<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
November 1, 2000 0-21486
HARRY'S FARMERS MARKET, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2037452
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1180 Upper Hembree Road, Roswell, Georgia 30076
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 667-8878
-----------------------------
N/A
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No_____
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class A Common 4,139,375
---------------------------- --------------------
Class Outstanding at December 14, 2000
Class B Common 2,050,701
---------------------------- --------------------
Class Outstanding at December 14, 2000
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
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<PAGE>
Harry's Farmers Market, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Amounts in thousands (Unaudited)
November 1, February 2,
2000 2000
------------------ ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash (See Note F) $ 428 $ 432
Accounts receivable, net of allowance 220 121
Inventories 10,546 10,987
Prepaid expenses 685 652
Assets held for sale - 4,500
Other current assets - 81
------------------ ------------------
Total current assets 11,879 16,773
------------------ ------------------
PROPERTY AND EQUIPMENT
Buildings 31,846 31,724
Equipment 31,358 31,159
Vehicles 185 185
------------------ ------------------
63,389 63,068
Accumulated depreciation (35,531) (32,503)
------------------ ------------------
27,858 30,565
Land 7,224 7,224
------------------ ------------------
Total property and equipment 35,082 37,789
------------------ ------------------
OTHER ASSETS
Deposits on equipment 525 247
Loan costs 752 1,143
Other 220 299
------------------ ------------------
1,497 1,689
------------------ ------------------
Total assets $ 48,458 $ 56,251
================== ==================
</TABLE>
See accompanying notes to financial statements
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<PAGE>
Harry's Farmers Market, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Amounts in thousands (Unaudited)
November 1, February 2,
2000 2000
------------------- -----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations $ 1,456 $ 4,162
Accounts payable - trade 7,182 7,273
Workers' compensation and general liability insurance 200 256
Accrued payroll and payroll taxes payable 636 649
Sales taxes payable 230 34
Other accrued liabilities 417 761
Income taxes payable - 250
------------------- -----------------
Total current liabilities 10,121 13,385
------------------- -----------------
LONG-TERM OBLIGATIONS, NET OF CURRENT MATURITIES 20,947 21,783
------------------- -----------------
OTHER NON-CURRENT LIABILITIES 502 477
------------------- -----------------
STOCKHOLDERS' EQUITY
Common Stock - Class A 34,681 34,681
Common Stock - Class B 3,936 3,936
Additional Paid-in Capital 1,257 1,257
Accumulated deficit (22,986) (19,268)
------------------- -----------------
Total stockholders' equity 16,888 20,606
------------------- -----------------
Total liabilities and stockholders' equity $ 48,458 $ 56,251
=================== =================
</TABLE>
See accompanying notes to financial statements
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<PAGE>
Harry's Farmers Market, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Amounts in thousands, except per share data For the Thirteen Weeks Ended,
------------------------------------------------------------------------
November 1, 2000 November 3, 1999
--------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Net sales $ 32,432 100.0% $ 33,592 100.0%
Cost of goods sold 23,420 72.2 24,037 71.6
------------ ------------ ------------ ------------
Gross profit 9,012 27.8 9,555 28.4
------------ ------------ ------------ ------------
Operating expenses
Direct store expenses 5,588 17.2 5,768 17.1
Selling, general & administrative
expenses 3,307 10.2 2,975 8.9
Depreciation and other amortization 961 2.9 1,034 3.1
------------ ------------ ------------ ------------
Total operating expenses 9,856 30.3 9,777 29.1
------------ ------------ ------------ ------------
Operating loss (844) (2.5) (222) (0.7)
Interest expense (916) (2.8) (679) (2.0)
Other income 249 0.8 348 1.0
------------ ------------ ------------ ------------
Loss before provision for accretion of
warrants and income taxes (1,511) (4.5) (553) (1.7)
Provision for accretion of warrants - (.0) (37) (0.1)
------------ ------------ ------------ ------------
Loss applicable to common shareholders
before income taxes (1,511) (4.5) (590) (1.8)
Income tax benefit 95 0.2 - -
------------ ------------ ------------ ------------
Net loss applicable to common shareholders $ (1,416) (4.3)% $ (590) (1.8)%
============ ============ ============ ============
Net loss per common share - Basic $ (0.23) $ (0.10)
============ ============
