================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

[X]    Annual report under Section 13 or 15(d) of the Securities Exchange Act
       of 1934 for the fiscal year ended March 31, 2002

[_]    Transition report under Section 13 or 15(d) of the Securities Exchange
       Act of 1934 For the transition period from ____________ to ____________

                      Commission file number: 33-93982-LA

                            ANNIE'S HOMEGROWN, INC.
--------------------------------------------------------------------------------
       (Exact name of Small Business Issuer as specified in its charter)

             DELAWARE                                            06-1258214
             --------                                            ----------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                      395 MAIN STREET, WAKEFIELD, MA 01880
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

                                  781-224-1172
--------------------------------------------------------------------------------
                (Issuer's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Exchange Act: NONE

Securities registered pursuant to Section 12(g) of the Exchange Act: NONE

Check whether the Issuer: (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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
the Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this form. [X]

The issuer's revenue for the fiscal year ended March 31, 2002 was $14,065,834.
As of March 31, 2002, the aggregate market value of the Issuer's voting stock
held by non-affiliates was approximately $1,834,494. The Issuer's securities are
not traded on any market or exchange. The market value used for the issuer's
securities is based on the Homegrown Natural Foods, Inc. transaction price of
$2.00 per share, as described herein adjusted for the 2000 to 1 reverse stock
split.

As of June 30, 2002, there were 1,000,000 shares of the Issuer's Series A
Convertible Preferred Stock, $2.00 par value and 2,204.2535 shares of the
Issuer's Common Stock, $.001 par value, issued and outstanding, and 299,301
units of Scrip.

================================================================================
<PAGE>
ITEM 1. BUSINESS

GENERAL

Annie's Homegrown, Inc. is engaged in the manufacture, marketing and sale of
premium all natural and organic macaroni and cheese dinners, all natural pasta
meals and other all natural and organic food products. We were founded in
January 1989 as a Delaware corporation. Our principal executive offices are
located at 395 Main Street, Wakefield, Massachusetts 01880 and our telephone
number is (781) 224-1172.

We use contract packers to manufacture our products according to strict
specifications, which include the recipes, ingredients, graphics and packaging
for our products. Our products are sold primarily through distributors to
supermarkets and natural and specialty food stores. We also manufacture private
label macaroni and cheese house brands for retailers. In the natural food class
of trade, we believe our products are sold in nearly all of the stores
nationwide. In supermarkets our products are sold in approximately 40% of the
stores nationwide. We have the highest market penetration in supermarkets in the
Boston and San Francisco metropolitan areas. Our products are sold through
approximately 99% of the supermarkets in the Boston area and approximately 96%
of the supermarkets in the San Francisco area. We continue to expand into the
New York, Philadelphia, Denver and Chicago metropolitan markets with both
existing products as well as new products. Our strategy is to expand our
supermarket distribution nationally in addition to developing new and unique all
natural and organic food products to sell to our existing customer base. Our
mission is to provide the highest quality, all natural food products to our
customers and to serve as an ethically, socially, and environmentally conscious
business model for customers, other companies and the food industry. We promote
environmental efforts to minimize the consumption of resources and encourage
individuals to make personal commitments to social and environmental causes.

PRODUCTS

We manufacture and sell a variety of products under the Annie's name. All of our
products are made using premium all natural ingredients. Our products include:

ANNIE'S SHELLS AND CHEDDAR, introduced in January 1989, made with petite durum
semolina pasta shells and premium all natural white cheddar cheese.

ANNIE'S ALFREDO, introduced in August 1989, made with petite durum semolina
pasta shells and premium all natural white cheddar cheese with garlic and basil.

ANNIE'S WHOLE WHEAT SHELLS AND CHEDDAR, reintroduced in May 1999 as part of our
totally organic line of products, made with an organically grown whole wheat
pasta shells and premium organic white cheddar cheese.

ANNIE'S MILD MEXICAN(TM), introduced in November 1994, made with petite durum
semolina pasta shells and premium all natural white cheddar cheese and Mexican
spices.

ANNIE'S MILD CHEDDAR, introduced in April 1997, made with durum semolina elbows
and premium totally natural mild cheddar cheese. The product was developed to
appeal to the tastes of young children. Its packaging highlights the cartoon
version of Bernie the Rabbit of Approval.

ANNIE'S FAMILY SIZE SHELLS AND CHEDDAR, introduced in September 1997, is a
larger version of the original ANNIE'S SHELLS AND CHEDDAR.

ANNIE'S BUNNY SHAPE PASTA & YUMMY CHEESE, introduced in September 1997, made
with bunny shaped durum semolina pasta and a yummy premium all natural white
cheddar cheese.

                                       1
<PAGE>
ANNIE'S ORGANIC PASTA & ORGANIC WHITE CHEDDAR, introduced in May 1998, made with
an organically grown durum wheat pasta shells and premium all natural Organic
white cheddar cheese. We believe that it is the only product of its kind in the
market.

ANNIE'S PEACE PASTA WITH PARMESAN, introduced in November 1998, is a "groovy"
product that combines durum semolina peace symbol shaped pasta with a premium
parmesan cheese that has a hint of garlic and onion. Annie's Peace Pasta with
Parmesan comes packaged in a tie-dye box.

ANNIE'S ORGANIC SHELLS & ORGANIC ALFREDO, introduced in December 1999, made with
an organically grown durum wheat pasta shells and organic white cheddar cheese
with garlic and basil. We believe that it is the only product of its kind in the
market.

ANNIE'S CHEDDAR MACARONI AND CHEESE, introduced in November 2000, made with
petite durum semolina pasta shells and premium all natural orange cheddar
cheese.

These products are typically priced at retail between $0.99 and $1.49 for a
package except for the Organics, which are priced between $1.79 and $1.99 a
package.

In the quarter ended September 1998, we reintroduced a new line of five all
natural pasta dinners called Annie's Pasta Meals. We responded to our consumer
requests to reduce the amount of unused cardboard packaging by adding more pasta
and cheese to each box thus reducing the amount of unused cardboard packaging.
The meals combine different pasta shapes with five sauce recipes with simple
cooking directions. Annie's Pasta Meals are made with certified organic pasta
and include the following:

ANNIE'S ORGANIC ROTINI WITH FOUR CHEESE SAUCE
ANNIE'S ORGANIC PENNE PASTA WITH ALFREDO SAUCE
ANNIE'S ORGANIC RADIATORE PASTA WITH SUNDRIED TOMATO AND BASIL SAUCE
ANNIE'S ORGANIC CORKSCREW PASTA WITH SAVORY HERB AND GARLIC SAUCE
ANNIE'S ORGANIC CURLY FETTUCCINE WITH WHITE CHEDDAR AND BROCCOLI SAUCE

Annie's Pasta Meals are typically priced at retail between $1.59 and $1.99 for a
7.25 oz. package.

ANNIE'S WHITE CHEDDAR POPCORN, totally natural white cheddar popcorn, is based
on the founders' successful Smartfood White Cheddar popcorn recipe. The product
is sold in 4 oz. and 1 oz. bags in the natural and specialty stores and
supermarkets.

We entered the canned pasta meal category in May 1998 and introduced another two
new canned meals in May 1999. In February 2001, Annie's reintroduced the canned
meal line to be totally organic.

BERNIEOS, introduced in May 1998, is made with bunny and O shaped pasta in a
tomato and cheese sauce.

ALL STARS, introduced in May 1998 is made with star shaped pasta in a tomato and
cheese sauce.

P'SGHETTi, introduced in December 1999 is made with cut spaghetti in tomato
sauce.

P'SGHETTI WITH SOY MEATBALLS, introduced in December 1999 is made with cut
spaghetti in tomato sauce with small soy meatballs.

The canned meals retail between $.99 and $1.29 for a 15 oz. can.

                                       2
<PAGE>
In September 2000, Annie's introduced ANNIE'S MICROWAVE MACARONI AND CHEESE that
is a microwavable single serving organic durum macaroni and all natural cheddar
cheese package. There are five servings to a box with a retail price between
$3.50 and $3.99.

In December 2001, Annie's introduced certified Organic Boxed Pastas. The Boxed
Pastas comes in five varieties: Spaghetti, Whole Wheat Spaghetti, Penne, Rotini,
and Gemelli. All the products are made with 100% durum semolina pasta. Each box
contains one pound of pasta and retails between $1.99 to $2.59.

On August 27, 1998, we acquired certain assets of The Tamarind Tree Ltd.
Tamarind Tree produces and markets an ethnic line of heat and serve vegetarian
food entrees in the Indian cuisine tradition. The products are as follows:

Alu Chole, curried garbanzos and potatoes
Channa Dal Masala, golden lentils with vegetables
Dal Makhani, aromatic lentil chili
Dhingi Mutter, garden peas and mushrooms
Saag Chole, tender spinach and garbanzos
Navratan Korma, creamy vegetable medley with nuts
Palak Paneer, savory spinach with Indian cheese
Vegetable Jalfrazi, spicy garden vegetables

Tamarind Tree entrees are typically priced at retail between $3.59 and $3.99 for
a 9.25 oz. package.

SALES, MARKETING AND DISTRIBUTION

We sell our products two ways: either through distributors or direct to the
retail chain. If we sell through distributors, the distributors sell our
products to primarily two classes of retailers: (i) supermarket chains, also
known as "mass markets"; and (ii) natural and specialty food stores. When we
sell direct we sell directly to the mass markets or club stores, thus
establishing a lower retail selling price in those outlets. Selection of new
regional markets is based upon consumer profiles, product opportunity and costs
of introduction.

In the mass markets, we sell in large supermarket chains such as STOP AND SHOP
in New England and SAFEWAY STORES in California. We currently have penetrated
all of the major supermarket chains in New England, and sell in several major
supermarket chains in New York and California. In 2001, we expanded our business
to include club stores such as Costco. We continue to expand our sales area to
include major supermarkets in the Philadelphia, Denver, and Chicago metropolitan
regions. Currently, we sell in approximately 40% of the supermarkets in those
regions.

Our products are also sold in natural food markets and specialty food stores,
such as WHOLE FOODS MARKET and WILD OATS, and to select natural and specialty
food distributors. Buying practices of natural and specialty food stores are
highly selective due to the nature of the retailers, which reflect their
customers' demands for both natural and premium quality products. According to
Spence Information Services (SPINSscan), Annie's was the Number 1 ranked brand,
based on total dollar sales and total unit sales, in the Entree and Mixes
category with the top two selling items in that category for the 52-week period
ended May 31, 2002.

Annie's uses food brokers to represent the Company in contacting distributors
and retailers. Food brokers are under contract directly with Annie's. Regional
managers supplied by Napa Valley Kitchens (or formerly supplied by Liberty
Richter) manage the food brokers. Regional managers and food brokers present our
products to a supermarket or distributor buyer using our sales and marketing
presentation. The key competitive factors in influencing a purchasing decision
by the buyer include the product quality, packaging, sales history,
profitability, and consumer demand. If a buyer decides to accept our product,
other issues such as the cost of acquiring shelf space (slotting fees) and our

                                        3
<PAGE>
specific commitments to marketing programs are negotiated. Introductory slotting
fees and marketing programs often vary from account to account. Emphasizing the
selling features of our products, our brokers attempt to negotiate the lowest
slotting cost. Slotting fees can take the form of cash payments and/or free
product allowances. Utilizing our brokers' knowledge regarding specific
accounts, we tailor our introductory marketing program to each new account.

In October 1996, we signed a master distribution agreement with Liberty Richter,
Inc. The agreement called for them to distribute all of our products throughout
the continental United States, except for our private label and mail order
lines. In addition, they agreed to provide other services, such as order
processing, invoicing, record management, sales coverage, broker management,
promotion execution, management of sales allowances and trade show
participation. The decision to use Liberty Richter was based on management's
determination that it was easier and more cost effective to outsource these
functions than for Annie's to perform them in-house. Under this agreement,
Annie's sold its products to Liberty Richter, which in turn sold the products to
the distributor who sold them to the retailer. In July 1999, we agreed with
Liberty to modify the master agreement to allow us to sell our products directly
to the mass markets that do not buy through distributors in the New England and
West Coast regions. For the fiscal years ended March 31, 1999 and 2000, sales
under that master distribution agreement accounted for approximately 87% and
69%, respectively, of our net sales. As of May 31, 2000, we mutually agreed to
terminate that agreement and Liberty ceased to represent our products.

Since June 1, 2000, we have been selling our products directly to our
distributors. We retained Napa Valley Kitchens to provide certain services such
as order processing, invoicing, record management, sales coverage, broker
management, promotion execution, management of sales and allowances. All
promotions and slotting presentations are subject to the Company's approval.
Napa Valley Kitchens is a subsidiary of Homegrown Natural Foods, Inc., which
acquired control of us in December 1999.

It is customary in the food industry to use distributors to sell products. It
is easier to sell through distributors as supermarkets have stringent product,
marketing, volume and pricing requirements. In certain cases, a supermarket may
require Annie's to sell to the supermarket through a distributor designated by
the supermarket.

Annie's makes the final determination of what deals are offered to the
retailers. The distributor performs the function of getting the product to the
correct store and shelf spot in the store.
It is the food brokers and regional managers, under the direction of Annie's,
that determine how to best market the Company's products. Regional managers and
food brokers present our products to a supermarket or distributor buyer using
our sales and marketing presentation.

The Company's sales strategy is to continue to expand our supermarket
distribution nationally. By examining market research data, Annie's determines
the areas of the country in which it needs to improve distribution. Those areas
are then examined for the size of the macaroni and cheese market. Annie's then
determines which markets to enter by comparing the size of the market with the
size of our current distribution, concentrating on the larger markets. In
addition, Annie's continues to develop new and unique all natural and organic
food products to sell to our existing customers. New products are introduced
based on conditions in the market place. No material increase in development of
new products is planned.



                                        4
<PAGE>
CONSUMERS

Our products are marketed toward mothers, children and young adults. These three
groups are the primary purchasers in the macaroni and cheese dinner category. We
believe our consumers are people who prefer to buy a natural, better-tasting
product and are willing to pay a premium price.

We rely primarily on brand loyalty and word of mouth to promote our products.
Our marketing strategy is designed to encourage consumers to try our products
for the first time and develop brand loyalty. We accomplish this by continually
educating consumers about the differences between our all natural products and
the competition's products, as well as through product sampling, community
giveaways, promotional pricing and account specific marketing events such as
buy-one, get-one free promotions.

Over the years, we have developed a mailing list of 150,000 names. Currently we
receive approximately 250 pieces of mail, 100 e-mails, and 40 telephone calls
each week pertaining to our products and our Company. We do not use an outside
service to handle our consumer relations and therefore these figures are based
on internal Company estimates.

Our strategy is to use word of mouth to promote our products. Our Website,
consumer correspondence and our packaging help to generate brand loyalty and
educate the consumer. In stores, we use product sampling and promotional pricing
to get consumers to try our products.

PRODUCT QUALITY AND DEVELOPMENT

Ann E. Withey, our co-founder and a Director maintains the final responsibility
for our product recipes. We take great pride in producing high quality, all
natural, easy to prepare meals. Our pasta is made from 100% durum semolina
flour. We believe the quality of our 100% durum semolina pasta is one of the
more important differences between our products and other competitive national
brands. Several of the lower priced brands are prepared from a lower grade, less
expensive blend of spring wheat and durum flour. Pure durum semolina flour
produces a golden, translucent looking finished pasta product, while blended
enriched flour produces a faded, chalky looking finished product. We have
retained a product development consultant at times to increase the speed at
which new products are created and introduced to the market. The consultant
reviews all recipes and flavors with us. All of our consultant's recommendations
are subject to Ms. Withey's final approval.

MANUFACTURING

We use contract packers to manufacture our products according to strict
specifications, which include our products' recipes, ingredients, graphics and
packaging. We have all the components of the products shipped to the contract
packers. We have never experienced material shortages or delays in the
manufacture of our products. However, our products are subject to the inherent
risks in agriculture and all of our products must be transported from the
manufacturer and are therefore subject to work stoppages and other risks. We
believe that there are numerous companies that could manufacture our products
under our quality specifications without a substantial increase in cost or delay
in delivery.

COMPETITION

Our industry is highly competitive. The principal methods of competition in the
macaroni and cheese market include product quality and taste, brand advertising,
trade and consumer promotions, packaging and the development of new products. We
compete not only for consumer acceptance but also for shelf space in
supermarkets and natural food stores and for the marketing focus of our
distributors, some of which also distribute competing products.

                                       5
<PAGE>
The mass-market macaroni and cheese category is highly competitive. The leading
brand in that category is Kraft's Original Macaroni and Cheese Dinner (Kraft is
approximately 85% owned by Philip Morris Companies, Inc.), which accounted for
over 70% of the total dollar sales in the macaroni and cheese category in 2001,
according to AC Nielsen's Scan Data reports. In addition to the Kraft brand, the
mass-market macaroni and cheese category is comprised of other products such as
Golden Grain (owned by the Quaker Oats Company), several regional brands, and
private label products (i.e., store brands). Most of the companies that compete
in the mass-market macaroni and cheese category are larger than we are and have
significantly greater resources than we do.

Nevertheless, we believe that our products do not directly compete with those
store brands as mentioned above. Our products are positioned as "premium" brands
and compete with other premium brands in the macaroni and cheese categories,
such as Kraft's Velveeta brand. We are viewed as a natural alternative to the
mass-market, artificially flavored brands. We believe that our target consumers
are people who prefer to buy natural, better-tasting products and are willing to
pay a premium for those products. We use unique, brightly colored packaging to
differentiate our products from mass-market brands, which tend to be very
similar to each other in graphic design.

