,  licenses
and permits to operate the Supermarkets.

EMPLOYEES

At May 22, 1997, the Company had  approximately  385  employees.  Other than for
three  executive  officers,  all  employees  of the Company are  employed at the
Supermarkets, and approximately 137 were employed on a full-time basis.


ITEM 2.  PROPERTIES.

The  Company  leases all  fifteen  Supermarket  locations.  Eight of such leases
expire on dates from 2001 through 2010, and seven of such leases expire on dates
from 2013 through 2018.  Thirteen of the  Supermarkets  are located in Manhattan
and two are located in Brooklyn,  New York. The Supermarkets  range in size from
approximately  5,000 to 16,000 square feet of selling  space,  averaging  10,500
square feet of selling space.

All of the stores are air-conditioned, have all necessary fixtures and equipment
and are suitable for the retail operations  conducted  thereat.  The Company has
completed phase one of a remodeling  program to refurbish the Supermarkets  (see
Item 1. "Business - Growth Strategy").


                                        5

<PAGE>

ITEM 3.   LEGAL PROCEEDINGS.

In June 1994, the United States Federal Trade  Commission (the "FTC")  commenced
an action alleging that the mergers by John Catsimatidis,  the Company and three
other entities controlled by Mr. Catsimatidis (collectively, the "companies") of
32 Sloan's  Supermarkets  between 1991 and 1993 violated Federal  antitrust laws
because the effect of the mergers might be substantially  to lessen  competition
among  supermarkets  within  four  Manhattan  residential   neighborhoods.   The
complaint   indicated  that  the  FTC  could  seek  divestiture  of  up  to  ten
supermarkets owned by the companies.

In order to avoid the costs of  protracted  litigation in the matter and without
admitting  that any antitrust law was violated as alleged in the  complaint,  on
November 21, 1994,  the companies  entered into a settlement  agreement with the
Acting  Director of the Bureau of  Competition  of the FTC  regarding the claims
made by the FTC against them (the "Settlement Agreement").  The companies agreed
in the  Settlement  Agreement that within twelve months from the date of a final
order in the  proceeding  they would  divest  themselves  of an aggregate of six
supermarkets  in Manhattan,  chosen by them from a list of sixteen  supermarkets
specifically  designated in the Settlement Agreement (none of which are owned by
the Company) and certain  alternate  supermarkets  referenced in the  Settlement
Agreement  (five of  which  were  then  owned by the  Company).  Nothing  in the
Settlement  Agreement  required  the  Company  to  divest  itself  of any of its
supermarkets,  but divestiture of supermarkets  owned by the Company would count
towards satisfaction of the divestiture obligations.

An order  embodying the Settlement  Agreement was made  effective  March 6, 1995
(the  "Order").  Pursuant to that Order,  for a period of 10 years from March 6,
1995, the companies cannot, without prior FTC approval,  acquire any interest in
any existing  supermarket in a designated  area. The order does not restrict the
companies from acquiring an interest in a supermarket by leasing or purchasing a
new location that at the time of merger (and for six months prior to the merger)
is not being operated as a supermarket.

In March 1996, an application (the  "Application")  was made to modify the Order
so as to lift the divestiture  requirements other than with respect to one store
on the Upper West Side which was not owned by the Company.  The FTC approved the
divestiture of that store and its  divestiture  was completed on May 9, 1996. On
April 29,  1996,  the  Application  was revised;  and it was further  revised in
August  and  September  so  as  to  seek  relief  solely  with  respect  to  the
requirements  of  divestiture  of any  supermarkets  in the  Chelsea  section of
Manhattan.

On September 13, 1996, the FTC granted the Application as modified,  and deleted
the requirements of divestiture in Chelsea. Simultaneously,  the FTC appointed a
trustee to divest four  supermarkets  pursuant to the Order,  as  modified.  The
trustee was not granted any authority to divest until the FTC approved a trustee
agreement  between the trustee and the companies.  An agreement was entered into
with the trustee which would have been effective upon approval by the FTC.

Subsequent to the  modification  of the Order,  SAC,  Gristede's and RAS sold an
aggregate of four stores in compliance  with the  divestiture  provisions of the
Order,  as  modified.  Based  thereon,  the  trustee  agreement  will not become
effective.


                                        6

<PAGE>



A settlement of FTC claims relating to the  divestiture  provisions of the Order
has been  agreed to  pursuant  to which  $600,000  has been paid to the FTC.  No
portion of such amount was borne by the companies.

On August 8, 1994,  a lawsuit  against  the  Company  and Mr.  Catsimatidis  was
instituted in the United States District Court for the Southern  District of New
York by RMED International, Inc. ("RMED"), a former stockholder of the Company.

The  complaint  alleges,  among other  things,  that RMED and a purported  class
consisting of persons who purchased the Company's common stock on or after March
19, 1993 were damaged by alleged  nondisclosures  in certain filings made by the
Company with the Securities  and Exchange  Commission  between  January 1993 and
June 1994 relating to an  investigation  by the FTC. The complaint  alleges that
such  nondisclosures  constituted  violations  of  Federal  and New  York  State
securities  laws,  as well as common  law fraud  and  seeks  damages  (including
punitive  damages) in an unspecified  amount (although in discovery  proceedings
the named plaintiff has claimed that its damages were  approximately  $800,000),
as well as costs and  disbursements of the action.  On June 2, 1994, the Company
issued a press release which disclosed the FTC action.

     On September 30, 1994, the defendants filed a motion to dismiss for failure
to state a cause of action and for lack of subject matter  jurisdiction over the
state claims. The motion was denied. In June 1995, RMED filed a motion for class
certification,  and discovery was held in abeyance  pending  disposition of that
motion.  The motion was granted in March 1996 and  discovery is now  proceeding.
Management  believes that the lawsuit is without merit and intends to defend the
action vigorously; however, the outcome cannot be determined.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.

     NONE

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS.

The Company's  Common Stock is listed and traded on the American  Stock Exchange
under stock symbol "SLO." For the two fiscal years ended March 2, 1997 and March
3, 1996,  the quarterly  high and low price range for such common stock is shown
in the following tabulation:

                             1997                            1996
--------------------------------------------------------------------------------
    Quarter           High           Low              High           Low
--------------- ------------------------------  --------------------------------
First                3-3/4          2-7/8             5-1/4         4-1/16
Second               3-1/2          2-1/2             5-3/4         3-5/8
Third                3-3/8          2-1/4               5           3-5/8
Fourth               3-1/16         1-7/8               4           3-1/8
--------------------------------------------------------------------------------


                                        7

<PAGE>


The approximate number of holders of record of the Company's Common Stock on May
22, 1997 was 236. The Company  believes that there are a  significant  number of
shares of the Company's Common Stock held in street name and, consequently,  the
Company is unable to determine the actual number of beneficial owners.

The  Company  has never paid a cash  dividend  on its Common  Stock and does not
expect to pay a cash dividend in the near future.

Under its Loan and Security  Agreement with European American Bank ("EAB"),  the
Company is restricted from paying dividends on its Common Stock so long as there
is  outstanding  indebtedness  to EAB.  As of March  2,  1997,  the  outstanding
indebtedness to EAB under the agreement was approximately $6,400,000.

                                        8

<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>

                                                                                       Fiscal Year
                                                   --------------------------------------------------------------------------------
                                                          1993             1994             1995             1996             1997
                                                                       (49 weeks)       (52 weeks)       (53 weeks)       (52 weeks)
-----------------------------------------------------------------------------------------------------------------------------------
                                                                       (in thousands, except per share data)
<S>                                                   <C>               <C>              <C>              <C>                <C>   
Sales .........................................            --           $ 44,975         $ 48,367         $ 50,279           51,793
Cost of sales .................................            --             29,591           30,919           31,036           31,184
-----------------------------------------------------------------------------------------------------------------------------------
         Gross profit .........................            --             15,384           17,448           19,243           20,609
Store operating, general and
     administrative expenses ..................            --             14,172           15,624           16,811           17,740
Management fee ................................            --                562              605              629              645
-----------------------------------------------------------------------------------------------------------------------------------
         Store operating profit ...............            --                650            1,219            1,803            2,224
Nonstore operating expense ....................            --                266              395              414              288
-----------------------------------------------------------------------------------------------------------------------------------
         Operating profit .....................            --                384              824            1,389            1,936
-----------------------------------------------------------------------------------------------------------------------------------
Other income (expense):
     Interest income ..........................             149               24               34               37               23
     Other income (expense) ...................            (524)              28                7               17              (41)
     Interest expense .........................            --               (342)            (405)            (551)            (710)
     Gain on sale of leasehold
         interests ............................            --               --               --              1,001             --
-----------------------------------------------------------------------------------------------------------------------------------
                                                           (375)            (290)            (364)             504             (728)
-----------------------------------------------------------------------------------------------------------------------------------
         Income (loss) before
              provision for
              income taxes,
              discontinued
              operations and
              extraordinary
              item(1) .........................            (375)              94              460            1,893            1,208
Provision for income taxes ....................            --                 10               80               62               48
-----------------------------------------------------------------------------------------------------------------------------------
         Income (loss) before
              discontinued
              operations and
              extraordinary
              item(1) .........................            (375)              84              380            1,831            1,160
Income (loss) from discontinued
     operations ...............................            (296)              78              (18)            --               --
Extraordinary item(1) .........................            --               --               --                (89)            --
-----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) .............................        $   (671)        $    162         $    362         $  1,742         $  1,160
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) per share of
     common stock:
         Before discontinued
              operations and
              extraordinary item  .............        $   (.16)        $    .03         $    .13         $    .58         $    .37
         Discontinued operations ..............            (.12)             .03             (.01)            --               --
         Extraordinary item(1) ................            --               --               --               (.03)            --
-----------------------------------------------------------------------------------------------------------------------------------
                                                       $   (.28)        $    .06         $    .12         $    .55         $    .37
-----------------------------------------------------------------------------------------------------------------------------------
Cash dividend paid ............................        $   --           $   --           $   --           $   --           $   --
-----------------------------------------------------------------------------------------------------------------------------------
Balance sheet data:
     Working capital (deficit) ................        $  3,336         $ (3,241)        $ (3,025)        $ (2,458)        $ (1,087)
     Total assets .............................           4,332           17,624           16,391           22,094           22,815
     Long-term debt ...........................            --              4,158            2,743            5,400            4,200
     Stockholders' equity .....................           3,957            4,119            5,256            6,998            8,158
-----------------------------------------------------------------------------------------------------------------------------------

<FN>

--------

1 Extraordinary item is a loss on early extinguishment of long-term debt.
</FN>
</TABLE>

                                        9

<PAGE>



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.