Net loss per common share - Diluted $ (0.23) $ (0.10)
============ ============
</TABLE>
See accompanying notes to financial statements
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<PAGE>
Harry's Farmers Market, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Amounts in thousands, except per share data For the Thirty-Nine Weeks Ended,
------------------------------------------------------------------------
November 1, 2000 November 3, 1999
--------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
Net sales $ 102,620 100.0% $ 102,425 100.0%
Cost of goods sold 73,596 71.5 73,343 71.6
------------ ------------ ------------ ------------
Gross profit 29,024 28.5 29,082 28.4
------------ ------------ ------------ ------------
Operating expenses
Direct store expenses 17,385 16.8 17,557 17.1
Selling, general & administrative
expenses 10,044 9.6 9,173 9.0
Depreciation and other amortization 3,025 2.9 3,084 3.0
------------ ------------ ------------ ------------
Total operating expenses 30,454 29.3 29,814 29.1
------------ ------------ ------------ ------------
Operating loss (1,430) (0.8) (732) (0.7)
Interest expense (2,857) (2.8) (1,752) (1.7)
Other income 762 0.7 1,592 1.5
------------ ------------ ------------ ------------
Loss before provision for accretion of
warrants, income taxes and
extraordinary loss (3,525) (2.9) (892) (0.9)
Provision for accretion of warrants (-) (0.0) (111) (0.1)
------------ ------------ ------------ ------------
Loss applicable to common shareholders
before income taxes and
extraordinary loss (3,525) (2.9) (1,003) (1.0)
Income tax benefit 95 - - -
------------ ------------ ------------ ------------
Loss applicable to common shareholders
before extraordinary loss (3,430) (2.9) (1,003) (1.0)
Extraordinary loss (288) (0.4) - -
------------ ------------ ------------ ------------
Net loss applicable to common shareholders $ (3,718) (3.3)% $ (1,003) (1.0)%
============ ============ ============ ============
Net loss per common share - Basic $ (0.60) $ (0.16)
============ ============
Net loss per common share - Diluted $ (0.60) $ (0.16)
============ ============
</TABLE>
See accompanying notes to financial statements
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<PAGE>
Harry's Farmers Market, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Amounts in thousands, except per share data For the Thirty-nine Weeks Ended,
----------------------------------------
November 1, 2000 November 3,1999
----------------------------------------
<S> <C> <C>
Changes in Cash
Cash flows from operating activities:
Net loss $ (3,718) $ (893)
Adjustments to reconcile net earnings
To cash provided by operations:
Depreciation and amortization 3,412 3,464
Amortization of debt discount - 127
Gain on sale of assets (31) (60)
Extraordinary loss 288 -
(Increase) Decrease in accounts receivables (99) 422
Decrease in other receivables 81 -
Decrease (Increase) in inventories 441 (2,838)
Increase in prepaid expenses (33) (85)
Increase in deposits (278) -
(Increase) Decrease in other assets (131) 2
Decrease in accounts payable (91) (68)
Increase in accrued liabilities 428 64
Decrease in deferred revenue (134) (89)
---------------- ----------------
Net cash provided by operating activities 135 46
---------------- ----------------
Cash flows from investing activities:
Capital expenditures, including capitalized interest (393) (888)
Proceeds from sale of property and equipment 31 145
Proceeds from sale of other assets 4,500 262
---------------- ----------------
Net cash provided by (used in) investing
activities 4,138 (481)
---------------- ----------------
Cash flows from financing activities:
Net payments on revolving credit facility (621) 800
Principal payments on long-term obligations (3,656) (859)
Deferred loan costs - (503)
---------------- ----------------
Net cash used in financing activities (4,277) (562)
---------------- ----------------
Net decrease in cash (4) (997)
Cash at beginning of period 432 1,697
---------------- ----------------
Cash at end of period $ 428 $ 700
</TABLE>
See accompanying notes to financial statements
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<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 1, 2000
NOTE A - BASIS OF PRESENTATION
The interim financial statements included herein have been prepared by the
Company without audit. These statements reflect all adjustments, which are, in
the opinion of management, necessary to present fairly the financial position as
of November 1, 2000, and the results of operations and cash flows for the
thirty-nine weeks then ended. All such adjustments are of a normal recurring
nature. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these financial
statements be read in conjunction with the financial statements and notes for
the fiscal year ended February 2, 2000, included in the Company's Annual Report
on Form 10-K filed by the Company.
