Summary of HEALTHY FAST FOOD INC

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial statements and the related notes included in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those projected in the forward-looking statements as a result of many factors.

History and Overview

Healthy Fast Food, Inc. (the "Company") was incorporated under the laws of the state of Nevada on November 14, 2005 to own and operate EVOS fast food franchises.

We entered into a franchise agreement effective December 14, 2005 to operate an EVOS restaurant in Henderson, Nevada. Shortly after signing the franchise agreement, we found a location for the restaurant, obtained approval of the site from EVOS USA, Inc. (EVOS USA"), and entered into a lease in January 2006. From January 2006 to September 2006, we sold 300,000 shares of common stock in a private placement, resulting in net proceeds of $544,878. These proceeds, together with loans from related parties, were used to build out, open and operate the restaurant. From February 2006 to October 2006, we designed the restaurant interior in cooperation with EVOS USA, obtained the necessary permits and licenses from government agencies and authorities, built out the improvements to the leasehold site, installed furniture and equipment, received training from EVOS USA, hired and trained restaurant staff, and launched a marketing and advertising campaign for the restaurant's opening in October 2006.

In December 2006, we entered into an area representative agreement that gives us the exclusive right to develop EVOS restaurants in a 12-state territory. To maintain our exclusivity in the territory, we were required to open a minimum number of restaurants within certain timeframes through 2016. These restaurants could be opened by us or by franchise owners that we identified and solicited. By December 1, 2008, we were required to have five restaurants opened and by May 31, 2009, we were required to have 12 additional restaurants opened. EVOS USA extended the original deadline of May 31, 2008 to December 1, 2008 upon payment of an extension fee of $140,000. The December 1, 2008 deadline was further extended by EVOS USA without any additional payment to March 1, 2009. Effective July 1, 2009, the Company ceased conducting business under the EVOS USA franchise and area development agreements. The Company renamed and rebranded its two fast food restaurants to "Fresh and Fast", and continues to offer its customers healthier alternatives to standard fast food establishments.

From December 2006 to June 2007, we engaged in a second private placement of 389,450 shares of common stock, resulting in net proceeds of $1,552,127. These proceeds were used to repay related party loans, pay some of the expenses of our initial public offering, and fund our efforts to solicit franchise owners for our territory. A portion of these proceeds were also used to open another restaurant. During this period, we improved our operations at the Henderson restaurant and began to build the infrastructure necessary to support the operation of multiple restaurants. We hired a director of operations and a director of training in March 2007.

In March 2008, we completed an initial public offering of 1,000,000 units, each unit consisting of one share of common stock, one Class A warrant and two Class B warrants, resulting in gross proceeds of $5,100,000 and net proceeds of $4,002,840. The proceeds of the offering were intended to be used to open six company-owned EVOS restaurants in the Las Vegas metropolitan statistical area (the "Las Vegas MSA") during the following 12 to 18 months, as well as for marketing expenses, franchise development and working capital. We opened our second restaurant in the Las Vegas MSA in December 2008, and our EVOS sub-franchisee in California opened its first store in November 2008.

After experiencing continued operating losses with our EVOS restaurants, we decided to diversify into another healthy fast food concept and acquired the worldwide rights to U-Swirl Frozen YogurtSM ("U-Swirl") on September 30, 2008. Our intent with the acquisition of the rights to U-Swirl is to build and

operate stores to be owned and operated by the Company ("Company-owned") and to franchise to others the right to own and operate U-Swirl stores pursuant to either a (a) license agreement as a U-Swirl licensee, (b) a franchise and area development agreement as a U-Swirl franchisee, or (c) a joint venture agreement as a U-Swirl joint-venture partner.

We opened one Company-owned U-Swirl location in the Las Vegas MSA in March 2009, a second and third location in the Las Vegas MSA in April 2009 and July 2009 respectively. The original U-Swirl store continues to operate as a licensee. We issued a Franchise Disclosure Document (the "FDD") in November 2008 and filed it in certain states which require filing. In July 2009, we entered into a franchise agreement with Galena Frozen Yogurt Company, which over the next 12 months plans to open three U-Swirl Frozen Yogurt stores in Reno, Nevada, and at least one U-Swirl store in Northern California.

Results of Operations

Three Months Ended June 30, 2009. For the three months ended June 30, 2009, our restaurants generated $569,031 in sales, as compared to $167,795 for the three months ended June 30, 2008. The increase in revenues is due primarily to the fact that two EVOS restaurants and two U-Swirl locations were in operation during the 2009 quarter, as compared to only one EVOS restaurant during the 2008 quarter.