COMPANY BACKGROUND

The fiscal year ended February 26, 1995  consisted of 52 weeks.  The fiscal year
ended March 3, 1996  consisted of 53 weeks.  The fiscal year ended March 2, 1997
consisted of 52 weeks.

RESULTS OF OPERATIONS (1997 COMPARED TO 1996)

Net income was $1,159,678 for the fiscal year ended March 2, 1997 as compared to
$1,742,266 for the fiscal year ended March 3, 1996.  The 1996 income  included a
gain of $1,001,397 on the sale of the  leasehold of one  supermarket  during the
year.

Sales for the 1997 fiscal year were  $51,792,539 as compared to $50,279,245  for
fiscal year 1996. The increase in sales was primarily due to the fact that three
stores  acquired  during 1996 were open for the entire 1997 year, as well as the
opening of two additional stores at the beginning of the 1997 year. The increase
in sales  generated by the  additional  stores was partially  offset by the fact
that the prior year  consisted of 53 weeks as compared  with 52 weeks in 1997 as
well as a decline in same store sales of $3,949,350  (after  adjusting 1996 same
store sales  downward to reflect a comparable 52 week period).  Same store sales
declined due to (a) management's decision to seek higher margins over sales, (b)
a decrease in the selling price of cereals and (c) a reduction in beverage sales
during  the  summer  months  of 1997 as  compared  to the same  period  in 1996.
Beverage sales,  which ordinarily  represent  approximately 17% of summer sales,
were negatively impacted by the abnormally cool weather in the New York area.

Gross  profit  was  $20,608,413  (39.79%  of  sales)  in  1997  as  compared  to
$19,243,125 (38.27% of sales) in 1996. The improvement in the 1997 period mainly
reflects  the   implementation  of  the  better  buying  program  utilizing  the
distribution center of an affiliate to make bulk purchases, on a direct basis at
better  prices,  as well as the  expansion of the sales of  value-added,  higher
margin products. Additionally, prices were selectively increased.

Store operating,  general and  administrative  expenses were $17,739,680 in 1997
(34.25% of sales) as  compared  to  $16,811,184  (33.44% of sales) in 1996.  The
primary  reasons  for  the  increase  were  the  expenses  associated  with  the
additional  stores  operating in the 1997 year and the extra costs incurred with
the start-up of the new stores.

Nonstore operating expense decreased to $287,966 in 1997 as compared to $414,165
in 1996, mainly as a result of lower legal expense.

Interest  expense was $709,454 in 1997 as compared  with  $551,631 in 1996.  The
increase is  attributable  to the additional  borrowing  incurred to finance the
purchase of the three stores acquired during fiscal 1996.

RESULTS OF OPERATIONS (1996 COMPARED TO 1995)

Net income was  $1,742,266 for the year ended March 3, 1996 compared to $362,088
for the year  ended  February  26,  1995.  The 1996  income  includes  a gain of
$1,001,397  on the sale of the leasehold of one of its  supermarkets  during the
year.


                                       10

<PAGE>


Sales in 1996 were $50,279,245  compared to $48,366,513 in 1995. The increase in
sales is primarily due to 1996 having 53 weeks  compared to 52 weeks in 1995 and
the fact that three additional stores were operated for part of 1996.

Gross profit was $19,243,125  (38.27%) in 1996 compared to $17,447,668  (36.07%)
in 1995.  Gross profit has  continued  to increase as a result of improved  cost
controls,  more  efficient  inventory  purchasing  and  a  better  product  mix.
Advertising and volume  achievement  allowances  from vendors  continued to be a
significant  portion of gross  profit.  During 1996,  the Company  recognized as
income  approximately  $1,141,000 of these  allowances from vendors  compared to
approximately  $1,350,000  during 1995. This decrease is primarily the result of
fewer new products being introduced by vendors during fiscal 1996 as compared to
fiscal 1995. The deferred  portion of the advertising  income was  approximately
$172,000 at March 3, 1996  compared to  approximately  $354,000 at February  26,
1995.

Store operating, general and administrative expenses increased to $16,811,184 in
1996 from  $15,623,576  in 1995. As a percentage of sales,  these  expenses were
33.4% and 32.3% for 1996 and 1995,  respectively.  The increase is primarily due
to additional  depreciation  and  amortization  applicable  to the  Supermarkets
acquired,  the  additional  costs  incurred in opening the new  Supermarket  and
additional payroll costs associated with a new union contract, which took effect
during fiscal 1996.

Nonstore  operating  expenses increased to $414,165 in 1996 compared to $395,400
in 1995. As a percentage of sales,  nonstore  operating expenses remained fairly
constant.  Interest  expense  increased to $551,631 in 1996 from  $406,193.  The
increase is primarily the result of the additional bank loan for the purchase of
the three Supermarkets.

LIQUIDITY AND CAPITAL RESOURCES

During the fiscal  year ended  March 2, 1997,  the  Company  reduced its working
capital deficiency by approximately $1,373,000 and reduced its long-term debt by
$1,200,000.

Sales and gross  profits  have  increased  in each of the last  three  years and
management  anticipates that this trend will continue,  along with the continued
generation of significant cash flows from operations.

INFLATION

The  Company  does not  believe  that  inflation  has had,  or will  have in the
foreseeable future, a material impact upon the Company's operating results.


                                       11

<PAGE>



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




                                                               Page No.
                                                               --------

Report of independent certified public accountants                 F-1

Consolidated financial statements:
   Balance sheets                                            F-2 - F-3
   Statements of operations                                        F-4
   Statements of stockholders' equity                              F-5
   Statements of cash flows                                        F-6
   Notes to consolidated financial statements               F-7 - F-24


                                       12

<PAGE>

Report of Independent Certified Public Accountants


Board of Directors and Stockholders of
    Sloan's Supermarkets, Inc.
New York, New York

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Sloan's
Supermarkets,  Inc. and  subsidiaries as of March 2, 1997 and March 3, 1996, and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash flows for each of the three years in the period ended March 2, 1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable  assurance about whether the  consolidated  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 consolidated  financial statements referred to above present
fairly,   in  all  material   respects,   the  financial   position  of  Sloan's
Supermarkets,  Inc. and  subsidiaries as of March 2, 1997 and March 3, 1996, and
the results of their operations and their cash flows for each of the three years
in the period  ended  March 2,  1997,  in  conformity  with  generally  accepted
accounting principles.



May 30, 1997



                                       F-1

<PAGE>

<TABLE>
<CAPTION>

                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                           Consolidated Balance Sheets



                                                                                                 March 2, 1997         March 3, 1996
                                                                                                   -----------           -----------
<S>                                                                                                <C>                  <C>         
Assets
Current:
   Cash                                                                                            $    70,237          $     71,242
   Accounts receivable - net of allowance for doubtful accounts of
      $30,000 in both years ............................................................               501,916               282,182
   Inventory ...........................................................................             5,873,991             5,461,283
   Prepaid expenses and other current assets ...........................................               299,887               167,512
   Due from related parties ............................................................             1,830,127               527,694
                                                                                                   -----------           -----------
        Total current assets ...........................................................             8,576,158             6,509,913
                                                                                                   -----------           -----------
Property and equipment:
   Furniture, fixtures and equipment ...................................................             5,466,456             5,461,146
   Leasehold interests and improvements ................................................            11,704,425            11,657,126
                                                                                                   -----------           -----------
                                                                                                    17,170,881            17,118,272
   Less:  Accumulated depreciation and amortization ....................................             4,527,506             2,947,116
                                                                                                   -----------           -----------
        Net property and equipment .....................................................            12,643,375            14,171,156
                                                                                                   -----------           -----------
Due from affiliates ....................................................................               337,304               318,005
                                                                                                   -----------           -----------
Deposits and other assets ..............................................................               313,585               301,230
                                                                                                   -----------           -----------
Deferred costs .........................................................................               115,489               115,358
                                                                                                   -----------           -----------
Noncompete agreement - net of accumulated amortization of
   $311,567 and $232,535, respectively .................................................               478,749               557,781
                                                                                                   -----------           -----------
Deferred finance costs - net of accumulated amortization of
   $35,048 and $9,190, respectively ....................................................               350,801               120,105
                                                                                                   -----------           -----------
                                                                                                   $22,815,461           $22,093,548
                                                                                                   -----------           -----------

See accompanying notes to consolidated financial statements.

</TABLE>

                                       F-2

<PAGE>

<TABLE>
<CAPTION>

                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                           Consolidated Balance Sheets



                                                                                              March 2, 1997           March 3, 1996
                                                                                               ------------            ------------
<S>                                                                                            <C>                     <C>         
Liabilities and Stockholders' Equity
Current:
   Accounts payable, trade .........................................................           $  6,593,412            $  5,591,948
   Accrued payroll, vacation and withholdings ......................................                491,857                 703,785
   Accrued expenses and other current liabilities ..................................                377,431                 473,506
   Revolving credit facility .......................................................              1,000,000               1,000,000
   Current portion of long-term debt ...............................................              1,200,000               1,200,000
                                                                                               ------------            ------------
        Total current liabilities ..................................................              9,662,700               8,969,239
Long-term debt .....................................................................              4,200,000               5,400,000
Deferred credits ...................................................................                   --                   172,442
Deferred rent ......................................................................                794,645                 553,429
                                                                                               ------------            ------------
        Total liabilities ..........................................................             14,657,345              15,095,110
                                                                                               ------------            ------------
Commitments and contingencies
Stockholders' equity:
   Preferred stock, $50 par - shares authorized 500,000; none
      issued .......................................................................                   --                      --
   Common stock, $0.02 par - shares authorized 10,000,000;
      outstanding 3,132,289 ........................................................                 62,646                  62,646
   Additional paid-in capital ......................................................             18,248,286              18,248,286
   Accumulated deficit .............................................................            (10,152,816)            (11,312,494)
                                                                                               ------------            ------------
        Total stockholders' equity .................................................              8,158,116               6,998,438
                                                                                               ------------            ------------
                                                                                               $ 22,815,461            $ 22,093,548
                                                                                               ============            ============

See accompanying notes to consolidated financial statements.