Due to the seasonal nature of the Company's business, the results for the
quarter ended November 1, 2000, are not necessarily indicative of the results
for the entire 2001 fiscal year.
NOTE B - INVENTORIES
Inventories consist primarily of grocery items, which are stated at the lower of
cost or market. Cost is determined under the first-in, first-out (FIFO)
valuation method.
NOTE C - EARNINGS PER SHARE
Basic net earnings per common share are based upon the weighted average number
of common shares outstanding during the period. Diluted net earnings per common
share are based upon the weighted average number of common shares outstanding
plus dilutive potential common shares, including options and warrants
outstanding during the period. The following table sets forth the computation of
basic and diluted income (loss) per share.
For the thirteen weeks ended:
<TABLE>
<CAPTION>
November 1, November 3,
2000 1999
--------------- ---------------
<S> <C> <C>
Numerator for basic loss per common share $ (1,416) $ (590)
=============== ===============
Denominator for basic loss per common share - weighted average
shares outstanding 6,190 6,190
Effect of assumed conversion of debt and preferred stock - -
--------------- ---------------
Denominator for diluted loss per common share - adjusted
weighted average shares outstanding 6,190 6,190
--------------- ---------------
Basic loss per share $ (0.23) $ (0.10)
--------------- ---------------
Diluted net loss per share $ (0.23) $ (0.10)
--------------- ---------------
</TABLE>
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<PAGE>
For the thirty-nine weeks ended:
<TABLE>
<CAPTION>
November 1, 2000 November 3, 1999
------------------ ------------------
<S> <C> <C>
Numerator for basic loss per common share $ (3,718) $ (1,003)
================== ==================
Denominator for basic loss per common share - weighted average
shares outstanding 6,190 6,190
Effect of assumed conversion of debt and preferred stock - -
------------------ ------------------
Denominator for diluted net loss per common share adjusted
weighted average shares outstanding 6,190 6,190
================== ==================
Basic net loss per share $ (0.60) $ (0.16)
================== ==================
Diluted net income (loss) per share $ (0.60) $ (0.16)
================== ==================
</TABLE>
NOTE D - CLAIMS AND LITIGATION
The Company is involved in various claims and litigation, which arise in the
ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to current outstanding actions will not
materially affect the financial position of the Company.
NOTE E - EXTRAORDINARY LOSS
On March 16, 2000, the Company closed the sale of its distribution facility and
repaid the remaining $2,458,237 outstanding on the facility's mortgage. The
Company incurred an extraordinary loss of $287,850 on the early repayment of the
note relating to prepayment fees and the write-off of deferred financing costs.
NOTE F - LINE OF CREDIT AVAILABILITY
In addition to the cash shown on the balance sheet, the Company had
approximately $1.1 million available on its line of credit at November 1, 2000.
NOTE G - COMMITMENTS AND CONTINGENCIES
During the quarter ended November 1, 2000, the Company entered into a new lease
relating to the construction of a new store facility. The lease is structured
with a base minimum lease payment and an additional contingent lease payment
based on future gross receipts of the store facility. Management expects the
store to be completed during fiscal year 2002. The following is a summary of the
approximate future base minimum lease payments due under the operating lease
agreement.
Years Annual Base Rents Due
----- ---------------------
Fiscal 2002 - 2006 $ 177,528
Fiscal 2007 - 2011 195,281
Fiscal 2012 - 2016 214,809
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<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
---------------------
Thirteen Weeks Ended November 1, 2000 (the "Third Quarter of Fiscal 2001")
compared to Thirteen Weeks Ended November 3, 1999 (the "Third Quarter of Fiscal
2000").