The macaroni and cheese category is less competitive in natural food stores,
which do not typically carry mass market brands such as Kraft and Golden Grain.
We compete with other branded products as well as with store brands in that
market based on our quality and all natural and/or organic ingredients. In the
natural foods market, we compete with several brands that are produced by
companies that are larger than we are.

As discussed above, we believe that our principal bases of competition include
product quality, taste, reputation and brand loyalty. We believe that we compete
favorably with respect to those factors, although there can be no assurance that
we will be able to continue to do so. Our ability to compete successfully in the
future will depend on factors both within and outside our control, including
general market conditions and our ability to respond to changing market
conditions and the activities of our competitors, to control costs, to introduce
successful new products, and to grow our customer base. We can give no assurance
that we will be able to compete successfully with respect to these factors in
the future or that present or future competitors will not successfully compete
with us in the future.

PHILOSOPHY AND CORPORATE CULTURE

Our mission is to provide the highest quality all natural food products to our
customers and to serve as an ethically, socially, and environmentally conscious
business model for our customers, other companies and the food industry. We
promote environmental efforts to minimize the consumption of resources and to
encourage individuals to make personal commitments to social and environmental
causes. We understand that we have a responsibility to produce profits for our
stockholders. However, in addition to our corporate responsibilities, we are
committed to benefiting communities as a reward for their support. Since our
inception, we have supported hundreds of non-profit and school groups that
helped women, children and the environment. Currently, we continue to support
hundreds of non-profit groups through our "Cases for Causes" program.
Through our Cases for Causes Program, we contribute cases of our products to PTA
groups, walkathons, book fairs, bake sales, daycare centers and other non-profit
groups and events. These groups can give away the cases or sell the free cases
as a fund-raiser to generate support for their organizations. The Cases for
Causes Program helps society and the environment while simultaneously increasing
the public awareness for our products.

                                        6
<PAGE>
We have also created and support the Be Green(R) environmental awareness
program. There is a description on each package of our product describing how
individuals can help the environment by increasing environmental awareness.
Consumers can receive a free Be Green(R) bumper sticker that helps consumers to
express their support for the environment.

INTELLECTUAL PROPERTY RIGHTS

We seek to protect the value of our trademarks, trade dress, copyrights and
trade secrets through licensing and other means. We have the following
registered trademarks in the United States: "Bernie-Rabbit of Approval,"
"Annie's," "Annie's Homegrown," "Annie's Pasta," and "Be Green." We also use
other trademarks and trade dress for which federal trademark registrations are
now pending. We use appropriate copyright notices with our packaging,
promotional materials and other artwork. All of our suppliers have entered into
confidentiality agreements with us, pursuant to which they have agreed to keep
confidential and not use our trade secrets, including our processes, formulae,
ingredients and recipes, except to our benefit. We do not have any patents. We
believe that we are not infringing on the intellectual property rights of any
third party, and we intend to take all necessary and appropriate action to
protect against dilution or imitation of our products, packaging, promotional
materials and other artwork, and to defend our trademarks, copyrights, and trade
secrets against such infringements.

REGULATION

The Company and its manufacturers, distributors and co-packers are subject to
extensive regulation by federal, state and local authorities that affect its
business. All of our food products and packaging materials are subject to
regulations administered by the Food and Drug Administration ("FDA")and the U.S.
Department of Agriculture ("USDA"). Under the Federal Food, Drug and Cosmetic
Act of 1938, as amended, the FDA prescribes the requirements and establishes the
standards for quality, purity and labeling. Among other things, the FDA enforces
statutory prohibitions against misbranded and adulterated foods, establishes
safety standards for food processing, establishes ingredients and manufacturing
procedures for certain foods, establishes standards of identity for certain
foods, and establishes labeling standards and nutrition labeling requirements
for food products. Among other requirements, the FDA must approve the Company's
products, including a review of the manufacturing processes and facilities used
to produce these products before these products can be marketed in the United
States.

Under the Organic Foods Production Act of 1990, as amended, the USDA regulates
the marketing and labeling of certain agricultural products as organically
produced products. In order to maintain our organic products as certified
organic, Annie's is certified by an outside private agency, Quality Assurance
International, that our organic products meet their highest quality standards.
The Federal Trade Commission ("FTC") regulates the advertising of the Company's
products and business. In addition, various states regulate our business by
enforcing federal and state standards of identity for selected food products,
grading food products, inspecting our manufacturers' plants and in a few
instances imposing their own labeling requirements on food products. Some food
commodities are subject to governmental agricultural programs. These programs
have substantial effects on prices and supplies and are subject to Congressional
and administrative review.

We and our manufacturers, distributors and co-packers are also subject to
various federal, state and local laws and regulation concerning the discharge of
materials into the environment, or otherwise related to environmental
protection, including the Clean Air Act, the Clean Water Act, the Resource
Conversation and Recovery Act and the Comprehensive Environmental Response,

                                        7
<PAGE>
Compensation, and Liability Act of 1980, also known as Superfund. Superfund
imposes joint and several liability on parties that arrange for the disposal of
hazardous substances, and on current and previous owners and operators of a
facility for the clean-up of hazardous substances released from the facility
into the environment.

New government laws and regulations may be introduced in the future that could
result in additional compliance costs, seizures, confiscation, recall or
monetary fines, any of which could prevent or inhibit the development,
distribution and sale of the Company's products. If the Company fails to comply
with applicable laws and regulations, it may be subject to civil remedies,
including fines, injunctions, recalls or seizures, as well as potential criminal
sanctions, which could have a material adverse effect on the business, results
of operations and financial condition. The Company has not experienced any
regulatory problems in the past and has not been subject to any fines or
penalties.

EMPLOYEES

As of June 30, 2002, we had fourteen employees: two general management
employees, eight sales and marketing support including community and consumer
relations, and four in operations including financial management. We have never
participated in a collective bargaining agreement. We believe the relationship
we have with our employees is good.

ITEM 2. DESCRIPTION OF PROPERTIES

We lease 3,400 square feet at 395 Main Street, Wakefield, Massachusetts. The
lease expires on April 16, 2003. The lease has a monthly base rent (which
increases approximately 5% each year) plus an additional amount due for our
portion of the real estate taxes and building expenses. Total rent expense under
this lease was $53,540 for the year ended March 31, 2002. We believe that our
properties are adequately covered by insurance. We believe that our facilities
and equipment are in good condition and are suitable for our operations as
presently conducted and for our foreseeable future operations. We currently
believe that additional facilities and equipment can be acquired if necessary,
although there can be no assurance that additional facilities and equipment will
be available upon reasonable or acceptable terms, if at all.

ITEM 3. LEGAL PROCEEDINGS

There are no material legal proceedings ongoing and none are anticipated by
management.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Company held an Annual Meeting of Stockholders on March 29, 2002.

(a) The following directors were elected at the meeting: Ellen Ambrose, Ronald
L. Cheney, John Foraker, E. Michael Moone, Paul B. Nardone and Ann
E. Withey.

(b) The following matters were voted upon at the Special Meeting:




                                        8
<PAGE>
1. ELECTION OF DIRECTORS

       NOMINEE                        VOTES FOR        VOTES WITHELD
       -------                        ---------        -------------
       Ellen Ambrose                  4,634,152            8,526

       Ronald L. Cheney               4,634,402            8,276

       E. Michael Moone               4,634,202            8,476

       Paul B. Nardone                4,633,637            9,041

       Ann E. Withey                  4,634,532            8,146

       John Foraker                   4,634,052            8,626

2. RATIFICATION OF THE SELECTION OF KPMG LLP AS AUDITORS FOR THE FISCAL YEAR
   ENDING MARCH 31, 2002

                    Votes For          Votes Against          Abstentions
                    ---------          -------------          -----------
                    4,637,078               2,341                3,259

3. AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED, TO REFLECT A 1
   FOR 2000 REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK, PAR VALUE $0.001,
   AND THE ISSUANCE OF SCRIP IN LIEU OF FRACTIONAL SHARES TO HOLDERS WHO, AS A
   RESULT OF THAT STOCK SPLIT, WILL HOLD LESS THAN ONE SHARE OF THE COMPANY'S
   COMMON STOCK.

                    Votes For          Votes Against          Abstentions
                    ---------          -------------          -----------
                    4,611,980             17,055                13,643

                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our securities are not listed or traded on any public securities market or stock
exchange or over the counter, and no public market maker exists with respect to
our securities. Effective April 1, 2002, the beginning of our current fiscal
year, we suspended our public reporting obligations under Section 15(d) of the
Securities and Exchange Act of 1934, as amended, because we have fewer than 300
recordholders of our Common Stock. The approximate number of record holders of
our Common Stock as of June 30, 2002 was 50. As of June 30, 2002, there was one
holder of our Series A Preferred Stock. We have never paid a cash dividend with
respect to any of our securities. We currently intend to retain earnings, if
any, for use in our business, and we do not anticipate paying cash dividends on
our shares of Common Stock or Preferred Stock in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES.

We amended our Certificate of Incorporation on November 30, 1999 to authorize
one million shares of Preferred Stock, $2.00 par value. The Board of Directors
designated all of those shares as Series A Convertible Preferred Stock. The
Series A Convertible Preferred Stock has the same voting rights as our Common
Stock, is convertible into an equal number of shares of Common Stock,
participates in dividends at the same rate as Common Stock, and has a
liquidation preference over the Common Stock equal to its par value plus 10% per
annum. Certain mergers, consolidations and sales of assets are treated as
liquidations for the purpose of determining whether this liquidation preference
takes effect.
                                        9
<PAGE>


On December 2, 1999, we sold all of the authorized Series A Convertible
Preferred Stock, to Homegrown Natural. a Delaware corporation that was
previously unaffiliated with us, for $2 million.
We relied upon Rule 506 of Regulation D promulgated under the Securities Act of
1933 in connection with the sale of our Series A Convertible Preferred Stock.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

We are engaged in the manufacture, marketing, and sale of premium, all natural
and organic macaroni and cheese dinners, all natural pasta meals and other all
natural and organic food products. We use contract packers to manufacture our
products according to our specifications, which include our products' recipes,
ingredients, graphics and packaging. Our products are sold primarily through
distributors to supermarkets and natural and specialty food stores. We also
manufacture private label macaroni and cheese house brands for retailers. Prior
to June 1, 2000, most of our sales were made to Liberty Richter under contract
terms allowing certain rights of return on unsold product held by Liberty. The
contract called for Liberty to pay us based on terms relating to the receipt of
our products by Liberty. We deferred recognition of such sales until the product
was sold by Liberty to distributors or supermarket chains. As a result, if
Liberty paid us before Liberty sold the products to a third party, we had an
advance from Liberty. If Liberty sold the products to a third party before it
paid us, we had a receivable from Liberty.

As of May 31, 2000, we mutually agreed to terminate that agreement and Liberty
ceased to represent our products. We terminated the agreement in order to obtain
certain of the services provided by Liberty from Napa Valley Kitchens and to
sell our products directly to distributors. Napa Valley Kitchens is an affiliate
of Homegrown Natural Foods, which acquired control of us in December 1999. We
reimbursed Liberty in the amount of approximately $450,000 for all of our
salable products held in their warehouse. In addition, we paid Liberty the
balance of their anticipated earnings in the amount of approximately $185,000
from the distribution agreement through the calendar year 2000. These payments
had no material impact on the Company's financial position during the fiscal
year ended March 31, 2001. The Company paid Napa Valley Kitchens approximately
$264,000 for its services in the fiscal year ended March 31, 2001 and
approximately $351,000 for the fiscal year ended March 31, 2002. The Company
does not expect its selling cost to change materially as a result of the
cancellation of the Liberty Richter agreement, the engagement of Napa Valley
Kitchens, and the decision to sell direct to distributors. Our cost of sales
consists of the cost of finished product shipped from a contract packer. We
purchase the raw materials and ship them to the contract packer according to the
specifications provided by us, which include the recipes, ingredients, graphics
and packaging for the product. Then, the contract packer packages the raw
materials into the appropriate boxes and cases according to orders specified by
us. The products are shipped directly from the contract packer via common
carrier to our main public warehouse in Illinois or to one of our two satellite
warehouses in Massachusetts or California. Selling expenses include the costs of
product marketing, sales commissions, cost of product distribution and account
management. Annie's has contracts directly with the food brokers. The food
brokers' work on a commission basis, generally 5% of net cash received. We
negotiate, through the food broker, the cost of acquiring shelf space
(introductory slotting fees) as well as the continuing support needed for the
product as indicated. Introductory slotting fees can take the form of cash
payments and/or free product allowances.

                                       10
<PAGE>
Impairment of long-lived assets

The Company's long-lived assets consist primarily of goodwill, investments in
joint ventures and property and equipment. Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of such an asset may not be recoverable. Such events or
circumstances include, but are not limited to, a significant decrease in the
fair value of the underlying business, a significant decrease in the benefits
realized from the acquired business, difficulty or a significant change in the
operations of the acquired business. Recoverability of long-lived assets is
measured by comparison of the carrying amount to estimated future undiscounted
net cash flows the assets are expected to generate. Estimating these cash flows
requires management to make judgments about the growth in demand for product and
sustainability of gross margins. If assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the long-lived asset exceeds its fair value. Based on the current
standards of SFAS No. 121, the Company has determined that it has no impairment
of long-lived assets.

Valuation of deferred income taxes

As of March 31, 2002 and 2001, the Company had a net deferred tax asset balance
of $0. In assessing the realization of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependant upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Management has recorded a
valuation allowance of $327,472 and $425,118 as of March 31, 2002 and March 31,
2001, respectively, against the minimum tax credit carryforwards and other
deferred tax assets. Based upon the projections for future taxable income over
the periods for which the deferred tax assets are deductible, management
believes that it is more likely than not that the company will realize the
benefit of these unreserved net deferred tax assets. The amount of the deferred
tax assets considered realizable, however, could be reduced in the near term if
estimates of future taxable income are reduced.

RESULTS OF OPERATIONS

Adoption of EITF Consensus Regarding Sales Incentives

The results of operations reflect the adoption of EITF consensuses related to
the classification of certain vendor promotional allowances and other sales
incentives as reductions of sales rather than as a selling expense as had been
the predominant industry and company practice in the past. The net sales amount
for the fiscal year ended March 31, 2002 is in conformity with those EITF
consensuses, which were adopted effective January 1, 2002. In order to provide
comparable information from year to year, prior years have been restated by
reclassifying promotional allowances and other sales incentives of approximately
$2.1 million for the fiscal year ended March 31, 2001, from selling expenses to
net sales.

The following table sets forth, as a percentage of net sales, certain items
included in the Company's Statements of Operations (see Financial Statements and
related Notes) for the years indicated:



                                       11
<PAGE>
                                                YEARS ENDED MARCH 31,
                                                 2001           2002
                                               --------       --------
STATEMENTS OF OPERATIONS DATA:
Net sales...................................    100.00%        100.00%
Cost of sales...............................     63.26          64.50
Gross profit................................     36.74          35.50
Selling expenses............................     23.30          22.34
General and administrative expenses.........     11.12          10.63
Operating income ...........................      2.32           2.53
Interest expense ..........................       0.43           0.27
Interest and other income...................      0.85           0.25
Income tax expense..........................      0.01           0.01
Net income .................................      2.73           2.50

TWELVE MONTHS ENDED MARCH 31, 2001 COMPARED TO TWELVE MONTHS ENDED MARCH 31,
2002

NET SALES. Net sales increased by $2,678,110 or 23.52% from $11,387,724 in 2001
to $14,065,834 in 2002. The net sales increase was primarily a result of sales
growth of existing products in existing accounts as well as growth through new
distribution.

GROSS PROFIT. As a percentage of net sales, gross profit decreased from 36.74%
in 2001 to 35.50% in 2002. This decrease was primarily the result of the product
mix by selling more products with a lower gross profit margin in 2001 than
2002.

SELLING EXPENSES. Selling expenses increased by $488,985 or 18.43% from
$2,653,102 in 2001 to $3,142,087 in 2002 and decreased as a percentage of net
sales from 23.30% in 2001 to 22.34% in 2002. The increase in selling expenses
reflected an increase in spending in marketing costs associated with the
continued rollout of our products in 2002 and marketing programs to increase
public awareness of the Annie's brand. Warehousing costs increased due to
increased sales, increased costs, and to increasing our inventory at our public
warehouses to be closer to our customer base that is expanding across the
country.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased by $228,753 or 18.07% from $1,266,093 in 2001 to $1,494,846 in 2002
and decreased as a percentage of net sales from 11.12% in 2001 to 10.63% in
2002. The increase in general and administrative expenses is primarily a result
of legal fees relating to the reverse split and retaining an investment banker
for advisory services.

INTEREST EXPENSE. Interest expense decreased by $10,940 from $48,785 in 2001 to
$37,845 in 2002 and decreased as a percentage of sales from 0.43% in 2001 to
0.27% in 2002. The decrease in interest expense is the result of lower interest
rate charged on the line of credit.

INTEREST AND OTHER INCOME. Interest and other income decreased by $61,822 or
64.14% from $96,384 in 2001 to $34,562 in 2002 and decreased as a percentage of
sales from 0.85% in 2001 to 0.25% in 2002. The decrease was a result of
recognizing more income from coupon inserts in 2001 than in 2002 and recognizing
losses from the joint ventures.


                                       12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations to date through a public offering of Common
Stock, private sales of equity and convertible debt securities, a line of credit
and term loan from a financial institution and cash generated from operations.
At March 31, 2002, we had working capital of $2,152,144, an increase of $270,582
over our working capital balance of $1,881,562 at March 31, 2001. The net
increase in working capital was primarily attributable to the net income of
Annie's offset by purchases of equipment. Net cash provided by operating
activities for the year ended March 31, 2002 was $586,505 consisting primarily
of net income, an increase in accounts payable and accrued expenses offset by an
increase in accounts receivable. The increase in accounts receivable was
attributable to our largest sales ever in March 2002. Net cash used in investing
activities consisted of capital expenditures totaling $459,018 which related to
the purchase of the Tamarind Tree Brand, described below, and the purchase of
plates and dies for the new products as well as office equipment. The cash used
also includes loans and investments to the two joint ventures.