</TABLE>

                                       F-3

<PAGE>


<TABLE>
<CAPTION>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                      Consolidated Statements of Operations



                                                                              March 2,              March 3,           February 26,
Year ended                                                                      1997                  1996                  1995
                                                                           ------------          ------------          ------------
<S>                                                                        <C>                   <C>                   <C>         
Sales ............................................................         $ 51,792,539          $ 50,279,245          $ 48,366,513
Cost of sales ....................................................           31,184,126            31,036,120            30,918,845
                                                                           ------------          ------------          ------------
        Gross profit .............................................           20,608,413            19,243,125            17,447,668
Store operating, general and administrative
   expenses ......................................................           17,739,680            16,811,184            15,623,576
Management fee ...................................................              644,811               628,491               604,582
                                                                           ------------          ------------          ------------
        Store operating profit ...................................            2,223,922             1,803,450             1,219,510
Nonstore operating expense .......................................              287,966               414,165               395,400
                                                                           ------------          ------------          ------------
        Operating profit .........................................            1,935,956             1,389,285               824,110
                                                                           ------------          ------------          ------------
Other income (expense):
   Interest income ...............................................               22,581                36,671                34,364
   Other income (expenses) - net .................................              (41,072)               17,218                 7,365
   Interest expense ..............................................             (709,454)             (551,631)             (406,193)
   Gain on sale of leasehold interests ...........................                 --               1,001,397                  --
                                                                           ------------          ------------          ------------
                                                                               (727,945)              503,655              (364,464)
                                                                           ------------          ------------          ------------
        Earnings before provision for income
           taxes, discontinued operations and
           extraordinary item ....................................            1,208,011             1,892,940               459,646
Provision for income taxes .......................................               48,333                62,000                80,059
                                                                           ------------          ------------          ------------
        Earnings before discontinued operations
           and extraordinary item ................................            1,159,678             1,830,940               379,587
Loss from discontinued operations ................................                 --                    --                 (17,499)
Extraordinary loss on early extinguishment of
   long-term debt ................................................                 --                 (88,674)                 --
                                                                           ------------          ------------          ------------
Net income .......................................................         $  1,159,678          $  1,742,266          $    362,088
                                                                           ------------          ------------          ------------
Income (loss) per share of common stock:
   Earnings before discontinued operations and ...................         $        .37          $        .58          $        .13
      extraordinary item
   Discontinued operations .......................................                 --                    --                    (.01)
   Extraordinary item ............................................                 --                    (.03)                 --
                                                                           ------------          ------------          ------------
                                                                           $        .37          $        .55          $        .12
                                                                           ------------          ------------          ------------
Weighted average common shares outstanding .......................            3,132,000             3,171,000             2,919,000
                                                                           ============          ============          ============


See accompanying notes to consolidated financial statements.

</TABLE>

                                       F-4

<PAGE>

<TABLE>
<CAPTION>

                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                 Consolidated Statements of Stockholders' Equity



Years ended March 2, 1997, March 3, 1996 and February 26, 1995

                                                      Common stock 
                                           -------------------------------        Additional                                Total
                                              Number of                              paid-in        Accumulated        Stockholders'
                                                 shares           Amount             capital            deficit             Equity
                                           ------------       ------------       ------------       ------------        ------------
<S>                                           <C>             <C>                <C>                <C>                 <C>         
Balance, February 27, 1994 .........          2,397,605       $     47,952       $ 15,850,610       $(11,779,478)       $  4,119,084
Exercise of stock options ..........            450,000              9,000            766,000               --               775,000
Declaration of 10% stock
   dividend ........................            284,684              5,694          1,631,676         (1,637,370)               --
Net income .........................               --                 --                 --              362,088             362,088
                                           ------------       ------------       ------------       ------------        ------------
Balance, February 26, 1995 .........          3,132,289             62,646         18,248,286        (13,054,760)          5,256,172
Net income .........................               --                 --                 --            1,742,266           1,742,266
                                           ------------       ------------       ------------       ------------        ------------
Balance, March 3, 1996 .............          3,132,289             62,646         18,248,286        (11,312,494)          6,998,438
Net income .........................               --                 --                 --            1,159,678           1,159,678
                                           ------------       ------------       ------------       ------------        ------------
Balance, March 2, 1997 .............          3,132,289       $     62,646       $ 18,248,286       $(10,152,816)       $  8,158,116
                                           ============       ============       ============       ============        ============

See accompanying notes to consolidated financial statements.

</TABLE>


                                       F-5

<PAGE>

<TABLE>
<CAPTION>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                      Consolidated Statements of Cash Flows


Year ended                                                                      March 2,        March 3,       February 26, 
                                                                                  1997             1996             1995
                                                                               ---------        ---------        --------- 
<S>                                                                          <C>              <C>              <C>        
Cash flows from operating activities:
   Net income ..........................................................     $ 1,159,678      $ 1,742,266      $   362,088
   Adjustments to reconcile net income to net cash provided by
      operating activities:
        Gain on sale of leasehold interests ............................            --         (1,001,397)            --
        Depreciation and amortization ..................................       1,699,677        1,279,604          976,505
        Extraordinary loss on early extinguishment of long-term
           debt ........................................................            --             88,674             --
        Changes in operating assets and liabilities, net of effect
           from acquisition of supermarkets:
              Restricted cash ..........................................            --             26,952            6,323
              Accounts receivable - net ................................        (219,734)          (5,334)         262,758
              Inventory ................................................        (412,708)        (826,866)        (318,607)
              Prepaid expenses and other current assets ................        (132,375)          60,553           94,640
              Due from related parties - net ...........................      (1,302,433)        (313,874)         237,485
              Receivable from officer ..................................         (19,299)         (20,788)         (17,906)
              Other assets .............................................         (12,355)         (34,084)         (73,119)
              Deferred credits .........................................            --             (5,605)         121,677
              Accounts payable, trade ..................................       1,001,464         (269,174)         277,935
              Accrued payroll, vacation and withholdings ...............        (211,928)         112,836         (163,920)
              Accrued expenses and other current liabilities ...........         (96,075)         278,296         (268,061)
              Accrued rent leveling ....................................         241,216          215,471           28,678
              Other credits ............................................        (172,442)        (181,213)        (148,447)
                                                                               ---------        ---------        --------- 
                Net cash provided by operating activities ..............       1,522,686        1,146,317        1,378,029
                                                                               ---------        ---------        --------- 
Cash flows from investing activities:
   Proceeds from sale of leaseholds - net ..............................            --          1,708,293             --
   Acquisition of new stores ...........................................            --         (5,781,000)            --
   Capital expenditures - net ..........................................         (52,609)        (763,527)        (393,563)
                                                                               ---------        ---------        --------- 
                Net cash used in investing activities ..................         (52,609)      (4,836,234)        (393,563)
                                                                               ---------        ---------        --------- 
Cash flows from financing activities:
   Deferred financing costs ............................................        (271,082)        (118,730)            --
   Repayments of bank loan .............................................      (1,200,000)      (4,195,614)      (1,089,912)
   Proceeds from bank loan .............................................            --          8,000,000             --
                                                                               ---------        ---------        --------- 
                Net cash provided by (used in) financing
                   activities ..........................................      (1,471,082)       3,685,656       (1,089,912)
                                                                               ---------        ---------        --------- 
Net decrease in cash ...................................................          (1,005)          (4,261)        (105,446)
Cash, beginning of year ................................................          71,242           75,503          180,949
                                                                               ---------        ---------        --------- 
Cash, end of year ......................................................     $    70,237      $    71,242      $    75,503
                                                                               =========        =========        =========

Supplemental disclosures of cash flow information:
   Cash paid for interest ..............................................     $   709,727      $   551,608      $   405,797
   Cash paid for taxes .................................................          52,971           46,080          155,499
                                                                               ---------        ---------        --------- 
Noncash transactions:
   Exercise of cash options ............................................     $      --        $      --        $   775,000
                                                                               ---------        ---------        --------- 

See accompanying notes to consolidated financial statements.

</TABLE>

                                       F-6

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements




1.   Business                 The operations of Sloan's  Supermarkets,  Inc. and
                              subsidiaries  ("Sloan's"  or the  "Company")  have
                              historically  consisted of the manufacture of cast
                              component parts for the fine jewelry industry. The
                              Company   changed   its  name   from   Designcraft
                              Industries, Inc. to its present name in 1993.

                              As a  result  of the  sale  of the  assets  of its
                              remaining  jewelry  businesses,   the  Company  no
                              longer operates in the fine jewelry  manufacturing
                              business.   On  March  19,   1993,   Namdor   Inc.
                              ("Namdor"),   a  wholly-owned  subsidiary  of  the
                              Company,  purchased  certain assets relating to 11
                              supermarkets  in the New  York  metropolitan  area
                              (the  "Supermarkets")  from CKMR Corporation.  The
                              purchased assets included machinery and equipment,
                              furniture,   fixtures,   leasehold   improvements,
                              inventory of supplies and  merchandise  located at
                              the  Supermarkets   and  a  noncompete   agreement
                              (amortized on a straight-line  basis over 10 years
                              - the life of the  agreement).  The net cash price
                              for the assets and the  noncompete  agreement  was
                              approximately  $8.8 million.  In addition,  at the
                              time  of  the  purchase,  Namdor  assumed  certain
                              accounts payable of the business's prior owners in
                              an amount of $5,000,000.

                              The acquisition of the Supermarkets by the Company
                              has been  accounted for as a purchase  transaction
                              in accordance  with  Accounting  Principles  Board
                              Opinion No. 16, "Business Combinations".  As such,
                              the  purchase  price has been  allocated to assets
                              acquired and  liabilities  assumed  based on their
                              estimated  fair  values.  The  excess  of the fair
                              value of assets acquired less liabilities  assumed
                              over   cost   has   been   allocated   to   reduce
                              proportionately  the values assigned to noncurrent
                              assets in determining their fair values.