Net sales for the Third Quarter of Fiscal 2001 were approximately $32.4
million, compared to net sales of approximately $33.6 million for the Third
Quarter of Fiscal 2000. The sale decrease of $1.2 million, or 3.6%, was due
primarily to increased competition.
Gross profits in the Third Quarter of Fiscal 2001 decreased to
approximately $9.0 million, or 27.8% of net sales, compared to approximately
$9.6 million, or 28.4% of net sales in the Third Quarter of Fiscal 2000. The
decrease in gross profit dollars was largely due to a lower gross margin
percent.
Direct store expenses decreased to approximately $5.6 million, or 17.2
% of net sales in the Third Quarter of Fiscal 2001, compared to approximately
$5.8 million, or 17.1% of net sales in the Third Quarter of Fiscal 2000.
Selling, general and administrative expenses for the Third Quarter of
Fiscal 2001 increased to approximately $3.3 million, or 10.2% of net sales,
compared to approximately $3.0 million, or 8.9% of net sales in the Third
Quarter of Fiscal 2000. The increase in selling, general and administrative
expense was due to higher wages associated with the addition of new personnel,
higher consulting and related expenses and higher communication expenses.
Depreciation and amortization, which includes depreciation and
amortization for the stores and the corporate facilities, but excludes the
manufacturing facilities (which are included in cost of goods sold) was
approximately $1.0 million, or 2.9% of net sales for the Third Quarter of Fiscal
2001, compared to approximately $1.0 million, or 3.1% of net sales for the Third
Quarter of Fiscal 2000. Increases in depreciation expense due to new property
additions were offset by assets becoming fully depreciated and accordingly not
having any depreciation expense associated with them in the current period.
Due to the reasons set forth above, the Company had an operating loss
of approximately $0.8 million, or (2.5)% of net sales during the Third Quarter
of 2001, compared to an operating loss of approximately $0.2 million, or (0.7)%
of net sales in the Third Quarter of Fiscal 2000.
Interest expense in the Third Quarter of Fiscal 2001 was approximately
$0.9 million, or 2.8% of net sales compared to approximately $0.7 million, or
2.0% of net sales during the Third Quarter of Fiscal 2000. The increase in
interest expense was due to a higher interest rate being paid on debt incurred
in the Company's refinancing during the fourth quarter of fiscal 2000.
For the Third Quarters of Fiscal 2001 and 2000 no income tax provision
was necessary. The Company has unrecognized net operating loss carry forwards
for financial purposes of approximately $27.6 million as of the end of the Third
Quarter of Fiscal 2001 that may be applied against future earnings.
As a result of the above, the Company had a net loss applicable to
common shareholders for the Third Quarter of Fiscal 2001 of approximately $(1.4)
million, or $(0.23) per common share - Basic, compared with net loss applicable
to common shareholders of approximately $(0.6) million, or $(0.10) per common
share - Basic, during the Third Quarter of Fiscal 2000.
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<PAGE>
Thirty-Nine Weeks Ended November 1, 2000 (the "First Three-Quarters of Fiscal
2001") compared to Thirty-Nine Weeks Ended November 3, 1999 (the "First
Three-Quarters of Fiscal 2000").
Net sales for the First Three-Quarters of Fiscal 2001 were
approximately $102.6 million compared to approximately $102.4 million for the
First Three-Quarters of Fiscal 2000.
Gross profits in the First Three-Quarters of Fiscal 2001 decreased to
approximately $29.0 million, or 28.5% of net sales, compared to approximately
$29.1 million, or 28.4% of net sales in the First Three-Quarters of Fiscal 2000.
Direct store expenses of approximately $17.4 million, or 16.8% of net
sales in the First Three-Quarters of Fiscal 2001, was slightly lower than the
approximately $17.6 million, or 17.1% of net sales in the First Three-Quarters
of Fiscal 2000.