TAMARIND TREE

On August 27, 1998, we acquired certain assets of The Tamarind Tree Ltd.
("Tamarind Tree"). Tamarind Tree produced and marketed an ethnic line of heat
and serve vegetarian food entrees. The assets acquired consisted of the Tamarind
Tree brand, including the registered trademark, "The Taste of India,"
intellectual property relating to the brand and other tangible and intangible
assets that were used in Tamarind Tree's business.

The purchase price was comprised of cash in the amount of $200,000, legal fees
in the amount of $71,038, royalty payments of $10,110, and an advance against
royalties in the amount of $75,000, and future royalties and overrides. The
royalties are payable by us to Tamarind Tree for five years at the rate of 6%
annually on "adjusted net sales." Additionally, overrides are payable by us to
Tamarind Tree for five years at the rate of 2% of all sales of certain products
and sales in excess of a certain minimum amount of other products. The royalty
payments will be accounted for as additional consideration for the purchase of
the assets and will be recorded as additional goodwill as the future royalties
are earned. We have capitalized the payments of $271,038 and $130,169 of
royalties earned subsequent to the acquisition as goodwill.

We financed the acquisition of Tamarind Tree by entering into a $300,000 term
loan with Fremont Financial Corporation. The interest rate on the loan was prime
rate plus 3% and called for 20 monthly principal payments of $15,000 commencing
October 1, 1998. The loan was secured by all of our assets including a security
interest in the Tamarind Tree Brand, and was guaranteed by the two largest
stockholders of the Company. The balance of the term loan was paid in December
1999 upon the closing of the Homegrown Natural Foods transaction.

We negotiated a line of credit with a financial institution for $600,000, which
closed on February 3, 1998 ("Line of Credit"). The Line of Credit was for a term
of two years and was secured by all of our assets and guaranteed by our two
largest stockholders at that time, Andrew Martin and Ann Withey. In August 1998,
we increased the Line of Credit to $900,000 and signed a Term Loan for an
additional $300,000 to purchase the Tamarind Tree Brand. We used the proceeds of
the sale of Preferred Stock to Homegrown Natural Foods to payoff and terminate
the Line of Credit and the Term Loan with the financial institution.



                                       13
<PAGE>
RAW MATERIALS FOOD COMPANY ("RMFC")

On July 31, 1997, we acquired all the outstanding shares of RMFC, a Colorado
based whole food supplement company, for stock valued at $360,000 and paid
acquisition costs. The acquisition was accounted for using the purchase method
of accounting and, accordingly, the purchase price was allocated to the assets
purchased and the liabilities assumed based upon the fair values at the date of
acquisition. The fair value of assets acquired, including goodwill, was
$437,555, and the liabilities assumed totaled $52,610. Goodwill of $400,184 was
being amortized over 20 years on the straight-line basis. In our effort to focus
on our core business, we sold the RFMC subsidiary to the remaining founder of
RMFC on June 30, 1999 for the return of his 15 shares of our common stock
and a note for $77,000.

On November 13, 1998, we terminated our employment contract with one of the
founders of RMFC and repurchased all 15 shares of our common stock. As of
June 30, 1999, we consummated an agreement with the other founder of Raw
Materials Food Company to sell back to that founder all of the common stock of
RMFC. In payment for the common stock, the founder returned to us 15 shares
of our Common Stock issued to him as consideration for the original acquisition
of RMFC and a note in the amount of $77,000. The note bears interest at 5.79%
per annum and the repayment terms are tied to the cash flows of Raw Materials
Food Company. At March 31, 2001, the balance on the note receivable is $48,183.
We recognized a gain of $62,121 on the aforementioned sale of the common stock
of RMFC, which represents the amount by which the fair value of the 15
shares of our common stock exceeds the net assets sold. We have deferred any
gain recognition relating to the $77,000 note receivable from RMFC until such
time as cash flows from RMFC's operating activities are sufficient to fund the
repayment of the note.

HOMEGROWN NATURAL FOODS, INC.

On December 2, 1999, Homegrown Holdings Corp., now known as Homegrown Natural
Foods, Inc., a corporation that was previously unaffiliated with us purchased
one million shares of the Preferred Stock, designated Series A Convertible
Preferred Stock, for $2 million. See "Homegrown Natural Foods Transaction" in
Item 11.

2000 LINE OF CREDIT

On May 4, 2000, we entered into an agreement for a $250,000 line of credit with
a bank. The line of credit is secured by all of our assets. On November 3, 2000,
we replaced the $250,000 line with a $1,000,000 line of credit from Warren Five
Cents Savings Bank. The line of credit calls for an interest rate of the bank's
prime rate plus 1% (5.75% at March 31, 2002) and is secured by all of the assets
of the Company. On June 15, 2001, we increased the current line of credit to
$1,500,000.The line of credit expires on August 31, 2002. However, because our
ability to renegotiate and extend our line of credit cannot be assured, the
potential impacts on liquidity raise substantial doubt about our ability to
continue as a going concern since our current forecast for the coming year
require utilization of the credit facility. Annie's has begun discussions with
the current bank on a new line of credit with principally the same structure as
the current line of credit. Annie's does not expect to have any difficulty
renewing the line of credit on terms acceptable to us.



                                       14
<PAGE>
HomeGrown Licensed Brands, Inc.

In July 2001, the Company formed HomeGrown Licensed Brands, Inc., a Delaware
corporation ("Licensed Brands"), as a joint venture with Joseph Viviano, a
consultant to the Company. The Company and Mr. Viviano each have a 50%
beneficial ownership interest in Licensed Brands. The purpose of Licensed Brands
is to manufacture and sell pasta products utilizing trademarks licensed from
other companies. Licensed Brands was initially capitalized with $100,000,
$50,000 of which was contributed by the Company. In addition, the two
stockholders of Licensed Brands are each obligated to contribute an additional
$25,000 if necessary to satisfy the working capital needs of Licensed Brands.

ORGANIC WHEAT SUPPLIER JOINT VENTURE

In April 2001, Annie's and Ceres Organic Harvest, Inc., an organic wheat
supplier (the "Supplier") entered into a joint venture transaction whereby both
Annie's and the Supplier became 50% owners of the membership interests in a
Delaware limited liability company (the "Joint Venture"). As a member of the
Joint Venture, Annie's contributed, or will contribute, all goodwill and
intangible assets related to the Joint Venture's business, including
relationships with vendors, customers, both potential and current, and all of
the Joint Venture's working capital in cash pursuant to a line of credit
(described below). The Supplier contributed, or will contribute, all of its
certified organic semolina flour, durum patent flour, durum wheat, other pasta
wheat-based flours and products, and other related pasta products to the Joint
Venture. The Supplier has also contributed, or will also contribute to the Joint
Venture, any purchase order or pending transaction, any accounts receivable, any
accounts payable, and any inventory purchased that relates to the Joint
Venture's business, as well as all goodwill and intangible assets related to the
Joint Venture's business, including relationships with potential and current
vendors and customers.

Pursuant to the terms of the Joint Venture's Limited Liability Company
Agreement, responsibility for the business and affairs of the Joint Venture has
been allocated between Annie's and the Supplier. Annie's is responsible for
providing the Joint Venture's financial accounting, marketing and administrative
functions (including billing customers, paying vendors, overseeing licensing,
certification, taxation, legal, and certain selling and marketing tasks.) In
addition, Annie's has agreed to make available to the Joint Venture a revolving
line of credit, the proceeds of which will be available for general business
purposes in an amount not to exceed $350,000. This line of credit will be
secured by all of the assets of the Joint Venture.

The Supplier is responsible for providing the other operational functions for
the Joint Venture, including sourcing, manufacturing, marketing, purchasing,
logistics, maintaining compliance with organic certification rules and
regulations, and quality control. Annie's and the Supplier each receive monthly
management fees to reimburse them for the services they provide to the Joint
Venture and out-of-pocket costs they will each render on behalf of the Joint
Venture. In connection with this transaction, the Supplier assigned its
five-year term supply agreement with Annie's to the Joint Venture.
The net profits and net losses of the Joint Venture for each fiscal year will be
allocated equally between Annie's and the Supplier.

Under the terms of the Joint Venture agreement, Annie's has the option to
purchase the Supplier's interest in the Joint Venture in June 2006 for a price
equal to one times the Joint Venture's net operating profit after interest and
depreciation and before taxes, for the then previous twelve consecutive months.
As a result of this transaction, both Annie's and the Joint Venture expect to
sell durum wheat to other companies in the expanding organic wheat market.
Annie's also believes that this transaction will result in a more stable supply
and price for Annie's organic wheat requirements.

                                       15
<PAGE>
Contractual Obligations

<TABLE><CAPTION>
Contractual Cash Obligations      Total    Less than 1 year   1-3 years   4-5 years   After 5 years
----------------------------      -----    ----------------   ---------   ---------   -------------
<S>                             <C>            <C>               <C>         <C>           <C>
Line of Credit                  $618,645       $618,645            --         --            --

Operating Leases                  44,058         40,658          $3,400       --            --

Total Obligations               $ 44,058       $ 40,658          $3,400       --            --
</TABLE>

CAPITAL NEEDS

Our primary capital needs are for developing new products to sell to our
existing customer base and expansion into national supermarket distribution.
Annie's realizes any estimate we compute to fully implement our plans will keep
increasing as we introduce new products to our existing customers. We anticipate
that the funds available from the Line of Credit together with funds generated
from operations will be sufficient to meet our liquidity needs for the next
twelve months. However, we might still need additional capital in the future to
fully implement our business strategy as set forth herein. If such capital is
unavailable either because of general market conditions or the results of our
operations, we will have to scale back either our investments in new products,
or our national supermarket expansion, or both.

ENGAGEMENT OF INVESTMENT BANKING FIRM

In January 2002, the Company engaged the investment banking firm, U.S. Bancorp
Piper Jaffray, to explore strategic alternatives. The Company signed an
exclusivity agreement, dated June 10, 2002, with a potential investor for
purposes of negotiating the terms of a transaction. The exclusivity agreement
expires August 9, 2002. The Company may not be able to negotiate a transaction
with this potential investor or any other party on terms acceptable to it.

OTHER MATTERS

In May 2000, the Financial Accounting Standards Board Emerging Issues Task Force
("EITF") reached a consensus on Issue No. 00-14, ACCOUNTING FOR CERTAIN SALES
INCENTIVES. This issue addressed the recognition, measurement, and income
statement classification for various types of sales incentives, including
discounts, coupons and rebates. In April 2001, the EITF reached a consensus on
Issue No. 00-25, VENDOR INCOME STATEMENT CLASSIFICATION OF CONSIDERATION TO A
PURCHASER OF VENDOR'S PRODUCT OR SERVICES. This issue addresses the income
statement classification of consideration a vendor provides to a retailer, other
than that directly addressed in Issue No. 00-14, including slotting fees,
cooperative advertising arrangements and buydowns. The consensuses reached in
Issues 00-25 and 00-14 are effective for fiscal quarters beginning after
December 15, 2001. The adoption of these consensuses will not affect when the
Company recognizes incentives or the amount. However, adoption of these
consensuses will affect the classification of certain expenses in the statement
of operations. As a result, the Company does not expect the adoption of these
consensuses to have a material impact on the financial statements.


                                       16
<PAGE>
In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141 requires
that the purchase method of accounting be used for all business combinations
initiated after June 30, 2001 as well as all purchase method business
combinations completed after June 30, 2001. Statement 141 also specifies
criteria intangible assets acquired in a purchase method business combination
must meet to be recognized and reported apart from goodwill, noting that any
purchase price allocable to an assembled workforce may not be accounted for
separately. Statement 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of Statement 142.
Statement 142 will also require that intangible assets with definite useful
lives be amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for impairment in accordance with SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of.

The Company is required to adopt the provisions of Statement 141 immediately,
except with regard to business combinations initiated prior to July 1, 2001,
which it expects to account for using the pooling-of-interests method, and
Statement 142 effective April 1, 2002. Furthermore, any goodwill and any
intangible asset determined to have an indefinite useful life that are acquired
in a purchase business combination completed after June 30, 2001 will not be
amortized, but will continue to be evaluated for impairment in accordance with
the appropriate pre-Statement 142 accounting literature. Goodwill and intangible
assets acquired in business combinations completed before July 1, 2001 will
continue to be amortized prior to the adoption of Statement 142.

Statement 141 will require, upon adoption of Statement 142, that the Company
evaluate its existing intangible assets and goodwill that were acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from goodwill. Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible assets acquired
in purchase business combinations, and make any necessary amortization period
adjustments by the end of the first interim period after adoption. In addition,
to the extent an intangible asset is identified as having an indefinite useful
life, the Company will be required to test the intangible asset for impairment
in accordance with the provisions of Statement 142 within the first interim
period. Any impairment loss will be measured as of the date of adoption and
recognized as the cumulative effect of a change in accounting principle in the
first interim period.

In connection with the transitional goodwill impairment evaluation, Statement
142 will require the Company to perform an assessment of whether there is an
indication that goodwill (and equity-method goodwill) is impaired as of the date
of adoption. To accomplish this the Company must identify its reporting units
and determine the carrying value of each reporting unit by assigning the assets
and liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. The Company will then have up to six
months from the date of adoption to determine the fair value of each reporting
unit and compare it to the reporting unit's carrying amount. To the extent a
reporting unit's carrying amount exceeds its fair value, an indication exists
that the reporting unit's goodwill may be impaired and the Company must perform
the second step of the transitional impairment test. In the second step, the
Company must compare the implied fair value of the reporting unit's goodwill,
determined by allocating the reporting unit's fair value to all of its assets
(recognized and unrecognized) and liabilities in a manner similar to a purchase
price allocation in accordance with Statement 141, to its carrying amount, both
of which would be measured as of the date of adoption. This second step is
required to be completed as soon as possible, but no later than the end of the
year of adoption. Any transitional impairment loss will be recognized as the
cumulative effect of a change in accounting principle in the Company's statement
of earnings.
                                       17
<PAGE>
As of the date of adoption, the Company expects to have unamortized goodwill in
the approximate amount of $325,000, which will be subject to the transition
provisions of Statements 141 and 142. Amortization expense related to goodwill
was $30,000 and $19,200 for the year ended March 31, 2001 and 2002,
respectively. Because of the extensive effort needed to comply with adopting
Statements 141 and 142, it is not practicable to reasonably estimate the impact
of adopting these Statements on the Company's financial statements at the date
of this report, including whether any transitional impairment losses will be
required to be recognized as the cumulative effect of a change in accounting
principle.

FORWARD LOOKING STATEMENTS

From time to time, information provided by us, statements made by our employees
or information included in our filings with the Securities and Exchange
Commission (including this Form 10-KSB) may contain statements which are not
historical facts, so called "forward-looking statements", which involve risks
and uncertainties. Forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. When
used in this Form 10-KSB, the terms "anticipates", "expects", "estimates",
"believes" and other similar terms as they relate to the Company or its
management are intended to identify such forward-looking statements. In
particular, statements made above in "Item 2. Description of Property" relating
to the suitability of our facilities and equipment for future operations and the
availability of additional facilities and equipment in the future and in "Item
6. Management's Discussion and Analysis of Financial Condition and Results of
Operations" relating to the sufficiency of funds for our working capital
requirements during 2001-2002 and our expectation that future cash flow will
continue to be provided from operations will not have any significant impact on
our business may be forward-looking statements. Our actual future results may
differ significantly from those stated in any forward-looking statements.

ITEM 7. FINANCIAL STATEMENTS

Please refer to pages F-1 through F-17
Independent Auditors' Report
Balance Sheets at March 31, 2001 and 2002
Statements of Operations for the Years ended March 31, 2001 and 2002
Statements of Stockholders' Equity for the Years ended March 31, 2001 and 2002
Statements of Cash Flows for the Years ended March 31, 2001 and 2002
Notes to Financial Statements at March 31, 2001 and 2002

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

The Company signed an exclusivity agreement, dated June 10, 2002, with a
potential investor for the purposes of negotiating the terms of the transaction.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT EXECUTIVE OFFICERS,
        KEY PERSONS AND DIRECTORS

The executive officers and directors of the Company serve for one year or until
their successors have been elected or appointed. The following chart lists the
executive officers and directors as of June 30, 2002:

NAME                AGE        FIRST YEAR ELECTED             POSITION
----                ---        ------------------             --------
Ann E. Withey        38              1989             Inspirational President
                                                       and Director
John Foraker         38              1999             Chairman
Paul B. Nardone      34              1995             President, Chief Executive
                                                       Officer
Neil Raiff           44              1989             Chief Financial Officer,
                                                       Secretary and Treasurer
Ronald L. Cheney     65              1998             Director
E. Michael Moone     61              1999             Director
Ellen Ambrose        46              1999             Director


                                       18
<PAGE>
ANN E. WITHEY co-founded Annie's Homegrown, Inc. in 1989 and is currently a
Director. Ms. Withey's responsibilities are to lead the consumer relations,
quality control and new product development functions of the Company, to
maintain the social integrity of the Company including adherence to our mission
statement as well as consumer correspondence and relations. Ms. Withey has also
served as a director of Annie's since 1989. Ms. Withey was co-founder of
Smartfood, Inc. and creator of the original recipe for Smartfood Popcorn.
Smartfood Inc. was sold to Frito-Lay, a division of PepsiCo, in 1989. Ms. Withey
and her husband own and operate a small organic produce farm in Connecticut. Ms.
Withey actively supports a variety of programs that benefit women, children,
education and the environment. Ms. Withey holds a B.A. degree from the
University of Connecticut.