                              On October 13, 1995, the Company  purchased  three
                              supermarket  store locations  including  furniture
                              and fixtures, leasehold improvements and inventory
                              from a company owned by the Chairman of the Board.
                              The purchase  price of  $5,000,000  was based on a
                              fair market evaluation performed by an independent
                              third party.  Such acquisition was financed with a
                              term loan.  In  addition,  the  Company  purchased
                              inventory at the locations at a cost of $781,000.


                                       F-7

<PAGE>



                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              On August 29,  1995,  the  Company  sold one store
                              leasehold to a third party for approximately  $1.7
                              million.  The  sale  resulted  in a  net  gain  of
                              approximately    $1.0    million.    The   store's
                              supermarket  equipment  was  transferred  to a new
                              store  location  which was opened during  February
                              1996.  In addition,  the Company  opened its first
                              health and beauty aid store during March 1996.  As
                              of the date of this report,  the Company  operates
                              14  supermarkets  and one  health  and  beauty aid
                              store.




2.   Summary of               PRINCIPLES OF CONSOLIDATION
     Significant
     Accounting Policies      The consolidated  financial statements include the
                              accounts  of Sloan's  Supermarkets,  Inc.  and its
                              wholly-owned     subsidiaries.     All    material
                              intercompany  accounts and transactions  have been
                              eliminated in consolidation.

                              FISCAL YEAR

                              The Company's fiscal year is comprised of 52 or 53
                              weeks ending on the Sunday closest to the last day
                              of February.  The 1997 year consisted of 52 weeks,
                              1996 of 53 weeks and 1995 of 52 weeks.

                              INVENTORIES

                              Store  inventories  are valued  principally at the
                              lower of cost or market with cost determined under
                              the retail method.

                              PROPERTY AND EQUIPMENT

                              Depreciation of furniture,  fixtures and equipment
                              is computed by the  straight-line  method over the
                              estimated  useful lives of the assets,  with lives
                              ranging   from  seven  to  ten  years.   Leasehold
                              improvements  are  amortized  over the  shorter of
                              their estimated  useful lives or the lease term by
                              the straight-line method.


                                       F-8

<PAGE>

                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              (a) LEASES

                              The  Company  charges  the  cost of  noncancelable
                              operating lease payments and beneficial leaseholds
                              to  operations on a  straight-line  basis over the
                              lives of the leases.

                              Included  in  income  for the  fiscal  year  ended
                              February   26,  1995  are  benefits  of  $143,000,
                              related to charges  taken in the prior fiscal year
                              for deferred rents.

                              (b) DEFERRED ADVERTISING

                              Advertising    rebates   and   space    allocation
                              allowances  are deferred and  recognized  over the
                              period of the agreement.

                              INCOME PER SHARE

                              Per share data are based on the  weighted  average
                              number of shares of common  stock and common stock
                              equivalents  outstanding  during each year. Income
                              (loss) per share is computed by the treasury stock
                              method;  primary and fully  diluted  income (loss)
                              per share are the same.  The 10% stock dividend in
                              fiscal 1995 has been retroactively  applied to all
                              periods presented.

                              INCOME TAXES

                              The  Company   follows   Statement   of  Financial
                              Accounting  Standards  No.  109,  "Accounting  for
                              Income  Taxes"  ("SFAS  109"),  which  requires  a
                              liability  method of accounting  for income taxes.
                              Under the liability method,  deferred income taxes
                              are  recognized  for  the  tax   consequences   of
                              "temporary  differences"  by  applying  applicable
                              statutory  tax rates to  differences  between  the
                              financial  statement  carrying amounts and the tax
                              bases of existing assets and liabilities.

                              The Company files a  consolidated  Federal  income
                              tax  return  that  includes  the  accounts  of its
                              subsidiaries.  The  Company  and its  subsidiaries
                              file separate state and local income tax returns.


                                       F-9

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements





                              FAIR VALUE OF FINANCIAL INSTRUMENTS

                              The  carrying  values  of  financial   instruments
                              including  cash,  accounts  receivable,   accounts
                              payable and due from related  parties  approximate
                              fair  value  at March 2,  1997 and  March 3,  1996
                              because of the relative short  maturities of these
                              instruments.

                              The   aggregate   fair  value  of  the  bank  debt
                              approximates  its carrying  amount  because of its
                              recent and  frequent  repricing  based upon market
                              conditions.

                              RECLASSIFICATIONS

                              Certain  reclassifications  have  been made to the
                              presentations  for fiscal 1996 and 1995 to conform
                              to the presentation for fiscal 1997.

                              ESTIMATES

                              The   preparation   of  financial   statements  in
                              conformity  with  generally  accepted   accounting
                              principles  requires  management to make estimates
                              and assumptions  that affect the reported  amounts
                              of  assets  and   liabilities  and  disclosure  of
                              contingent  assets and  liabilities at the date of
                              the financial  statements and the reported amounts
                              of  revenues  and  expenses  during the  reporting
                              period.  Actual  results  could  differ from those
                              estimates.

                              LONG-LIVED ASSETS

                              During 1995,  Statement  of  Financial  Accounting
                              Standards No. 121,  "Accounting for the Impairment
                              of Long-lived  Assets and for Long-lived Assets to
                              Be Disposed Of" ("SFAS 121"), was issued. SFAS 121
                              requires the Company to review  long-lived  assets
                              and certain  identifiable  assets related to those
                              assets for impairment  whenever  circumstances and
                              situations change such that there is an indication
                              that the carrying  amounts may not be recoverable.
                              If  the  undiscounted  future  cash  flows  of the
                              enterprise are less than their  carrying  amounts,
                              their  carrying  amounts are reduced to fair value
                              and an impairment loss is recognized. The adoption
                              of this  pronouncement in fiscal 1997 did not have
                              a significant  impact on the  Company's  financial
                              statements.


                                      F-10

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              STOCK OPTIONS

                              The Company  accounts for all  transactions  under
                              which  employees  receive shares of stock or other
                              equity  instruments  in the Company or the Company
                              incurs  liabilities  to employees in amounts based
                              on the price of its stock in  accordance  with the
                              provisions of Accounting  Principles Board Opinion
                              No.   25,   "Accounting   for   Stock   Issued  to
                              Employees".  The  Company has not adopted the fair
                              value  method   encouraged  but  not  required  by
                              Statement of Financial  Accounting  Standards  No.
                              123,  "Accounting for  Stock-Based  Compensation".
                              Appropriate  pro forma and other  information  has
                              been included herein.



3.   Related Party            The Company has advanced funds to companies  owned
     Transactions             by the  Chairman  of the  Board  who is  also  the
                              principal  stockholder of the Company. As of March
                              2, 1997 and March 3,  1996,  the  Company  is owed
                              approximately  $337,000  and  $318,000,  including
                              $133,304   and   $114,005  of  accrued   interest,
                              respectively. Such advances bear interest at prime
                              plus  1.25% per annum  (9.50% at March 2, 1997 and
                              9.50% at March 3, 1996).


                                      F-11

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              Red Apple Group, Inc. ("Red Apple"), a corporation
                              wholly  owned  and  controlled  by  the  Company's
                              Chairman of the Board,  supervises  all operations
                              of  the  Supermarkets  pursuant  to  a  management
                              agreement   entered   into  in  March   1993  (the
                              "Management Agreement").  The Management Agreement
                              is  terminable  by either  party  after  March 19,
                              1998.   The   term   of   the   agreement    shall
                              automatically be extended for additional  one-year
                              periods  unless  either  party has given the other
                              notice of  termination no later than 90 days prior
                              to the end of the previous term. As of the date of
                              this  report,  no such notice has been given.  The
                              Management  Agreement  requires the Company to pay
                              to Red Apple a quarterly fee equal to 1.25% of all
                              sales  made  in  or  from  the  Supermarkets.  The
                              quarterly   fee  payable   under  the   Management
                              Agreement  does not  necessarily  equal  the costs
                              which  would have been or may be  incurred  by the
                              Company on a stand-alone basis.

                              The Company has various  amounts  receivable  from
                              supermarket companies owned by the Chairman of the
                              Board   related  to  the   allocation  of  volume,
                              advertising  and  other  rebates  to the  Company.
                              Rebates,  whether allocated or directly attributed
                              to the Company, are recorded as reductions to cost
                              of sales or  advertising  expense over the life of
                              the  related   agreement.   Rebates   recorded  as
                              reductions to expenses approximated $1.7, $1.1 and
                              $1.4 million  during  fiscal 1997,  1996 and 1995,
                              respectively.

                              Red Apple also provides  maintenance  services for
                              the   Company   which  are  not   covered  by  the
                              Management   Agreement.   Such  services   include
                              supermarket    refrigeration,    electrical    and
                              equipment  maintenance.  During the 1997, 1996 and
                              1995   fiscal   years,    the   Company   incurred
                              approximately    $-0-,   $123,000   and   $90,000,
                              respectively.


                                      F-12

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              City Produce  Distributors,  Inc.,  a  corporation
                              indirectly  wholly  owned  and  controlled  by the
                              Chairman of the Board,  sells  produce and certain
                              grocery items to the Company at prices  consistent
                              with other third  parties.  During the 1997,  1996
                              and 1995 fiscal years,  such purchases  aggregated
                              approximately    $5,263,000,     $3,618,000    and
                              $2,900,000, respectively.

                              Newspaper  advertising  for  the  Supermarkets  is
                              frequently   pooled  with  advertising  for  other
                              supermarkets  which are not  owned by the  Company
                              but  which  are  operated  by  Red  Apple  or  its
                              affiliates  under the Sloan's name. In such cases,
                              the  Company  pays a  proportionate  share of such
                              advertising  expenses  based  upon its  number  of
                              Supermarkets  covered in the advertisements.  Such
                              amounts  allocated  to  the  Company  approximated
                              $115,000,  $136,000  and  $139,000  during  fiscal
                              1997, 1996 and 1995, respectively.