Selling, general and administrative expenses for the First
Three-Quarters of Fiscal 2001 increased to approximately $10.0 million, or 9.6%
of net sales compared to $9.2 million, or 9.0% of net sales in the First
Three-Quarters of Fiscal 2000. The increase in selling, general and
administrative expense was due to higher wages associated with the addition of
new personnel, higher consulting and related expenses and higher communication
expenses.
Depreciation and amortization, which includes depreciation and
amortization for the stores and the corporate facilities, but excludes the
manufacturing facilities (which are included in cost of goods sold) was
approximately $3.0 million, or 2.9 % of net sales for the First Three-Quarters
of Fiscal 2001, compared to approximately $3.1 million, or 3.0% of net sales for
the First Three-Quarters of Fiscal 2000. Increases in depreciation expense due
to new property additions were offset by assets becoming fully depreciated and
accordingly not having any depreciation expense associated with them in the
current period.
Due to the reasons set forth above, the Company had an operating loss
of approximately $1.4 million, or (0.8)% of net sales during the First
Three-Quarters of 2001, compared to an operating loss of approximately $0.7
million, or (0.7) % of net sales in the First Three-Quarters of Fiscal 2000.
Interest expense increased to approximately $2.9 million, or 2.8% of
net sales in the First Three-Quarters of Fiscal 2001, compared to approximately
$1.8 million, or 1.7 % of net sales in the First Three-Quarters of Fiscal 2000.
The increase in interest expense was due to a higher interest rate being paid on
debt, which arose from the Company's refinancing in the fourth quarter of fiscal
2000. As a result of the refinancing, the Company's preferred stock and
convertible debt were retired at substantial discounts.
Other income decreased to approximately $0.8 million, or 0.7% of net
sales during the First Three-Quarters of Fiscal 2001, from approximately $1.6
million, or 1.5 % of net sales in the First Three-Quarters of Fiscal 2000. This
decrease was primarily due to the Company receiving, in the first quarter of
fiscal 2000, approximately $500,000 from the sale of certain property rights
related to the use of a billboard on one of the Company's properties.
For the First Three-Quarters of Fiscal 2001 and 2000 no income tax
provision was necessary. A refund of taxes paid in Fiscal 2000 in the amount of
approximately $100,000 was received during the Third Quarter of 2001. The
Company has unrecognized net operating loss carry forwards for financial
purposes of approximately $27.6 million as of the end of the First Three-
Quarters of Fiscal 2001 that may be applied against future earnings.
On March 16, 2000, the Company closed the sale of its distribution
facility and repaid the remaining $2,458,237 outstanding on the facility's
mortgage. The Company incurred an extraordinary loss of approximately $300,000
on the early repayment of the note relating to prepayment fees and the write-off
of deferred financing costs.
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<PAGE>
As a result of the above, the Company had a net loss applicable to
common shareholders for the First Three-Quarters of Fiscal 2001 of approximately
$(3.7) million, or $(0.60) per common share - Basic, compared with net loss
applicable to common shareholders of approximately $(1.0) million, or $(0.16)
per common share - Basic, during the First Three-Quarters of Fiscal 2000.
Liquidity and Capital Resources
The Company's cash requirements are based upon its seasonal working
capital needs and capital requirements for capitalized additions and
improvements and expansions.
As of November 1, 2000, the Company had current assets of approximately
$11.9 million and current liabilities of approximately $10.1 million, resulting
in a net working capital position of approximately $1.8 million. The Company had
approximately $1.1 million, as of November 1, 2000, available under its
revolving credit facility.
Net cash provided by operating activities for the First Three-Quarters
of Fiscal 2001 was approximately $0.1 million. EBITDA, which is defined as
earnings (excluding one time nonrecurring charges or income) before interest,
taxes, depreciation and amortization, decreased from approximately $3.8 million
in the First Three-Quarters of Fiscal 2000 to approximately $2.7 million in
First Three-Quarters of Fiscal 2001. Management believes that EBITDA is a
measurement commonly used by analysts and investors. Accordingly, this
information has been presented to permit a more complete analysis; however,
EBITDA as reported may not be comparable to similarly titled measures used by
other companies. EBITDA should not be considered a substitute for net income or
cash flow data prepared in accordance with generally accepted accounting
principles or as a measure of profitability or liquidity.