JOHN FORAKER founded Homegrown Holdings Corp. (now known as Homegrown Natural
Foods, Inc.) in 1999 as an investment vehicle for the natural food industry, and
negotiated Homegrown Natural Foods' investment in Annie's. Mr. Foraker is
currently our Chairman as well as the CEO of Homegrown Natural Foods. Mr.
Foraker has served as President & CEO of Napa Valley Kitchens, marketer of
CONSORZIO(R)brand specialty food products, since 1995. In 1997, Mr. Foraker
founded Calio Groves, the leading domestic producer and marketer of California
olive oil products. From 1987 through 1991, Mr. Foraker was a Vice President for
Bank of America NT & SA, in Santa Rosa, CA., where he was responsible for a
significant portion of the Bank's wine industry portfolio. Mr. Foraker is on the
board of Spottswoode Winery and Calio Groves. Mr. Foraker holds a B.S. in
Agricultural Economics from the University of California at Davis and an M.B.A.
from the University of California at Berkley.

PAUL B. NARDONE has been the Company's President since October 1996 and Chief
Executive Officer since December 1999. In July 1999, Mr. Nardone was elected to
our Board of Directors. Mr. Nardone is responsible for managing our strategic
plan. In 1990, Mr. Nardone founded New England Snacks, Inc., a regional snack
food distributorship. In March 1992, New England Snacks, Inc. was sold to
Alternative Distributors where Mr. Nardone served as Vice President of sales
until joining the Company in 1993. Mr. Nardone holds a B.A. degree in Political
Science from Tufts University in Medford, Massachusetts. Mr. Nardone is
currently enrolled in the Executive M.B.A. program at Columbia University
Business School.

NEIL RAIFF, CPA has been our Chief Financial Officer and Treasurer since 1989
and our Secretary since December 1999. From 1989 to September 1994, Mr. Raiff
served in this capacity on a contractual basis. In October 1994, Mr. Raiff
became a part-time employee, and in May 1995 he joined us as a full-time
employee. Mr. Raiff is responsible for all financial and administrative
functions including financial forecasting and strategic planning, expense
control, accounting, and banking and insurance relationships. From 1991 to May
1995, Mr. Raiff was self-employed as a CPA in private practice. Mr. Raiff holds
a B.S. in Accountancy from Bentley College in Waltham, Massachusetts.

RONALD L. CHENEY has been a member of our Board of Directors since 1998. He
retired from his practice of law in 1996. From 1992 to 1996, Mr. Cheney served
as an officer and director of Intertill Investment Corporation, an unregistered
investment fund, and as a general partner of Intertill Associates LP, a limited
partnership that invested in unregistered investment companies. Prior to his
retirement, Mr. Cheney worked for the last ten years as a sole practitioner
specializing in the area of securities law. Mr. Cheney has been a panelist at
discussions on securities litigation, lectured in law school, and published
articles on securities law. Mr. Cheney holds a B.A. from Yale University and his
LL.B. from Harvard Law School.



                                       19
<PAGE>
E. MICHAEL MOONE has been Chairman of Luna Vineyards in Napa, California and a
managing partner of Silverado Equity Partners, LP since 1995. From 1990 to 1992,
Mr. Moone served as President & CEO of Stouffer Foods Corporation, where he also
served as President of Nestle Frozen Food Company. From 1984 to 1990 Mr. Moone
served as President of Wine World Estates, a producer and importer of premium
wines. From 1995 to 2000, Mr. Moone served as Chairman of Napa Valley Kitchens.
In 1995, Silverado Partners, led by Mr. Moone, completed the successful purchase
of Nestle's wine holdings, which was taken public in 1997 under the name
Beringer Wine Estates. Mr. Moone holds a B.S. from University of California at
Los Angeles.

ELLEN AMBROSE is a principal in Brand Insights, a marketing consulting company
for the packaged foods industry a position she has held since 1996. From 1990 to
1996, Ms. Ambrose was Vice President & General Manager for Nestle Beverage
Company, with responsibility for the ready-to-drink coffee, ground coffee, and
powdered beverages divisions. Before joining Nestle, Ms. Ambrose was a principal
in Marketing Corporation of America, a strategic marketing consulting firm
handling clients such as Frito-Lay, Kraft, General Foods, and Pepperidge Farms.
She also served as a marketing director for Beatrice/Hunt Wesson's Fisher nuts
brand, and as Group marketing Manager for the Orville Redenbacher division. Ms.
Ambrose is currently a director of Homegrown Natural Foods. Ms. Ambrose holds a
B.S. degree in Food Science from University California at Davis.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Not Applicable.

ITEM 10. EXECUTIVE COMPENSATION

The Board of Directors has the authority to fix the compensation of the
directors. The directors may be paid their expenses and a fixed sum for their
attendance at each meeting of the Board or a stated salary as a director, and
each may be reimbursed for his or her expenses. Annie's pays no compensation for
its directors who are also employees of Annie's. Options to purchase the
Company's Common Stock were granted to the Company's non-employee directors for
their services for fiscal year 2002 pursuant to the 1999 Non-employee Director's
Stock Option Plan.

The following table sets forth, for the fiscal years ended March 31, 2002,
2001,and 2000, a summary of compensation awarded to, earned by or paid to the
Company's Chief Executive Officer and each of its four other most highly
compensated executive officers (the "Named Executive Officers") at March 31,
2002.

SUMMARY COMPENSATION TABLE
<TABLE><CAPTION>
                                                        SECURITIES
                                                        UNDERLYING
NAME AND                          SALARY(1)   BONUS (2)   OPTIONS   ALL OTHER
PRINCIPAL POSITION        YEAR       ($)         ($)        (#)   COMPENSATION
------------------------  ----    --------    --------    ------    --------
<S>                       <C>     <C>         <C>         <C>       <C>
PAUL NARDONE (3)(5)       2002    $150,000    $ 44,135        --          --
President, Chief          2001     126,000      21,323        --          --(6)
Executive Officer         2000     104,000      44,044        --          --(6)

ANN E. WITHEY             2002    $ 26,250    $     --        --    $ 30,237(4)
Founder, Director         2001      30,000          --        --      36,041(4)
                          2000      84,000          --        --          --

NEIL RAIFF (7)            2002    $126,000    $ 37,073        --          --
Chief Financial Officer,  2001     108,000      18,277        --          --
Secretary and Treasurer   2000      84,000      25,962        --          --

ANDREW M. MARTIN (3)      2002    $     --    $     --        --    $     --
                          2001          --          --        --          --
                          2000      72,000          --        --          --
</TABLE>
                                       20
<PAGE>
(1)  Amounts shown do not include the cost to the Company of personal benefits,
     the value of which did not exceed 10% of the aggregate salary and bonus
     compensation for each Named Executive Officer.
(2)  Bonus were earned pursuant to a bonus plan adopted by the Board of
     Directors, which required us to achieve certain financial targets for the
     years ended March 31, 2002, 2001 and 2000.
(3)  Mr. Martin served as Chief Executive Officer until July 1999. The Board of
     Directors appointed Mr. Nardone our Chief Executive Officer on December 2,
     1999.
(4)  Other compensation to Ms. Withey includes the forgiveness of the Stock
     Option Loan from October 1997. For 2000, Ms. Withey waived the forgiveness
     on the Stock Option Loan from October 1997 and December 1998.
(5)  Pursuant to an Employment Agreement between Mr. Nardone and the Company
     dated November 26, 1996, Mr. Nardone receives a quarterly cash bonus and a
     fixed number of stock options based on the amount by which the Company's
     actual performance exceeds budget during the preceding quarter. Mr. Nardone
     earned, and was owed, stock options to purchase 18.75 shares of Common
     Stock. On July 7, 1999, the Board of Directors authorized the issuance of
     an incentive stock option to Mr. Nardone to purchase 118.75 shares of our
     Common Stock under our 1999 Omnibus Stock Option Plan, with accelerated
     vesting based upon the achievement of certain performance incentives. On
     August 26, 1999, the Board of Directors authorized the issuance of a
     non-qualified stock option to Mr. Nardone to purchase 53.68 shares of our
     Common Stock under our 1996 Stock Plan, at an exercise price of $20.00 per
     share, in exchange for the following changes to Mr. Nardone's Employment
     Agreement: (i) surrender of his entitlement to a change of control bonus of
     2%; (ii) surrender of his entitlement to incentive stock options to
     purchase 18.75 shares of Common Stock mentioned above; (iii) reduction of
     his base salary from $120,000 to $96,000, (iv) surrender of his entitlement
     to certain cash bonuses based on performance in exchange for his
     participation in our Bonus Pool Program and (v) extension of the term of
     his Employment Agreement to March 31, 2000. Mr. Nardone's contract was
     subsequently extended through March 31, 2001. Effective as of September
     2001, Mr. Nardone's Employment Agreement was extended through March 2003.
(6)  In December 1999, Mr. Nardone received 12,500 shares of common stock of
     Homegrown Natural Foods, Inc. (less than 1% of the outstanding common
     shares of Homegrown Natural Foods), which he returned to Homegrown Natural
     Foods on June 29, 2001.
(7)  On July 7, 1999, the Board of Directors authorized the issuance of an
     incentive stock option to Mr. Raiff to purchase 59.375 shares of our Common
     Stock under our 1999 Omnibus Stock Option Plan, with accelerated vesting
     based upon the achievement of certain performance incentives. On August 26,
     1999, the Board of Directors authorized the issuance of a ten-year
     non-qualified stock option to Mr. Raiff to purchase 23.68 shares of our
     Common Stock under our 1996 Stock Plan, with an exercise price of $20.00
     per share, in exchange for the surrender of his entitlement to a change of
     control bonus of 1% granted to him in our Change of Control and Severance
     Agreement dated December 21, 1998.

OPTION GRANTS IN LAST FISCAL YEAR

No stock options were granted to the Named Executive Officers during the 2002
fiscal year as follows:

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information with respect to the Named Executive
Officers concerning the exercise of options during fiscal years ended March 31,
2002, March 31, 2001 and March 31, 2000 and unexercised options held as of the
end of fiscal 2002.


                                       21
<PAGE>
                                                 NUMBER OF          VALUE OF
                                                 SECURITIES        UNEXERCISED
                                                 UNDERLYING       IN-THE-MONEY
                                                UNEXERCISED        OPTIONS AT
                                 SHARES TO BE  OPTIONS AT FY-    FY-END ($) (1)
                                   RECEIVED   END EXERCISABLE/    EXERCISABLE/
      NAME                YEAR   ON EXERCISE   UNEXERCISABLE     UNEXERCISABLE
------------------------  ----   -----------   --------------   ----------------
PAUL B. NARDONE (2)       2002         --      132.85/ 39.58    $213,658/$ 0
President and Chief       2001         --       21.47/150.96    $85,463/$128,195
Executive Officer         2000         --       10.74/161.69    $42,731/$170,927

ANN E. WITHEY             2002         --           --                --
Founder, Director         2001         --           --                --
                          2000         --           --                --

NEIL RAIFF                2002         --       63.26/19.79     $94,262/$ 0
Chief Financial Officer,  2001         --        9.47/73.58     $37,708/$56,554
Secretary and Treasurer   2000         --        4.74/78.31     $18,855/$75,407

--------------------------------------------------------------------------------
(1)  Calculated based on an assumed fair market value of $4,000.00, minus the
     exercise price of the option. The $4,000.00 fair market value assigned to
     the Common Stock is after adjustment for the reverse split on March 31,
     2002. The fair market value is derived from the valuation used in the sale
     of Series A Convertible Preferred Stock (convertible on a one-for-one basis
     into shares of Common Stock) to Homegrown Natural Foods in December 1999
     and the call price of the Stock Collar Agreements the founders entered into
     with Homegrown Natural Foods in December 1999 covering certain of their
     shares of Common Stock, which was $2.00 per pre-split share. We have no
     information on other transactions that would present a more meaningful
     estimate of the per share price of our Common Stock.
(2)  Mr. Martin served as Chief Executive Officer until July 1999. The Board of
     Directors appointed Mr. Nardone our Chief Executive Officer on December 2,
     1999.

DIRECTOR COMPENSATION

In July 1999, the Board of Directors adopted our 1999 Non-Employee Directors'
Stock Option Plan (the "Non-Employee Directors' Plan"). The Non-Employee
Directors' Plan was created to compensate directors while simultaneously
creating an incentive to such directors to maximize stockholder value. The
following is a general summary of the plan, which is qualified in its entirety
by reference to the Non-Employee Directors' Plan.

The Non-Employee Directors' Plan provides for an annual non-discretionary grant
of stock options to each director who is not also an employee (collectively, the
"Non-Employee Directors"). This annual grant is in lieu of all other
compensation for service as a member of the Board of Directors (although
Non-Employee Directors may still receive reimbursement for their expenses in
attending meetings). A total of 50 shares of Common Stock is reserved for
issuance under the Non-Employee Directors' Plan.

Each Non-Employee Director receives an annual option grant on the anniversary of
his or her election or appointment to the Board of Directors to purchase 3.75
shares of our Common Stock for service on the Board of Directors for the ensuing
year and 1.25 shares for each committee on which the Non-Employee Director
serves, both with an exercise price equal to the fair market value of the
underlying Common Stock on the date the option is granted. The exercise price
will be 110% of the fair market value of the subject Common Stock for any person

                                       22
<PAGE>
who owns stock possessing more than 10% of the total combined voting power or
value of our equity. Options remain exercisable for five years from the date
granted. Messrs. Foraker, Lemon and Moone voluntarily waived their participation
in the Non-Employee Directors' Plan in 2000, 2001 and 2002. As of March 31,
2002, two non-employee directors held options to purchase 28.75 shares of our
common stock at an exercise price of $4,000.00 per share under the Non-Employee
Directors' Plan.

1999 OMNIBUS STOCK OPTION PLAN

Our management strives to attract and retain top quality employees, consultants
and directors. To that end, in July 1999, the Board of Directors adopted and our
stockholders approved our 1999 Omnibus Stock Option Plan (the "1999 Plan"). The
following is a general summary of the plan, which is qualified in its entirety
by reference to the 1999 Plan.

Under the 1999 Plan, options to purchase shares of our Common Stock may be
granted which are either (i) options intended to qualify as ISOs under Section
422(b) of the Internal Revenue Code, or (ii) non-qualified stock options
("NQSOs"). Options to purchase a total of 237.50 shares of Common Stock may be
granted under the 1999 Plan; however, options to purchase more than 150 shares
may not be granted to any single recipient during any single calendar year. If
there is a change of the number or kind of shares issuable under the 1999 Plan
as a result of declaration of stock dividend, stock split, combination,
exchange, merger, consolidation, reclassification or any similar extraordinary
event affecting our Common Stock, an adjustment will be made in the maximum
aggregate number of shares that may be subject to the 1999 Plan, as well as in
the number of shares subject to outstanding options and the exercise price of
options granted under the 1999 Plan. The Board of Directors will oversee and
administer the 1999 Plan (subject to the 1999 Plan's terms), will have authority
to select recipients eligible to receive option grants, and will grant ISOs and
NQSOs under the 1999 Plan's terms. The Board of Directors may grant ISOs or
NQSOs or any combination of such options, but our directors and consultants will
only be entitled to receive NQSOs.

The exercise price of options under the 1999 Plan will be not less than 100% of
the fair market value of our Common Stock on the date of grant if the grant is
intended to be an ISO. No ISO will be granted to any individual who, immediately
prior to the grant, owns shares of our stock possessing more than 10% of the
total combined voting power of our stock, unless that option's exercise price is
not less than 110% of fair market value of our Common Stock on the date of grant
and the option, by its terms, expires no later than five years after the date of
grant.

Our Board of Directors, will determine the exercise period and vesting terms, if
any, for each option grant, but the exercise period will not be more than ten
years after the date the option is granted. If a recipient of options ceases to
be an employee, consultant or director to us for any reason other than his or
her death, disability or approved retirement, any option that is otherwise
exercisable by such former employee, consultant or director will terminate
unless it is exercised within 30 days of the date of his or her termination. If
a recipient ceases to be an employee, consultant or director of us by reason of
his or her death, any option held by that recipient which was exercisable on the
date of his or her death may be exercised by the legal representative of the
recipient's estate for up to one year after his or her death or until the stated
expiration date of the option, whichever period is shorter. Any option not
exercisable on the date of the recipient's death is forfeited. If a recipient
ceases to be an employee, consultant or director as a result of his or her
disability, any such options which are exercisable on the date of his or her
termination may be exercised for up to one year following the date of
termination or until the stated expiration date of such option, whichever period
is shorter. If a recipient is "Terminated for Cause", as defined under the 1999
Plan (e.g., for violation of our personnel policies), the terminated recipient's
options will immediately be forfeited.

                                       23
<PAGE>
In the event of a Change of Control, as defined in the 1999 Plan, unless
otherwise proscribed in the stock option grant, one-half of the unvested
portions of each grant under the 1999 Plan will become fully exercisable
immediately prior to such event. We did not intend for the Homegrown Natural
Foods transaction described previously to constitute a "Change of Control" for
the purposes of the 1999 Plan, and the stock option grants prior to the closing
of the Homegrown Natural Foods transaction will so indicate. If the 1999 Plan
remains in effect following such a Change of Control, the remainder of any
unvested options will continue to vest as otherwise provided unless the Board of
Directors determines otherwise.

The Board of Directors may amend, discontinue or terminate the 1999 Plan at any
time. The 1999 Plan will automatically terminate on the tenth anniversary of its
effective date.