                              At March 2, 1997 and March 3, 1996, the net amount
                              due from related parties  resulting from the above
                              transactions  amounted to $1,830,127 and $527,694,
                              respectively.

                              Lowenthal,  Landau,  Fischer & Bring,  P.C., a law
                              firm  of  which a  director  of the  Company  is a
                              member,  was paid $219,000,  $213,000 and $117,000
                              in  fees  for  rendering  legal  services  to  the
                              Company  during the fiscal  years  ended  March 2,
                              1997,   March  3,  1996  and  February  26,  1995,
                              respectively.


4.   Commitments and          The   Company   operates   primarily   in   leased
     Contingencies            facilities,  under noncancelable  operating leases
                              expiring at various dates  through  2018.  Certain
                              leases  provide for  contingent  rents (based upon
                              store sales exceeding stipulated amounts or on the
                              Consumer  Price  Index),  escalation  clauses  and
                              renewal  options  ranging  from  five  to  fifteen
                              years.  The Company is obligated  under all leases
                              to  pay  for  taxes,  insurance  and  common  area
                              maintenance expenses.




                                      F-13

<PAGE>



                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              Rent expense under noncancelable operating leases,
                              including  leases  with  related  parties  for the
                              fiscal  years ended  March 2, 1997,  March 3, 1996
                              and  February  26,  1995,   respectively,   is  as
                              follows:

                      March 2,       March 3,      February 26,
Year ended              1997           1996            1995
----------------------------------------------------------------
Base rents           $2,781,602     $2,350,162      $1,972,164
Contingent rents         30,000         30,000          30,000
----------------------------------------------------------------
Rent expense         $2,811,602     $2,380,162      $2,002,164
----------------------------------------------------------------



                              Future    minimum    lease    commitments    under
                              noncancelable leases as of March 2, 1997 are:


Fiscal year ending
------------------------------------------------
1998                              $  2,215,556
1999                                 2,036,400
2000                                 1,962,441
2001                                 2,009,949
2002                                 1,946,376
Thereafter                          20,559,901
------------------------------------------------
                                   $30,730,623
------------------------------------------------



                              The Company may also expand its operations through
                              acquisitions  of  supermarkets  and/or  businesses
                              which the Company  believes  would  complement its
                              core   supermarket   business.   The   Company  is
                              continuing to pursue the possibility of purchasing
                              additional supermarkets from other companies owned
                              by John Catsimatidis.


                                      F-14

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



5.   Income Taxes             The Company  adopted  SFAS 109 which,  among other
                              things, requires a change from the deferred method
                              to the liability  method of accounting  for income
                              taxes  and  allows  recognition  of  deferred  tax
                              assets based on the likelihood of realization of a
                              tax  benefit  in  future  years.  Pursuant  to the
                              adoption of SFAS 109,  deferred  income  taxes are
                              provided for the temporary differences between the
                              tax basis and financial accounting reporting basis
                              of the Company's net assets and liabilities.

                              Deferred  tax  expense or benefit is the change in
                              the computed tax asset or liability balance. As of
                              March 2, 1997,  the Company had total deferred tax
                              assets  of   approximately   $720,000,   of  which
                              approximately $680,000 is related to net operating
                              loss  carryforwards  which are available to offset
                              income earned in future years,  and  approximately
                              $230,000 in deferred  tax  liabilities  related to
                              excess  tax  depreciation.  The net  deferred  tax
                              assets  at March 2,  1997 and  March 3,  1996 were
                              offset  by  a  valuation  allowance  of  an  equal
                              amount. Accordingly, no deferred income taxes were
                              recognized in any of the periods.

                              The  Company  utilized  approximately  $1,200,000,
                              $1,700,000   and  $-0-  of  net   operating   loss
                              carryforwards  during fiscal 1997,  1996 and 1995,
                              respectively, the benefit of which offsets current
                              income  taxes  payable.  As of March 2, 1997,  the
                              Company had available  Federal net operating  loss
                              carryforwards  of  approximately   $2,000,000,  of
                              which the tax benefits of  $1,000,000  when and if
                              realized,  will be credited directly to additional
                              paid-in capital.

                              The income tax expense amounts in the consolidated
                              statements of  operations  consist of state income
                              taxes and Federal alternative minimum taxes.



                                      F-15

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements





6.   Debt                     CREDIT FACILITY AND TERM LOAN AGREEMENT

                              On October 13,  1995,  the Company  entered into a
                              five-year credit agreement with European  American
                              Bank which replaced its previous credit agreement.
                              The new agreement includes a $1,000,000  revolving
                              credit  facility and $7,000,000 term loan. The new
                              agreement,  which permits  borrowings based on the
                              prime  rate  plus   1.25%,   contains   covenants,
                              representations  and events of default  typical of
                              credit facility  agreements,  including  financial
                              covenants which require the Company to meet, among
                              other  things,  debt service  coverage  ratios and
                              fixed  charge  coverage  ratios  and  which  limit
                              advances to  affiliates.  Similar to the Company's
                              prior credit agreements,  the new revolving credit
                              facility  and term loan is secured  by  equipment,
                              general intangibles and accounts receivable.


                              Long-term debt consists of the following:


                                                     March 2,          March 3,
                                                       1997              1996
                                                   ----------        ---------- 
Loan payable to bank at prime plus 1.25% per
   annum (9.5% at March 2, 1997), interest
   payable monthly in arrears, principal
   payable in monthly installments of $100,000
   beginning November 13, 1995
   (collateralized by certain assets of the
   Company, including store equipment and
   leases) ....................................   $ 5,400,000      $  6,600,000
Less:   Current portion ........................   (1,200,000)       (1,200,000)
                                                   ----------        ---------- 
                                                  $ 4,200,000      $  5,400,000
                                                  ===========      ============


                              Deferred  financing  costs  related  to  the  loan
                              payable to bank are being  amortized over the life
                              of  the   related   debt.   As  a  result  of  the
                              refinancing of the credit  agreement,  the Company
                              wrote off deferred financing costs which pertained
                              to the previous credit agreement. The write-off of
                              $88,674 is reflected in the consolidated financial
                              statements as an extraordinary item.


                                      F-16

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              Principal maturities of long-term debt follow:

                              1998 ...................  $1,200,000

                              1999 ...................   1,200,000

                              2000 ...................   1,200,000

                              2001 ...................   1,800,000
                                                         ---------
                                                        $5,400,000
                                                        ==========



7.  Stockholders' Equity      On November 16, 1994,  the Company  declared a 10%
                              stock  dividend  payable  on January  20,  1995 to
                              stockholders of record on December 20, 1994.

                              Earnings  per share and  weighted  average  shares
                              outstanding  have been restated to reflect the 10%
                              stock dividend.

8.  Retirement Plans          The  Company   participates   in  various  defined
                              contribution  multi-  employer union pension plans
                              which are  administered  jointly by management and
                              union   representatives  and  which  sponsor  most
                              full-time and certain  part-time union  employees.
                              The pension  expense for these plans  approximated
                              $630,000,  $800,000  and  $702,000 in fiscal 1997,
                              1996 and 1995,  respectively.  The Company  could,
                              under   certain   circumstances,   be  liable  for
                              unfunded  vested  benefits  or other  expenses  of
                              jointly administered union/management plans.




                                      F-17

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements


9.   Stock Option Plans       During  fiscal  1990,  the Company  granted to the
                              Chairman of the Board and principal stockholder of
                              the  Company  a   nonqualified   stock  option  to
                              purchase an aggregate of 200,000  shares of common
                              stock at a price of $5.00 per share. During fiscal
                              1993, the exercise price of these options had been
                              reduced to $2.00 per share (the fair market  value
                              at  that  date)  by  approval  of  the   Company's
                              stockholders.  During  fiscal  1991,  the  Company
                              granted the Chairman a  nonqualified  stock option
                              to  purchase  an  aggregate  of 250,000  shares of
                              common  stock at a price of $1.50  per  share.  On
                              October 20, 1994,  the options  were  exercised by
                              the Chairman.  The purchase  price for the options
                              exercised  were  paid  for  by  offsetting   loans
                              previously  made to the Company by the Chairman or
                              by companies controlled by the Chairman.

                              On  October  7,  1994,  the  Company  granted  the
                              Chairman an aggregate of 250,000  shares of common
                              stock at a price  of $4.12  per  share  (the  fair
                              market value at that date).

                              The Company  currently has one incentive grant and
                              four nonqualified grants under which stock options
                              may be  granted  to  officers,  directors  and key
                              employees  of  the  Company  - the  1994  Employee
                              Incentive  Grant  (the  "1994  Grant"),  the  1994
                              Nonqualified Grant (the "1994 NQ Grant"), the 1995
                              Chairman's  Nonqualified  Options (the "Chairman's
                              Grant"),  the 1994 Director's  Nonqualified  Grant
                              (the   "Directors'    Grant"),    and   the   1994
                              Nonqualified    Recruitment   Grant   (the   "1994
                              Recruitment   Grant").  The  options  to  purchase
                              common shares  generally are issued at fair market
                              value on the date of the grant,  begin  vesting on
                              the date of the  grant,  and expire ten years from
                              issuance  and  are   conditioned   upon  continual
                              employment during the vesting period.

                              Under the 1994  Grant  and the 1994 NQ Grant,  the
                              Company  granted options to purchase up to 100,000
                              and 35,000 shares of common stock, respectively.

                              In  addition  to  the  one  incentive  grant,  the
                              Company has granted  stock  options to certain key
                              executives  and  directors.  The vesting terms and
                              contractual  lives of these  grants are similar to
                              that of the incentive grant.

                              The Company applies  Accounting  Principles  Board
                              Opinion No. 25,  "Accounting  for Stock  Issued to
                              Employees,"  and related  interpretations  for its
                              stock  option  grants.   Generally,   compensation
                              expense is not recognized for stock option grants.