Our restaurant operating costs were $484,604, or 85% of net sales revenues, resulting in a restaurant operating profit of $84,427. During the comparable quarter in 2008, restaurant operating costs were 126% of net revenues and we lost $43,745 on our restaurant operations. Some of the restaurant operating costs are fixed, such as salaries for our director of operations and our director of training, as well as occupancy costs. These costs do not fluctuate with restaurant sales. Restaurant operating costs for the 2009 period reflect the increased EVOS royalty rate of 5.5% that went into effect beginning April 2009. We were subject to an EVOS 4.5% royalty rate prior to April 2009.

Franchise royalties and fees in 2009 increased slightly to $4,335 from $3,775 in 2008.

For the quarter ended June 30, 2009, general and administrative expense increased by $15,763 (18%) due primarily to general administrative costs ($25,092) associated with increased U-Swirl International, Inc. operations. The largest components of general and administrative expenses for the 2009 period were legal fees ($23,764) attributable primarily to the development and filing of the FDD, supplies for two new U-Swirl Yogurt locations ($19,968), and administrative salaries and payroll taxes ($7,200).

Officer compensation for the quarter ended June 30, 2009 increased by $46,087 (64%), as we paid salaries to all of our officers during the 2009 quarter. Some of the officers were not paid salaries in 2008.

We discontinued the services of our investor relations firm in December 2008. We incurred $22,500 of investor relations fees in 2008, as we hired a financial public relations firm in conjunction with our becoming a public company.

We incurred $8,026 of pre-opening costs in connection with our U-Swirl Frozen Yogurt location that opened in April 2009.

We determined to impair our franchise fee attributed to our relationship with EVOS at June 30, 2009, as we ceased conducting business under the EVOS franchise concept as of July 1, 2009. Accordingly, we recorded a $12,746 impairment loss.

The increase in depreciation and amortization expense of $37,973 (211%) reflects our increased base of leasehold improvements, property and equipment.

As a result of the above, our net loss for the three months ended June 30, 2009 was $205,336, as compared to a loss of $216,160 for the comparable 2008 quarter.

Six Months Ended June 30, 2009. For the six months ended June 30, 2009, our restaurants generated $822,925 in sales, as compared to $351,093 for the six months ended June 30, 2008. The increase in revenues is due primarily to the fact that two EVOS restaurants and two Company-owned U-Swirl locations were in operation during the second quarter of 2009, as compared to only one EVOS restaurant during the six months ended June 30, 2008.

Our restaurant operating costs were $784,157, or 95% of net sales revenues, resulting in a restaurant operating profit of $38,768. During the comparable period in 2008, restaurant operating costs were 124% of net revenues and we lost $84,153 on our restaurant operations. Some of the restaurant operating costs are fixed, such as salaries for our director of operations and our director of training, as well as occupancy costs. These costs do not fluctuate with restaurant sales. Restaurant operating costs for the 2009 period also reflect the increased EVOS royalty rate of 5.5% that went into effect beginning April 2009. Prior to April 2009, from April 2008 until March 2009, we were subject to a 4.5% royalty rate on revenue generated from the EVOS operations and prior to April 2008, we were subject to a 3.5% royalty rate for revenue generated from the EVOS operations.

As set forth in Note 11 of the Notes to Financial Statements, the operation of Fresh and Fast (formerly EVOS) restaurants as a separate business segment have been significantly less profitable than U-Swirl restaurant operations. For the six months ended June 30, 2009, the Fresh and Fast operating loss was $154,405 while the U-Swirl business segment generated operating income of $28,762. We have determined to close these stores as soon as practicable in order to enable us to maintain our sole focus on the development and operation of the U-Swirl concept and to minimize losses incurred by the operation of the Fresh and Fast restaurants.

EVOS franchise royalties and fees in 2009 decreased to $10,954 from $23,011 in 2008.

For the six months ended June 30, 2009, general and administrative expense increased by $95,876 (62%) due to legal ($28,811) primarily attributable to the development and filing of the FDD, printing and postage ($11,406), directors and officers insurance ($8,657), general liability insurance ($2,906), administrative salaries ($4,883), and supplies associated with the opening of two new U-Swirl Yogurt locations ($39,213). The largest components of general and administrative expenses for the six months ended June 30, 2009 were accounting fees ($17,290), insurance costs ($23,078), postage and printing expenses ($19,088), legal fees ($48,306), restaurant supplies ($42,827), and administrative salaries and payroll taxes ($18,209).

Officer compensation for the six months ended June 30, 2009 increased by $107,890 (79%), as we paid salaries to all of our officers during the six months ended June 30, 2009. Some of the officers were not paid salaries in 2008.