On July 7, 1999, August 26, 1999,and March 18, 2002 pursuant to the 1999 Plan,
the Board of Directors approved the issuance of incentive stock options to
purchase an aggregate of 204 shares to five employees with an exercise price
equal to the fair market value of the Common Stock on the date of grant, with
accelerated vesting based upon the achievement of certain performance
milestones.

1996 STOCK PLAN

On October 28, 1996, we adopted a 1996 stock option plan (the "1996 Plan"). The
purpose of the 1996 Plan is to encourage ownership of our Common Stock by
officers, key employees, directors, consultants and other persons not employed
by us. Pursuant to the 1996 Plan, we may grant incentive stock options and
non-qualified stock options to our employees, officers, directors and
consultants. A total of 100 shares of Common Stock were reserved for issuance
under the 1996 Plan. The Board of Directors is authorized to determine the
employees, officers, directors and consultants to whom options are granted and
the number of shares for each option. The Board also interprets the 1996 Plan
and the options granted thereunder and is authorized to adopt, amend or rescind
the rules and regulations and make all other determinations necessary or
advisable for the administration of the 1996 Plan. The 1996 Plan may be amended
at any time by the Board, although certain amendments would require stockholder
approval. During the year ended March 31, 2000, 82.37 stock options were granted
to employees with an exercise price of $20.00 per share. An additional 7.50
shares were granted during the year end March 31, 2002 with an exercise price of
$20.00 per share.

The Board has the discretion to determine the extent to which an option may be
exercised in part and the extent to which any part may or may not be exercised
prior to expiration of specified periods of time after the grant. However, no
option shall be exercisable to any extent after the expiration of ten years
(five years in the case of an incentive stock option granted to a greater than
10% stockholder). If the optionee terminates his or her services with the
Company, the optionee must exercise the option within the earlier of the
expiration date of such option or within 90 days of termination of services for
any reason other than death or disability. In the event of death or retirement,
the incentive stock option shall terminate at the earlier of such date of
expiration or within 180 days and 90 days respectively following such event. The
exercise price of incentive stock options granted under the 1996 Plan must be at
least equal to the fair market value of our Common Stock on the date of grant.
The exercise price of incentive stock options granted to an optionee who owns
stock possessing more than 10% of our Common Stock must equal at least 110% of
the fair market value of our Common Stock on the date of grant.


                                       24
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to the Company
regarding the beneficial ownership of our Common Stock as of March 31, 2002 for
(i) each stockholder known by us to own beneficially 5% or more of the
outstanding shares of its Common Stock; (ii) each director; and (iii) all
directors and executive officers as a group. We believe that the beneficial
owners of the Common Stock listed below, based on information furnished by such
owners, have sole investment and voting power with respect to such shares,
subject to community property laws where applicable.

                                         AMOUNT OF
                                         BENEFICIAL              PERCENT OF
    NAME AND ADDRESS (1)              OWNERSHIP(2)(3)(5)         OWNERSHIP(4)
    --------------------              ------------------         ------------

Homegrown Natural Foods, Inc.(6)          1,788.85                  66.15%
580 Gateway Drive
Napa, CA 94558

John Foraker (7)                          1,788.85                  66.15%
Homegrown Natural Foods, Inc.
580 Gateway Drive
Napa, CA 94558

Ann E. Withey (8)                           394.27                  14.58%
c/o Annie's Homegrown, Inc.
395 Main Street
Wakefield, MA 01880

Paul Nardone (9)                            132.85                   4.68%

Neil Raiff (10)                              86.97                   3.14%

Ronald L.Cheney (11)                         55.05                   2.02%

Elen Ambrose (12)                            12.50                   0.46%

E. Michael Moone (13)                            0                      *

All Directors And Executive Officers
 as a Group (7 People) (14)               2,470.50                  84.34%


--------------------------
 *   Less than 1% of total voting securities
(1)  Addresses are provided only for 5% beneficial owners.
(2)  Except as otherwise noted in the footnotes to this table, each person or
     entity named in the table has sole voting and investment power with respect
     to all shares as owned, based on information provided to us by the persons
     or entities named in the table.
(3)  Shares of Common Stock subject to options exercisable within 60 days of
     March 31, 2002 are deemed outstanding for computing the percentage of the
     person or group holding such securities.
(4)  Percentage of beneficial ownership is calculated on the basis of the amount
     of outstanding securities (Common and Preferred Stock) at March 31, 2002
     (2,704.25) plus, for each person or group, any securities that person or
     group has the right to acquire within 60 days pursuant to stock options or
     other rights.
(5)  Includes the 1 for 2,000 reverse stock split, which was presented as
     Proposal 3 in the Company's Proxy Statement for its 2002 Annual Meeting.

                                       25
<PAGE>
     Pursuant to the Proposal, approximately 299,000 shares of Common Stock was
     retired and approximately 299,000 units of scrip was issued. Percentage of
     beneficial ownership is calculated on an as adjusted, pro forma basis,
     showing the amount of outstanding securities (Common and Preferred Stock)on
     March 31, 2002, less shares that will be retired in conjunction with the
     reverse stock split (leaving 2,704.25 deemed outstanding).
(6)  Includes all stock subject to Irrevocable Proxies that Mr. Andrew Martin
     (705.55 shares) and Ms. Ann Withey (308.71 shares) granted to Homegrown
     Holdings Corp., now known as Homegrown Natural Foods, Inc., in conjunction
     with the Stock Collar Agreements each dated December 2, 1999 (described
     below), which grants voting authority with respect to such shares.
(7)  Includes all stock subject to Irrevocable Proxy Agreement that each of Mr.
     Andrew Martin (705.55 shares) and Ms. Ann Withey (308.71 shares) granted to
     Homegrown Holdings Corp., now known as Homegrown Natural Foods, Inc., in
     conjunction with the Stock Collar Agreements dated December 2, 1999
     (described below), which grants voting authority with respect to such
     shares and for which Mr. Martin and Ms. Withey disclaim beneficial
     ownership. Mr. Foraker, Chairman of the Company's Board of Directors, is
     also the Chief Executive Officer of Homegrown Natural Foods. Mr. Foraker
     holds 30, 532 shares of Homegrown Natural Foods. Series A Preferred Stock,
     227, 501 shares of its Common Stock, and options to purchase 101, 000
     shares of its Common Stock.
(8)  Ms. Withey is a director of Annie's. All of Ms. Withey's Common Stock is
     subject to Stock Transfer Instructions, dated July 27, 1995, and as amended
     described below. Certain loans by Annie's to Ms. Withey are secured by the
     Common Stock that may be received by her upon exercise of certain option
     grants (described below). Does not include 308.71 shares of Ms. Withey's
     Common Stock are subject to a Stock Collar Agreement and Irrevocable Proxy
     with Homegrown Natural Foods, for which she disclaims beneficial ownership.
(9)  Mr. Nardone is a director of Annie's. Includes the vested portion (53.68
     shares) of a non-qualified stock option to purchase 53.68 shares of the
     Company's Common Stock under the Company's 1996 Stock Plan for an exercise
     price of $20.00. Also includes vested portion (79.17 shares) on a Qualified
     Stock Option to purchase 118.75 shares of the Company's Common Stock under
     the Company's 1999 Common Stock Option Plan for an exercise price of
     $4000.00. Mr. Nardone was issued 12,500 shares of Common Stock of Homegrown
     Natural Foods (less than 1% of the outstanding Common Stock of Homegrown
     Natural Foods) in consideration of service rendered. Mr. Nardone returned
     those shares to Homegrown Natural Foods on June 29, 2001.
(10) Mr. Raiff is the Chief Financial Officer of Annie's. Includes the vested
     portion (23.68 shares) of a non-qualified stock option to purchase 23.68
     shares of the Company's Common Stock under the Company's 1996 Stock Plan
     for an exercise price of $20.00. Also includes vested portion (39.58
     shares) on a Qualified Stock Option to purchase 59.38 shares of the
     Company's Common Stock under the Company's 1999 Common Stock Option Plan
     for an exercise price of $4,000.00.
(11) Mr. Cheney is a director of Annie's. The figure above includes 16.25 shares
     of Common Stock issuable upon exercise of certain options granted pursuant
     to the Company's Non-Employee Directors' Stock Option Plan.
(12) Ms. Ambrose is a director of Annie's. The figure above includes 12.50
     shares of Common Stock issuable upon exercise of certain options granted
     pursuant to Annie's Non-Employee Directors' Stock Option Plan. Ms. Ambrose
     also holds 2,500 shares of Series A Preferred Stock and options to purchase
     5,000 shares of Common Stock of Homegrown Natural Foods, Inc. and is a
     director of Homegrown Natural Foods, Inc.
(13) Mr. Moone is a director of Annie's and a director of Homegrown Natural
     Foods, Inc. Mr. Moone also holds 488,402 shares of Series A Preferred Stock
     and options to purchase 103,333 shares of Common Stock of Homegrown Natural
     Foods, Inc.
(14) Includes 224.87 shares of Common Stock issuable upon exercise of certain
     options granted to directors and executive officers pursuant to the
     Company's various Stock Option Plans.

                                       26
<PAGE>
STOCK TRANSFER INSTRUCTIONS

In July 1995, and as a condition to qualification imposed by the Securities
Division of the Secretary of State of the Commonwealth of Massachusetts for the
Company's then upcoming direct public offering, the Company's co-founders, Ms.
Ann Withey and Mr. Andrew Martin, each delivered to Annie's stock transfer agent
certificates representing 750,000 of their shares of the Company's Common Stock
(the "Initial Subject Shares"). In addition to the Initial Subject Shares, they
presented certain Stock Transfer Instructions to the Company's transfer agent
relating to the disposition and transfer of the Initial Subject Shares, as
described below. Pursuant to an addendum to those Stock Transfer Instructions,
the co-founders' other shares of Common Stock (the "Additional Subject Shares")
were also subjected to the Stock Transfer Instructions. The Commonwealth of
Massachusetts is not a party to the Stock Transfer Instructions.

The Stock Transfer Instructions provide that the Initial Subject Shares and the
Additional Subject Shares will not have any right, title, interest or
participation in the assets of Annie's in the event of a dissolution,
liquidation, reorganization, exchange or any other transaction or proceeding
which results in a distribution of the assets of Annie's until the holders of
all shares of Common Stock not covered by the Stock Transfer Instructions have
received an amount equal to the public offering price, $6.00 per share.

The stock transfer instructions provide that on July 27, 2001, 2002, 2003, and
2004, 25% of those shares become freely transferable. Additionally, each
co-founder may transfer, within any three-month period, a number of the
Additional Subject Shares that would equal 1% of the Company's Common Stock then
outstanding.

The Initial Subject Shares and the Additional Subject Shares may also become
transferable upon certification by the Company's Chief Financial Officer that
any of the following has been achieved:

o    for two consecutive fiscal years, Annie's has minimum annual earnings equal
     to $0.30 per share;

o    for five consecutive fiscal years, Annie's has an average minimum annual
     earnings of $0.30 per share; or

o    the Company's shares have traded on a United States stock exchange at a
     price at least equal to $10.50 (adjusted for stock splits, stock dividends
     and recapitalizations and the like) for at least 90 consecutive trading
     days.

No such certification has occurred, and no such certification is expected by the
Company's management to occur in the foreseeable future.

Shares subject to the Stock Transfer Instructions may be transferred upon death
or by gift to family members if the shares remain subject to the restrictions
described above. Shares subject to the Stock Transfer Instructions continue to
have all voting rights to which those shares are entitled. Annie's will withhold
any dividends on Ms. Withey's and Mr. Martin's shares subject to the Stock
Transfer Instructions and will pay those dividends to Ms. Withey and Mr. Martin
only as and to the extent their shares become free for transfer.




                                       27
<PAGE>
HOMEGROWN NATURAL FOODS TRANSACTION

On December 2, 1999, Homegrown Holdings Corp., now known as Homegrown Natural
Foods, Inc., purchased 1,000,000 of the Company's Series A Preferred Stock and
entered into Stock Collar Agreements with Mr. Martin and Ms. Withey in
connection with certain shares of the Company's Common Stock owned by Ms. Withey
and all of the Company's Common Stock owned by Mr. Martin. Specifically,
Homegrown Natural Foods was granted a "call" option to purchase 1,677,691 shares
of the Company's Common Stock held by Mr. Martin and 900,000 shares of the
Company's Common Stock held by Ms. Withey, each exercisable as quickly as those
shares are released from the Stock Transfer Instructions, and for an exercise
price of $2.00 per share. In addition, Mr. Martin was granted a "put" option to
sell 1,677,691 shares of the Company's Common Stock held by him to Homegrown
Natural Foods at $1.92 per share, exercisable fifteen days after Homegrown
Natural Foods' call option is exercisable. Ms. Withey was granted a put option
to sell 900,000 shares of the Company's Common Stock held by her to Homegrown
Natural Foods for $1.92 per share exercisable fifteen days after Homegrown
Natural Foods call option for her shares is exercisable.

Mr. Martin and Ms. Withey have provided Homegrown Natural Foods with an
Irrevocable Proxy to vote their shares of the Company's Common Stock subject to
the Stock Collar Agreements. Pursuant to the Irrevocable Proxy Agreements, on
December 2, 1999, Homegrown Natural Foods obtained full power and authority to
vote all of Mr. Martin's shares of the Company's Common Stock and 617,418 of Ms.
Withey's shares of the Company's Common Stock for a ten year period. Because of
these transactions and a related issuance of Preferred Stock to Homegrown
Natural Foods, Homegrown Natural Foods acquired control of Annie's on December
2, 1999.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS NAPA VALLEY
         KITCHENS.

In June 2000, Annie's retained Napa Valley Kitchens to provide certain services
such as order processing, invoicing, record management, sales coverage, broker
management, promotion execution, management of sales and allowances. The Company
paid Napa Valley Kitchens approximately $264,000 for its services in the year
ended March 31, 2001 and approximately $351,000 for the year ended March 31,
2002. Napa Valley Kitchens is a subsidiary of Homegrown Natural Foods, which
acquired control of Annie's pursuant to the terms of the Stock Collar Agreement
that Ms. Withey and Mr. Martin entered into with Homegrown Natural Foods and
pursuant to a Stock Purchase Agreement dated December 2, 1999.

HOMEGROWN NATURAL FOODS.

In conjunction with the Homegrown Natural Foods transaction, on December 2,
1999, Mr. Martin and Ms. Withey entered into a Stock Collar Agreement with
Homegrown Holdings Corp., now known as Homegrown Natural Foods that provides
Homegrown Natural Foods with a stock collar on certain shares of Annie's Common
Stock owned by Ms. Withey and all of the shares of the Company's Common Stock
owned by Mr. Martin. Under the terms of the Stock Collar Agreement, Homegrown
Natural Foods was granted a call option to purchase 1,677,691 shares of the
Company's Common Stock held by Mr. Martin and 900,000 shares of the Company's
Common Stock held by Ms. Withey, each exercisable as quickly as those shares are
released from the Irrevocable Stock Transfer Instructions, described above under
the heading "Security Ownership" by Management and Principal Stockholders. In
addition, Mr. Martin was granted a put option at $1.92 per share with regard to
1,677,691 shares of the Company's Common Stock held by him, exercisable fifteen
days after Homegrown Natural Foods' call option is exercisable. Ms. Withey was
granted a put option on the same terms with respect to 900,000 shares of Common
Stock owned by her. The call and put options are exercisable quarterly over a
five-year period following the closing of the Homegrown Natural Foods
transaction. Mr. Martin and Ms. Withey have provided Homegrown Natural Foods
with an Irrevocable Proxy to vote their shares subject to the Stock Collar
Agreement.

                                       28
<PAGE>
LOANS TO OFFICER.

Mr. Martin, a former director of Annie's, borrowed $75,000 from Annie's on June
30, 1995 pursuant to an unsecured demand note accruing interest at 11% per
annum. As of June 30, 1999, the full principal balance of the loan was
outstanding. Annie's called the demand note and Mr. Martin executed a secured
promissory note, dated December 31, 1997, in the principal amount of $75,000
providing for interest payable quarterly at 6.02%, secured by 25,000 shares of
the Company's Common Stock owned by Mr. Martin, which stock was deposited in an
escrow account established for this purpose, together with stock powers in blank
authorizing the resale of such shares under the applicable rules and regulations
of the Securities and Exchange Commission, and restricting the resale of other
shares of Annie's Common Stock owned by Mr. Martin under certain circumstances.
The loan was rescheduled into an Omnibus Secured Promissory Note in accordance
with Mr. Martin's separation agreement.

AMOUNTS DUE FROM OFFICER.

Annie's periodically paid certain of Mr. Martin's personal expenses, which were
accounted for on Annie's books as "Due From Officer." The total amount of such
advances outstanding on March 31, 1999 was $24,759. The loan was rescheduled
into an Omnibus Secured Promissory Note in accordance with Mr. Martin's
separation agreement.

STOCK OPTION LOANS.

Pursuant to Section 8 of the Company's 1990 Stock Option Plan, on December 21,
1998, Annie's made loans to Mr. Martin, Ms. Withey and to Ms. Churchill Luster
in the amounts of $102,468.80, $71,978.10 and $43,236.11, respectively, to
enable each of them to purchase shares of Common Stock upon exercise of certain
options that previously were granted to them. In each case, the options were
granted on December 30, 1993 for a term of five years with an exercise price of
$1.005 per share. The terms of the Stock Purchase and Loan Agreements ("1998
Stock Loans") provide for annual interest at the rate of 4.51%, the mid-term
Applicable Federal Rate in effect for December 1998. Interest is payable
annually on December 30. The entire outstanding principal is due on December 30,
2003. The terms of the 1998 Stock Loans further provide for Annie's to pay all
interest due on the foregoing loan on each borrower's behalf, plus one-fifth of
the original principal amount of such loans, providing that each such borrower
is still employed by Annie's on December 29 of each year during the life of the
obligation. Payments of principal and interest are deemed compensation income to
each borrower. The 1998 Stock Loans are secured by the Common Stock (the "1998
Stock Loan Pledged Shares") issuable upon exercise of the options. In the event
that a borrower is terminated by Annie's for good cause, the 1998 Stock Loan
Pledged Shares are subject to repurchase by Annie's at $1.005 per share. In the
event that a borrower is terminated for other than good cause, such a borrower
may obtain title to the 1998 Stock Loan Pledged Shares by payment of all
outstanding principal and interest due on his or her stock loan, or may resell
the 1998 Stock Loan Pledged Shares to Annie's at $1.005 per share.

