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        Intangible and other assets consist of the following (in thousands):

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B.     INTANGIBLE AND OTHER ASSETS (CONTINUED):

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D. LONG-TERM DEBT:

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D.    LONG-TERM DEBT (CONTINUED):

E.    RELATED PARTY TRANSACTIONS:

        Certain directors and officers of the Company are also directors, officers or controlling
        shareholders of other entities from which the Company leases its corporate headquarters and
        various store and other locations under agreements classified as operating leases. Aggregate
        rentals in connection with all such leases for the three quarters ended July 4, 2002 and July 5,
        2001 were $906,200 and $507,000. In addition, two new store locations are under construction
        and are to be leased from entities controlled by, or from persons related to, certain directors and
        officers of the Company. The aggregate amount of rentals associated with these properties will
        not be determined until completion of the construction.

        The Company charges an affiliate for general and administrative services provided. Such charges
        amounted to $8,400 and $8,400 in the three quarters ended July 4, 2002 and July 5, 2001, respectively.

        During the first three quarters of fiscal years 2002 and 2001, the Company made payments of
        $59,600 and $59,300, respectively, to a director of the Company for consulting fees and
        reimbursement of expenses.

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F.    NEW ACCOUNTING PRONOUNCEMENTS:

G.    COMMITMENTS AND CONTINGENCIES:

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G.    COMMITMENTS AND CONTINGENCIES (CONTINUED):

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RESULTS OF OPERATIONS:

Matters discussed below should be read in conjunction with "Operating Data (Retail Locations Only)"
on the preceding page. Certain statements contained in this report are forward looking, such as
statements regarding the Company's plans and strategies or future financial performance. Although
the Company believes that its expectations are based on reasonable assumptions within the bounds of
its knowledge, investors and prospective investors are cautioned that such statements are only
projections and that actual events or results may differ materially from those expressed in any such
forward-looking statements. In addition to the factors discussed elsewhere in this report, the
Company's actual consolidated quarterly or annual operating results have been affected in the past, or
could be affected in the future, by additional factors, including, without limitation, general economic,
business and market conditions; environmental, tax and tobacco legislation or regulation; volatility of
gasoline prices, margins and supplies; merchandising margins; customer traffic; weather conditions;
labor costs and the level of capital expenditures.

In the last twelve months, the Company continued its store evaluation and strategic initiative program
by converting convenience store locations to Choice Cigarette Discount Outlets ("Choice") or closing
locations. During that period, 11 convenience stores were converted to Choice stores and three
convenience stores were closed. The Company also expanded its store base during this period by
constructing two convenience stores and one Choice location. The Company intends to
aggressively pursue the conversion of convenience stores to Choice outlets to achieve additional
improvement to store profitability. As previously announced, in April 2002 the Company hired
financial advisors to assist the Company in the exploration and evaluation of all of its strategic
alternatives to enhance stockholder value. If this evaluation leads to the disposition of assets in excess
of certain amounts, Messrs. Sahakian, Kervandjian and Petrick will be eligible to receive bonuses
pursuant to a Transaction Success Bonus Plan adopted by the Company. The aggregate amount of
such bonuses will be based upon the total consideration received for such assets.


Quarters Ended July 4, 2002 and July 5, 2001

For the third quarter of fiscal 2002, ended July 4, 2002, total revenues were $108.8 million, a decline
of $3.5 million, or 3.1%, compared to total revenues of $112.3 million for the third quarter of fiscal
2001, ended July 5, 2001. Revenues declined due to a $7.9 million, or 13.5%, decline in gasoline sales
to $50.2 million for the current fiscal quarter compared to gasoline sales of $58.1 million in the third
quarter of fiscal 2001. This decline is the result of a 21.3 cent per gallon decline in the average
retail price per gallon of petroleum sold at the Company's locations in the third quarter of fiscal 2002
compared to the same quarter of fiscal 2001. Merchandise sales for the current fiscal quarter increased
by $4.3 million, or 8.1%, to $58.1 million, while other income increased by $23,000, or 5.2%, to
$465,000 compared to the third quarter of fiscal 2001. Merchandise sales at comparable stores
increased by 4.6% and gasoline gallons sold at comparable stores increased by 1.2% for the third
quarter of fiscal 2002 compared to the same quarter of fiscal 2001. Seasonably warm weather
conditions, combined with increased consumer travel in the current fiscal quarter, contributed to the
growth in comparable store sales.