We discontinued the services of our investor relations firm in December 2008. We incurred $131,342 of investor relations fees in 2008, as we hired a financial public relations firm in conjunction with our becoming a public company. Of this amount, $101,342 was the value of warrants to purchase 60,000 units issued to the public relations firm as part of its compensation.

We incurred $8,026 of pre-opening costs in connection with our U-Swirl Frozen Yogurt locations that are scheduled to open during the third quarter 2009.

The increase in depreciation and amortization expense of $52,971 (139%) reflects our increased base of leasehold improvements, property and equipment due to the operation of the new stores.

As a result of the above, our net loss for the six months ended June 30, 2009 was $552,616, as compared to a loss of $497,211 for the comparable 2008 period.

Liquidity and Financial Condition

As of June 30, 2009. At June 30, 2009, we had working capital of $1,699,133 and cash of $1,659,956. Working capital and cash at December 31, 2008 were $3,297,263 and $3,335,740, respectively. The decrease in working capital was due to our loss for the six-month period and the purchase of fixed assets for our three U-Swirl Frozen Yogurt locations, two that opened in March and April, and pre-opening expenses and expenditures for three new U-Swirl restaurants that are scheduled to open during the third quarter of 2009. Leasehold improvements, property and equipment increased from $879,435 at December 31, 2008, to $2,036,318 at June 30, 2009. Current liabilities at June 30, 2009, include $15,000 of deferred revenue. At June 30, 2009, we had not substantially performed all of our obligations under the franchise agreement with a new franchisee in Reno, Nevada. We will recognize $15,000 of franchise fee income in July 2009.

During the six months ended June 30, 2009, we collected $23,535 in tenant improvement allowance, and used $1,247,929 for the purchase of fixed assets and $5,920 for deposits in connection with the opening of U-Swirl Frozen Yogurt stores. During the six months ended June 30, 2008, we used $257,759 for investing activities, of which $114,759 was used for the purchase of fixed assets, $3,000 was used for deposits in connection with the new restaurant facility, and $140,000 was paid to EVOS USA. As we had a net loss of $552,616 in 2009, operating activities used cash of $441,947 as compared to $357,698 in 2008.

Summary of Significant Accounting Policies

Inventories. Inventories consisting of food, beverages and supplies are stated at the lower of cost or market, including provisions for spoilage commensurate with known or estimated exposures which are recorded as a charge to cost of sales during the period spoilage is incurred.

Leasehold improvements, property and equipment. Leasehold improvements, property and equipment are stated at cost less accumulated depreciation. Expenditures for property acquisitions, development, construction, improvements and major renewals are capitalized. The cost of repairs and maintenance is expensed as incurred. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 5 to 10 years. Leasehold improvements are amortized over the shorter of the lease term, which generally includes reasonably assured option periods, or the estimated useful lives of the assets. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected gain or loss from operations.

We periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful life of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. We use an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Deposits. Deposits consist of the $157,537 in security deposits for multiple locations, of which $93,524 was paid and $64,013 (in connection with our Henderson restaurant property lease) was unpaid as of June 30, 2009. All deposits are carried at the lower of fair value or cost.

Revenue, discounts and expense recognition. Revenue from restaurant sales is recognized when food and beverage products are sold. We reduce revenue by sales returns and sales discounts.

Revenue earned as a U-Swirl Frozen Yogurt franchisor will be derived from restaurants in U-Swirl International, Inc.'s worldwide territory and will include initial franchise fees, continuing service fees, and royalties. Continuing service fees and royalties will be recognized in the period in which they are earned. Franchise fee revenue is recognized and fully earned upon the signing and acceptance of the franchise

agreement and franchise fee by both parties. SFAS 45, paragraph 5(a)-(c), stipulates that initial franchise fee revenue from a franchise sale should be recognized when the franchiser has substantially performed or satisfied all material services or conditions relating to the sale. Substantial performance has occurred when the franchisor has: (a) no remaining obligations or intent to refund any cash received or to forgive any unpaid notes or receivables; (b) performed substantially all of the initial services required by the franchise agreement (such as providing assistance in site selection, obtaining facilities, advertising, training, preparing operating manuals, bookkeeping, or quality control); and (c) met all other material conditions or obligations. We completed our training for the new U-Swirl franchisee in July 2009. Therefore, the revenue recognition process did not meet the "substantial performance" definition outlined above for the six months ended June 30, 2009. Consequently, we recorded U-Swirl franchisee fee deferred revenue of $15,000 and $0 during the six months ended June 30, 2009 and 2008, respectively.

Costs and expenses are recognized during the period in which they are incurred.