On October 1, 1997 and pursuant to Section 8 of the 1990 Option Plan, Annie's
also made loans to Ms. Churchill Luster, Mr. Martin and Ms. Withey in the
amounts of $49,735.20, $67,641.60 and $67,641.60, respectively, to enable each
of them to purchase shares of Common Stock upon exercise of certain options that
previously were granted to them (the "1997 Stock Loans"). In each case, the
options were granted on October 1, 1992 for a term of five years with an
exercise price of $0.80 per share. The terms of the 1997 Stock Loans provide for
annual interest at the rate of 6.34%, the mid-term Applicable Federal Rate in
effect for October 1997. Interest is payable annually on October 1. The entire
outstanding principal is due on October 1, 2002. The terms of the 1997 Stock
Loans further provide for Annie's to pay all interest due on the foregoing loan

                                       29
<PAGE>
on each borrower's behalf, plus one-fifth of the original principal amount of
such loans, providing that each such borrower is still employed by Annie's on
September 30 of each year during the life of the obligation. Payments of
principal and interest are deemed compensation income to each borrower. The 1997
Stock Loans are secured by the Common Stock (the "1997 Stock Loan Pledged
Shares") issuable upon exercise of the options. In the event that a borrower is
terminated by Annie's for good cause, the 1997 Stock Loan Pledged Shares are
subject to repurchase by Annie's at $0.80 per share. In the event that a
borrower is terminated other than for good cause, the borrower may obtain title
to the 1997 Stock Loan Pledged Shares by payment of all outstanding principal
and interest due on his or her stock loan, or may resell the 1997 Stock Loan
Pledged Shares to Annie's at $0.80 per share.

Pursuant to the terms of the 1998 Stock Loans and the 1997 Stock Loans, Mr.
Martin's and Ms. Churchill Luster's stock loans became due and payable 45 days
after the date of their respective terminations. That maturity date was extended
to the closing date of the Homegrown Natural Foods financing. In conjunction
with that financing, Mr. Martin and Ms. Churchill Luster each entered into
Separation Agreements, dated December 2, 1999, with Annie's.

Under the terms of Mr. Martin's Separation Agreement, he executed a five-year
Omnibus Secured Promissory Note, pursuant to which he agreed to pay $274,630.18
to Annie's, with interest accruing on the principal balance at the rate of 9%
per annum, and payable in 20 quarterly installments equal to 5% of the original
principal amount of the debt, with the balance due and payable of the fifth
anniversary of the date of the note. The note was secured by all of his interest
in his Stock Collar Agreement with Homegrown Natural Foods pursuant to a
Security Agreement and Collateral Assignment, dated December 2, 1999. As part of
the Separation Agreement, Annie's released its security interest on the shares
of Common Stock owned by Mr. Martin that it held pursuant to the 1998 Stock Loan
Agreement and the 1997 Stock Loan Agreement. The Omnibus Secured Promissory Note
was given in satisfaction of his obligations to Annie's under the 1997 Stock
Loan Agreement, 1998 Stock Loan Agreement, another promissory note and other
certain personal advances and loans by Annie's to Mr. Martin. Also, as part of
this transaction, Mr. Martin agreed to amend the Company's right to repurchase
shares of the Company's stock acquired using proceeds from the 1998 Stock Loan
Agreement and 1997 Stock Loan Agreement to change the purchase price for each
stock to $2.00 per share.

Ms. Luster also executed a Separation Agreement with the Company, dated December
2, 1999. The Separation Agreement provided for severance payments to her as a
result of termination of her employment by us, in consideration for a release of
any claims that she may have had against the Company. In connection with her
Separation Agreement, Ms. Luster also rescheduled her debt to the Company,
originally incurred as a result of the loans described above. Ms. Luster's
rescheduled obligations are evidenced by an Omnibus Secured Promissory Note in
the amount of $87,794, dated December 2, 1999, bearing interest at the rate of
9% per annum and secured by her shares of our Common Stock. During the year
ended March 31, 2001, the note was fully paid through her surrender to the
Company of shares of our common stock.






                                       30
<PAGE>
ITEM 13. EXHIBITS LIST AND REPORTS ON FORM 8-K

(A) EXHIBITS

Exhibit
Number              Description
--------------------------------------------------------------------------------
** 3.1    Certificate of Incorporation, as amended
** 3.2    By-Laws, as amended
** 3.4    Certificate of Amendment re: name change
** 4.1    Certificate of Designation
** 10.1   Lease agreement with Second Street Limited Partnership dated December
          19, 1994 for Chelsea, MA office
** 10.2   Lease agreement with Marin Freeholders dated August 31, 1995 for
          Sausalito, CA office
** 10.6   Distribution Agreement with Liberty Richter, Inc.
** 10.7   Employment Contract with Paul B. Nardone dated November, 1996
** 10.8   Loan and Security Agreement dated as of February 3, 1998 between
          Fremont Financial Corporation and Annie's Homegrown, Inc.
** 10.13  Stock Purchase and Loan Agreement with Andrew Martin dated December
          21, 1998
** 10.14  Stock Purchase and Loan Agreement with Ann Withey dated December 21,
          1998
** 10.15  Stock Purchase and Loan Agreement with Deborah Churchill Luster dated
          December 21, 1998
** 10.16  Employment Agreement with Paul Nardone dated December 21, 1998
** 10.17  Change of Control and Severance Agreement with Neil Raiff dated
          December 21, 1998
** 10.18  Sample Change of Control and Severance Agreement with Other Employees
** 10.31  1990 Incentive Stock Option Plan
** 10.32  1996 Stock Plan
** 10.41  Loan Agreement and Security Agreement with Inventory Addendum dated
          June 7, 1996 with Presidential Financial Corporation of Massachusetts
** 10.42  Demand and Secured Promissory Note dated June 7, 1996 payable to
          Presidential Financial Corporation of Massachusetts
** 10.43  Lease agreement with Anthony C. Simboli dated February 3, 1998 for
          Wakefield, MA office
** 10.44  Loan Agreement dated December 31, 1997 between Andrew M. Martin and
          Annie's Homegrown, Inc.
** 10.45  Stock Purchase and Loan Agreement dated October 1, 1997 between Andrew
          M. Martin and Annie's Homegrown, Inc.
** 10.46  Amendment to Stock Purchase and Loan Agreement between Andrew M.
          Martin and Annie's Homegrown, Inc. dated December 31, 1997
** 10.47  Stock Purchase and Loan Agreement dated October 1, 1997 between Ann E.
          Withey and Annie's Homegrown, Inc.
** 10.48  Amendment to Stock Purchase and Loan Agreement between Ann E. Withey
          and Annie's Homegrown, Inc. dated December 31, 1997
** 10.49  Stock Purchase and Loan Agreement dated October 1, 1997 between
          Deborah Churchill and Annie's Homegrown, Inc.
** 10.50  Pledge Agreement dated December 31, 1997 between Andrew M. Martin and
          Annie's Homegrown, Inc.
** 10.54  Investment and Stock Purchase Agreement
** 10.55  Escrow Letter Agreement
** 10.56  Promissory Note in the original principal amount of $1,000,000 issued
          to Homegrown Holdings Corp. by Annie's Homegrown Inc. dated December
          2, 1999.
** 10.57  Warrant issued to Homegrown Holdings Corp. by Ann E. Withey to
          purchase shares of the Company's Common Stock. Warrant issued to
          Homegrown Holdings Corp. by Andrew M. Martin to purchase shares of the
          Company's Common Stock.

                                       31
<PAGE>
** 10.58  Stock Collar Agreement by and between Ann E. Withey and Homegrown
          Holdings Corp. dated December 2, 1999
** 10.59  Stock Collar Agreement by and between Andrew M. Martin and Homegrown
          Holdings Corp. dated December 2, 1999.
** 10.60  Separation Agreement by and between Andrew M. Martin and Annie's
          Homegrown Inc. dated December 2, 1999.
** 10.61  Separation Agreement by and between Deborah Churchill Luster and
          Annie's Homegrown Inc. dated December 2, 1999
** 10.62  Irrevocable Proxy between Ann E. Withey and Homegrown Holdings Corp.
          dated December 2, 1999.
** 10.63  Irrevocable Proxy between Andrew M. Martin and Homegrown Holdings
          Corp. dated December 2, 1999.
** 10.64  Second Amendment to Employment Agreement by and between Paul B.
          Nardone and Annie's Homegrown Inc.
** 10.65  Third Amendment to Employment Agreement by and between Paul B. Nardone
          and Annie's Homegrown Inc. dated August 16, 2000
** 10.66  Amendment to the Investment and Stock Purchase Agreement between
          Homegrown Holdings Corp and Annie's Homegrown, Inc. dated October 16,
          2000
** 10.67  $1,000,000 Revolving Demand Note between Warren Five Cents Savings
          Bank and Annie's Homegrown, Inc. dated November 3, 2000
** 10.68  Loan and Security Agreement between Warren Five Cents Savings Bank and
          Annie's Homegrown, Inc. dated November 3, 2000
** 10.69  $1,500,000 Revolving Demand Note between Warren Five Cents Savings
          Bank and Annie's Homegrown, Inc. dated June 15, 2001
** 10.70  Loan and Security Agreement between Warren Five Cents Savings Bank and
          Annie's Homegrown, Inc. dated June 15, 2001
** 10.71  Limited Liability Company Agreement of Ceres Organics LLC dated July
          2, 2001
** 10.72  Fourth Amendment to the Employment Agreement by and between Paul B.
          Nardone and Annie's Homegrown, Inc. dated as of September 4, 2001.
*  10.73  Corrected Fourth Amendment to the Employment Agreement by and between
          Paul B. Nardone and Annie's Homegrown, Inc. dated as of September 4,
          2001.
*  24.1   Power of Attorney (included on Signature Page of this report)

----------------
*   Filed herewith
**  Previously filed as an Exhibit to the Company Registration statement on Form
    SB-2 (No. 33-93982-LA) and subsequent periodic reports and incorporated
    herein by reference.

(B) REPORTS ON FORM 8-K

No reports on Form 8-K were filed by the Company during the Company's fiscal
quarter ended March 31, 2002.



                                       32
<PAGE>
                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                 ANNIE'S HOMEGROWN, INC.
                                                 Registrant

                                                 /s/ Paul B. Nardone
                                                 ----------------------------
                                                 Paul B. Nardone, President
                                                 and Chief Executive Officer

                                                 July 12, 2002
                                                 ----------------------------
                                                 Date

Each person whose signature appears below appoints Paul B. Nardone, and Neil
Raiff, as his or her attorney-in-fact, with full power of substitution and
resubstitution to sign any and all amendments to this report on Form 10-KSB of
Annie's Homegrown, Inc. and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact and
agent or his or her substitute or substitutes may lawfully do or cause to be
done by virtue hereof.

In accordance with the Exchange Act, 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/ Paul B. Nardone     President, Chief Executive Officer         July 12, 2002
--------------------    and Director (Principal Executive
Paul B. Nardone         Officer)


/s/ Ann E. Withey       Founder & Director                         July 12, 2002
--------------------
Ann E. Withey


/s/ John Foraker        Chairman of the Board                      July 12, 2002
--------------------
John Foraker


/s/ Neil Raiff          Chief Financial Officer, Treasurer         July 12, 2002
--------------------    and Secretary (Principal Financial
Neil Raiff              and Accounting Officer)



/s/ Ronald Cheney       Director                                   July 12, 2002
--------------------
Ronald Cheney


                        Director
--------------------
E. Michael Moone


/s/ Ellen Ambrose       Director                                   July 12, 2002
--------------------
Ellen Ambrose



                                       33
<PAGE>


                         SUPPLEMENTAL INFORMATION TO BE
                      FURNISHED WITH REPORTS FILED PURSUANT
                        TO SECTION 15(D) OF THE EXCHANGE
                          ACT BY NON-REPORTING ISSUERS
















                                       34
<PAGE>










                             ANNIE'S HOMEGROWN, INC.

                              Financial Statements
                             March 31, 2002 and 2001
                   (With Independent Auditors' Report Thereon)











<PAGE>
                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
Annie's Homegrown, Inc.:

We have audited the accompanying balance sheets of Annie's Homegrown, Inc. as of
March 31, 2002 and 2001, and the related statements of operations, stockholders'
equity, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Annie's Homegrown, Inc. at
March 31, 2002 and 2001 and the results of its operations and its cash flows for
the years then ended, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 3 to the
financial statements, the Company has not secured a long-term financing facility
that raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                  /s/ KPMG LLP


Boston, Massachusetts
May 21, 2002


                                       F-1
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                                 Balance Sheets
                             March 31, 2002 and 2001


<TABLE><CAPTION>
                                                    ASSETS                         2002              2001
                                                                               ------------      ------------
<S>                                                                            <C>               <C>
Current assets:
     Cash and cash equivalents                                                 $    212,256            78,823
     Accounts receivable                                                          2,598,635         2,149,513
     Inventory                                                                    1,604,295         1,427,356
     Other assets                                                                    60,351            42,671
                                                                               ------------      ------------
                 Total current assets                                             4,475,537         3,698,363
                                                                               ------------      ------------
Office equipment, plates, and dies                                                  395,532           301,222
Accumulated depreciation                                                           (218,264)         (159,464)
                                                                               ------------      ------------
                 Office equipment, plates, and dies, net                            177,268           141,758
                                                                               ------------      ------------
Goodwill, net                                                                       325,008           300,625
Investment in and advances to joint ventures                                        300,156                --
Other assets                                                                         92,948           121,092
                                                                               ------------      ------------
                 Total assets                                                  $  5,370,917         4,261,838
                                                                               ============      ============


                                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Notes payable                                                             $    618,645           695,598
     Accounts payable                                                             1,264,450           865,698
     Accrued expenses                                                               440,298           255,505
                                                                               ------------      ------------
                 Total current liabilities                                        2,323,393         1,816,801
                                                                               ------------      ------------
                 Total liabilities                                                2,323,393         1,816,801
                                                                               ------------      ------------
Commitments

Stockholders' equity:
     Series A convertible preferred stock (aggregate liquidation
         preference $2,472,222), $2.00 par value. Authorized 1,000,000
         shares; issued and outstanding 1,000,000 shares                          2,000,000         2,000,000
     Common stock, $.001 par value. Authorized 10,000,000 shares; issued
         2,316 shares at March 31, 2002 and 2,291 shares at March 31, 2001                2                 2
     Additional paid-in capital                                                   2,817,152         2,717,152
     Accumulated deficit                                                         (1,155,826)       (1,507,913)
     Notes receivable stockholders                                                 (209,309)         (292,158)
     Treasury stock; 112 common shares at cost at March 31, 2002 and 2001          (287,292)         (287,292)
     Deferred compensation                                                         (117,203)         (184,754)
                                                                               ------------      ------------
                 Total stockholders' equity                                       3,047,524         2,445,037
                                                                               ------------      ------------
                 Total liabilities and stockholders' equity                    $  5,370,917         4,261,838
                                                                               ============      ============
</TABLE>

See accompanying notes to financial statements.


                                       F-2
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                            Statements of Operations
                       Years ended March 31, 2002 and 2001


<TABLE><CAPTION>
                                                                                   2002              2001
                                                                               ------------      ------------
<S>                                                                            <C>               <C>
Net sales                                                                      $ 14,065,834        11,387,724
Cost of sales                                                                     9,071,975         7,204,031
                                                                               ------------      ------------
                 Gross profit                                                     4,993,859         4,183,693
                                                                               ------------      ------------
Operating expenses:
     Selling                                                                      3,142,087         2,653,102
     General and administrative                                                   1,494,846         1,266,093
                                                                               ------------      ------------
                 Total operating expenses                                         4,636,933         3,919,195
                                                                               ------------      ------------
                 Operating income                                                   356,926           264,498
                                                                               ------------      ------------
Other (expense) income:
     Interest expense                                                               (37,845)          (48,785)
     Interest and other income                                                       34,562            96,384
                                                                               ------------      ------------
                 Other (expense) income                                              (3,283)           47,599
                                                                               ------------      ------------
                 Income before income tax expense                                   353,643           312,097

Income tax expense                                                                    1,556             1,756
                                                                               ------------      ------------
                 Net income                                                    $    352,087           310,341
                                                                               ============      ============
Earnings per common share:
     Basic                                                                     $     161.43            140.87
     Diluted                                                                         127.11            110.44
Weighted average number of shares used in computation of per-share data:
     Basic                                                                            2,181             2,203
     Diluted                                                                          2,770             2,810
</TABLE>






See accompanying notes to financial statements.