Based on the terms of the Company's credit facility, management
currently believes principal and interest payments in fiscal 2001 will be
approximately $5.0 million. In addition, the Company currently plans to spend
approximately $1.0 million on capital improvements.
The Company's ability to fund its working capital and capital
expenditure requirements, make interest payments and meet its other cash
requirements depends, among other things, on the availability of internally
generated funds and the continued availability of and compliance with its credit
facilities. For example, pursuant to the terms of its credit facility with Back
Bay Funding, LLC, as amended, the Company is required to have a minimum EBITDA
of $4.9 million for Fiscal 2001. Management believes that internally generated
funds and its available credit facilities will provide the Company with
sufficient sources of funds to satisfy its anticipated cash requirements in
fiscal 2001. However, such forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results to differ
materially from results expressed or implied by such forward looking statements.
Potential risks and uncertainties include, but are not limited to: economic
conditions, changes in consumer spending, decreases in sales, weather,
competition, changes in the rate of inflation, potential sales by the Company of
certain out-parcels and other assets, the inability to develop new stores as
planned and other uncertainties that may occur from time to time. In the event
of any significant reduction of internally generated funds, the Company may
require funds from outside financing sources. In such event, there can be no
assurance that the Company would be able to obtain such funding as and when
required or on acceptable terms.
Cautionary Statement for Purposes of "Safe Harbor Provisions" of the Private
Securities Litigation Reform Act of 1995.
Certain statements contained in this filing are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, such as statements relating to financial results, business strategy,
plans for future business development activities, capital spending or financing
sources, capital structure and the effects of regulation and competition, and
are thus prospective. Such forward-looking statements are subject to risks,
uncertainties and other factors, which could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. Potential risks and uncertainties include, but are not limited to:
economic conditions, changes in consumer spending, weather, competition, changes
in the rate of
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<PAGE>
inflation, changes in state or federal legislation or regulation, the potential
for delisting from the Nasdaq Stock Market, inability to develop new stores as
planned, acceptance of new stores, stability and availability of product costs,
unavailability of anticipated financings, inability to consummate proposed
transactions, interest rates, the availability of human resources and other
uncertainties detailed from time to time in the Company's Securities and
Exchange Commission filings.
ITEM 3. Quantitative and Qualitative Disclosure About Market Risk.
Not Applicable.
-13-
<PAGE>
PART II - OTHER INFORMATION
-14-
<PAGE>
Item 1. Legal Proceedings
From time to time the Company is involved in lawsuits in the ordinary
course of business. Such lawsuits have not resulted in any material losses to
date, and the Company does not believe that the outcome of any existing lawsuits
will have a material adverse effect on its business or financial condition.
Item 2. Changes in Securities
There been no material modification in the instruments defining the
rights of shareholders during the First Three Quarters of Fiscal 2001. None of
the rights evidenced by the shares of the Company's common stock have been
materially limited or qualified by the issuance or modification of any other
class of securities.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits:
10.1 First Amendment to Loan and Security Agreement, dated
October 4, 2000, by and among Back Bay Capital
Funding, LLC and the Company
10.2 Severance Agreement and General Release, dated October 6,
2000, by and between John D. Branch and the Company.
B. Reports on Form 8-K
During the third quarter of Fiscal 2001, the Company filed a report
on Form 8-K dated October 9, 2000.
Item 5. Other Events - On October 6, 2000, the Company
issued a press release announcing management changes.
-15-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARRY'S FARMERS MARKET, INC.
Dated: December 15, 2000 By: /s/ Harry A.Blazer
------------------ --------------------------------------------
Harry A. Blazer
Chairman, President and Chief Executive
Officer
(principal executive officer)
Dated: December 15, 2000 By: /s/ Barbara Worrell
------------------ ------------------------------------------------
Barbara Worrell
Director of Accounting
(principal financial and accounting officer)
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