                                      F-18

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              In   accordance   with   Statement   of  Financial
                              Accounting  Standards  No.  123,  "Accounting  for
                              Stock-Based  Compensation" (SFAS 123), the Company
                              discloses   the  pro  forma  impact  of  recording
                              compensation  expense  utilizing the Black-Scholes
                              model.  The  Black-Scholes  option valuation model
                              was developed for use in estimating the fair value
                              of   traded   options   which   have  no   vesting
                              restrictions  and  are  fully   transferable.   In
                              addition,  option  valuation  models  require  the
                              input of highly subjective  assumptions  including
                              the expected stock price  volatility.  Because the
                              Company's   stock  options  have   characteristics
                              significantly   different  from  those  of  traded
                              options,  and  because  changes in the  subjective
                              input  assumptions can materially  affect the fair
                              value  estimate,   in  management's  opinion,  the
                              Black-Scholes model does not necessarily provide a
                              reliable  measure  of the fair  value of its stock
                              options.

                              The accounting  provisions of SFAS No. 123 did not
                              have an  effect  on the  Company's  pro  forma net
                              income  and  earnings  per share and thus have not
                              been presented.

                                      F-19

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              A summary  of the  status of the  Company's  stock
                              options is presented below:

                                                                Weighted Average
                                                      Shares      Exercise Price
--------------------------------------------------------------------------------
Balance, February 27, 1994 ...................          --           $   --
   Granted ...................................       473,000            4.29
   Exercised .................................          --               --
   Forfeited .................................          --               --
                                                     -------         -------

Balance, February 26, 1995 ...................       473,000            4.29
   Granted ...................................          --               --
   Exercised .................................          --               --
   Forfeited .................................        (9,000)           5.63
                                                     -------         -------

Balance, March 3, 1996 .......................       464,000            4.27
   Granted ...................................          --               --
   Exercised .................................          --               --
   Forfeited .................................        (8,000)           5.63
                                                     -------         -------

Balance March 2, 1997 ........................       456,000         $  4.24
                                                     =======         =======

                              Options  exercisable as of March 2, 1997, March 3,
                              1996 and February 26, 1995 were  442,800,  444,200
                              and 446,600, respectively.



                                      F-20

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              The following table  summarizes  information as of
                              March   2,   1997   concerning   outstanding   and
                              exercisable options:


--------------------------------------------------------------------------------
                       Options Outstanding                Options Exercisable
              ------------------------------------     -------------------------
                            Weighted
                            Average      Weighted                       Weighted
  Range of                  Remaining    Average                        Average
  Exercise    Number        Contractual  Exercise       Number          Exercise
    Prices    Outstanding   Life         Price          Exercisable     Price
--------------------------------------------------------------------------------
     $3.75     275,000        6.69        $3.75           275,000        $3.75

      5.63      33,000        6.81         5.63            33,000         5.63

      5.63      85,000        6.81         5.63            85,000         5.63

      3.81      30,000        7.69         3.81            30,000         3.81

      3.81      33,000        2.69         3.81            19,800         3.81
--------------------------------------------------------------------------------
$3.75-5.63     456,000        6.50         4.24           442,800         4.24
--------------------------------------------------------------------------------



10.  Litigation               In June 1994,  the  United  States  Federal  Trade
                              Commission   (the  "FTC")   commenced   an  action
                              alleging  that the  mergers by John  Catsimatidis,
                              the Company and three other entities controlled by
                              Mr. Catsimatidis  (collectively,  the "companies")
                              of 32 Sloan's  Supermarkets  between 1991 and 1993
                              violated Federal antitrust laws because the effect
                              of the mergers  might be  substantially  to lessen
                              competition   among   supermarkets   within   four
                              Manhattan residential neighborhoods. The complaint
                              indicated  that the FTC could seek  divestiture of
                              up to ten supermarkets owned by the companies.


                                      F-21

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              In  order  to  avoid  the   costs  of   protracted
                              litigation  in the  matter and  without  admitting
                              that any  antitrust law was violated as alleged in
                              the complaint, on November 21, 1994, the companies
                              entered  into  a  settlement  agreement  with  the
                              Acting  Director of the Bureau of  Competition  of
                              the  FTC  regarding  the  claims  made  by the FTC
                              against  them (the  "Settlement  Agreement").  The
                              companies agreed in the Settlement  Agreement that
                              within  twelve  months  from  the  date of a final
                              order  in  the   proceeding   they  would   divest
                              themselves of an aggregate of six  supermarkets in
                              Manhattan,  chosen by them from a list of  sixteen
                              supermarkets   specifically   designated   in  the
                              Settlement  Agreement  (none of which are owned by
                              the  Company) and certain  alternate  supermarkets
                              referenced in the  Settlement  Agreement  (five of
                              which were then owned by the Company).  Nothing in
                              the Settlement  Agreement  required the Company to
                              divest  itself  of any of  its  supermarkets,  but
                              divestiture of  supermarkets  owned by the Company
                              would   count   towards    satisfaction   of   the
                              divestiture obligations.

                              An order  embodying the  Settlement  Agreement was
                              made  effective   March  6,  1995  (the  "Order").
                              Pursuant to that  Order,  for a period of 10 years
                              from March 6, 1995, the companies cannot,  without
                              prior FTC  approval,  acquire any  interest in any
                              existing  supermarket  in a designated  area.  The
                              order  does  not  restrict  the   companies   from
                              acquiring an interest in a supermarket  by leasing
                              or  purchasing a new location  that at the time of
                              merger (and for six months prior to the merger) is
                              not being operated as a supermarket.

                              In March 1996, an application (the  "Application")
                              was  made to  modify  the  Order so as to lift the
                              divestiture  requirements  other than with respect
                              to one store on the Upper  West Side which was not
                              owned  by  the  Company.   The  FTC  approved  the
                              divestiture of that store and its  divestiture was
                              completed on May 9, 1996.  On April 29, 1996,  the
                              Application  was  revised;   and  it  was  further
                              revised  in  August  and  September  so as to seek
                              relief solely with respect to the  requirements of
                              divestiture  of any  supermarkets  in the  Chelsea
                              section of Manhattan.


                                      F-22

<PAGE>


                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              On  September  13,  1996,   the  FTC  granted  the
                              Application   as   modified,   and   deleted   the
                              requirements    of    divestiture    in   Chelsea.
                              Simultaneously,  the FTC  appointed  a trustee  to
                              divest four supermarkets pursuant to the Order, as
                              modified.   The   trustee   was  not  granted  any
                              authority  to  divest  until  the FTC  approved  a
                              trustee  agreement  between  the  trustee  and the
                              companies.  An agreement was entered into with the
                              trustee  which  would  have  been  effective  upon
                              approval by the FTC.

                              Subsequent  to  the  modification  of  the  Order,
                              Supermarket  Acquisition Corp. ("SAC"),  Red Apple
                              Supermarket,    Inc.    ("RAS")   and    Gristedes
                              Supermarkets, Inc. ("Gristedes") sold an aggregate
                              of four stores in compliance  with the divestiture
                              provisions  of  the  Order,  as  modified.   Based
                              thereon,  the  trustee  agreement  will not become
                              effective.

                              A  settlement  of  FTC  claims   relating  to  the
                              divestiture  provisions  of  the  Order  has  been
                              agreed to pursuant to which $600,000 has been paid
                              to the FTC. No portion of such amount was borne by
                              the companies.

                              On August 8, 1994,  a lawsuit  against the Company
                              and Mr.  Catsimatidis was instituted in the United
                              States District Court for the Southern District of
                              New York by RMED International,  Inc. ("RMED"),  a
                              former stockholder of the Company.


                                      F-23

<PAGE>



                           Sloan's Supermarkets, Inc.
                                and Subsidiaries

                   Notes to Consolidated Financial Statements



                              The complaint  alleges,  among other things,  that
                              RMED and a purported  class  consisting of persons
                              who  purchased  the  Company's  common stock on or
                              after  March 19,  1993  were  damaged  by  alleged
                              nondisclosures  in  certain  filings  made  by the
                              Company   with   the   Securities   and   Exchange
                              Commission  between  January  1993 and  June  1994
                              relating  to an  investigation  by  the  FTC.  The
                              complaint   alleges   that   such   nondisclosures
                              constituted  violations  of  Federal  and New York
                              State securities laws, as well as common law fraud
                              and seeks damages (including  punitive damages) in
                              an  unspecified   amount  (although  in  discovery
                              proceedings  the named  plaintiff has claimed that
                              its damages were approximately  $800,000), as well
                              as costs and  disbursements of the action. On June
                              2, 1994,  the Company issued a press release which
                              disclosed the FTC action.

                              On September  30,  1994,  the  defendants  filed a
                              motion to dismiss  for failure to state a cause of
                              action and for lack of subject matter jurisdiction
                              over the state claims.  The motion was denied.  In
                              June   1995,   RMED   filed  a  motion  for  class
                              certification,  and discovery was held in abeyance
                              pending disposition of that motion. The motion was
                              granted  in  March  1996  and   discovery  is  now
                              proceeding.  Management  believes that the lawsuit
                              is without  merit and intends to defend the action
                              vigorously;   however,   the  outcome   cannot  be
                              determined.




                                      F-24

<PAGE>



                                    PART III

Item 9.  CHANGES IN AND DISBURSEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURES.

     None


Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Set forth below is certain  information  as of May 22, 1997 with  respect to all
directors and executive officers of the Company.


                                          Position with the Company or
                             Director     Other Principal Occupation
Name and Age                   Since      for the Past Five Years
------------                 --------     --------------------------------------
John A. Catsimatidis          1988(2)     Chairman of the Board, Chief Executive
     (48)                                 Officer and  Treasurer  of the Company
                                          since  July 28,  1988;  President  and
                                          Chief  Executive  Officer of Red Apple
                                          Group,   Inc.   (holding  company  for
                                          supermarket  chains)  and  Chairman of
                                          the Board and Chief Executive  Officer
                                          and   Director   of  United   Refining
                                          Company (a  refiner  and  retailer  of
                                          petroleum products) for more than five
                                          years. Director of News Communications
                                          Inc., a public  company whose stock is
                                          traded   over-the-   counter,    since
                                          December 4, 1991.

Martin R. Bring                1988       Member  of the law firm of  Lowenthal,
     (54)                                 Landau,  Fischer  & Bring,  P.C.,  New
                                          York,  N.Y.  for more than five years;
                                          Director  of Hero Group,  Ltd.,  a New
                                          York  Stock  Exchange  listed  company
                                          since 1991.