                                       F-3
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                       Statements of Stockholders' Equity
                       Years ended March 31, 2002 and 2001



<TABLE><CAPTION>
                                       PREFERRED STOCK          COMMON STOCK     ADDITIONAL
                                    ---------------------      --------------      PAID-IN     ACCUMULATED
                                      SHARES     AMOUNT        SHARES  AMOUNT      CAPITAL       DEFICIT
                                    ---------  ----------      ------  ------     ---------     ---------
<S>                                 <C>        <C>             <C>     <C>        <C>          <C>
Balance at March 31, 2000           1,000,000  $2,000,000       2,291  $    2     2,717,152    (1,818,254)
  Acquisition of treasury stock            --          --          --      --            --            --
  Amortization of deferred
     compensation expense                  --          --          --      --            --            --
  Repayment of stockholders'
     notes                                 --          --          --      --            --            --
  Net income                               --          --          --      --            --       310,341
                                    ---------  ----------      ------  ------     ---------     ---------
Balance at March 31, 2001           1,000,000   2,000,000       2,291       2     2,717,152    (1,507,913)
  Issue of common stock for
     exercise of stock options             --          --          25      --       100,000            --
  Amortization of deferred
     compensation expense                  --          --          --      --            --            --
  Repayment of stockholders'
     notes                                 --          --          --      --            --            --
  Net income                               --          --          --      --            --       352,087
                                    ---------  ----------      ------  ------     ---------     ---------
Balance at March 31, 2002           1,000,000  $2,000,000       2,316  $    2     2,817,152    (1,155,826)
                                    =========  ==========      ======  ======     =========     =========





                                       NOTES           TREASURY STOCK
                                    RECEIVABLE -     -----------------       DEFERRED       STOCKHOLDERS'
                                    STOCKHOLDERS     SHARES   AMOUNT       COMPENSATION        EQUITY
                                    ------------     ------  ---------     ------------     ------------
Balance at March 31, 2000               (458,413)        86  $(200,000)        (246,338)       1,994,149
  Acquisition of treasury stock               --         26    (87,292)              --          (87,292)
  Amortization of deferred
     compensation expense                     --         --         --           61,584           61,584
  Repayment of stockholders'
     notes                               166,255         --         --               --          166,255
  Net income                                  --         --         --               --          310,341
                                    ------------     ------  ---------     ------------     ------------
Balance at March 31, 2001               (292,158)       112   (287,292)        (184,754)       2,445,037
  Issue of common stock for
     exercise of stock options                --         --         --               --          100,000
  Amortization of deferred
     compensation expense                     --         --         --           67,551           67,551
  Repayment of stockholders'
     notes                                82,849         --         --               --           82,849
  Net income                                  --         --         --               --          352,087
                                    ------------     ------  ---------     ------------     ------------
Balance at March 31, 2002               (209,309)       112  $(287,292)        (117,203)       3,047,524
                                    ============     ======  =========     ============     ============
</TABLE>
See accompanying notes to financial statements.

                                       F-4
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                            Statements of Cash Flows
                       Years ended March 31, 2002 and 2001


<TABLE><CAPTION>
                                                                    2002                2001
                                                                 ----------          ----------
<S>                                                              <C>                 <C>
Cash flows from operating activities:
     Net income                                                  $  352,087             310,341
     Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
           Depreciation and amortization                             78,000              72,000
           Net loss from joint ventures                              20,969                  --
           Stock compensation to outside directors,
              employees, and consultants                            104,864             111,334
           Changes in assets and liabilities:
              Accounts receivable                                  (449,122)         (1,591,590)
              Inventory                                            (176,939)            (82,668)
              Other assets                                           10,464              (3,706)
              Accounts payable                                      398,752             166,433
              Accrued expenses                                      247,430                 368
                                                                 ----------          ----------
                 Net cash provided by (used in)
                    operating activities                            586,505          (1,017,488)
                                                                 ----------          ----------
Cash flows from investing activities:
     Purchase of office equipment, plates, and dies                 (94,310)            (96,872)
     Acquisition of Tamarind Tree brand                             (43,583)            (34,281)
     Investment in and advances to joint venture                   (321,125)                 --
                                                                 ----------          ----------
                 Net cash used in investing activities             (459,018)           (131,153)
                                                                 ----------          ----------
Cash flows from financing activities:
     Notes receivable stockholders                                   82,849              78,963
     Net (payments) borrowings on line of credit                    (76,953)            695,598
     Net proceeds from exercise of stock options                         50                  --
                                                                 ----------          ----------
                 Net cash provided by financing
                    activities                                        5,946             774,561
                                                                 ----------          ----------
                 Net increase (decrease) in cash and
                    cash equivalents                                133,433            (374,080)

Cash and cash equivalents, beginning of year                         78,823             452,903
                                                                 ----------          ----------
Cash and cash equivalents, end of year                           $  212,256              78,823
                                                                 ==========          ==========
Supplemental disclosures of cash flow information:
     Cash paid for interest                                      $   37,313              48,785
     Cash paid for income taxes                                       1,556               1,756
Supplemental disclosure of noncash activities:
     Treasury stock received in exchange for the payment
        of a note receivable stockholder                         $       --              87,292
</TABLE>

See accompanying notes to financial statements.

                                       F-5
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


(1)     DESCRIPTION OF BUSINESS

        Annie's Homegrown, Inc. (the Company) is engaged in the manufacture,
        marketing, and sale of premium all natural and organic macaroni and
        cheese dinners, all natural pasta meals and other natural and organic
        food products.

(2)     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        (A)     CASH AND CASH EQUIVALENTS

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

        (B)     REVENUE RECOGNITION

                During the first two months of fiscal 2001, a majority of the
                Company's sales were made to Liberty Richter, Inc. (Liberty or
                distributor) under contract terms allowing certain rights of
                return on unsold product held by Liberty. The contract called
                for Liberty to pay the Company based on terms relating to the
                receipt of the Company's products by Liberty. The Company
                deferred recognition of such sales until the product was sold by
                Liberty to its natural and specialty food distributors. As of
                May 31, 2000, the Company and Liberty mutually terminated this
                agreement. As a result, the Company's sales are made directly to
                their customers and are recognized as revenue upon shipment.

        (C)     INVENTORIES

                Inventories are valued at the lower of average cost, using the
                first-in, first-out (FIFO) method, or market.

        (D)     OFFICE EQUIPMENT, PLATES, AND DIES

                Office equipment, plates, and dies are recorded at cost. The
                cost of office equipment, plates, and dies is depreciated using
                accelerated depreciation methods over the estimated useful lives
                of the related assets, generally five to seven years.

        (E)     GOODWILL

                Goodwill represents the excess of purchase price over the fair
                value of net assets acquired in connection with purchase
                business combinations. Goodwill is amortized using the
                straight-line method over 20 years.

                The Company evaluates impairment of intangible and other
                long-term assets annually, or more frequently if events or
                changes in circumstances indicate that carrying amounts may no
                longer be recoverable. Recoverability of intangible assets is
                determined based upon the excess of carrying amounts over
                expected future cash flows (undiscounted) of the underlying
                business or product line. The assessment of the recoverability
                of intangible assets will be impacted if estimated future cash
                flows are not achieved.

                                      F-6                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        (F)     INCOME TAXES

                Income taxes are accounted for under the asset and liability
                method. Deferred tax assets and liabilities are recognized for
                the future tax consequences attributable to differences between
                the financial statement carrying amounts of existing assets and
                liabilities and their respective tax bases and operating loss
                and tax credit carryforwards. Deferred tax assets and
                liabilities are measured using enacted tax rates expected to
                apply to taxable income in the years in which those temporary
                differences are expected to be recovered or settled. The effect
                on deferred tax assets and liabilities of a change in tax rates
                is recognized in income in the period that includes the
                enactment date. A valuation allowance reduces deferred tax
                assets when it is "more likely than not" that some portion or
                all of the deferred tax asset will not be recognized.

        (G)     EARNINGS PER COMMON SHARE

                Basic earnings per common share are computed by dividing net
                earnings available to common stockholders by the weighted
                average number of common shares outstanding for the period.
                Diluted earnings per common share reflect the maximum dilution
                that would have resulted from the exercise of stock options and
                conversion of preferred stock. Diluted earnings per common share
                are computed by dividing net earnings by the weighted average
                number of common shares and all dilutive securities.

                A reconciliation of the weighted average number of shares
                outstanding used in the computation of the basic and diluted
                earnings per share for the years ended March 31, 2002 and 2001
                are as follows:

                                                          2002         2001
                                                       ----------   ----------
               Weighted average shares (basic)              2,181        2,203
               Effect of dilutive stock options                89          107
               Assumed conversion of preferred stock          500          500
                                                       ----------   ----------
                  Weighted average shares (diluted)         2,770        2,810
                                                       ==========   ==========

        (H)     USE OF 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.

        (I)     FAIR VALUE OF FINANCIAL INSTRUMENTS

                The carrying amounts of cash and cash equivalents, accounts
                receivable, accounts payable, accrued expenses, and notes
                payable approximate fair value because of the short maturity of
                those instruments.

                                      F-7                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        (J)     STOCK OPTION PLANS

                The Company accounts for its stock-based compensation under the
                provisions of Accounting Principles Board (APB) Opinion No. 25,
                ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
                interpretations and provides disclosure related to its
                stock-based compensation under the provisions of Financial
                Accounting Standards Board No. 123, ACCOUNTING FOR STOCK-BASED
                COMPENSATION.

        (K)     RECLASSIFICATIONS

                Certain reclassifications have been made to the 2001 financial
                statements to conform to the current year presentation.

        (L)     RECENT ACCOUNTING PRONOUNCEMENTS

                In May 2000, the Financial Accounting Standards Board's Emerging
                Issues Task Force (EITF) reached a consensus on Issue No. 00-14,
                ACCOUNTING FOR CERTAIN SALES INCENTIVES. This issue addressed
                the recognition, measurement and income statement classification
                for various types of sales incentives, including discounts,
                coupons, and rebates. In April 2001, the EITF reached a
                consensus on Issue No. 00-25, VENDOR INCOME STATEMENT
                CLASSIFICATION OF CONSIDERATION TO A PURCHASER OF VENDOR'S
                PRODUCTS OR SERVICES. This issue addresses the income statement
                classification of consideration a vendor provides to a retailer,
                other than that directly addressed in Issue No. 00-14, including
                slotting fees, cooperative advertising arrangements, and
                buydowns. The Company adopted the consensuses in the fourth
                quarter of fiscal 2002. The adoption of the consensuses resulted
                in the following reclassifications in the 2002 income statement.
                Net sales and operating expenses were reduced by approximately
                $556,000, $502,000, $456,000, and $797,000 for each three-month
                period ended June 30, 2001, September 30, 2001, December 31,
                2001, and March 31, 2002, respectively. For 2001, net sales and
                operating expenses were reduced by approximately $2,111,000.

                In July 2001, the FASB issued Statement No. 141, BUSINESS
                COMBINATIONS, and Statement No. 142, GOODWILL AND OTHER
                INTANGIBLE ASSETS. Statement 141 requires that the purchase
                method of accounting be used for all business combinations
                initiated after June 30, 2001 as well as all purchase method
                business combinations completed after June 30, 2001. Statement
                141 also specifies criteria intangible assets acquired in a
                purchase method business combination must meet to be recognized
                and reported apart from goodwill, noting that any purchase price
                allocable to an assembled workforce may not be accounted for
                separately. Statement 142 will require that goodwill and
                intangible assets with indefinite useful lives no longer be
                amortized, but instead tested for impairment at least annually
                in accordance with the provisions of Statement 142. Statement
                142 will also require that intangible assets with definite
                useful lives be amortized over their respective estimated useful
                lives to their estimated residual values, and reviewed for
                impairment in accordance with SFAS No. 121, ACCOUNTING FOR THE
                IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
                DISPOSED OF.

                The Company is required to adopt the provisions of Statement 141
                immediately, except with regard to business combinations
                initiated prior to July 1, 2001, which it expects to account for
                using the pooling-of-interests method, and Statement 142
                effective April 1, 2002. Furthermore, any goodwill and any
                intangible asset determined to have an indefinite useful life
                that are acquired in a purchase business combination completed
                after June 30, 2001 will not be amortized, but will continue to
                be evaluated for impairment in accordance with the appropriate
                pre-Statement 142 accounting literature.

                                      F-8                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


                Goodwill and intangible assets acquired in business combinations
                completed before July 1, 2001 will continue to be amortized
                prior to the adoption of Statement 142.

                Statement 141 will require, upon adoption of Statement 142, that
                the Company evaluate its existing intangible assets and goodwill
                that were acquired in a prior purchase business combination, and
                to make any necessary reclassifications in order to conform with
                the new criteria in Statement 141 for recognition apart from
                goodwill. Upon adoption of Statement 142, the Company will be
                required to reassess the useful lives and residual values of all
                intangible assets acquired in purchase business combinations,
                and make any necessary amortization period adjustments by the
                end of the first interim period after adoption. In addition, to
                the extent an intangible asset is identified as having an
                indefinite useful life, the Company will be required to test the
                intangible asset for impairment in accordance with the
                provisions of Statement 142 within the first interim period. Any
                impairment loss will be measured as of the date of adoption and
                recognized as the cumulative effect of a change in accounting
                principle in the first interim period.

                In connection with the transitional goodwill impairment
                evaluation, Statement 142 will require the Company to perform an
                assessment of whether there is an indication that goodwill (and
                equity-method goodwill) is impaired as of the date of adoption.
                To accomplish this, the Company must identify its reporting
                units and determine the carrying value of each reporting unit by
                assigning the assets and liabilities, including the existing
                goodwill and intangible assets, to those reporting units as of
                the date of adoption. The Company will then have up to six
                months from the date of adoption to determine the fair value of
                each reporting unit and compare it to the reporting unit's
                carrying amount. To the extent a reporting unit's carrying
                amount exceeds its fair value, an indication exists that the
                reporting unit's goodwill may be impaired and the Company must
                perform the second step of the transitional impairment test. In
                the second step, the Company must compare the implied fair value
                of the reporting unit's goodwill, determined by allocating the
                reporting unit's fair value to all of its assets (recognized and
                unrecognized) and liabilities in a manner similar to a purchase
                price allocation in accordance with Statement 141, to its
                carrying amount, both of which would be measured as of the date
                of adoption. This second step is required to be completed as
                soon as possible, but no later than the end of the year of
                adoption. Any transitional impairment loss will be recognized as
                the cumulative effect of a change in accounting principle in the
                Company's statement of earnings.

                As of the date of adoption, the Company will have unamortized
                goodwill of approximately $325,000, which will be subject to the
                transition provisions of Statements 141 and 142. Amortization
                expense related to goodwill was $30,000 and $19,200 for the year
                ended March 31, 2001 and March 31, 2002, respectively. Because
                of the extensive effort needed to comply with adopting
                Statements 141 and 142, it is not practicable to reasonably
                estimate the impact of adopting these Statements on the
                Company's financial statements at the date of this report,
                including whether any transitional impairment losses will be
                required to be recognized as the cumulative effect of a change
                in accounting principle.

(3)     LIQUIDITY

        The Company's line of credit expires on August 31, 2002 and the Company
        has begun discussions with the current lender on a securing a new credit
        facility. However, because the Company's ability to renegotiate and
        extend its line of credit cannot be assured, the potential impacts on
        liquidity raise substantial doubt

                                      F-9                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        about the Company's ability to continue as a going concern since the
        Company's current forecast for the coming year require utilization of
        the credit facility. Management has begun discussions with the current
        lender on a new credit facility with principally the same structure as
        the current credit facility and does not expect to have any difficulty
        securing a new credit facility on terms acceptable to the Company.

(4)     JOINT VENTURES

        CERES ORGANIC HARVEST, INC.

        In April 2001, the Company and Ceres Organic Harvest, Inc. (the
        Supplier) entered into a joint venture (Ceres Organic LLC or Ceres)
        transaction where each company has a 50% ownership interest in the joint
        venture. The Company accounts for the joint venture under the equity
        method of accounting. Accordingly, the net profits and net losses of the
        joint venture for each fiscal year are allocated equally between the
        Company and the Supplier. Under the joint venture agreement, the Company
        will provide to the joint venture a $350,000 demand line of credit at
        the same interest rate as what the Company is charged by its bank. The
        Company plans to fund the demand line of credit to the joint venture
        through its existing line of credit. The advances under the demand line
        of credit are being carried on the Company's books as an investment in
        and advance to the joint venture.

        For the year ended March 31, 2002, the Company's portion of the results
        of operations was a loss of $10,611, which is carried as an offset to
        the investment in and advance to the joint venture on the balance sheet.
        The Company purchased $581,742 of organic wheat from its joint venture,
        Ceres Organic LLC, for the year ended March 31, 2002. In addition, the
        Company recorded $61,966 for management fees as an offset to the
        Company's general and administrative expenses for the services and
        expenses provided to the joint venture during the year ended March 31,
        2002. As of March 31, 2002, Ceres owed the Company approximately
        $271,125 under the demand line of credit.

        HOMEGROWN LICENSED BRANDS, INC.

        In July 2001, the Company formed HomeGrown Licensed Brands, Inc., a
        Delaware corporation (Licensed Brands), as a joint venture with Joseph
        Viviano, a consultant to the Company. The Company and Mr. Viviano each
        have a 50% beneficial ownership interest in Licensed Brands. The purpose
        of Licensed Brands is to manufacture and sell pasta products utilizing
        trademarks licensed from other companies. Licensed Brands was initially
        capitalized with $100,000, of which, $50,000 was contributed by the
        Company. In addition, the two stockholders of Licensed Brands are each
        obligated to contribute an additional $25,000 if necessary to satisfy
        the working capital needs of Licensed Brands.

        The Company accounts for the joint venture under the equity method of
        accounting. For the year ended March 31, 2002, the Company's portion of
        the results of operations was a loss of $10,358. The Company received
        $21,000 for management fees as an offset to the Company's general and
        administrative expenses for the services and expenses provided to the
        joint venture for the year ended March 31, 2002.