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Gross profits on merchandise sales increased by $485,000, or 2.8%, to $17.7 million compared to
$17.2 million in the third quarter of fiscal 2001, despite a 1.6% decline in the gross margin rate for the
current fiscal quarter. Gasoline gross profits declined by $1.6 million, or 25.9%, to $4.6 million, while
gasoline gallons sold in the current fiscal quarter increased by 1.3 million gallons, or 3.1%, to 45.2
million gallons sold. Gasoline gross profit per gallon declined by 3.9 cents per gallon for the current
fiscal quarter when compared to the third quarter of fiscal 2001. In the third quarter of fiscal 2002, the
Company improved merchandise gross profit and gasoline gallon sales levels; however, the gasoline
gross margin per gallon sold declined due to competitive gasoline market conditions in the Company's
operating area.

In the third quarter of fiscal 2002, selling, general and administrative, and depreciation and
amortization expenses increased marginally, while interest expense declined when compared to the
third quarter of fiscal 2001. Selling expenses increased by $241,000, or 1.4%, to $17.1 million due to
additional operating leases for store improvements and higher insurance reserves. General and
administrative expense increased by $101,000, or 5.0%, to $2.1 million due to increased legal and
professional fees, in part associated to the Company's hiring of its financial advisors. Depreciation and
amortization expense increased by $14,000, or 0.7%, to $2.1 million as the result of depreciation of
new equipment for store improvements. Interest expense declined by $268,000, or 13.7%, to $1.7
million for the third quarter of fiscal 2002 due to lower borrowing levels and lower interest rates.

Losses before income taxes were $200,000 in the third quarter of fiscal 2002 compared to a pre-
tax profit of $950,000 in the third quarter of fiscal 2001. Lower gasoline margins, which were partially offset by increases in merchandise margins, were the leading factors in the Company's financial
performance for the third quarter of fiscal 2002. The provision for income taxes remained the same as
a percentage of earnings before income taxes for the comparable quarters. Net losses were $144
thousand, or $0.02 per share, for the quarter ended July 4, 2002, compared to a net profit of $627,000,
or $0.09 per share, for the quarter ended July 5, 2001.

Total revenues for the first three quarters of fiscal 2002 were $300.0 million, a decline of $18.6
million, or 5.9%, compared to total revenues of $318.6 million for the first three quarters ended July 5,
2001. The decline in revenues was due to a $34.1 million, or 20.6%, decline in gasoline sales to
$131.7 million compared to gasoline sales of $165.8 million reported in the first nine months of fiscal
2001. A 26.7 cent per gallon decline in the Company's average retail price per gallon of petroleum
sold in its markets for the first three quarters of fiscal 2002 when compared to the same period of fiscal
2001 resulted in lower gasoline dollar sales. Merchandise sales increased by $15.6 million, or 10.3%,
to $166.9 million from $151.3 million in the first nine-month period of fiscal 2001. Other income was
$1.4 million, a decline of $135,000, or 8.9%, when compared to the first three quarters of fiscal 2001.
At comparable stores, merchandise sales increased by 6.2%, while gasoline gallons sold declined by
3.0%, for the first three quarters of fiscal 2002 compared to the same period of fiscal 2001.

Gross profits on merchandise sales for the first three quarters of fiscal 2002 increased by $2.3 million,
or 4.6%, to $51.5 million compared to merchandise gross profits of $49.2 million for the first three
quarters of the prior fiscal year. The merchandise gross margin rate declined by 1.7% for the current
nine-month period. The Company achieved increases in gasoline gallon sales during the first three

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quarters of fiscal 2002, however realized lower gross margins per gallon sold during this period as a
result of a competitive gasoline market environment. Gasoline gallon sales increased by 789,000
gallons, or 0.6%, to 131.3 million gallons sold, while gross profit per gallon declined by 2.3 cents per
gallon in the first three quarters ended July 4, 2002 compared to the same period ended July 5, 2001.
Gasoline gross profit margins declined by $3.0 million, or 17.8%, to $13.7 million for the first three
quarters of fiscal 2002.

Selling expenses increased by $1.0 million, or 2.1%, to $50.9 million due primarily to additional store
operating leases and increased insurance reserves. General and administrative expense increased by
$537,000, or 9.5%, to $6.2 million primarily as the result of increased legal and professional fees and
additional salaried positions. Depreciation and amortization expense for the first nine months of fiscal
2002 increased by $135,000, or 2.2%, to $6.2 million due to depreciation of new equipment and
improvements at existing stores and stores converted to Choice Cigarette Discount Outlets. Lower
borrowing levels and lower interest rates levels resulted in a $843,000, or 14.2%, decline in interest
expense to $5.1 million for the first three quarters ended July 4, 2002.