Frederick Selby                1978       Since 1990,  Chairman of Selby Capital
     (59)                                 Partners   (acquisition  and  sale  of
                                          privately owned firms and divisions of
                                          public   companies).   Prior  thereto,
                                          Investment    Banking    Senior   Vice
                                          President,  BAII Banking (Paris), Legg
                                          Mason Wood  Walker and  Bankers  Trust
                                          Company.

--------

(2)  Mr.  Catsimatidis also served as a director of the Company from November 4,
     1986 to November 27, 1987.


                                       13

<PAGE>

Leroy Hemingway II             1991       Chairman  of the  Board of The  Famous
     (65)                                 Carpet Barns of Florida,  Inc. (a firm
                                          engaged  in retail  sales of  carpets)
                                          and Chairman of the Board of Hemingway
                                          Properties,   Inc.   (an   owner   and
                                          operator of shopping centers) for more
                                          than five years.

Mark S. Kassner                ----       Since  1991,   Vice   President, Chief
     (36)                                 Financial Officer and Secretary. Since
                                          1987,  executive  officer  of the  Red
                                          Apple  Group,  Inc. and certain of its
                                          affiliates with primary responsibility
                                          in  the   areas  of   accounting   and
                                          financial reporting.

Carmine Zappola                ----       Since  March  19, 1993,   Director  of
     (60)                                 Operations; Director of Operations for
                                          CKMR from January 1, 1991 to March 18,
                                          1993. Prior to 1991, Mr. Zappola was a
                                          Supervisor      for     CKMR      with
                                          responsibility  for 12-20 stores.  Mr.
                                          Zappola  has over  thirty  (30)  years
                                          experience  in the retail  supermarket
                                          industry.



SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"),  requires  directors and officers of the Company and persons who own more
than 10 percent of the Company's  common stock to file with the  Securities  and
Exchange Commission (the "Commission")  initial reports of ownership and reports
of changes in ownership of the common stock.  Directors,  officers and more than
10 percent  stockholders are required by the Exchange Act to furnish the Company
with copies of all Section 16(a) forms they file.

To the  Company's  knowledge,  based  solely on a review  of the  copies of such
reports  furnished  to the  Company and  written  representations  that no other
reports were  required  during the year ended March 2, 1997,  all Section  16(a)
filings  applicable  to  its  directors,  officers  and  more  than  10  percent
beneficial owners were timely filed.



                                       14

<PAGE>


Item 11. EXECUTIVE COMPENSATION.

The  following  table sets forth for the three  fiscal years ended March 2, 1997
certain  information  concerning the  compensation  paid or accrued to the Chief
Executive  Officer  of the  Company.  As of March 2, 1997  there were no persons
serving as  executive  officers of the Company  whose total salary and bonus for
the fiscal year ended March 2, 1997 exceeded $100,000.

<TABLE>
<CAPTION>
                                                                                           Long-term Compensation
                                                                            ---------------------------------------------------

                                                                                                                       
                                            Annual Compensation                      Awards                     Payouts
                                   ----------------------------------       -----------------------       ---------------------
                                                             Other                                                      All
                                                             annual         Restricted                                  other
Name and                                                     compen-        stock          Options        LTIP          compen-
principal                           Salary       Bonus       sation         award(s)       /Sar's         payouts       sation
position                  Year        ($)         ($)          ($)            ($)           (#)           ($)            ($)
--------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>        <C>         <C>          <C>            <C>          <C>            <C>            <C> 
John Catsimatidis,        1997       $ --        $ --         $ --           $ --            --          $ --           $ --
  Chairman of the
  Board, Chief
  Executive
  Officer

                          1996       $ --        $ --         $ --           $ --            --          $ --           $ --

                          1995       $ --        $ --         $ --           $ --         275,000        $ --           $ --
--------------------------------------------------------------------------------------------------------------------------------

</TABLE>


STOCK OPTIONS

No stock  options were granted to or  exercised by Mr.  Catsimatidis  during the
fiscal  year  ended  March 2, 1997.  The  following  table  sets  forth  certain
information  with  respect  to  options to  purchase  Common  Stock held by John
Catsimatidis on March 2, 1997.


                        Number of Unexercised             Value of Unexercised
                           Options Held on               in-the-Money Options on
                            March 2, 1997                     March 2, 1997
                    -----------------------------   ----------------------------
Name                   Exercisable/Unexercisable      Exercisable/Unexercisable
--------------------------------------------------------------------------------
John Catsimatidis            275,000/0                            0/0
--------------------------------------------------------------------------------


The closing  sales price of the Common Stock on the American  Stock  Exchange on
February 28, 1997, the last trading day preceding  March 2, 1997, was $3.06.  On
March 3, 1996,  Mr.  Catsimatidis  held  options to purchase  275,000  shares of
Common Stock at $3.75 per share.

COMPENSATION OF DIRECTORS

Non-officer  directors  receive a quarterly  stipend of $1,500 and $500 for each
meeting  attended.  Directors  who  serve on  committees  receive  $250 for each
meeting attended.




                                       15

<PAGE>


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT.


The following table sets forth certain information regarding ownership of Common
Stock on March 2, 1997 by:  (i) each  stockholder  known to the  Company  to own
beneficially  more than 5% of the outstanding  shares of Common Stock; (ii) each
of the Company's directors;  and (iii) all officers and directors of the Company
as a group.  Except as  otherwise  indicated,  the address of each person is c/o
Sloan's Supermarkets,  Inc., 823 Eleventh Avenue, New York, N.Y. 10019-3535. The
Company believes that ownership of the shares by the persons named below is both
of record and beneficial and such persons have sole voting and investment  power
with respect to the shares indicated.


Name and Address of                           Number of
 Beneficial Owner                             Shares            Percent of Class
----------------------------------        ------------------    ----------------

John Catsimatidis ........................    1,452,552(1)                 42.6%
Leroy Hemingway II .......................       15,950(2)                    *
Frederick Selby ..........................        7,822(2)                    *
Martin Bring .............................        6,600(2)                    *
All officers and directors as a
  group (6 persons) ......................    1,499,924(3)(2)              43.6%

-----

*    Less than 1%.

(1)  Includes an aggregate of 25,730 shares held by  corporations  controlled by
     Mr.  Catsimatidis,  2,057 shares held by a profit sharing plan of which Mr.
     Catsimatidis is a trustee, 605 shares held by Mr. Catsimatidis as a trustee
     of  individual  retirement  accounts and currently  exercisable  options to
     purchase an aggregate of 275,000  shares of Common Stock.  Does not include
     options to purchase an  aggregate  of 250,000  shares of Common Stock which
     the Board of  Directors  have granted to Mr. John  Catsimatidis  subject to
     approval by the  stockholders  of the Company and which are not exercisable
     unless and until such approval is given.

(2)  Includes  for each of Messrs.  Selby,  Hemingway  and Bring an aggregate of
     6,600 shares of Common  Stock which may be  purchased  upon the exercise of
     currently exercisable stock options.

(3)  Includes  an  aggregate  of  311,800  shares of Common  Stock  which may be
     purchased upon the exercise of currently exercisable stock options.


                                       16

<PAGE>


Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

At  the  time  of  the  Supermarket  Acquisition,  the  Company  entered  into a
Management  Agreement with Red Apple pursuant to which Red Apple  supervises all
operations  of the  Supermarkets  subject  to the  policy  goals  and  decisions
prescribed by a committee of the independent  directors.  On March 31, 1993, the
Board  established an Oversight  Committee and elected Frederick Selby and Leroy
Hemingway II as its initial members.

The Management  Agreement  requires the Company to pay Red Apple a quarterly fee
equal to 1-1/4% of all sales made in or from the  Supermarkets  and to reimburse
Red Apple for all reasonable  expenses  incurred by Red Apple in the performance
of its services  thereunder.  The initial term of the  Management  Agreement ran
until  March 19,  1994.  Unless  terminated  by  either  party,  the  Management
Agreement is  automatically  renewed for successive one year terms.  The current
term expires March 19, 1998.

Red Apple  also  provides  maintenance  services  to the  Company  which are not
covered  by  the  Management   Agreement.   Such  services  include  supermarket
refrigeration, electrical and equipment maintenance. During the year ended March
2, 1997, the Company did not incur expenses for such services.

As of March 2, 1997, the Company had an aggregate of approximately $1,830,000 in
due from related  parties owned by Mr.  Catsimatidis as a result of transactions
in the ordinary course of business.

City Produce  Distributors,  Inc.,  a  corporation  indirectly  wholly owned and
controlled by John Catsimatidis,  sells produce and certain grocery items to the
Company at prices  consistent with those  obtainable from  non-affiliated  third
parties.   During  the  year  ended  March  2,  1997,   such  sales   aggregated
approximately $5,263,000.

Newspaper advertising for the Supermarkets is frequently pooled with advertising
for other supermarkets which are not owned by the Company but which are operated
by Red Apple or its affiliates other than the Company under the Sloan's name. In
such cases, the Company pays a portion of such  advertising  expenses based upon
the number of Supermarkets  and  supermarkets of other companies  covered in the
advertisements (see Item 1. "Description of Business - Marketing"). Such amounts
allocated to the Company  approximated  $115,000  during the year ended March 2,
1997.

The  tradename  "Sloan's" is used by the Company under a  non-exclusive  license
granted to the Company for a nominal  consideration by SAC, a corporation wholly
owned by John Catsimatidis (see Item 1. "Description of Business - Tradenames").

In consideration of accommodations  extended to the Company by H.S. Realty Corp.
("H.S.  Realty"),  a corporation wholly owned by John Catsimatidis which enabled
the Company to consummate the sale of assets of the Company's  Howard H. Sweet &
Son  Inc.  subsidiary  ("Sweet")  to  Tiffco  Jewelry  and  Chain  Crafts,  Inc.
("Tiffco"),  on January 23, 1990, the Company,  among other things,  advanced to
H.S.  Realty  approximately  $204,000.  The  Company  also agreed to pay to H.S.
Realty on a monthly  basis an amount equal to the fixed monthly rent on the real
estate containing Sweet's manufacturing  facilities (the "Sweet Property") under
H.S. Realty's lease with Tiffco so long as Tiffco was making such payments to an
escrow agent under an escrow agreement  entered into between Sweet, the Company,
Tiffco and others at the closing of the sale of Sweet's assets to Tiffco.