                                     F-10                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


(5)     INCOME TAXES

        Income tax expense consists of state taxes of $1,556 and $1,756 in 2002
        and 2001, respectively.

        As of March 31, 2002, the Company had the following net operating loss
        carryforwards for tax purposes:

                                   Federal          $  526,373
                                   State               346,951


        These net operating loss carryforwards are available to offset future
        federal/state taxable income through 2019. The Company also has
        alternative minimum tax net operating loss carryforwards of $513,968 as
        of March 31, 2002, which are available to reduce future federal
        alternative minimum taxable income through 2019. Pursuant to Section 382
        of the Internal Revenue Code, if there is a change in stock ownership of
        the Company exceeding 50% during a three-year period, the utilization of
        the Company's net operating loss carryforwards may be limited. The
        Homegrown Holdings Corp. transaction resulted in a change in stock
        ownership and, consequently, the Company's net operating losses
        generated prior to the ownership change are subject to an annual
        limitation.

        The provision for income taxes for the years ended March 31, 2002 and
        2001 differs from the amounts computed by applying the federal statutory
        rate to pre-tax income due to the following:

                                                            2002        2001
                                                         ----------  ----------
        Federal income tax expense at statutory rate     $  120,239     106,113
        State income taxes, net of federal benefit           13,200      21,846
        Change in federal and state valuation allowance     (97,646)   (160,665)
        Other                                               (34,237)     34,462
                                                         ----------  ----------
                        Actual income tax expense        $    1,556       1,756
                                                         ==========  ==========

                                     F-11                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        The tax effects of temporary differences that give rise to significant
        portions of deferred tax assets and liabilities at March 31 are
        presented below:

                                                            2002        2001
                                                         ----------  ----------
        Deferred tax assets:
           Net operating loss carryforwards              $  289,726     484,344
           Other accrued expenses                           102,846      30,100
           Payroll expense, due to accrual for financial
             reporting purposes                              33,523      56,797
                                                         ----------  ----------
                                                            426,095     571,241

        Valuation allowance                                (327,472)   (425,118)
                                                         ----------  ----------
                                                             98,623     146,123
                                                         ----------  ----------

        Deferred tax liabilities:
           Deferred gain on sale                            (97,497)   (144,339)
           Depreciation and amortization                     (1,126)     (1,784)
                                                         ----------  ----------
                       Net deferred tax asset            $       --          --
                                                         ==========  ==========


        A valuation allowance has been established due to the uncertainty of
        realizing the net operating loss carryforwards and other deferred tax
        assets.

        The total federal and state valuation allowance was $327,472 and
        $425,118 at March 31, 2002 and 2001, respectively.

(6)     RELATED PARTY TRANSACTIONS

        The Company retained Napa Valley Kitchens (NVK) on June 1, 2000 to
        provide services such as order processing, invoicing, record management,
        sales coverage, broker management, promotion execution, management of
        sales allowances, and marketing support. All promotions and slotting
        presentation are subject to the Company's approval. NVK is owned by
        Homegrown Holdings and during the years ended March 31, 2002 and 2001,
        the Company paid NVK $351,334 and $264,338, respectively, for these
        services. As of March 31, 2002 and 2001, the Company owed NVK $149,988
        and $84,809, respectively, which is included in accounts payable in the
        accompanying balance sheets.

(7)     DEBT

        On November 3, 2000, the Company entered into a $1,000,000 line of
        credit with a bank that is secured by all of the assets of the Company.
        The line of credit provides for interest at prime plus 1% (5.75% at
        March 31, 2002). On June 15, 2001, the Company increased the line of
        credit to $1,500,000. At March 31, 2002, the balance on the line of
        credit is $618,645, leaving $881,355 remaining available under the line
        of credit. The line of credit expires on August 31, 2002, with renewal
        provisions on an annual basis, if jointly agreed to by the parties. The
        Company has begun discussions with the current lender on a new credit
        facility with principally the same structure as the current credit
        facility. The Company does not expect to have any difficulty securing a
        new credit facility on terms acceptable to the Company.

                                     F-12                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


(8)     ACCRUED EXPENSES

        Accrued expenses consist of the
         following at March 31:
                                                            2002        2001
                                                         ----------  ----------
        Compensation                                     $   84,379      91,305
        Promotional costs                                   202,126      50,000
        Other                                               153,793     114,200
                                                         ----------  ----------
                                                         $  440,298     255,505
                                                         ==========  ==========

(9)     LEASES

        The Company leases office space under an operating a lease that expires
        in 2003.

        A schedule of future minimum lease payments under the noncancelable
        lease is as follows:

                                Year ending March 31:
                                    2003                 $   40,658
                                    2004                      3,400
                                                         ----------
                                                         $   44,058
                                                         ==========

        Total rent expense on operating leases amounted to $53,540 and $52,999
        for the years ended March 31, 2002 and 2001, respectively.

(10)    STOCKHOLDERS' EQUITY

        COMMON STOCK

        On March 29, 2002, the Company effected a one-for-two thousand reverse
        stock split of outstanding shares of common stock, approved by a
        majority of its stockholders. All share data reflected in these
        financial statements has been restated for all periods to reflect this
        reverse stock split.

        Pursuant to the reverse stock split, each holder of at least two
        thousand shares of the Company's common stock received new shares of
        common stock, including fractional shares. In the case whereby a
        stockholder had less than two thousand shares, the stockholder was
        issued one unit of scrip for each share of common stock. The scrip was
        issued to fractional shareholders as a result of the reverse stock split
        bears no voting rights, no rights to dividends and no redemption rights.
        Each unit of scrip entitles the holder to $6.00 per unit of scrip in the
        event of a sale, merger or liquidation of the Company (collectively,
        Corporate Transactions). In the event of a liquidation, the Series A
        Preferred Stock holds a liquidation preference that is superior to that
        of the common stock and scrip and amounts to $2,472,222 at March 31,
        2002. However, as a result of the reverse stock split transaction, the
        Company's common stock holders are subordinated to the rights of the
        scrip holders, who are entitled to a liquidation preference of $575,302
        utilizing book value of the Company at March 31, 2002. The units of
        scrip outstanding were 299,501 as of March 31, 2002.

                                     F-13                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        PREFERRED STOCK

        On December 2, 1999, Homegrown Holdings Corp., purchased one million
        shares of Series A convertible preferred stock (Preferred Stock) for $2
        million. The Preferred Stock, in the aggregate had voting rights
        equivalent to one million shares of common stock. After the reverse
        stock split transaction, the preferred stock has the right to be
        converted into 500 shares of common stock and participates in dividends
        at the same rate as the common stock. In an event of a liquidation, the
        Preferred Stock has the liquidation preference of par value plus 10% per
        annum. Certain mergers, consolidations and sales of assets are treated
        as liquidations.

        Additionally, effective December 2, 1999, one of the co-founders of the
        Company and an officer of the Company, who also served as a member of
        the board of directors, resigned from the Company. As part of an
        agreement with the co-founder regarding the termination of his
        employment with the Company, the co-founder executed a separation
        agreement with the Company, providing for severance payments to him in
        consideration for a full release of any claims that he may have had
        against the Company. In connection with the separation agreement, the
        co-founder rescheduled his debt to the Company arising out of certain
        advances and loans previously made to him by the Company. The
        rescheduled obligations are evidenced by an Omnibus secured promissory
        note (the Promissory Note), which bears interest at the rate of 9% per
        annum. The promissory note is secured by the co-founder's right to
        payment under his stock collar agreement with Homegrown Holdings. The
        note will be repaid over five years in quarterly installments commencing
        December 2, 1999.

        Additionally, an officer and board member also executed a separation
        agreement with the Company on December 2, 1999. The separation agreement
        provided for severance payments to her as a result of termination of her
        employment with the Company, in consideration for a full release of any
        claims that she may have had against the Company. She also rescheduled
        her debt to the Company, originally incurred as a result of certain
        loans previously made to her by the Company. The rescheduled obligations
        are evidenced by an Omnibus secured promissory note bearing interest at
        the rate of 9% per annum and secured by her shares of the Company's
        common stock. During the year ended March 31, 2001, the note was fully
        paid through the receipt of her shares of the Company's common stock.

(11)    STOCK OPTION PLANS

        1996 STOCK OPTION PLAN

        In October 1996, the Company adopted the 1996 stock option plan. Under
        this plan, the Company has authorized 100 shares to be granted as stock
        options to employees, directors and consultants. The board of directors
        administers the plan, selects individuals to whom options will be
        granted and determines the number of options, the exercise price and the
        vesting terms of each option. Additionally, the vesting terms are also
        subject to acceleration upon the occurrence of certain events. During
        the year ended March 31, 2002, 8 options were granted to employees with
        an exercise price of $20.00 per share.

        In connection with the granting of these options, the Company recorded
        deferred compensation expense of $357,672 for the difference between the
        exercise price and the fair value of the Company's common stock
        (determined by reference to third party transactions) at the date of
        grant. This amount is being amortized to compensation expense over the
        vesting of the individual options on a straight-line basis for each
        portion of the options that vest in each year. Deferred compensation
        expense recognized for the years ended March 31, 2002 and 2001 amounted
        to $67,551 and $61,584, respectively.

                                     F-14                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        As of March 31, 2002, 90 options were issued under this plan.

        1999 OMNIBUS STOCK OPTION PLAN

        In July 1999, the Company adopted the 1999 Omnibus Stock Option Plan
        that permits the Company to grant stock options to employees, directors,
        and consultants. Under this plan, the Company has authorized 238 shares
        to be granted as stock options. The board of directors administers the
        plan, selects the individuals to whom the options will be granted and
        determines the number of options, the exercise price and vesting terms
        of each option. Additionally, the vesting period is not more than six
        years after the grant date of the option and can be subject to
        acceleration upon the occurrence of certain events. During the years
        ended March 31, 2002 and 2001, 14 and 3 options were granted to
        employees with an exercise price of $4,000 per share, respectively. The
        exercise price related to these options equaled the fair value of the
        Company's common stock at the date of grant. Accordingly, the Company
        has not recorded any compensation expense.

        In addition, during the year ended March 31, 2000, the Company granted
        25 options to a consultant with an exercise price of $20.00 per option
        in exchange for services to be rendered over a two-year period which
        were exercised as of March 31, 2002. The cost of these services is based
        on the fair value of the options issued in exchange for the receipt of
        such services. The fair value of the options represents the difference
        between the exercise price and the fair value of the Company's common
        stock. The Company will accrue for the expense over the period during
        which the services are provided. For the years ended March 31, 2002 and
        2001, the Company recognized $37,313 and $49,750 of expense related to
        these services, respectively.

        As of March 31, 2002, 204 options were issued under this plan.

        1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

        In July 1999, the Company adopted the 1999 Non-Employee Directors' Stock
        Option Plan. Under this plan, the Company has authorized 50 shares to be
        granted to directors that are not employees of the Company in lieu of
        compensation for service as a member of the board of directors. All
        eligible individuals are granted 4 stock options for service on the
        board of directors and 2 stock options for each committee on which the
        individual serves. The exercise price of the stock options is equal to
        the fair market value of the Company's common stock on the date of the
        grant. The stock options vest on the last day of service to which the
        stock option grant relates to and have an exercise period of five years
        from the grant date of the stock options.During the years ended March
        31, 2002 and 2001, 9 and 11 options were granted to directors with an
        exercise price of $4,000 per share, respectively. The exercise price
        related to these options equaled the fair value of the Company's common
        stock at the date of grant. Accordingly, the Company has not recorded
        any compensation expense.

        As of March 31, 2002, 29 options were issued under this plan.

                                     F-15                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        A summary of changes in common stock options is as follows:

                                                                      WEIGHTED
                                                                       AVERAGE
                                                                      EXERCISE
                                                          NUMBER OF  PRICE PER
                                                           SHARES      SHARE
                                                         ----------  ----------
        Outstanding at March 31, 2000                           303  $ 2,590.39
           Options granted                                       14    4,000.00
           Options exercised                                     --          --
           Options expired/canceled                              --          --
                                                         ----------  ----------
        Outstanding at March 31, 2001                           317    2,653.54

           Options granted                                       31    3,013.22
           Options exercised                                     25       20.00
           Options expired/canceled                              --          --
                                                         ----------  ----------
        Outstanding at March 31, 2002                           323    2,891.34
                                                         ==========  ==========

        The following table summarizes information about fixed stock options
        outstanding at March 31, 2002:
<TABLE><CAPTION>
                                      OPTIONS OUTSTANDING AND EXERCISABLE
                      ------------------------------------------------------------------
      RANGE OF        NUMBER OUTSTANDING   WEIGHTED AVERAGE REMAINING   WEIGHTED AVERAGE
  EXERCISE PRICES     AT MARCH 31, 2002        CONTRACTUAL LIFE          EXERCISE PRICE
-------------------   ------------------   --------------------------   ----------------
<S>                           <C>                 <C>                   <C>
$       20.00                  53                  91 months             $        20.00
     4,000.00                 156                  84 months                   4,000.00
                      ------------------
$ 20.00 to 4,000.00           209                                              2,991.85
                      ==================
</TABLE>


        The Company applies APB Opinion No. 25 and related interpretations for
        its stock option plans. Had compensation cost for the Company's stock
        option plans been determined consistent with SFAS No. 123, the Company's
        net income and income per share would have been decreased to the pro
        forma amounts indicated below:

                                                            2002        2001
                                                         ----------  ----------
        Net income as reported                           $  352,087     310,341
                                                         ==========  ==========
        Pro forma net income (loss)                      $  197,394     262,111
                                                         ==========  ==========

        The fair value of each option grant is estimated on the date of grant
        using the minimum value method and the risk-free interest rate for
        investment instruments with maturities similar to the lives of the
        options

                                     F-16                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        granted. For options granted during the year ended March 31, 2002, a
        ten-year life and an interest rate of 5.44% were used to value the
        options. For options granted during the year ended March 31, 2001, a
        ten-year life and an interest rate of 4.95% were used to value the
        options.

(12)    RAW MATERIALS FOOD COMPANY

        As of June 30, 1999, the Company reached an agreement with the remaining
        founder of Raw Materials to sell back to such founder the common stock
        of Raw Materials previously owned by the Company. In payment for the
        common stock, the founder returned to the Company 15 shares of Company
        common stock issued to him as consideration for the original acquisition
        of Raw Materials and a note in the amount of $77,000.

        In connection with the sale of the common stock of Raw Materials, the
        Company recognized a gain of $62,121 during the year ended March 31,
        2000, which represents the amount by which the fair value (determined by
        the most recent independent appraisal) of the 15 shares of Annie's
        Homegrown, Inc. exceeded the net assets sold. The Company has deferred
        any gain recognition of the $77,000 note receivable from Raw Materials
        until such time as cash flows from Raw Materials' operating activities
        are sufficient to fund the repayment of the note. During the years ended
        March 31, 2002 and 2001, the Company recognized $0 and $14,549 in other
        income relating to cash repayments on the note receivable, respectively.
        At March 31, 2002, the remaining balance of the note is $48,183.

(13)    ACQUISITION OF TAMARIND TREE

        On August 27, 1998, the Company acquired certain assets of The Tamarind
        Tree Ltd. (Tamarind Tree) and royalties are payable by the Company to
        Tamarind Tree for five years at the rate of 6% annually on "adjusted net
        sales." Additionally, overrides are payable by the Company to Tamarind
        Tree for five years at the rate of 2% of all sales of certain products
        and sales in excess of a certain minimum amount of other products. The
        royalty payments will be accounted for as additional consideration for
        the purchase of the assets acquired and will be recorded as additional
        goodwill as the future royalties are earned. Royalty payments in 2002
        and 2001 amounted to $43,583 and $34,281, respectively.

(14)    SUPPLIER/SOURCES OF SUPPLY

        Three vendors accounted for 37% of accounts payable at March 31, 2002,
        and four vendors accounted for 45% of accounts payable at March 31,
        2001.

(15)    LIBERTY DISTRIBUTION AGREEMENT

        In October 1996, the Company signed a master distribution agreement with
        Liberty. The agreement called for Liberty to distribute all of the
        Company's products except for the private label and mail order lines in
        the continental United States. The Company consigned the products to
        Liberty who in turn sold the products to supermarket chains, and natural
        and specialty food stores. Liberty had one warehouse located in New
        Jersey.

                                     F-17                            (Continued)
<PAGE>
                             ANNIE'S HOMEGROWN, INC.
                          Notes to Financial Statements
                             March 31, 2002 and 2001


        Liberty distributed and sold the Company's products within the territory
        utilizing its own sales force and sub distributors that they maintain.
        In addition, Liberty provided other services such as order processing,
        invoicing, record management, sales coverage, broker management,
        promotion execution, management of sales allowances, and trade show
        participation. All promotions and slotting presentations as well as sub
        distributors and brokers were subject to the Company's approval.

        Under the Liberty Agreement, Liberty had to distribute any new products
        that the Company chose to distribute through their channels unless
        Liberty had a pre-existing non compete provision with another vendor. In
        July 1999, the Company and Liberty modified their master distribution
        agreement to permit the Company to sell its products directly to
        supermarket chains that do not buy through distributors in the New
        England and West Coast regions. The contract expired on December 31,
        1999 with automatic renewals scheduled on a year-to-year basis. On May
        31, 2000, the Company and Liberty mutually agreed to terminate the
        distribution agreement. According to the agreement, Liberty ceased
        representing the Company and the Company reimbursed Liberty in the
        amount of approximately $450,000 for all their salable products
        remaining at Liberty's warehouse. In addition, the Company paid to
        Liberty the balance of Liberty's anticipated earnings of approximately
        $185,000 from the distribution agreement through the calendar year 2000.
        These payments had no material impact on the Company's financial
        position during the fiscal year ended March 31, 2001.

                                      F-18