Losses before income taxes were $1.8 million for the first three quarters of fiscal 2002, compared to a
pre-tax loss of $121,000 for the first three quarters of fiscal 2001. Improved merchandise sales at
comparable stores were offset by lower gasoline gross margins due to a competitive petroleum market
in the Company's operating area during the current nine-month reporting period. The provision for
income taxes remained relatively the same as a percentage of earnings before income taxes for the
comparable reporting periods. Net losses for the first three quarters of fiscal 2002 were $1.2 million,
or $0.17 per share, compared to net losses of $80,000, or $0.01 per share, for the first three quarters of
fiscal 2001.


LIQUIDITY AND CAPITAL RESOURCES:

Most of the Company's sales are for cash and its inventory turns over rapidly. As a result, the
Company's daily operations do not generally require large amounts of working capital. From time to
time, the Company utilizes a portion of its cash to acquire and construct new stores and
renovate existing locations.

Capital requirements for debt service and capital leases for the remainder of fiscal year 2002 are
approximately $700,000. Anticipated capital expenditures in the balance of the fiscal year are
approximately $200,000 for the replacement of store equipment and upgrading the Company's data
processing systems.

Operating lease commitments for the balance of fiscal year 2002 are approximately $1.7 million.
These commitments for fiscal years 2003, 2004, 2005 and 2006 are approximately $6.3 million, $5.4
million, $4.2 million, and $2.9 million, respectively.

Management believes that cash from operations and its available credit facility will be sufficient to
meet the Company's obligations for the foreseeable future.

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NEW ACCOUNTING PRONOUNCEMENTS:

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142 and, in August 2001,
issued SFAS No. 144. SFAS No. 142, "Goodwill and Other Intangible Assets," requires that such
assets with indefinite lives not be amortized but be tested annually for impairment and provides
specific guidance for such testing. This statement also requires disclosure of information regarding
goodwill and other assets that was previously not required. SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," provides additional guidance for impairment testing
and determination of when an asset is considered to be for sale. The Company is not required to adopt
these accounting standards until fiscal year 2003. At this time, the Company has not determined the
impact these standards will have on the Company's financial statements.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES:

Our discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate
our estimates, including those related to self insured liabilities, impairment and income taxes. We base
our estimates on historical experience, current and anticipated business conditions, the condition of the
financial markets, and various other assumptions that are believed to be reasonable under existing
conditions. Actual results may differ from these estimates.

We believe that the following critical accounting policies affect our more significant judgements and
estimates used in the preparation of our consolidated financial statements:

Self insurance liabilities -- We record estimates for self insured worker's compensation and general
liability insurance coverage. Should a greater amount of claims occur compared to what was
estimated, or costs increase beyond what was anticipated, reserves recorded may not be sufficient, and
additional expense may be recorded.

Impairment -- We evaluate long-lived assets, including stores, for impairment annually, or whenever
events or changes in circumstances indicate that the assets may not be recoverable. The impairment is
measured by calculating the estimated future cash flows expected to be generated by the store, and
comparing this amount to the carrying value of the store's assets. Cash flows are calculated utilizing
individual store forecasts and total company projections for the remaining estimated lease lives of the
stores being analyzed. Should actual results differ from those forecasted and projected, we may be
subject to future impairment charges related to these facilities.

Income taxes -- We currently have net operating loss ("NOL") carryforwards that can be utilized to
offset future income for federal and state tax purposes. These NOLs generate a significant deferred tax
asset. However, we have recorded a valuation allowance against this deferred tax asset as we have
determined that it is more likely than not that we will not be able to fully utilize the NOLs. Should our
assumptions regarding the utilization of these NOLs change, we may reduce some or all of this
valuation allowance, which would result in the recording of an income tax benefit.

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ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk

The Company uses its revolving credit facility and its mortgage and equipment loans to finance a
significant portion of its operations. These on-balance sheet financial instruments, to the extent they
provide for variable rates of interest, expose the Company to interest rate risk resulting from changes in
the LIBOR or prime rate.

To the extent that the Company's financial instruments expose the Company to interest rate risk, they
are presented in the table below. The table presents principal cash flows and related interest rates by
year of maturity for the Company's revolving credit facility, mortgage loans and equipment loans at
July 4, 2002.

The carrying amounts of cash and short-term debt approximate fair value. The Company estimates the
fair value of its long-term, fixed-rate debt generally using discounted cash flow analysis based on the
Company's current borrowing rates for debt with similar maturities. The Company estimates the fair
value of its long-term, variable-rate debt based on carrying amounts plus unamortized loan fees
associated with the debt.

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PART II - OTHER INFORMATION

ITEM 6 - Exhibits and Reports on Form 8-K

      The Company did not file any reports on Form 8-K during the quarter ended July 4, 2002.

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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.