                                       17

<PAGE>


The $204,000  advance was  originally  to be repayable on the earlier of January
23,  1991 or five  days  after  the sale by H.S.  Realty  to Tiffco of the Sweet
Property.  Since  January 23,  1991,  the Board of  Directors  has  extended the
repayment  date of the advance on an annual  basis,  the most  recent  extension
being  until  January  23,  1998 or five days  after the sale by H.S.  Realty to
Tiffco of the Sweet  Property.  As of March 2, 1997, H.S. Realty was indebted to
the  Company  on  account of the  advance  in the  amount of  $337,304  and such
indebtedness  was accruing  interest at the rate of 9.50% per annum (1- 1/4% per
annum over the prime rate of interest charged by Chemical Bank, N.A. as of March
3, 1996).

Effective as of January 1, 1994,  the Company has entered  into  Indemnification
Agreements with each of its directors and officers.  Said agreements  supplement
the indemnification provisions of the Company's By-laws and the Delaware General
Corporation Law. The stockholders of the Company authorized the Company to enter
into such  agreements  with  each of its  directors  at the  Annual  Meeting  of
Stockholders  held on August 21, 1987. The Board of Directors has authorized the
Company to enter into such agreements with each of its officers.

By virtue of his ownership of Common Stock (see Item 12 - "Security Ownership of
Certain  Beneficial  Owners and Management") and his position as Chairman of the
Board of the Company,  John  Catsimatidis  may be deemed to be a "parent" of the
Company under rules promulgated by the Commission.

Lowenthal,  Landau,  Fischer & Bring,  P.C., a law firm of which Martin Bring, a
director of the Company,  is a member,  received fees of approximately  $218,675
for rendering  legal  services to the Company during the fiscal year ended March
2, 1997.

In October 1995,  the Company  acquired three  Supermarkets  from SAC. The total
consideration  paid by the Company for the acquisition of the three Supermarkets
was  $5,000,000  plus the cost of inventory.  The purchase  price was based on a
fair market  evaluation  performed by an independent  third party.  (See Item 1.
"Business - Acquisition of Supermarkets").


                                       18

<PAGE>


                                     PART IV

Item 14. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  (1)  Financial Statements

          A list of all  financial  statements  filed as part of this  report is
          contained in the index to Item 8, which index is  incorporated  herein
          by reference.

     (2)  Financial Statement Schedules

          None.

     (3)  Exhibits

     Number         Description
     ------         -----------
     3.1            Amended and Restated  Certificate  of  Incorporation  of the
                    Registrant.  Incorporated by reference to Exhibit 3.1 to the
                    Registrant's  Annual  Report on Form 10-K of the fiscal year
                    ended February 28, 1990 (the "1990 10-K").

     3.2.           Certificate of Amendment to Amended and Restated Certificate
                    of   Incorporation   of  the  Registrant.   Incorporated  by
                    reference to Exhibit 3.2 to the  Registrant's  Annual Report
                    on Form 10-KSB for the fiscal year ended  February  27, 1994
                    (the "1994 10-KSB").

     3.3            Amended and Restated Bylaws of the Registrant.  Incorporated
                    by reference to Exhibit 3.2 to the 1990 10-K.

     10.1           Asset Purchase  Agreement dated as of December 1, 1989 among
                    Tiffco,  Tiffany, Sweet and the Registrant and Amendment No.
                    6 thereto, dated January 22, 1990. Incorporated by reference
                    to Exhibit 1 to the Registrant's  Current Report on Form 8-K
                    dated  February  5,  1990.  Amendments  No. 1  through 5 are
                    immaterial and are omitted. Exhibits (setting forth the form
                    of certain closing  documents) and schedules  (setting forth
                    lists of the  purchased  assets,  excluded  assets,  assumed
                    liabilities,  allocation  of the purchase  price and various
                    disclosure  items) are  omitted.  The  Registrant  agrees to
                    furnish supplementally to the Commission upon request a copy
                    of any of the omitted Amendments, exhibits and schedules.

     10.2           Environmental Indemnification Letter dated as of November 1,
                    1989 among BF, the Registrant and B.E. Realty.  Incorporated
                    by reference to Exhibit 10.9 to the 1990 10-K.

     10.3           Agreement  dated as of January  23,  1990 among  Sweet,  the
                    Registrant  and H.S.  Realty.  Incorporated  by reference to
                    Exhibit 10.12 to the 1990 10-K.

     10.4           Asset  Purchase  Agreement  dated  December  24,  1992,  and
                    effective January 7, 1993, between CKMR Corporation ("CKMR")
                    and  the  Registrant  (the  "Asset   Purchase   Agreement").
                    Incorporated  by reference to Exhibit 1 to the  Registrant's
                    Current  Report on Form 8-K dated March 19,  1993.  Exhibits
                    setting forth the form of certain closing


                                       19

<PAGE>



                    documents  and  schedules  (setting  forth  lists of assumed
                    liabilities,  real property  lease  assignments  and various
                    disclosure  items) are  omitted.  The  Registrant  agrees to
                    furnish supplementally to the Commission upon request a copy
                    of any of the omitted exhibits and schedules.

     10.5           Management Agreement between Red Apple and Namdor Inc. dated
                    March 19, 1993.  Incorporated  by reference to Exhibit 10.11
                    to the  Registrant's  Annual  Report on Form  10-KSB for the
                    fiscal year ended February 28, 1993.

     10.6           License  Agreement  dated March 19, 1993 between SAC and the
                    Company.  Incorporated  by reference to Exhibit 10.10 to the
                    1994 10-KSB.

     10.7           Form of  Indemnification  Agreement  dated as of  January 1,
                    1994  between  the  Registrant  and  each  director  of  the
                    Registrant.  Incorporated  by reference to Exhibit  10.11 to
                    the 1994 10-KSB.

     10.8           Form of  Indemnification  Agreement  dated as of  January 1,
                    1994  between  the   Registrant  and  each  officer  of  the
                    Registrant.  Incorporated  by reference to Exhibit  10.12 to
                    the 1994 10-KSB.

     10.9           1994 Stock Option Plan. Incorporated by reference to Exhibit
                    10.12 of the Company's  Annual Report on Form 10-KSB for the
                    fiscal year ended February 26, 1995 ("1995 10-KSB").

     10.10          Director  Stock  Option Plan.  Incorporated  by reference to
                    Exhibit 10.13 of the Company's 1995 10-KSB.

     10.11          Asset  Purchase  Agreement  dated  as of  October  13,  1995
                    between SAC and the  Company.  Incorporated  by reference to
                    Exhibit  1 to the  Registrant's  Current  Report on Form 8-K
                    dated  October  27,  1995  (the  "10/27/95  8-K").  Exhibits
                    setting  forth the form of  certain  closing  documents  and
                    schedules  (setting  forth  lists  of  assumed  liabilities,
                    assignments and various  disclosure items) are omitted.  The
                    Registrant   agrees  to   furnish   supplementally   to  the
                    Commission  upon  request  a copy  of  any  of  the  omitted
                    exhibits and schedules.

     10.12          Loan and Security  Agreement  dated October 13, 1995 between
                    Namdor and European American Bank (the "Bank"). Incorporated
                    by reference to Exhibit 2 to the October 19, 1995 Form 8-K.

     10.13          Guaranty  dated October 13, 1995 from the  Registrant to the
                    Bank.  Incorporated by reference to Exhibit 3 to the October
                    19, 1995 Form 8-K.

     10.14          Pledge  Agreement dated October 13, 1995 from the Registrant
                    to the Bank.  Incorporated  by reference to Exhibit 4 to the
                    October 19, 1995 Form 8-K between  Gristedes'  Supermarkets,
                    Inc. and Namdor.

     10.15          License  Agreement  dated October 13, 1995.  Incorporated by
                    reference to Exhibit 5 to the October 19, 1995 Form 8-K.


                                       20

<PAGE>



     11.            Statement re  computation  of per share income  (loss).  Not
                    required.

     21.            Listing of the  Registrant's  subsidiaries  all of which are
                    wholly owned by the Registrant.

                    Subsidiaries                     State of Incorporation
                    ------------                     ----------------------
                    Namdor, Inc.                     New York

                    The Registrant has one other  wholly-owned  subsidiary,  the
                    name of which is omitted  herein  because as of May 22, 1997
                    it did not constitute a significant subsidiary.

     23.            Consent of BDO Seidman,  LLP  Independent  Certified  Public
                    Accountants.


(b)  Reports on Form 8-K

     None


                                       21

<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934,  the  Registrant  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                     SLOAN'S SUPERMARKETS, INC.


Dated:  May 30, 1997                 By:  /s/ John A. Catsimatidis
                                          --------------------------
                                          John A. Catsimatidis
                                          Chairman of the Board

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated:


Signature                       Title                                 Date
---------                       -----                                 ----

/s/ John A. Catsimatidis        Chairman of the Board (Chief       May 30, 1997
------------------------        Executive Officer and Chief
John A. Catsimatidis            Operating Officer) and
                                Treasurer

/s/ Martin Bring                Director                           May 30, 1997
------------------------
Martin Bring

/s/ Frederick Selby             Director                           May 30, 1997
------------------------
Frederick Selby

/s/ Leroy Hemingway II          Director                           May 30, 1997
------------------------
Leroy Hemingway II

/s/ Mark Kassner                Vice President and Secretary       May 30, 1997
------------------------        (Chief Financial Officer and
Mark Kassner                    Chief Accounting Officer)


                                       22

<PAGE>

                                                                      Exhibit 23


CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Sloan's Supermarkets, Inc.
New York, New York

We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statement  on Form S-8 dated  January 23,  1996,  relating  to the  consolidated
financial  statements  appearing in the Company's Annual Report on Form 10-K for
the year ended March 2, 1997.



BDO Seidman, LLP


New York, New York

May 30, 1997



                                       23